As filed with the Securities and Exchange Commission on December 19, 1994
Registration No. 33-43846
811-524
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_/
Pre-Effective Amendment No. _____ /_/
Post-Effective Amendment No. 93 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 34
THE DREYFUS/LAUREL FUNDS TRUST
__________________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
200 Park Avenue - 55th floor
New York, New York 10166
_______________________________________________________
(Address of Principal Executive Office) (ZIP Code)
Registrant's Telephone Number, including area code: (800) 225-5267
__________________________________________________________________
John E. Pelletier Clifford J. Alexander, Esq.
Secretary Thomas M. Leahey, Esq.
The Dreyfus/Laurel Funds Trust Kirkpatrick & Lockhart
200 Park Avenue - 55th floor South Lobby - 9th Floor
New York, New York 10166 1800 M Street, N.W.
(Name and Address of Agent for Service) Washington, D.C. 20036
(202) 778-9000
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment becomes effective.
It is proposed that this filing will become effective (check appropriate
box):
/X/ Immediately upon filing /_/ on (date) pursuant to
pursuant to paragraph (b) paragraph (b)
/_/ 60 days after filing pursuant /_/ on (date) pursuant to
to paragraph (a)(1) paragraph (a)(1)
/_/ 75 days after filing pursuant /_/ on (date) pursuant to
to paragraph (a)(2) paragraph (a)(2)
DC-172634.1
<PAGE>
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- 2 -
<PAGE>
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940, accordingly no fee is payable herewith. A
Rule 24f-2 Notice for the Registrant's most recent fiscal year ended
December 31, 1993 was filed with the Commission on February 25, 1994.
- 3 -
<PAGE>
Dreyfus Core Value Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Caption Prospectus Caption
Part A of
Form N-1A
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The
Dreyfus/Laurel Funds;
Distribution and Service
Plans; How to Exchange
Your Investment From One
Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
- 4 -
<PAGE>
Items in Statement of Additional
Part B of Information Caption
Form N-1A
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Trust
History
13. Investment Objectives and Investment Policies
Policies
14. Management of the Fund Management of the Trust;
Trustees and Officers of
the Trust
15. Control Persons and Management of the Trust;
Principal Holders of Miscellaneous;
Securities
16. Investment Advisory and Management of the Trust;
Other Services Investment Manager;
Shareholder Services
17. Brokerage Allocation and Investment Policies;
Other Practices Portfolio Transactions
18. Capital Stock and Other Description of the Trust;
Securities See Prospectus -- "Cover
Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Fund; The Dreyfus/Laurel
Funds Trust"
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Distribution and Service
Offered Plans; Redemption of
Shares; Valuation of
Shares
20. Tax Status Taxes
21. Underwriters Purchase of Shares;
Distribution and Service
Plans; Amounts Expended
22. Calculation of Performance Performance Data
Data
23. Financial Statements Financial Statements
- 5 -
<PAGE>
Dreyfus Special Growth Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Caption Prospectus Caption
Part A of
Form N-1A
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The
Dreyfus/Laurel Funds;
Distribution and Service
Plans; How to Exchange
Your Investment From One
Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
- 6 -
<PAGE>
Items in Statement of Additional
Part B of Information Caption
Form N-1A
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Trust
History
13. Investment Objectives and Investment Policies
Policies
14. Management of the Fund Management of the Trust;
Trustees and Officers of
the Trust
15. Control Persons and Management of the Trust;
Principal Holders of Miscellaneous;
Securities
16. Investment Advisory and Management of the Trust;
Other Services Investment Manager;
Shareholder Services
17. Brokerage Allocation and Investment Policies;
Other Practices Portfolio Transactions
18. Capital Stock and Other Description of the Trust;
Securities See Prospectus -- "Cover
Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Fund; The Dreyfus/Laurel
Funds Trust"
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Distribution and Service
Offered Plans; Redemption of
Shares; Valuation of
Shares
20. Tax Status Taxes
21. Underwriters Purchase of Shares;
Distribution and Service
Plans; Amounts Expended
22. Calculation of Performance Performance Data
Data
23. Financial Statements Financial Statements
- 7 -
<PAGE>
Premier Limited Term Government Securities Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Caption Prospectus Caption
Part A of
Form N-1A
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The
Dreyfus/Laurel Funds;
Distribution and Service
Plans; How to Exchange
Your Investment From One
Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
- 8 -
<PAGE>
Items in Statement of Additional
Part B of Information Caption
Form N-1A
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Trust
History
13. Investment Objectives and Investment Policies
Policies
14. Management of the Fund Management of the Trust;
Trustees and Officers of
the Trust
15. Control Persons and Management of the Trust;
Principal Holders of Miscellaneous;
Securities
16. Investment Advisory and Management of the Trust;
Other Services Investment Manager;
Shareholder Services
17. Brokerage Allocation and Investment Policies;
Other Practices Portfolio Transactions
18. Capital Stock and Other Description of the Trust;
Securities See Prospectus -- "Cover
Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Fund; The Dreyfus/Laurel
Funds Trust"
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Distribution and Service
Offered Plans; Redemption of
Shares; Valuation of
Shares
20. Tax Status Taxes
21. Underwriters Purchase of Shares;
Distribution and Service
Plans; Amounts Expended
22. Calculation of Performance Performance Data
Data
23. Financial Statements Financial Statements
- 9 -
<PAGE>
Premier Managed Income Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Caption Prospectus Caption
Part A of
Form N-1A
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The
Dreyfus/Laurel Funds;
Distribution and Service
Plans; How to Exchange
Your Investment From One
Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
- 10 -
<PAGE>
Items in Statement of Additional
Part B of Information Caption
Form N-1A
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Trust
History
13. Investment Objectives and Investment Policies
Policies
14. Management of the Fund Management of the Trust;
Trustees and Officers of
the Trust
15. Control Persons and Management of the Trust;
Principal Holders of Miscellaneous;
Securities
16. Investment Advisory and Management of the Trust;
Other Services Investment Manager;
Shareholder Services
17. Brokerage Allocation and Investment Policies;
Other Practices Portfolio Transactions
18. Capital Stock and Other Description of the Trust;
Securities See Prospectus -- "Cover
Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Fund; The Dreyfus/Laurel
Funds Trust"
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Distribution and Service
Offered Plans; Redemption of
Shares; Valuation of
Shares
20. Tax Status Taxes
21. Underwriters Purchase of Shares;
Distribution and Service
Plans; Amounts Expended
22. Calculation of Performance Performance Data
Data
23. Financial Statements Financial Statements
- 11 -
<PAGE>
THE DREYFUS/LAUREL FUNDS TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT
This post-effective amendment to the registration Statement of The
Dreyfus/Laurel Funds Trust contains the following documents:
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendment
Part A - Prospectus
- Dreyfus Core Value Fund
- Dreyfus Special Growth Fund
- Premier Limited Term Government
Securities Fund
- Premier Managed Income Fund
Part B - Statement of Additional Information
- Dreyfus Core Value Fund
- Dreyfus Special Growth Fund
- Premier Limited Term Government
Securities Fund
- Premier Managed Income Fund
Part C - Other Information
Signature Page - The Dreyfus/Laurel Funds Trust
Exhibits
- 12 -
<PAGE>
Dreyfus
Core Value
Fund, Inc.
PROSPECTUS
- ------------------------------------------------------------------------------
PROSPECTUS DECEMBER 19, 1994
DREYFUS CORE VALUE FUND
- ------------------------------------------------------------------------------
DREYFUS CORE VALUE FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
CAPITAL APPRECIATION FUND," IS A SEPARATE PORTFOLIO OF THE DREYFUS/LAUREL
FUNDS TRUST, A MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL
FUND. THE FUND IS A DIVERSIFIED EQUITY FUND SEEKING LONG-TERM GROWTH OF
CAPITAL, WITH CURRENT INCOME AS A SECONDARY OBJECTIVE, THROUGH INVESTMENTS
PRIMARILY IN COMMON STOCKS.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF OF
CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP AT
SUCH INSTITUTION. INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE
FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER
FINANCIAL INSTITUTIONS ("SERVICE AGENTS") THAT HAVE ENTERED INTO A SELLING
AGREEMENT WITH THE FUND'S DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM INVESTOR SHARES BY TELEPHONE USING THE
DREYFUS TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
SHARES OF THE FUND ARE ALSO AVAILABLE THROUGH A SERVICING NETWORK
ASSOCIATED WITH MELLON BANK, N.A. ("MELLON BANK"), AN AFFILIATE OF DREYFUS.
EXCHANGE AND SHAREHOLDER SERVICES VARY DEPENDING UPON THE NETWORK THROUGH WHICH
YOU PURCHASE FUND SHARES. SEE "HOW TO BUY FUND SHARES."
----------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU INVEST
AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED DECEMBER 19, 1994,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO
SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE
FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK, 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
----------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK OR ITS
AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK OR AN AFFILIATE MAY BE
PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS CUSTODIAN, TRANSFER
AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS DISTRIBUTED BY PREMIER MUTUAL
FUND SERVICES, INC.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
EXPENSE SUMMARY 3
FINANCIAL HIGHLIGHTS 4
DESCRIPTION OF THE FUND 6
MANAGEMENT OF THE FUND 10
HOW TO BUY FUND SHARES 12
SHAREHOLDER SERVICES 15
HOW TO REDEEM FUND SHARES 18
DISTRIBUTION PLAN (INVESTOR SHARES ONLY) 20
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES 21
PERFORMANCE INFORMATION 22
GENERAL INFORMATION 23
2
<TABLE>
<CAPTION>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES: INVESTOR SHARES CLASS R INSTITUTIONAL SHARES
--------------- ------- --------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvestments none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets) none none none
Management Fee1 .88% .88% 0.88%
12b-1 Fee .25% none 0.15%
Other Expenses2 0.00% 0.00% 0.00%
----- ----- -----
Total Fund Operating Expenses 1.13% .88% 1.03%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE:
You would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period: INVESTOR SHARES CLASS R INSTITUTIONAL SHARES
--------------- ------- --------------------
<S> <C> <C> <C>
1 Year $ 12 $ 9 $ 11
3 Years $ 36 $ 28 $ 33
5 Years $ 62 $ 49 $ 57
10 Years $137 $108 $126
</TABLE>
_______________
1 The voluntary waiver of a portion of the Management Fees by Dreyfus is
expected during the current fiscal year. Without the voluntary waiver, the
Management Fees would be equal to 0.90%.
2 Does not include fees and expenses of the non-interested trustees (including
counsel). The investment manager is contractually required to reduce its
Management Fee in an amount equal to the Fund's allocable portion of such fees
and expenses, which are estimated to be 0.02% of the Fund's net assets. (See
"Management of the Fund.")
- --------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN
AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- --------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that investors will bear, directly or indirectly,
the payment of which will reduce investors' return on an annual basis. Other
Expenses and Total Fund Operating Expenses are based on estimated amounts for
the current fiscal year. Long-term investors in Investor shares could pay more
in 12b-1 fees than the economic equivalent of paying the maximum front-end
sales charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. ("NASD"). The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Service Agents may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan."
The Company understands that banks, brokers, dealers or other financial
institutions (including Dreyfus and its affiliates) (collectively "Service
Agents") may charge fees to their clients who are owners of the Fund's Investor
shares for various services provided in connection with a client's account.
These fees would be in addition to any amounts received by a Service Agent
under its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. (the "Distributor"). The Agreement requires each Service Agent to disclose
to its clients any compensation payable to such Service Agent by the
Distributor and any other compensation payable by the client for various
services provided in connection with their accounts.
In addition to Investor shares and Class R shares, the Fund offers
Institutional Shares to holders of shares of a predecessor class of the Fund as
of April 4, 1994. Institutional Shares are offered through a servicing network
associated with Mellon Bank, pursuant to a separate prospectus. Institutional
Shares are subject to a 12b-1 fee at an annual rate of up to 0.15% of its
average daily net assets. Estimated total annual fund operating expenses for
Institutional Shares are 1.03% of average daily net assets.
3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Institutional Share
outstanding through each fiscal year and the six months ended June 30, 1994
(unaudited) and should be read in conjunction with the financial statements and
related notes that appear in the Fund's Annual Report dated December 31, 1993
and Semi-Annual Report (unaudited) dated June 30, 1994, each of which is
incorporated by reference in the SAI. The financial statements included in the
Fund's Annual Report for the year ended December 31, 1993 have been audited by
Coopers & Lybrand, L.L.P., independent accountants, whose report appears in the
Fund's Annual Report. Financial Highlights are not included for Class R shares
because the Fund did not offer Class R shares as of June 30, 1994.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
6/30/94 ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85 12/31/84
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period....................... $27.80 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07 $32.40 $32.11 $25.91 $27.92
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income #.......... 0.19 0.31 0.36 0.39 0.55 0.87 0.54 0.76 0.90 1.00 0.86
Net realized and unrealized gain/
(loss) on investments.......... (0.44) 3.86 0.70 4.88 (4.23) 6.12 4.51 (0.41) 5.69 7.50 0.73
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations (0.25) 4.17 1.06 5.27 (3.68) 6.99 5.05 0.35 6.59 8.50 1.59
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Distributions from net
investment income ............ (0.08) (0.30) (0.36) (0.50 (0.55) (0.55) (0.59) (1.32) (0.50) (0.74) (0.69)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions from net realized
capital gains................. -- (1.53) (2.64) (0.57) (0.06) (7.60) (1.88) (5.36) (5.80) (1.56) (2.91)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions............. (0.08) (1.83) (3.00) (1.07) (0.61) (8.15) (2.47) (6.68) (6.30) (2.30) (3.60)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period.. $27.47 $27.8 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07 $32.40 $32.11 $25.91
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return+................... (0.92)% 16.51% 4.03% 22.87% (13.44)% 24.96% 19.54% 0.27% 22.48% 35.00% 6.86%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period
(000's)....................... $332,843 $349,813 $423,286 $508,971 $474,998 $640,116 $542,510 $431,630 $452,863 $369,610 $259,696
Ratio of operating expenses to
average net assets............ 1.11%++ 1.15%+++ 1.22% 1.20% 1.26% 1.23% 1.31% 0.95% 0.95% 0.96% 1.00%
Ratio of net investment income
to average net assets......... 33%++ 1.13% 1.33% 1.61% 1.96% 2.75% 2.14% 2.16% 2.65% 3.60% 3.69%
Portfolio turnover rate++++..... 32% 75% 66% 157% 180% 111% 24% 46% 37% 59% 47%
- --------------
</TABLE>
(1) On February 1, 1993, the Fund began offering Institutional Class shares.
Shares outstanding prior to February 1, 1993 were redesignated as Retail Class
shares. Effective April 4, 1994, the Retail shares were reclassified as
Investor Shares. The amounts shown for the period ended June 30, 1994, were
calculated using the performance of a Retail Share outstanding from January 1,
1994 to April 3, 1994, and the performance of an Investor Share outstanding
from April 4, 1994 to June 30, 1994. The Financial Highlights for the year
ended December 31, 1993 and prior periods are based upon a Retail Share
outstanding.
+ Total return represents aggregate total return for the periods indicated.
++Annualized.
+++Without the voluntary reimbursement of expenses by the investment adviser,
the annualized ratio of operating expenses to average net assets for the year
ended December 31, 1993 would have been 1.16%.
++++ In accordance with the Securities and Exchange Commission's July 1985
rules amendment, the rates for 1986 and later periods include U.S. Government
long-term securities which were excluded from the calculations in prior years.
# Net investment income before the voluntary reimbursement of expenses by the
investment adviser for the year ended December 31, 1993 was $0.31.
## The per share amounts have been calculated using the monthly average share
method, which more accurately presents per share data for this period since use
of the undistributed method does not accord with results of operations.
4
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
6/30/94 ENDED
(UNAUDITED) 12/31/93*##
--------- ----------
<S> <C> <C>
Net asset value, beginning of period $27.80 $25.96
------ ------
Income from investment operations:
Net investment income 0.21 0.32#
Net Realized and unrealized gain/(loss) on investments (0.46) 3.38
------ ------
Total from investment operations (0.25) 3.70
------ ------
Less distributions:
Distributions from net investment income (0.08) (0.33)
Distributions from net realized capital gains -- (1.53)
------ ------
Total distributions (0.08) (1.86)
Net asset value, end of period $27.47 $27.80
------ ------
------ ------
Total return+ (0.89)% 14.38%
------ ------
------ ------
Ratios to average net assets / Supplemental data:
Net Assets, end of period (000's) $62,602 $79,656
Ratio of operating expenses to average net assets++ 1.01% 1.04%+++
Ratio of net investment income to average net assets++ 1.43% 1.24%
Portfolio turnover rate 32% 75%
- --------------------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Institutional Class shares on February 1, 1993.
+ Total return represents aggregate total return for the period indicated.
++ Annualized.
+++ Without voluntary reimbursement of expenses by the investment adviser,
the annualized ratio of operating expenses to average net assets for the
year ended December 31, 1993 would have been 1.04%.
# Net investment income before reimbursement of expenses by the investment
adviser for the year ended December 31, 1993 was $0.31.
## Per share amounts have been calculated using the monthly average share
method.
5
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and Class R
shares (Class R shares of the Fund were formerly called Trust Shares).
Investor shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to Banks acting on behalf of customers having a qualified trust or
investment account or relationship at such institution. Investor shares are
primarily sold to retail investors by the Fund's Distributor and by Service
Agents that have entered into a Selling Agreement with the Fund's Distributor.
If shares of the Fund are held in an account at a Bank or with a Service Agent,
such Bank or Service Agent may require you to place all Fund purchase, exchange
and redemption orders through them. All Banks and Service Agents have agreed to
transmit transaction requests to the Fund's transfer agent or to the Fund's
Distributor. Distribution and shareholder services paid by Investor shares will
cause Investor shares to have a higher expense ratio and pay lower dividends
than Class R.
INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks long-term growth of capital,
with current income as a secondary objective, primarily through equity
investments, such as common stocks and securities convertible into common
stocks.
MANAGEMENT POLICIES
Securities are selected for the Fund based on a continuous study of
trends in industries and companies, earning power, growth features and other
investment criteria. Major emphasis is placed on industries and issuers that
are considered by Dreyfus to have particular possibilities for long-term
growth. In general, the Fund's investments are broadly diversified over a
number of industries and, as a matter of operating policy, the Fund will not
invest more than 25% of its total assets in any one industry.
Up to 20% of the Fund's total assets may be invested inforeign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in
fixed-income securities of companies that are close to entering, or already in,
reorganization proceedings. These obligations will likely be rated below the
four highest ratings of Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("S&P"). In addition, the Fund may write covered put and
call options on its portfolio securities, and purchase and write put and call
options on stock indexes to hedge its portfolio. The Fund may also lend its
portfolio securities.
The Fund may reduce the proportion of its investments in equity
securities and temporarily invest its assets in fixed-income securities and in
U.S. Government Securities and other high-grade, short-term money market
instruments, including repurchase agreements with respect to such instruments,
when, in the opinion of Dreyfus, a defensive posture is warranted. To this
extent, the Fund may not achieve its investment objective.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the Fund may
employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. From time to time, the Fund may lend portfolio
securities to brokers, dealers and other financial organizations. Such loans
will not exceed 331/3% of the Fund's total assets, taken at value. Loans of
portfolio securities by the Fund will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities.
6
MASTER/FEEDER OPTION. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's net investable
assets in another investment company having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. Shareholders of the Fund will be given at least 30 days' prior
notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Company's Trustees will
consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although the
Fund believes that the Trustees will not approve an arrangement that is likely
to result in higher costs, no assurance is given that costs will be materially
reduced if this option is implemented.
COVERED OPTION WRITING. From time to time, the Fund may write covered
put and call options on portfolio securities. The Fund could realize fees
(referred to as "premiums") for granting the rights evidenced by the options.
However, in return for the premium, the Fund forfeits the right to any
appreciation in the value of the underlying security while the option is
outstanding. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at the specified price at any time during the option period. In contrast, a
call option embodies the right of its purchaser to compel the writer of the
option to sell the option holder an underlying security at a specified price at
any time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may
suffer a loss equal to the difference between the price at which the Fund is
required to purchase the underlying security and its market value at the time
of the option exercise, less the premium received for writing the option. Upon
the exercise of a call option written by the Fund, the Fund may suffer a loss
equal to the excess of the security's market value at the time of the option
exercise over the Fund's acquisition cost of the security, less the premium
received for writing the option.
Whenever the Fund writes a call option it will continue to own or to
have the present right to acquire the underlying security for as long as it
remains obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account, cash,
U.S. Government Securities or other high grade debt obligations having a value
at least equal to the exercise price of the underlying securities or (b)
continue to own the equivalent number of puts of the same "series" (that is,
puts on the same underlying security having the same exercise prices and
expiration dates as those written by the Fund), or an equivalent number of puts
of the same "class" (that is, puts on the same underlying security) with
exercise prices greater than those it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has written,
it will deposit the difference with the Fund's custodian in a segregated
account).
The Fund may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the
outstanding option's expiration). To effect a closing purchase transaction, the
Fund would purchase, prior to the holder's exercise of an option that the Fund
has written, an option of the same series as that on which the Fund desires to
terminate its obligation. The obligation of the Fund under an option that it
has written would be terminated by a closing purchase transaction, but the Fund
would not be deemed to own an option as a result of the transaction. There can
be no assurance that the Fund will be able to effect closing purchase
transactions at a time when it wishes to do so. To facilitate closing purchase
transactions, however, the Fund will ordinarily write options only if a
secondary market for the options exists on a national securities exchange or in
the over-the-counter market.
7
CERTAIN PORTFOLIO SECURITIES
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities presents
certain risks, including those resulting from fluctuations in currency exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers, and the fact that foreign issuers are not generally subject
to uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is the
possibility of expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes that
would reduce the yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time deposits
and repurchase agreements having maturities longer than seven days. Securities
that have readily available market quotations are not deemed illiquid for
purposes of this limitation (irrespective of any legal or contractual
restrictions on resale.) The Fund may invest in commercial obligations issued
in reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). The Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but that can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Section 4(2) paper is restricted as to disposition under the
federal securities laws, and generally is sold to institutional investors, such
as the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in the Section 4(2) paper, thus
providing liquidity. Rule 144A securities generally must be sold to other
qualified institutional buyers. Determinations as to the liquidity of
investments in Section 4(2) paper and Rule 144A securities will be made by the
Board of Trustees or by Dreyfus pursuant to guidelines established by the Board
of Trustees. The Board or Dreyfus will consider the availability of reliable
price information and other relevant information in making such determinations.
If a particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the percentage
limitation on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and it is
not possible to predict how this market will mature. Investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity to
the extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-rated
securities") will likely have some quality and protective characteristics that,
in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay interest
and to repay principal in accordance with the terms of the obligation. While
the market values of low-rated securities tend to react less to fluctuations in
interest rate levels than the market values of higher-rated securities, the
market values of certain low-rated securities tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally present a
higher degree of credit risk. Issuers
8
of low-rated securities are often highly leveraged and may not have more
traditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. The risk of loss due to
default by such issuers is significantly greater because low-rated securities
are generally unsecured and frequently are subordinated to the prior payment of
senior indebtedness. The Fund may incur additional expenses to the extent that
it is required to seek recovery upon a default in the payment of principal or
interest on its portfolio holdings. The existence of limited markets for
low-rated securities may diminish the Fund's ability to obtain accurate market
quotations for purposes of valuing such securities and calculating its net
asset value. Further information regarding security ratings is contained in the
SAI.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed
put and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the index.
(Examples of well-known stock indexes are the Standard & Poor's 500 Composite
Stock Price Index and the NYSE Composite Index.) Options on stock indexes are
similar to options on securities. However, because options on stock indexes do
not involve the delivery of an underlying security, the option represents the
holder's right to obtain from the writer in cash a fixed multiple of the amount
by which the exercise price exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the underlying index on the exercise
date.
The advisability of using stock index options to hedge against the risk
of market-wide movements will depend on the extent of diversification of the
Fund's stock instruments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the extent
to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected. When the Fund
writes an option on a stock index, it will deposit cash or cash equivalents or
a combination of both in an amount equal to the market value of the option, in
a segregated account with the Fund's custodian, and will maintain the account
while the option is open.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. A
repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand. This
technique offers a method of earning income on idle cash. A risk associated
with repurchase agreements is the failure of the seller to repurchase the
securities as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the open
market. Repurchase agreements with a duration of more than seven days are
considered illiquid securities and are subject to the associated limits
discussed above.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consistent
with the Fund's investment objective and policies and permissible under the
Investment Company Act of 1940, as amended ("1940 Act"). As a shareholder of
another investment company, the Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for long-term growth of capital and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio turnover
rate of 100% would occur, for example, if all the securities held by the Fund
were replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses that
must be borne directly by the Fund and, thus, indirect-
9
ly by its shareholders. In addition, a high rate of portfolio turnover may
result in the realization of larger amounts of short-term capital gains that,
when distributed to the Fund's shareholders, are taxable to them as ordinary
income. Nevertheless, securities transactions for the Fund will be based only
upon investment considerations and will not be limited by any other
considerations when Dreyfus deems it appropriate to make changes in the Fund's
assets.
RISK FACTORS
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. The SAI describes all of the Fund's
fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain states, the
Fund may make commitments more restrictive than the investment policies and
restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interest of the
Fund, it may consider terminating sales of its shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
As of November 30, 1994, Dreyfus managed or administered approximately $71
billion in assets for more than 1.9 million investor accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises and
assists in the overall management of the Fund's affairs under an Investment
Management Agreement with the Fund, subject to the overall authority of the
Company's Board of Trustees in accordance with Massachusetts law. Pursuant to
the Investment Management Agreement, Dreyfus provides, or arranges for the
provision by one or more third parties of, investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. As the
Fund's investment manager, Dreyfus manages the Fund by making investment
decisions based on the Fund's investment objective, policies and restrictions.
The Fund is co-managed by Guy R. Scott and Mark E. Donovan. Mr. Scott
is a an Officer of Mellon Bank. Mr. Scott and Mr. Donovan have been employed by
Dreyfus as portfolio managers of the Fund since October 17, 1994. Mr. Scott is
responsible for the Fund and for managing over $280 million among various
institutional accounts. Mr. Scott also serves on the Equity Policy Group
Committee. Previously, Mr. Scott held a position as an Equity Portfolio Manager
for Putnam Advisory, where he was responsible for more than $1 billion in
pension assets. A Chartered Financial Analyst, Mr. Scott earned a B.S. in
Economics and an M.B.A. in Finance from the University of Wisconsin.
Mr. Donovan is a Senior Vice President and Vice Chairman of the Equity
Policy Group for The Boston Company where he oversees The Boston Company's
investment strategy. Previously, Mr. Donovan worked as a consultant with Kaplan
Smith & Associates, a subsidiary of First Boston Corporation, and as a
securities analyst with Value Line Inc. Mr. Donovan earned a degree from
Rennselaer Polytechnical Institute and is a Chartered Financial Analyst.
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Bank Holding Company Act of
1956, as amended. Mellon provides a comprehensive range of financial products
and services in domestic and selected international markets.
10
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries, including
Dreyfus, Mellon managed approximately $201 billion in assets as of September
30, 1994, including $76 billion in mutual fund assets. As of September 30,
1994, Mellon, through various subsidiaries, provided non-investment services,
such as custodial or administration services, for approximately $659 billion in
assets, including approximately $108 billion in mutual fund assets.
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of .88 of 1% of the value of the
Fund's daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage, taxes, interest, fees and expenses of the non-interested Trustees
(including counsel fees), Rule 12b-1 fees (if applicable) and extraordinary
expenses. Although Dreyfus does not pay for the fees and expenses of the
non-interested Trustees (including counsel fees), Dreyfus is contractually
required to reduce its investment management fee in an amount equal to the
Fund's allocable share of such fees and expenses. In order to compensate
Dreyfus for paying virtually all of the Fund's expenses, the Fund's investment
management fee is higher than the investment advisory fees paid by most
investment companies. Most, if not all, such companies also pay for a portion
of the non-investment advisory expenses that are not paid by such companies'
investment advisers. From time to time, Dreyfus may waive (either voluntarily
or pursuant to applicable state limitations) a portion of the investment
management fees payable by the Fund. From April 4, 1994, to October 17, 1994,
the Fund was advised by Mellon Bank under the Investment Management Agreement.
Prior to April 4, 1994, the Fund was advised by The Boston Company Advisors,
Inc. pursuant to a written agreement approved by the Company's Trustees. For
the fiscal year ended December 31, 1993 the Fund paid its investment adviser,
The Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect
wholly-owned subsidiary of Mellon Bank Corporation) 0.75% in investment
advisory fees under the Fund's previous investment advisory contract (such
contract only covered the provision of investment advisory and certain
specified administrative services). For the fiscal year ended December 31, 1993
total operating expenses (excluding Rule 12b-1 fees) of the Fund were 1.01% and
0.89% for the Retail and Institutional Classes, respectively, of the Fund's
daily net assets. It is anticipated that the current total operating expenses
of the Fund (excluding Rule 12b-1 fees) will be approximately .88% of the
Fund's average daily net assets.
In addition, Investor shares may be subject to certain distribution
fees. See "Distribution Plan."
Dreyfus may pay the Fund's Distributor for shareholder services from
Dreyfus's own assets, including past profits but not including the management
fee paid by the Fund. The Fund's Distributor may use part or all of such
payments to pay Service Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions that are affiliated with Dreyfus
or Mellon Bank or that have sold shares of the Fund, if Dreyfus believes that
the quality of the transaction and the commission are comparable to what they
would be with other qualified brokerage firms. From time to time, to the extent
consistent with its investment objective, policies and restrictions, the Fund
may invest in securities of companies with which Mellon Bank has a lending
relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor is a wholly owned subsidiary of
Institutional Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston Institutional
Group, Inc.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR--Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian. The Fund's Transfer
11
and Dividend Disbursing Agent is The Shareholder Services Group, Inc. (the
"Transfer Agent"), a subsidiary of First Data Corporation, One American Express
Plaza, Providence, Rhode Island 02903. Premier Mutual Fund Services, Inc.
serves as the Fund's sub-administrator and, pursuant to a Sub-Administration
Agreement, provides various administrative and corporate secretarial services
to each Fund.
HOW TO BUY FUND SHARES
GENERAL--Investor shares are offered to any investor and may be
purchased through the Distributor or Service Agents that have entered into
Selling Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution. A Retirement Plan is a certain qualified or non-qualified
employee benefit plan or other program, including pension, profit-sharing and
other deferred compensation plans, whether established by corporations,
partnerships, non-profit entities or state and local governments ("Retirement
Plan"). Class R shares may be purchased for a Retirement Plan only by a
custodian, trustee, investment manager or other entity authorized to act on
behalf of such 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.
In addition to Investor shares and Class R shares, the Fund also offers
Institutional Class shares through a separate prospectus. Institutional Class
shares are not subject to a sales charge on purchases or on redemptions.
Institutional Class shares are subject to a Rule 12b-1 fee at an annual rate of
up to 0.15% of the Fund's average net assets attributable to Institutional
Class Shares. Institutional Class shares are offered to those customers of
certain financial planners and investment advisers who held shares of a
predecessor class of the Fund on April 4, 1994. For more information concerning
Institutional Class shares, see the current prospectus for Institutional Class
shares.
Shares of the Fund that are offered through this Prospectus are also
available through a servicing network associated with Mellon Bank, an affiliate
of Dreyfus. For more information about purchasing Fund shares through the that
network and a Prospectus, call 1-800-548-2868. Please read the Prospectus
carefully. Exchange and Shareholder Services, including the telephone purchase
option and minimum and maximum dollar amounts associated with such services,
may vary depending upon the network through which you purchase Fund shares.
Stock certificates are issued only upon your written request. The Fund
reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client
of a Service Agent which has made an aggregate minimum initial purchase for its
customers of $2,500. Subsequent investments must be at least $100. However, the
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs
and 403(b)(7) Plans with only one participant is $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a non-working
spousal IRA with a minimum initial investment of $250. The initial investment
must be accompanied by the Fund's Account Application. For full-time or
part-time employees of Dreyfus or any of its affiliates or subsidiaries,
directors of Dreyfus, Board members of a fund advised by Dreyfus including
members of the Company's Board, or the spouse or minor child of any of the
foregoing, the minimum initial investment is $1,000. For full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries who elect to have
a portion of their pay directly deposited into their Fund account, the minimum
initial investment is $50. 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
12
the right to vary further the initial and subsequent investment minimum
requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to 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.
You may purchase Fund shares by check or wire, or, with respect to
Investor shares only, through the Dreyfus TELETRANSFER Privilege described
below. Checks should be made payable to "The Dreyfus Family of Funds" or, if
for Dreyfus retirement plan accounts, to "The Dreyfus Trust Company,
Custodian." Payments to open new accounts which are mailed should be sent to
The Dreyfus Family of Funds, P.O. Box 9387, Providence, Rhode Island
02940-9387, together with your Account Application indicating which Class of
shares is being purchased. For subsequent investments, your Fund account number
should appear on the check and an investment slip should be enclosed and sent
to The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus retirement plan accounts, both initial and subsequent investments
should be sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Neither initial nor subsequent investments
should be made by third party check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON
ONLY TO A DREYFUS FINANCIAL CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND
AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR THE LOCATION OF THE
NEAREST DREYFUS FINANCIAL CENTER, PLEASE CALL ONE OF THE TELEPHONE NUMBERS
LISTED UNDER "GENERAL INFORMATION."
Wire payments may be made if your bank account is in a commercial bank
that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. To purchase Investor Shares in your name,
immediately available funds may be transmitted by wire to The Bank of New York,
DDA# 8900104325. For wire information with respect to Class R shares please
call 1-800-548-2868. The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call 1-800-645-6561
after completing your wire payment in order to obtain your Fund account
number. Please include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial institution
that is an Automated Clearing House ("ACH") member. You must direct the
institution to transmit immediately available funds through the ACH System to
The Bank of New York with instructions to credit your Fund account. The
instructions must specify your Fund account registration and Fund account
number preceded by the digits "1111."
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified 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 one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for participation in a plan
or program shall be made on the date Fund shares are first purchased by or on
behalf of employees participating in such plan or program
13
and on each subsequent January 1st. All present holdings of shares of funds in
the Dreyfus Family of Funds by Eligible Benefit Plans will be aggregated to
determine the fee payable with respect to each purchase of Fund shares. The
Distributor reserves the right to cease paying these fees at any time. The
Distributor will pay such fees from its own funds, other than amounts received
from the Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and Taxes"
and the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
NET ASSET VALUE ("NAV") -- An investment portfolio's NAV refers to the
worth of one share. The NAV for Investor shares and Class R shares is computed
by adding, with respect to such Class of shares, the value of the Fund's
investments, cash, and other assets attributable to that Class, deducting
liabilities of the Class and dividing the result by number of shares of that
Class outstanding. The valuation of assets for determining NAV for the Fund may
be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid and
asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at a fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
Pursuant to a determination by the Board of Trustees that such value
represents fair value, debt securities with maturities of 60 days or less held
by the Fund are valued at amortized cost. When a security is valued at
amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument.
NAV is determined on each day that the New York Stock Exchange ("NYSE")
is open (a "business day"), as of the close of business of the regular session
of the NYSE (usually 4 p.m. Eastern Time). Investments and requests to exchange
or redeem shares received by the Fund in proper form before the close of
business on the NYSE (usually 4 p.m., Eastern Time) are effective on, and will
receive the price determined on, that day (except investments made by
electronic funds transfer, which are effective two business days after your
call). Investment, exchange and redemption requests received after the close of
the NYSE are effective on and receive the share price determined on the next
business day.
The NAV of most shares of investment portfolios advised by Dreyfus
(other than the money market funds) is published in leading newspapers daily.
The yield of most of The Dreyfus Funds' money market funds is published weekly
in leading financial publications and in most local newspapers. The NAV of any
Fund may also be obtained by calling 1-800-645-6561.
The public offering price of Investor shares and Class R shares is the
net asset value per share of that Class.
DREYFUS TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES) --
You may purchase Fund shares (minimum $500 and maximum $150,000 per day) by
telephone if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained
14
in a domestic financial institution which is an ACH member may be so
designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of Investor shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the same
class of certain other funds managed or administered by Dreyfus, to the extent
such shares are offered for sale in your state of residence. These funds have
different investment objectives which may be of interest to you. If you desire
to use this service, please call 1-800-645-6561 to determine if it is available
and whether any conditions are imposed on its use. Shareholders are limited to
six exchanges out of the Fund during the calendar year. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Service Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing, or by
telephone. Before any exchange, you must obtain and should review a copy of the
current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current value
of at least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "NO" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account by
written request, signed by all shareholders on the account, or by a separate
signed Shareholder Services Form, also available by calling 1-800-645-6561. If
you have established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-800-221-4060 or, if calling from overseas,
1-401-455-3306. See "How to Redeem Fund Shares--Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the fund
into which the exchange is made: Telephone Exchange Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and
the dividends and distributions payment option (except for Dreyfus Dividend
Sweep) selected by you.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges of Investor
shares into funds sold with a sales load. If you are exchanging Investor shares
into a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load, if the
shares of the fund from which you are exchanging were: (a) purchased with a
sales load, (b) acquired by a previous exchange from shares purchased with a
sales load or, (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or your
Service Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No
15
fees currently are charged shareholders directly in connection with exchanges,
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the SEC. The Fund reserves the right to reject any exchange
request in whole or in part. The availability of Fund exchanges may be modified
or terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result in,
a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in terms
of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however a sales load may be charged with respect to exchanges of
Investor shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. The exchange of shares of one
fund for shares of another is treated for Federal income tax purposes as a sale
of the shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize, or an exchange on behalf of a Retirement
Plan which is not tax exempt may result in, a taxable gain or loss. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the bank
account designated by you. At your option, the bank account designated by you
will be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on both
days. Only an account maintained at a domestic financial institution which is
an ACH member may be so designated. To establish a Dreyfus-AUTOMATIC Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561. You
may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares of
the same class of certain other funds in the Dreyfus
16
Family of Funds of which
you are an investor. Shares of the other fund will be purchased at the
then-current net asset value; however, a sales load may be charged with respect
to investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which do
not include the sales load or which reflect a reduced sales load. See
"Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you to transfer
electronically on the payment date 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 ACH member
may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these Privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or
cancellation of these Privileges is effective three business days following
receipt. These Privileges are available only for existing accounts and may not
be used to open new accounts. Minimum subsequent investments do not apply for
Dreyfus Dividend Sweep. The Fund may modify or terminate these Privileges at
any time or charge a service fee. No such fee currently is contemplated. Shares
held under Keogh Plans, IRAs or other retirement plans are not eligible for
Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. You should
consider whether Direct Deposit of your entire payment into a fund with
fluctuating NAV, such as the Fund, may be appropriate for you. To enroll in
Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you desire
to include in this Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your participation in
this Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your employer's
payroll department. Your employer must complete the reverse side of the form
and return it to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. You may obtain the necessary authorization form by calling
1-800-645-6561. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the sole
responsibility of the your employer, not the Distributor, Dreyfus, the Fund,
the Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not eligible
for this Privilege.
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.
Particular Retirement Plans, including Dreyfus sponsored retirement
plans, may permit certain par-
17
ticipants 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. An application for the Automatic Withdrawal Plan can be obtained by
calling 1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time
by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the following
numbers toll free: for Keogh Plans, please call 1-800-358-5566; for IRAs and
IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs, 401(k)
Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined net asset value as described below. 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 Service Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Service Agents or other institutions may charge their clients
a nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS
TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE
UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS
TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER
PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER
AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE
ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will
not be redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account is
$500 or less and remains so during the notice period.
PROCEDURES--You may redeem Fund shares by using the regular redemption
procedure through the
18
Transfer Agent, the Wire Redemption Privilege, the Telephone Redemption
Privilege or, for Investor shares only, through the Dreyfus TELETRANSFER
Privilege. Other redemption procedures may be in effect for clients of certain
Service Agents and institutions. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities.
You may redeem or exchange Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER Privilege or telephone exchange privilege, which is granted
automatically unless you refuse it, you authorize the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be
you, or a representative of your Service 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.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for the Dreyfus
retirement plan accounts to the Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Redemption requests may be delivered
in person only to a Dreyfus Financial Center. These requests will be forwarded
to the Fund and will be processed only upon receipt thereby. For the location
of the nearest financial center, please call the telephone number listed under
"General Information". Redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature must be guaranteed.
The Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank
of the Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your bank
is not a member. To establish the Wire Redemption Privilege, you must check the
appropriate box and supply the necessary information on the Fund's Account
Application or file a Shareholder Services Form with the Transfer Agent. You
may direct that redemption proceeds be paid by check (maximum $150,000 per day)
made out to the owners of record and mailed to your address. Redemption
proceeds of less than $1,000 will be paid automatically by check. Holders of
jointly registered Fund or bank accounts may have redemption proceeds of only
up to $250,000 wired within any 30-day period. You may telephone redemption
requests by calling 1-800-221-4060 or, if calling from overseas,
1-401-455-3306. The Fund reserves the right to refuse any redemption request,
including requests made shortly after a change of address, and may limit the
amount involved or the number of
19
such requests. This Privilege may be modified or terminated at anytime by the
Transfer Agent or the Fund. The Fund's Statement of Additional Information sets
forth instructions for transmitting redemption requests by wire. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfer
Agent. The redemption proceeds will be paid by check and mailed to your
address. You may telephone redemption instructions by calling 1-800-221-4060
or, if calling from overseas, 1-401-455-3306. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at anytime by the
Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE--Investor shares. You may redeem Fund
shares (minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between your Fund account and the bank account designated
in one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus TELETRANSFER
Privilege for transfer to their bank account only up to $250,000 within any
30-day period. The Fund reserves the right to refuse any request made by
telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
DISTRIBUTION PLAN
(INVESTOR SHARES ONLY)
Investor shares and Institutional Shares are subject to a Distribution
Plan (the "Plan") adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1"). The Investor shares and Institutional Shares of the Fund bear some of
the cost of selling those shares under the Plan. The Plan allows the Fund to
spend annually up to 0.25% of its average daily net assets attributable to
Investor shares, and 0.15% of its average daily net assets attributable to
Institutional Shares, to compensate the Distributor, (and in the case of the
Investor shares, the Dreyfus Service Corporation, an affiliate of Dreyfus, for
shareholder servicing activities and expenses primarily intended to result in
the sale of Investor shares of the Fund. The Plan allows the Distributor to
make payments from the Rule 12b-1 fees it collects from the Fund to compensate
Service Agents that have entered into Selling Agreements ("Agreements") with
the Distributor. Under the Agreements, the Service Agents are obligated to
provide distribution related services with regard to the Fund and/or
shareholder services to the Service Agent's clients that own Investor shares or
Institutional Shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and pay
20
ments are subject to the continuation of the Fund's Plan and the Agreements
described above. From time to time, the Service Agents, the Distributor and the
Fund may agree to voluntarily reduce the maximum fees payable under the Plan.
See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Service Agents. A Service Agent entitled to
receive compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment income
quarterly and distributes net realized gains, if any, once a year, but it may
make distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized gains unless capital loss carryovers, if any, have been utilized or
have expired. Investors other than qualified Retirement Plans may choose
whether to receive dividends and other distributions in cash or to reinvest
them in additional Fund shares; dividends and other distributions paid to
qualified Retirement Plans are reinvested automatically in additional Fund
shares at net asset value. All expenses are accrued daily and deducted before
declaration of dividends to investors. Dividends paid by each Class will be
calculated at the same time and in the same manner and will be in the same
amount, except that the expenses attributable solely to a particular Class will
be borne exclusively by that Class. Investor shares will receive lower per
share dividends than Class R shares because of the higher expenses borne by the
Investor shares. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated investment
company" under the Code so long as such qualification is in the best interests
of its shareholders. Such qualification will relieve the Fund of any liability
for Federal income tax to the extent its earnings are distributed in accordance
with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund will be taxable to U.S. shareholders,
including certain non-qualified Retirement Plans, as ordinary income whether
received in cash or reinvested in Fund shares. Distributions from the Fund's
net realized long-term capital gains will be taxable to such shareholders as
long-term capital gains for Federal income tax purposes, regardless of how long
the shareholders have held their Fund shares and whether such distributions are
received in cash or reinvested in Fund shares. The net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and other distributions also may be subject to state
and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund to a foreign investor generally are subject to
U.S. withholding tax at the rate of 30%, unless the foreign investor claims the
benefit of a lower rate specified in a tax treaty. Distributions from net
realized long-term capital gains paid by the Fund to a foreign investor, as
well as the proceeds of any redemptions from a foreign investor's account,
regardless of the extent to which gain or loss may be realized, generally will
not be subject to U.S. withholding tax. However, such distributions may be
subject to backup withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and distributions
from net realized, long-term capital gains, if any, paid during the year.
Dividends paid by the Fund to qualified Retirement Plans ordinarily
will not be subject to taxation
21
until the proceeds are distributedfrom the Retirement Plans. The Fund will not
report to the IRS dividends paid to such plans. Generally, distributions from
qualified Retirement Plans, except those representing returns of non-deductible
contributions thereto, will be taxable as ordinary income and, if made prior to
the time the participant reaches age 59 1/2, generally will be subject to an
additional tax equal to 10% of the taxable portion of the distribution. If the
distribution from such a Retirement Plan (other than certain governmental or
church plans) for any taxable year following the year in which the participant
reaches age 70 1/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be imposed by
the IRS. The administrator, trustee or custodian of such a Retirement Plan will
be responsible for reporting distributions from such plans to the IRS.
Moreover, certain contributions to a qualified Retirement Plan in excess of the
amounts permitted by law may be subject to an excise tax.
With respect to individual investors and certain non-qualified
Retirement Plans, Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized long-term capital gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may notify
the Fund to institute backup withholding if the IRS determines a shareholder's
TIN is incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account and may be claimed as a credit on the record owner's
Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income and
capital gains.
You should consult your tax advisers regarding specific questions as to
Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by the
Fund during the measuring period were reinvested in shares of the same Class.
These figures also take into account any applicable service and distribution
fees. As a result, at any given time, the performance of the Investor shares
should be expected to be lower than that of Class R. Performance for each Class
will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial payment
of $1,000 and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and other
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, or for shorter periods depending upon the length of time
during which the Fund has operated. Computations of average annual total return
for periods of less than one year represent an annualization of the Fund's
actual total return for the applicable period.
22
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income and
principal changes for a specified period and dividing by the net asset value
(or maximum offering price in the case of Investor shares) per share at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return. Total return also may be calculated by using 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 Investor shares.
The Fund may also advertise the yield on a Class of shares. The Fund's
yield is calculated by dividing a Class of shares' annualized net investment
income per share during a recent 30-day (or one month) period by the maximum
public offering price per Class of such share on the last day of that period.
Since yields fluctuate, yield data cannot necessarily be used to compare an
investment in a Class of shares with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, Standard and Poor's 500 Composite Stock Price Index, the Consumer
Price Index, and the Dow Jones Industrial Average. Performance rankings as
reported in Changing Times, Business Week, Institutional Investor, The Wall
Street Journal, Mutual Fund Forecaster, No Load Investor, Money Magazine,
Morningstar Mutual Fund Values, U.S. News and World Report, Forbes, Fortune,
Barron's and similar publications may also be used in comparing the Fund's
performance. Furthermore, the Fund may quote its shares' total returns and
yields in advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total return for periods
other than those required to be shown or cumulative performance data. The Fund
may advertise a quotation of yield or other similar quotation demonstrating the
income earned or distributions made by the Fund.
GENERAL INFORMATION
The Company was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 under the name The
Boston Company Fund, changed its name effective April 4, 1994 to The Laurel
Funds Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on
October 17, 1994. The Company is registered with the SEC under the 1940 Act, as
a managed investment company. The Fund is a portfolio of the Company. The
Fund's shares are classified into three classes-- Institutional Shares,
Investor shares and Class R. The Company's Agreement and Declaration of Trust
permits the Board of Trustees to create an unlimited number of investment
portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of all funds
(and Classes thereof) vote together as a single Class, except as to any matter
for which a separate vote of any fund or Class is required by the 1940 Act, and
except as to any matter which affects the interests of one or more particular
funds or Classes, in which case only the shareholders of the affected fund or
Classes are entitled to vote, each as a separate Class. Only holders of
Investor shares will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution Plan relating to that Class.
23
At December 6, 1994, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the Fund's
outstanding voting shares, and is deemed, under the 1940 Act, to be a
controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees 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 purposes of removing a
Trustee from office and for any other purpose. Fund shareholders may remove a
Trustee by the affirmative vote of a majority of the Fund's outstanding voting
shares. In addition, the Board of Trustees will call a meeting of shareholders
for the purpose of electing Trustees if, at any time, less than a majority of
the Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York, 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
24
1994, Dreyfus Service Corporation 312/392P1121994
Dreyfus Core Value Fund
Investor and Class R Shares
December 19, 1994
DREYFUS CORE VALUE FUND is a diversified equity fund seeking long-term
growth of capital, with current income as a secondary objective, through
investments primarily in common stocks.
THIS PROSPECTUS describes Dreyfus Core Value Fund (the "Fund") of The
Dreyfus/Laurel Funds Trust (formerly The Laurel Funds Trust and previously
The Boston Company Fund), a management investment company that is part of
The Dreyfus Family of Funds. This Prospectus describes two classes of
shares--Investor Shares and Class R Shares (collectively, the "Shares")--
of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional infor-
mation about the Fund is contained in a Statement of Additional Informa-
tion (the "SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same
date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
In addition to this Fund, The Dreyfus Family of Funds also offer other
funds that provide investment opportunities for you in the equity, fixed
income and money markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868.
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSI-
BLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE SUM-
MARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary 5
Financial Highlights 6
Alternative Purchase Methods 9
Investment Objective and Policies 9
Other Investment Policies and Risk Factors 10
HOW TO DO BUSINESS WITH US
Special Shareholder Services 14
Investor Line 15
How to Invest in The Dreyfus/Laurel Funds 15
By Mail 16
By Telephone 16
By Wire 16
By Automatic Monthly Investments 16
By Direct Deposit 17
By In-Kind Purchases 17
When Share Price is Determined 17
Additional Information About Investments 18
How to Exchange Your Investment From One Fund to Another 18
By Telephone 19
By Mail 19
Additional Information About Exchanges 19
How to Redeem Shares 20
By Telephone 20
By Mail 20
By Automated Withdrawal Program 20
Redemption Proceeds 21
Additional Information About Redemptions 22
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan 22
How to Transfer an Investment to a Dreyfus Family of
Funds'
Retirement Plan 22
OTHER INFORMATION
Share Price 23
Performance Advertising 23
Distributions 24
Taxes 25
Other Services 27
Further Information About The Fund 27
The Dreyfus/Laurel Funds Trust 27
Management 28
The Fund's Other Class of Shares 30
Distribution Plan (Investor Class Shares and Institu-
tional Shares Only) 30
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various
costs and expenses that you, as a shareholder, will bear directly or in-
directly in connection with an investment in the Investor or Class R
Shares of the Fund. (See "Management.")
<TABLE>
<CAPTION>
Investor Class R Institutional
Shares Shares Shares
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvestments none none none
Deferred Sales Load none none none
Redemption Fee none none none
Exchange Fee none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Management Fee* 0.88% 0.88% 0.88%
12b-1 Fee 0.25% none 0.15%
Other Expenses** 0.00% 0.00% 0.00%
Total Fund Operating Expenses 1.13% 0.88% 1.03%
EXAMPLES
You would pay the following 1 year $ 12 $ 9 $ 11
on a $1,000 investment, 3 years 36 28 33
assuming (1) a 5% annual return 5 years 62 49 57
and (2) redemption at the end of 10 years 137 108 126
each time period:
<FN>
* The voluntary waiver of a portion of the Management Fees by the in-
vestment manager is expected during the current fiscal year. Without
the voluntary waiver, the Management Fees would be equal to 0.90%.
** Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is contractually required
to reduce its Management Fee in an amount equal to the Fund's alloca-
ble portion of such fees and expenses, which are estimated to be
0.02% of the Fund's net assets. (See "Management.")
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.
The Fund understands that banks, securities brokers or dealers and
other financial institutions (including Mellon Bank and its affiliates)
(collectively "Agents") may charge fees to their clients who are owners
of the Fund's Investor Shares for various services provided in connec-
tion with a client's account. These fees would be in addition to any
amounts received by an Agent under its Agreement with Premier Mutual
Fund Services, Inc. ("Premier"). The Agreement requires each Agent to
disclose to its clients any compensation payable to such Agent by Pre-
mier and any other compensation payable by the client for various ser-
vices provided in connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule
12b-1 fees than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the National Asso-
ciation of Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Institutional
Share outstanding through each fiscal year and the six months ended June
30, 1994 (unaudited) should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report dated
December 31, 1993 and Semi-Annual Report (unaudited) dated June 30, 1994,
each of which is incorporated by
DREYFUS CORE VALUE FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
<TABLE>
<CAPTION>
Six Months Year Year Year
Ended Ended Ended Ended
6/30/94 12/31/93## 12/31/92 12/31/91
(unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.80 $ 25.46 $ 27.40 $ 23.20
Income from investment operations:
Net investment income# 0.19 0.31 0.36 0.39
Net realized and unrealized gain/
(loss) on investments (0.44) 3.86 0.77 4.88
Total from investment operations (0.25) 4.17 1.06 5.27
Less distributions:
Distributions from net investment
income (0.08) (0.30) (0.36) (0.50)
Distributions from net realized
gains -- (1.53) (2.64) (0.57)
Total distributions (0.08) (1.83) (3.00) (1.07)
Net asset value, end of period $ 27.47 $ 27.80 $ 25.46 $ 27.40
Total return+ (0.92)% 16.51% 4.03% 22.87%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $332,843 $349,813 $423,286 $508,971
Ratio of operating expenses to
average net assets 1.11%++ 1.15%+++ 1.22% 1.20%
Ratio of net investment income to
average net assets 1.33%++ 1.13% 1.33% 1.61%
Portfolio turnover rate++++ 32% 75% 66% 157%
<FN>
(1) On February 1, 1993, the Fund began offering Institutional Class
Shares. Shares outstanding prior to February 1, 1993 were designated
as Retail Class Shares. Effective April 4, 1994 the Retail Shares
were reclassified as Investor Shares. The amounts shown for the pe-
riod ended June 30, 1994, were calculated using the performance of a
Retail Share outstanding from January 1, 1994, to April 3,1994, and
the performance of an Investor Share outstanding from April 4, 1994
to June 30, 1994. The Financial Highlights for the year ended Decem-
ber 31, 1993 and prior periods are based upon a Retail Share
outstanding.
+ Total return represents aggregate total return for the periods indi-
cated.
++ Annualized.
+++ Without the voluntary reimbursement of expenses by the investment ad-
viser the annualized ratio of operating expenses to average net assets
for the year ended December 31, 1993 would have been 1.16%.
</TABLE>
reference in the SAI. The financial statements included in the Fund's An-
nual Report for the year ended December 31, 1993 have been audited by Coo-
pers & Lybrand L.L.P., independent accountants, whose report appears in
the Fund's Annual Report. Financial Highlights for Class R Shares are not
included because the Fund did not offer Class R Shares at period ended
June 30, 1994.
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85 12/31/84
<S> <C> <C> <C> <C> <C> <C>
$ 27.49 $28.65 $26.07 $32.40 $32.11 $25.91 $27.92
0.55 0.87 0.54 0.76 0.90 1.00 0.86
(4.23) 6.12 4.51 (0.41) 5.69 7.50 0.73
(3.68) 6.99 5.05 0.35 6.59 8.50 1.59
(0.55) (0.55) (0.59) (1.32) (0.50) (0.74) (0.69)
(0.06) (7.60) (1.88) (5.36) (5.80) (1.56) (2.91)
(0.61) (8.15) (2.47) (6.68) (6.30) (2.30) (3.60)
$23.20 $27.49 $28.65 $26.07 $32.40 $32.11 $25.91
(13.44)% 24.96% 19.54% 0.27% 22.48% 35.00% 6.86%
$474,998 $640,116 $542,510 $431,630 $452.863 $369,610 $259,696
1.26% 1.23% 1.31% 0.95% 0.95% 0.96% 1.00%
1.96% 2.75% 2.14% 2.16% 2.65% 3.60% 3.69%
180% 111% 24% 46% 37% 59% 47%
<FN>
++++ In accordance with the SEC's July 1985 rules amendment, the rates for
1986 and later periods include U.S. Government long-term securities
which were excluded from the calculations in prior years.
# Net investment income per share before the voluntary reimbursement of
expenses by the investment adviser for the year ended December 31,
1993 was $0.31.
## Per share amounts have been calculated using the monthly average share
method which more accurately presents the per share data since use of
the undistributed method does not accord with the results of opera-
tions.
</TABLE>
DREYFUS CORE VALUE FUND
FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
Six Months Period
Ended Ended
6/30/94 12/31/93*##
(unaudited)
<S> <C> <C>
Net asset value, beginning of period $27.80 $25.96
Income from investment operations:
Net investment income 0.21 0.32#
Net realized and unrealized gain/(loss) on
investments (0.46) 3.88
Total from investment operations (0.25) 3.70
Less distributions:
Distributions from net investment income (0.08) (0.33)
Distributions from net realized gains -- (1.53)
Total distributions (0.08) (1.86)
Net asset value, end of period $27.47 $27.80
Total return+ (0.89)% 14.38%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $62,602 $79,656
Ratio of operating expenses to average net
assets++ 1.01% 1.04%+++
Ratio of net investment income to average
net assets++ 1.43% 1.24%
Portfolio turnover rate 32% 75%
<FN>
* The Fund commenced selling Institutional Shares on February 1, 1993.
+ Total return represents aggregate total return for the periods indi-
cated.
++ Annualized.
+++ Without voluntary reimbursement of expenses by the investment adviser
the annualized ratio of operating expenses to average net assets for
the year ended December 31, 1993 would have been 1.04%.
# Net investment income per share before the voluntary reimbursement of
expenses by the investment adviser for the year ended December 31,
1993 was $0.31.
## Per share amounts have been calculated using the monthly average share
method.
</TABLE>
DREYFUS CORE VALUE FUND
ALTERNATIVE PURCHASE METHODS
Investor Shares are also offered through a servicing network associated
with The Dreyfus Corporation (the "Manager") pursuant to a separate Pro-
spectus. For more information and a Prospectus relating to shares offered
through that network, call 1-800-645-6561. Please read that Prospectus
carefully. Exchange and shareholder services vary depending upon the net-
work through which you purchase your Fund Shares.
Institutional Shares are offered through a servicing network associated
with Mellon Bank, pursuant to a separate prospectus, to holders of Shares
of a predecessor class of the Fund as of April 4, 1994.
INVESTMENT OBJECTIVE AND POLICIES
Dreyfus Core Value Fund is a diversified fund that seeks to achieve its
investment objective primarily through equity investments, such as common
stocks and securities convertible into common stocks.
Securities are selected for the Fund based on a continuous study of trends
in industries and companies, earning power, growth features and other in-
vestment criteria. Major emphasis is placed on industries and issuers that
are considered by the Fund's investment manager, the Manager, to have par-
ticular possibilities for long-term growth. In general, the Fund's invest-
ments are broadly diversified over a number of industries and as a matter
of operating policy, the Fund will not invest more than 25% of its total
assets in any one industry.
Up to 20% of the Fund's total net assets may be invested in foreign secu-
rities. Such investments will be made principally in foreign equity secu-
rities. The Fund may invest up to 5% of its total net assets in fixed-
income securities of companies that are close to entering, or already in,
reorganization proceedings. These obligations will likely be rated below
the four highest ratings of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group ("S&P"). (See "Other Investment Poli-
cies.") In addition, the Fund may write covered put and call options on
its portfolio securities, and purchase and write put and call options on
stock indexes to hedge its portfolio. The Fund may also lend its portfolio
securities. These techniques are discussed in more detail below under
"Other Investment Policies."
The Fund may reduce the proportion of its investments in equity securities
and temporarily invest its assets in fixed-income securities and in U.S.
Government Securities and other high-grade, short-term money market in-
struments, including repurchase agreements with respect to such instru-
ments, when, in the opinion of the Manager, a defensive posture is war-
ranted. To this extent, the Fund may not achieve its investment objective.
OTHER INVESTMENT POLICIES AND RISK FACTORS
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
COVERED OPTION WRITING. From time to time, the Fund may write covered put
and call options on portfolio securities. The Fund could realize fees (re-
ferred to as "premiums") for granting the rights evidenced by the options.
However, in return for the premium, the Fund forfeits the right to any ap-
preciation in the value of the underlying security while the option is
outstanding. A put option embodies the right of its purchaser to compel
the writer of the option to purchase from the option holder an underlying
security at the specified price at any time during the option period. In
contrast, a call option embodies the right of its purchaser to compel the
writer of the option to sell the option holder an underlying security at a
specified price at any time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may suffer
a loss equal to the difference between the price at which the Fund is re-
quired to purchase the underlying security and its market value at the
time of the option exercise, less the premium received for writing the op-
tion. Upon the exercise of a call option written by the Fund, the Fund may
suffer a loss equal to the excess of the security's market value at the
time of the option exercise over the Fund's acquisition cost of the secu-
rity, less the premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to pur-
chase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account,
cash, U.S. Government Securities or other high-grade debt obligations hav-
ing a value at least equal to the exercise price of the underlying securi-
ties or (b) continue to own an equivalent number of puts of the same "se-
ries" (that is, puts on the same underlying security having the same exer-
cise prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying security) with exercise prices greater than those that it has
written (or, if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, it will deposit the difference
with the Fund's custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security from being called or put or, in the case
of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the out-
standing option's expiration). To effect a closing purchase transaction,
the Fund would purchase, prior to the holder's exercise of an option that
the Fund has written, an option of the same series as that on which the
Fund desires to terminate its obligation. The obligation of the Fund under
an option that it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as the re-
sult of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to
do so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists
on a national securities exchange or in the over-the-counter market.
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers,
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities pre-
sents certain risks, including those resulting from fluctuations in cur-
rency exchange rates, revaluation of currencies, future political and eco-
nomic developments and the possible imposition of currency exchange block-
ages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and re-
quirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices
more volatile than those of securities of comparable domestic issuers. In
addition, with respect to certain foreign countries, there is the possi-
bility of expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes
that would reduce the yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more that 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale). The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and Rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion and other relevant information in making such determinations. If a
particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the per-
centage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buy-
ers become, for a time, uninterested in purchasing these securities.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organiza-
tions. Such loans will not exceed 33 1/3 % of the Fund's total assets,
taken at value. Loans of portfolio securities by the Fund will be collat-
eralized by cash, letters of credit or securities issued or guaranteed by
the U.S. Government or its agencies, which will be maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable un-
rated securities (collectively referred to in this discussion as "low-
rated" securities) will likely have some quality and protective character-
istics that, in the judgment of the rating organization, are outweighed by
large uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay in-
terest and repay principal in accordance with the terms of the obligation.
While the market values of low-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher-
rated securities, the market values of certain low- rated securities tend
to be more sensitive to individual corporate developments and changes in
economic conditions than higher-rated securities. In addition, low-rated
securities generally present a higher degree of credit risk. Issuers of
low-rated securities are often highly leveraged and may not have more tra-
ditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during sus-
tained periods of rising interest rates may be impaired. The risk of loss
due to default by such issuers is significantly greater because low-rated
securities generally are unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional ex-
penses to the extent that it is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings. The ex-
istence of limited markets for low-rated securities may diminish the
Fund's ability to obtain accurate market quotations for purposes of valu-
ing such securities and calculating its net asset value. Further informa-
tion regarding security ratings is contained in the SAI.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
1940 Investment Company Act of 1940, as amended ("1940 Act"). As a share-
holder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement trans-
actions in pursuit of its investment objectives. A repurchase agreement
involves the purchase of a security by the Fund and a simultaneous agree-
ment (generally with a bank or broker-dealer) to repurchase that security
from the Fund at a specified price and date or upon demand. This technique
offers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed put
and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price Index and the New York Stock Exchange Composite
Index.) Options on stock indexes are similar to options on securities.
However, because options on stock indexes do not involve the delivery of
an underlying security, the option represents the holder's right to obtain
from the writer in cash a fixed multiple of the amount by which the exer-
cise price exceeds (in the case of a put) or is less than (in the case of
a call) the closing value of the underlying index on the exercise date.
The advisability of using stock index options to hedge against the risk of
market-wide movements will depend on the extent of diversification of the
Fund's stock investments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing
or writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being
hedged correlate with price movements in the stock index selected. When
the Fund writes an option on a stock index, it will deposit cash or cash
equivalents or a combination of both in an amount equal to the market
value of the option, in a segregated account with the Fund's custodian,
and will maintain the account while the option is open.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and not for short-term trading
profits, in the past the portfolio turnover rate of the Fund has exceeded
100% and may exceed 100% in the future. A portfolio turnover rate of 100%
would occur, for example, if all the securities held by the Fund were re-
placed once in a period of one year. In past years the Fund's rate of
portfolio turnover exceeded that of certain other mutual funds with the
same investment objective. A higher rate of portfolio turnover (100% or
greater) involves correspondingly greater brokerage commissions and other
expenses which must be borne directly by the Fund and, thus, indirectly by
its shareholders. In addition, a high rate of portfolio turnover may re-
sult in the realization of larger amounts of short-term capital gains
which, when distributed to the Fund's shareholders, are taxable to them as
ordinary income. (See "Distributions" and "Taxes.") Nevertheless, security
transactions for the Fund will be based only upon investment consider-
ations and will not be limited by any other considerations when the Man-
ager deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies, restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds Trust may in the future
seek to achieve the Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment ob-
jective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of the Fund to employ such procedures may subject it to liability
for any loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Dreyfus Family of Funds' investment portfolios and services, (2) lis-
ten to net asset values, yields and total return figures, and (3) talk
with a customer service representative during normal business hours. For
more information about direct access using a Touch-Tone phone, please con-
tact The Dreyfus Family of Funds.
HOW TO INVEST IN THE DREYFUS/LAUREL FUNDS
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and In-
vestor Shares of the Fund. Class R Shares are sold primarily to bank trust
departments and other financial service providers (including Mellon Bank
and its affiliates) ("Banks") acting on behalf of customers having a qual-
ified trust or investment account or relationship at such institution.
Class R Shares are primarily sold to retail investors by Premier and by
Agents that have entered into a Shareholder Servicing and Sales Support
Agreement with Premier. Once an investor has established an account, addi-
tional purchases may, in certain cases, be made directly through the
Fund's transfer agent. If Shares of the Fund are held in an account at a
Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit your transaction requests to the Fund's
transfer agent or to Premier. You may diversify your investments by choos-
ing a combination of investment portfolios offered by The Dreyfus Family
of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in The Dreyfus Family
of Funds by wiring funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(a) The Dreyfus Funds.
(b) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(c) Your name.
(d) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Dreyfus Family
of Funds at One Exchange Place, Boston, Massachusetts 02109 for more in-
formation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value per share
("NAV"). Call 1-800-548-2868 or write The Dreyfus Family of Funds at One
Exchange Place, Boston, Massachusetts 02109 for more information or a Di-
rect Deposit authorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able market value, must be liquid and must not be subject to restrictions
on resale. The market value of any securities exchanged, plus any cash,
must be at least equal to $25,000. Shares purchased in exchange for secu-
rities generally cannot be redeemed for fifteen days following the ex-
change in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the Shares
purchased and securities exchanged. Securities accepted by the Fund will
be valued in the same manner as the Fund values its assets. Any interest
earned on the securities following their delivery to the Fund and prior to
the exchange will be considered in valuing the securities. All interest,
dividends, subscription or other rights attached to the securities become
the property of the Fund, along with the securities. Call 1-800- 548-2868
or write The Dreyfus Family of Funds at One Exchange Place, Boston, Massa-
chusetts 02109 for more information about "in-kind" purchases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of
the New York Stock Exchange ("NYSE") on each day that the NYSE is open (a
"business day"). Investments and requests to exchange or redeem Shares re-
ceived by the Fund before the close of regular trading on the NYSE (usu-
ally 4 p.m., Eastern time) are effective on, and will receive the price
determined, that day (except investments made by electronic funds transfer
which are effective two business days after your call). Investment, ex-
change or redemption requests received after the close of the NYSE are ef-
fective on, and receive the first Share price determined, the next busi-
ness day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. The Fund may suspend the offering of
Shares of any class of the Fund and reserves the right to vary initial and
subsequent investment minimums. Subsequent investments to purchase addi-
tional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Fund reserves the right to change such
minimum from time to time. Any time the Shares of the Fund held in an ac-
count have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), a notification may be sent advising you of the
need to either make an investment to bring the value of the Shares held in
an account up to $1,000 ($500) or to establish an automatic monthly in-
vestment to purchase additional Shares. If the investment is not made or
the automatic monthly investment is not established within 60 days from
the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address
of record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds advised by the Manager and that were previously advised by
Mellon Bank. As noted below, exchanges from any one fund may be limited in
any one calendar year. In addition, the Shares being exchanged and the
Shares of each fund being acquired must have a current value of at least
$100 and otherwise meet the minimum investment requirement of the fund
being acquired. Call the Investor Line for additional information and a
prospectus describing other investment portfolios offered by The Dreyfus
Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calen-
dar year. The Fund reserves the right to make exceptions to an ex-
change limitation from time to time. An exchange limitation will not
apply to the exchange of Shares of a money market fund, the Shares of
any of the funds exchanged pursuant to an Automatic Withdrawal Pro-
gram, and to Shares held in 403(b) accounts.
(3) Shareholders are limited to six exchanges out of the Fund during the
calendar year. This limit is intended to protect the Fund against po-
tential disruptions in portfolio management resulting from market
timing activity, while enabling shareholders to make changes in their
investment program when market conditions or personal circumstances
warrant.
(4) The Shares being acquired must be qualified for sale in your state of
residence.
(5) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(6) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(7) An exchange is based on the next calculated NAV of each fund after
receipt of your exchange order.
(8) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(9) An exchange of the Fund's Shares is, for Federal income tax purposes,
a sale of the Shares, on which you may realize a taxable gain or
loss.
(10) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Shareholders will be given 60 days' notice prior to any material changes
in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.") The Fund imposes no
charges when Shares are redeemed. Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A Letter to The Dreyfus Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificates, if
you have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loan institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and
request the appropriate forms for:
* IRAs
* 403(b) plans for employees of public school systems and non-profit or-
ganizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS'
RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Dreyfus Family of Funds to
transfer funds from an existing non-retirement Dreyfus Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Dreyfus
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Investor and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash, and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Funds Trust's Board of
Trustees that such value represents fair value, debt securities with matu-
rities of 60 days or less held by the Fund are valued at amortized cost.
When a security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating inter-
est rates on the market value of the instrument.
The NAV of each class of Shares of most of The Dreyfus Family of Funds'
investment portfolios (other than money market funds) is published in
leading newspapers daily. The yield of each class of Shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the total return on a class of
Shares. Total return figures are based on historical earnings and are not
intended to indicate future performance. The "total return" of a class of
Shares of the Fund may be calculated on an average annual total return
basis or a cumulative total return basis. Average annual total return re-
fers to the average annual compounded rates of return on a class of Shares
over one-, five-, and ten-year periods or the life of the Fund (as stated
in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the invest-
ment, assuming the reinvestment of all dividends and capital gains distri-
butions. Cumulative total return reflects the total percentage change in
the value of the investment over the measuring period, again assuming the
reinvestment of all dividends and capital gains distributions.
Total return quotations will be computed separately for each class of the
Fund's Shares. Because of the difference in the fees and expenses borne by
Class R and Investor Shares of the Fund, the return on Class R Shares will
generally be higher than the return on Institutional and Investor Shares
and the return on Institutional Shares will generally be higher than the
return on Investor Shares. (See "The Fund's Other Class of Shares.") Any
fees charged by a Bank or Agent directly to its customers' accounts in
connection with investments in the Fund will not be included in calcula-
tions of total return. The Fund's Annual Report and Semi-Annual Report
contain additional performance information and is available upon request
without charge from Premier or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, Standard & Poor's 500 Composite Stock Price Index,
the Consumer Price Index, and the Dow Jones Industrial Average. Perfor-
mance rankings as reported in Changing Times, Business Week, Institutional
Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load Inves-
tor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and World
Report, Forbes, Fortune, Barron's and similar publications may also be
used in comparing the Fund's performance. Furthermore, the Fund may quote
its Investor and Class R Shares' returns in advertisements or in share-
holder reports. The Fund may also advertise non- standardized performance
information, such as total returns, for periods other than those required
to be shown or cumulative performance data.
DISTRIBUTIONS
The Fund declares dividends from its net investment income, if any, four
times yearly and distributes any net long-term capital gains on an annual
basis. The Board of Trustees may elect not to distribute capital gains in
whole or in part to take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per Share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will not
begin to accrue dividends until the following day. Redemption orders ef-
fected on any particular day will receive all dividends declared through
the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify, for treatment as a regulated investment com-
pany under the Code so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
All or a portion of the dividends paid by the Fund may be eligible for the
dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S. cor-
porations. However, dividends received by a corporate shareholder and de-
ducted by it pursuant to the dividends-received deduction are subject in-
directly to the alternative minimum tax.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for Federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant reaches age 70 1/2 is less than the "minimum required distribution"
for that taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other Federal, state or local consider-
ations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly. You may also request a statement of your account activity at
any time. Carefully review such confirmation statements and account state-
ments and notify The Fund immediately if there is an error. From time to
time, to reduce expenses, only one copy of the Fund's shareholder reports
(such as the Fund's Annual Report) may be mailed to your household. Please
call The Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your Federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS TRUST.
The Dreyfus/Laurel Funds Trust offers Shares of beneficial interest of
separate investment portfolios without par value (each a "fund"). The Bos-
ton Company Fund was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 and changed
its name to The Laurel Funds Trust, and then to The Dreyfus/Laurel Fund
Trust on October 17, 1994. The Dreyfus Laurel Funds Inc. is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The Trustees have authorized Shares of the Fund to be
issued in three classes--Investor Shares, Class R Shares and Institutional
Shares.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular fund or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
At December 6, 1994, Mellon Bank Corporation, the Manager's parent, owned
of record through its direct and indirect subsidiaries more than 25% of
The Dreyfus/Laurel Funds Trust's outstanding voting shares, and is deemed,
under the 1940 Act, to be a controlling shareholder.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Funds
Trust are managed under the direction of its Trustees. The SAI contains
the names and general background information concerning the Trustees and
officers of The Dreyfus/Laurel Funds Trust.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions, and is paid a fee.
Under the Investment Management Agreement, the Fund is contractually obli-
gated to pay a fee computed daily, and paid monthly, at the annual rate of
..90% of the Fund's average daily net assets less certain expenses de-
scribed below. The Manager has voluntarily agreed to waive this fee to
..88% of the Fund's average daily net assets less certain expenses de-
scribed below. The Manager pays all of the expenses of the Fund except
brokerage, taxes, interest, fees, expenses of the non-interested Trustees
(including counsel fees) and extraordinary expenses. Although the Manager
does not pay for the fees and expenses of the non-interested Trustees (in-
cluding counsel fees), the Manager is contractually required to reduce its
investment management fee in an amount equal to the Fund's allocable share
of such expenses. In order to compensate the Manager for paying virtually
all of the Fund's expenses, the Fund's investment management fee is higher
than the investment advisory fees paid by most investment companies. Most,
if not all, such companies also pay for additional non-investment advisory
expenses that are not paid by such companies' investment adviser. From
time to time, the Manager may waive (either voluntarily or pursuant to ap-
plicable state limitations) additional investment management fees payable
by the Fund. For the fiscal year ended December 31, 1993 the Fund paid its
investment adviser, The Boston Company Advisors, Inc. ("Boston Advisors"),
(an indirect wholly-owned subsidiary of Mellon Bank Corporation) 0.75% in
investment advisory fees under the Fund's previous investment advisory
contract (such contract only covered the provision of investment advisory
and certain specified administrative services). For the fiscal year ended
December 31, 1993 total operating expenses (excluding Rule 12b-1 fees) of
the Fund were 1.01% and 0.89% for the Retail and Institutional Classes
(currently Investor Shares), respectively, of the Fund's average daily net
assets. It is anticipated that the current total operating expenses of the
Fund (excluding Rule 12b-1 fees) will be approximately .88% of the Fund's
average daily net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager, or which have sold Shares of the Fund, if the Manager be-
lieves that the quality of the transaction and the commission are compara-
ble to what they would be with other qualified brokerage firms. From time
to time, to the extent consistent with its investment objective, policies
and restrictions, the Fund may invest in securities of companies with
which Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994, Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager may raise issues
under these provisions. However, Mellon Bank has been advised by its coun-
sel that these activities are consistent with these statutory and regula-
tory obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
The Fund is co-managed by Guy R. Scott and Mark E. Donovan. Guy R. Scott
is an Officer of Mellon Bank, a Senior Vice President of The Boston Com-
pany Advisors, Inc., a Senior Vice President and Equity Portfolio Manager
of The Boston Company Asset Management, Inc. Mr. Scott has been employed
by the Manager as a portfolio manager of the Fund since October 17, 1994.
Mr. Scott also serves on the Equity Policy Group Committee. Previously,
Mr. Scott held a position as an Equity Portfolio Manager for Putnam Advi-
sory, where he was responsible for more than $1 billion in pension assets.
A Chartered Financial Analyst, Mr. Scott earned a B.S. in Economics and an
M.B.A. in Finance at the University of Wisconsin.
Mr. Donovan is a Senior Vice President and Vice Chairman of the Equity
Policy Group for The Boston Company where he oversees The Boston Company's
investment strategy. Mr. Donovan has been employed by the Manager as a
portfolio manager of the Fund since October 17, 1994. Previously, Mr.
Donovan worked as a consultant with Kaplan Smith & Associates, a subsid-
iary of First Boston Corporation and as a securities analyst with Value
Line Inc. Mr. Donovan earned a degree from Rensselaer Polytechnical Insti-
tute and is a Chartered Financial Analyst.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258) acts
as custodian and fund accountant, maintaining possession of the Fund's in-
vestment securities and providing certain accounting and related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Fund has entered into a distribution agreement with Premier which provides
that Premier has the exclusive right to distribute Shares of the Fund.
Premier may pay service and/or distribution fees to Agents that assist
customers in purchasing and servicing of Shares of the Fund. (See "Distri-
bution Plan.")
THE FUND'S OTHER CLASS OF SHARES.
In addition to Investor and Class R Shares, the Fund also offers Institu-
tional Shares. Institutional Shares are not subject to a sales charge on
purchases or on redemptions. Institutional Shares are subject to a Rule
12b-1 fee at an annual rate of up to 0.15% of the Fund's average net as-
sets attributable to Institutional Shares. For more information about the
Fund's Institutional Shares, see the current Prospectus for the Institu-
tional class of Shares of the Fund.
DISTRIBUTION PLAN (INVESTOR CLASS SHARES AND INSTITUTIONAL
SHARES ONLY).
Investor Shares and Institutional Shares are subject to a Distribution
Plan ("Plan") adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1"). The Investor Shares and Institutional Shares of the Fund bear
some of the cost of selling those shares under the Plan. The Plan allows
the Fund to spend annually up to 0.25% of its average daily net assets at-
tributable to Investor Shares, and 0.15% of its average daily net assets
attributable to its Institutional Shares, to compensate Premier, and in
the case of the Investor Shares Dreyfus Service Corporation, an affiliate
of the Manager, for shareholder servicing activities or expenses and/or
for activities primarily intended to result in the sale of those respec-
tive classes of the Fund. The Plan allows Premier to make payments from
the Rule 12b-1 fees it collects from the Fund to compensate Agents that
have entered into Selling Agreements ("Agreements") with Premier. Under
the Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the
Agent's clients that own Investor Shares or the Institutional Shares of
the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Agents, Premier and
the Fund may agree to voluntarily reduce the maximum fees payable under
the Plan. See the SAI for more details on the Plan.
The Fund understands that Agents may charge fees to their clients who are
owners of the Fund's Investor Shares or Institutional Shares for various
services provided in connection with a client's account. These fees would
be in addition to any amounts received by an Agent under its Agreement
with Premier. The Agreements require each Agent to disclose to its clients
any compensation payable to such Agent by Premier and any other compensa-
tion payable by the client for various services provided in connection
with their accounts. Potential investors should read this Prospectus in
light of the terms governing Agreements with their Agents. An Agent enti-
tled to receive compensation for selling and servicing the Fund's Shares
may receive different compensation with respect to one class of Shares
over another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
<PAGE>
P R O S P E C T U S
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Dreyfus Core Value Fund
Institutional Shares
December 19, 1994
DREYFUS CORE VALUE FUND is a diversified equity fund seeking long-term
growth of capital, with current income as a secondary objective, through
investments primarily in common stocks.
THIS PROSPECTUS describes The Dreyfus Core Value Fund (the "Fund"), an
open-end diversified management investment company of The Dreyfus/Laurel Funds
Trust (formerly The Laurel Funds Trust and previously The Boston Company Fund),
that is part of The Dreyfus Family of Funds. This Prospectus describes one class
of shares--Institutional Shares (the "Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should read
this Prospectus and retain it for future reference. Additional information about
the Fund is contained in a Statement of Additional Information (the "SAI"),
which has been filed with the Securities and Exchange Commission (the
.....................................
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. ALL MUTUAL
FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK OR
AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS
CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS DISTRIBUTED
BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
....................... 1 .......................
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<PAGE>
D R E Y F U S C O R E V A L U E F U N D
--------------------------------
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"SEC") and is available upon request without charge by calling or writing to The
Dreyfus Family of Funds. The SAI bears the same date as the Prospectus and is
incorporated by reference in its entirety into this Prospectus.
In addition to this Fund, The Dreyfus Family of Funds also offer other funds
that provide investment opportunities for you in the equity, fixed income and
money markets. For more information about these additional investment
opportunities, call 1-800-548-2868.
.....................................
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
....................... 2 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Expense Summary........................................ 5
Financial Highlights................................... 7
Investment Objective and Policies...................... 10
OTHER INVESTMENT POLICIES............................. 10
HOW TO DO BUSINESS WITH US
Special Shareholder Services........................... 16
Investor Line.......................................... 16
How to Invest in the Fund.............................. 16
BY MAIL............................................... 17
BY TELEPHONE.......................................... 17
BY WIRE............................................... 17
BY AUTOMATIC MONTHLY INVESTMENTS...................... 18
BY DIRECT DEPOSIT..................................... 18
BY IN-KIND PURCHASES.................................. 18
WHEN SHARE PRICE IS DETERMINED........................ 19
ADDITIONAL INFORMATION ABOUT INVESTMENTS.............. 19
How to Redeem Shares................................... 20
BY TELEPHONE.......................................... 20
BY MAIL............................................... 20
BY AUTOMATED WITHDRAWAL PROGRAM....................... 20
REDEMPTION PROCEEDS................................... 21
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.............. 22
How To Use The Dreyfus Family of Funds in a
Tax-Qualified
Retirement Plan....................................... 22
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF
FUNDS'
RETIREMENT PLAN...................................... 22
</TABLE>
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<PAGE>
D R E Y F U S C O R E V A L U E F U N D
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- ------------------------------------
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<S> <C>
OTHER INFORMATION
Share Price............................................ 23
Performance Advertising................................ 23
Distributions.......................................... 24
Taxes.................................................. 25
Other Services......................................... 27
Further Information About The Fund..................... 28
THE DREYFUS/LAUREL FUNDS TRUST........................ 28
MANAGEMENT............................................ 28
THE FUND'S OTHER CLASSES OF SHARES.................... 30
DISTRIBUTION PLAN (INVESTOR CLASS SHARES AND
INSTITUTIONAL SHARES ONLY)........................... 31
</TABLE>
.....................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
....................... 4 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
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EXPENSE SUMMARY
The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the Institutional Shares of the Fund. (SEE
"MANAGEMENT.")
<TABLE>
<CAPTION>
Investor Class R Institutional
Shares Shares Shares
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE NONE NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTMENTS NONE NONE NONE
DEFERRED SALES LOAD NONE NONE NONE
REDEMPTION FEE NONE NONE NONE
EXCHANGE FEE NONE NONE NONE
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
MANAGEMENT FEE* 0.88% 0.88% 0.88%
12B-1 FEE 0.25% NONE 0.15%
OTHER EXPENSES** 0.00% 0.00% 0.00%
-------- ------- -------------
TOTAL FUND OPERATING EXPENSES(2) 1.13% 0.88% 1.03%
EXAMPLES
YOU WOULD PAY THE FOLLOWING ON A $1,000 1 YEAR $ 12 $ 9 $ 11
INVESTMENT, ASSUMING (1) A 5% ANNUAL RETURN 3 YEARS $ 36 $ 28 $ 33
AND (2) REDEMPTION AT THE END OF EACH TIME 5 YEARS $ 62 $ 49 $ 57
PERIOD: 10 YEARS $137 $108 $126
<FN>
* THE VOLUNTARY WAIVER OF A PORTION OF THE MANAGEMENT FEES BY THE INVESTMENT MANAGER IS
EXPECTED DURING THE CURRENT FISCAL YEAR. WITHOUT THE VOLUNTARY WAIVER, THE MANAGEMENT FEES
WOULD EQUAL 0.90%.
** DOES NOT INCLUDE FEES AND EXPENSES OF THE NON-INTERESTED TRUSTEES (INCLUDING COUNSEL). THE
INVESTMENT MANAGER IS CONTRACTUALLY REQUIRED TO REDUCE ITS MANAGEMENT FEE IN AN AMOUNT EQUAL
TO THE FUND'S ALLOCABLE PORTION OF SUCH FEES AND EXPENSES, WHICH ARE ESTIMATED TO BE 0.02% OF
THE FUND'S NET ASSETS. (See "MANAGEMENT.")
</TABLE>
.....................................
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
.....................................
The Fund understands that banks, securities brokers or dealers and other
financial institutions (including Mellon Bank and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Fund's
Institutional Shares for various services provided in connection with a client's
account. These fees would be in addition to any amounts received by an Agent
under its Agreement with Premier Mutual Fund Services, Inc. ("Premier"). The
Agreement requires each Agent to disclose to its clients any compensation
payable to such Agent by Premier and any other compensation payable by the
client for various services provided in connection with its account.
....................... 5 .......................
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<PAGE>
D R E Y F U S C O R E V A L U E F U N D
--------------------------------
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Long-term shareholders of Institutional Shares could pay more in Rule 12b-1
fees than the economic equivalent of the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc.
Institutional Shares are offered through a servicing network associated with
Mellon Bank, pursuant to a separate Prospectus, to holders of Shares of a
predecessor class of the Fund as of April 4, 1994. The Fund also offers Investor
Class Shares and Class R Shares. Investor Class Shares are primarily sold to
retail investors by Premier and by Agents that have entered into a Selling
Agreement with Premier. Class R Shares are sold primarily to bank trust
departments and other financial service providers acting on behalf of customers
having a qualified trust or investment account at such institution. Investor
Class Shares and Class R Shares are offered pursuant to a separate Prospectus
through a servicing network associated with Mellon Bank. Investor Class Shares
and Class R Shares are also offered through a servicing network associated with
The Dreyfus Family of Funds pursuant to a third Prospectus. For more information
and a prospectus for Shares offered through the Dreyfus Family of Funds network
call 1-800-645-6561.
....................... 6 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
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FINANCIAL HIGHLIGHTS
The tables below are based upon a single Institutional Share or Investor Share
outstanding through each fiscal period and should be read in conjunction with
the financial statements and related notes that appear in the Fund's Annual
Report dated December 31, 1993 and Semi-Annual Report (unaudited) dated June 30,
1994, each of which is incorporated by reference in the SAI. The financial
statements included in the Fund's Annual Report for the year ended December 31,
1993 have been audited by Coopers & Lybrand L.L.P., independent accountants,
whose report appears in the Fund's Annual Report. Financial Highlights for Class
R Shares are not included because the Fund did not offer Class R Shares at
period ended June 30, 1994.
<TABLE>
<S> <C> <C>
DREYFUS CORE VALUE FUND
FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT EACH
PERIOD.
SIX
MONTHS
ENDED PERIOD
6/30/94 ENDED
(UNAUDITED) 12/31/93*
Net Asset Value, beginning of period $27.80 $25.96
Income from investment operations:
--------- ------------
Net investment income 0.21 0.32#
Net realized and unrealized gain/(loss) on
investments (0.46) 3.38
--------- ------------
Total from investment operations (0.25) 3.70
--------- ------------
Less Distributions:
Distributions from net investment income (0.08) (0.33)
Distributions from net realized capital gains -- (1.53)
--------- ------------
Total Distributions (0.08) (1.86)
--------- ------------
Net Asset Value, end of period $27.47 $27.80
--------- ------------
Total Return+ (0.89)% 14.38%
Ratios to average net assets/Supplemental Data:
Net Assets, end of period (in 000's) $62,602 $79,656
Ratio of operating expenses to average net
assets++ 1.01% 1.04%+++
Ratio of net investment income to average net
assets++ 1.43% 1.24%
--------- ------------
Portfolio turnover rate 32% 75%
<FN>
* THE FUND COMMENCED SELLING INSTITUTIONAL SHARES ON FEBRUARY 1, 1993.
+ TOTAL RETURN REPRESENTS AGGREGATE TOTAL RETURN FOR THE PERIOD
INDICATED.
++ ANNUALIZED.
+++ WITHOUT VOLUNTARY REIMBURSEMENT OF EXPENSES BY THE INVESTMENT
ADVISER, THE ANNUALIZED RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS FOR THE YEAR ENDED DECEMBER 31, 1993 WOULD HAVE BEEN 1.04%.
# NET INVESTMENT INCOME PER SHARE BEFORE THE VOLUNTARY REIMBURSEMENT OF
EXPENSES BY THE INVESTMENT ADVISER, FOR THE YEAR ENDED DECEMBER 31,
1993 WAS $0.31.
## PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY AVERAGE SHARE
METHOD.
</TABLE>
....................... 7 .......................
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<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
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D R E Y F U S C O R E V A L U E F U N D
------------------------------------------------------------
P R O S P E C T U S
<TABLE>
<CAPTION>
DREYFUS CORE VALUE FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
Six Months
Ended Year Year Year Year Year Year
6/30/94 Ended Ended Ended Ended Ended Ended
(unaudited) 12/31/93## 12/13/92 12/31/91 12/31/90 12/31/89 12/31/88
----------- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $27.80 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07
----------- ------------ --------- --------- --------- --------- ---------
Income from investment
operations:
Net investment
income# 0.19 0.31 0.36 0.39 0.55 0.87 0.54
Net realized and
unrealized gain/
(loss) on investments (0.44) 3.86 0.70 4.88 (4.23) 6.12 4.51
----------- ------------ --------- --------- --------- --------- ---------
Total from investment
operations (0.25) 4.17 1.06 5.27 (3.68) 6.99 5.05
Less distributions:
Distributions from
net investment income (0.08) (0.30) (0.36) (0.50) (0.55) (0.55) (0.59)
Distributions from
net realized gains -- (1.53) (2.64) (0.57) (0.06) (7.60) (1.88)
----------- ------------ --------- --------- --------- --------- ---------
Total distributions (0.08) (1.83) (3.00) (1.07) (0.61) (8.15) (2.47)
----------- ------------ --------- --------- --------- --------- ---------
Net Asset Value, end of
period $27.47 $27.80 $25.46 $27.40 $23.20 $27.49 $28.65
----------- ------------ --------- --------- --------- --------- ---------
----------- ------------ --------- --------- --------- --------- ---------
Total return+ (0.92)% 16.51% 4.03% 22.87% (13.44)% 24.96% 19.54%
----------- ------------ --------- --------- --------- --------- ---------
Ratios to average net
assets/ supplemental
data:
Net Assets, end of
period
(in 000's) $332,843 $349,813 $423,286 $508,971 $474,998 $640,116 $542,510
Ratio of operating
expenses to average
net assets 1.11%++ 1.15%+++ 1.22% 1.20% 1.26% 1.23% 1.31%
Ratio of net
investment income to
average net assets 1.33%++ 1.13% 1.33% 1.61% 1.96% 2.75% 2.14%
Portfolio turnover
rate++++ 32% 75% 66% 157% 180% 111% 24%
<FN>
(1) ON FEBRUARY 1, 1993, THE FUND BEGAN OFFERING INSTITUTIONAL CLASS SHARES. SHARES OUTSTANDING PRIOR TO
FEBRUARY 1, 1993 WERE DESIGNATED AS RETAIL CLASS SHARES. EFFECTIVE APRIL 4, 1994 THE RETAIL SHARES
WERE RECLASSIFIED AS INVESTOR SHARES. THE AMOUNTS SHOWN FOR THE PERIOD ENDED JUNE 30, 1994 WERE
CALCULATED USING THE PERFORMANCE OF A RETAIL SHARE OUTSTANDING FROM JANUARY 1, 1994, TO APRIL 3, 1994
AND THE PERFORMANCE OF AN INVESTOR SHARE OUTSTANDING FROM APRIL 4, 1994, TO JUNE 30, 1994. THE
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 1993 AND PRIOR PERIODS ARE BASED UPON A RETAIL
SHARE OUTSTANDING.
+ TOTAL RETURN REPRESENTS AGGREGATE TOTAL RETURN FOR THE PERIODS INDICATED.
++ANNUALIZED.
+++ WITHOUT THE VOLUNTARY REIMBURSEMENT OF EXPENSES BY THE INVESTMENT ADVISER THE ANNUALIZED RATIO OF
OPERATING EXPENSES TO AVERAGE NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 1993 WOULD HAVE BEEN 1.16%.
++++ IN ACCORDANCE WITH THE SEC'S JULY 1985 RULES AMENDMENT, THE RATES
FOR 1986 AND LATER PERIODS INCLUDE U.S. GOVERNMENT LONG-TERM
SECURITIES WHICH WERE EXCLUDED FROM THE CALCULATIONS IN PRIOR YEARS.
# NET INVESTMENT INCOME PER SHARE BEFORE THE VOLUNTARY REIMBURSEMENT OF
EXPENSES BY THE INVESTMENT ADVISER FOR THE YEAR ENDED DECEMBER 31,
1993 WAS $0.31.
## PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY AVERAGE
SHARE METHOD WHICH MORE ACCURATELY PRESENTS THE PER SHARE DATA SINCE
USE OF THE UNDISTRIBUTED METHOD DOES NOT ACCORD WITH THE RESULTS OF
OPERATIONS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CORE VALUE FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
Year Year Year Year
Ended Ended Ended Ended
12/31/87 12/31/86 12/31/85 12/31/84
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value,
beginning of period $32.40 $32.11 $25.91 $27.92
--------- --------- --------- ---------
Income from investment
operations:
Net investment
income# 0.76 0.90 1.00 0.86
Net realized and
unrealized gain/
(loss) on investments (0.41) 5.69 7.50 0.73
--------- --------- --------- ---------
Total from investment
operations 0.35 6.59 8.50 1.59
Less distributions:
Distributions from
net investment income (1.32) (0.50) (0.74) (0.69)
Distributions from
net realized gains (5.36) (5.80) (1.56) (2.91)
--------- --------- --------- ---------
Total distributions (6.68) (6.30) (2.30) (3.60)
--------- --------- --------- ---------
Net Asset Value, end of
period $26.07 $32.40 $32.11 $25.91
--------- --------- --------- ---------
--------- --------- --------- ---------
Total return+ 0.27% 22.48% 35.00% 6.86%
--------- --------- --------- ---------
Ratios to average net
assets/ supplemental
data:
Net Assets, end of
period
(in 000's) $431,630 $452,863 $369,863 $259,696
Ratio of operating
expenses to average
net assets 0.95% 0.95% 0.96% 1.00%
Ratio of net
investment income to
average net assets 2.16% 2.65% 3.60% 3.69%
Portfolio turnover
rate++++ 46% 37% 59% 47%
</TABLE>
................ 8 ................ ............... 9 ...............
<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
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- --------------------------------------------------------------------------------
DREYFUS CORE VALUE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Dreyfus Core Value Fund is a diversified fund that seeks to achieve its
investment objective primarily through equity investments, such as common stocks
and securities convertible into common stocks.
Securities are selected for the Fund based on a continuous study of trends
in industries and companies, earning power, growth features and other investment
criteria. Major emphasis is placed on industries and issuers that are considered
by the Fund's investment manager, The Dreyfus Corporation ("the Manager"), to
have particular possibilities for long-term growth. In general, the Fund's
investments are broadly diversified over a number of industries and, as a matter
of operating policy, the Fund will not invest more than 25% of its total assets
in any one industry.
Up to 20% of the Fund's total net assets may be invested in foreign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in fixed-income
securities of companies that are close to entering, or already in,
reorganization proceedings. These obligations will likely be rated below the
four highest ratings of Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("S&P"). (SEE "OTHER INVESTMENT POLICIES.") In addition,
the Fund may write covered put and call options on its portfolio securities, and
purchase and write put and call options on stock indexes to hedge its portfolio.
The Fund may also lend its portfolio securities. These techniques are discussed
in more detail below under "OTHER INVESTMENT POLICIES."
The Fund may reduce the proportion of its investments in equity securities
and temporarily invest its assets in fixed-income securities and in U.S.
Government Securities and other high-grade, short-term money market instruments,
including repurchase agreements with respect to such instruments, when, in the
opinion of the Manager, a defensive posture is warranted. To this extent, the
Fund may not achieve its investment objective.
OTHER INVESTMENT POLICIES.
BORROWING. The Fund is authorized, within specified limits, to borrow money
for temporary administrative purposes and to pledge its assets in connection
with such borrowings.
COVERED OPTION WRITING. From time to time, the Fund may write covered put
and call options on portfolio securities. The Fund could realize fees (referred
to as "premiums") for granting the rights evidenced by the options. However, in
return for the premium, the Fund forfeits the right to any appreciation in the
value of the underlying security while the option is
....................... 10 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
outstanding. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at the specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified price at any time
during the option period.
Upon the exercise of a put option written by the Fund, the Fund may suffer a
loss equal to the difference between the price at which the Fund is required to
purchase the underlying security and its market value at the time of the option
exercise, less the premium received for writing the option. Upon the exercise of
a call option written by the Fund, the Fund may suffer a loss equal to the
excess of the security's market value at the time of the option exercise over
the Fund's acquisition cost of the security, less the premium received for
writing the option.
Whenever the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to purchase the
underlying security if a put option is exercised, the Fund will either (a)
deposit with the Fund's custodian in a segregated account, cash, U.S. Government
Securities or other high-grade debt obligations having a value at least equal to
the exercise price of the underlying securities or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates as
those written by the Fund), or an equivalent number of puts of the same "class"
(that is, puts on the same underlying security) with exercise prices greater
than those that it has written (or, if the exercise prices of the puts it holds
are less than the exercise prices of those it has written, it will deposit the
difference with the Fund's custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby permitting its sale or
the writing of a new option on the security prior to the outstanding option's
expiration). To effect a closing purchase transaction, the Fund would purchase,
prior to the holder's exercise of an option that the Fund has written, an option
of the same series as that on which the Fund desires to terminate its
obligation. The obligation of the Fund under an option that it has written would
be terminated by a closing purchase transaction, but the Fund would not be
deemed to own an option as the result of the transaction. There can be no
assurance that the Fund will be able to effect closing purchase transactions at
a time when it wishes to do so. To facilitate closing purchase transactions,
however, the Fund will ordinarily write options only if a secondary market for
the options exists on a national securities exchange or in the over-the-counter
market.
....................... 11 .......................
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<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
- --------------------------------------------------------------------------------
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers, and
may invest in obligations of foreign branches of domestic banks and domestic
branches of foreign banks. Investment in foreign securities presents certain
risks, including those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future political and economic developments and the
possible imposition of currency exchange blockages or other foreign governmental
laws or restrictions, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
Moreover, securities of many foreign issuers may be less liquid and their prices
more volatile than those of securities of comparable domestic issuers. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation, confiscatory taxation and limitations on the use or removal of
funds or other assets of the Fund, including withholding of dividends. Foreign
securities may be subject to foreign government taxes that would reduce the
yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15% of the
value of its net assets in illiquid securities, including time deposits and
repurchase agreements having maturities longer than seven days. Securities that
are readily marketable are not deemed illiquid for purposes of this limitation
(irrespective of any legal or contractual restrictions on resale). The Fund may
invest in commercial obligations issued in reliance on the so-called "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund may also
purchase securities that are not registered under the Securities Act of 1933, as
amended, but which can be sold to qualified institutional buyers in accordance
with Rule 144A under that Act ("Rule 144A securities"). Section 4(2) paper is
restricted as to disposition under the federal securities laws, and generally is
sold to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold to other qualified institutional buyers. Determinations as to the
liquidity of investments in Section 4(2) paper and Rule 144A securities will be
made by the Board of Trustees. The Board will consider availability of reliable
price information and other relevant information in making such determinations.
If a particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the percentage
limitation on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional
....................... 12 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
buyers is a recent development and it is not possible to predict how this market
will mature. Investing in Rule 144A securities could have the effect of
increasing the level of Fund illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organizations. Such
loans will not exceed 33 1/3% of the Fund's total assets, taken at value. Loans
of portfolio securities by the Fund will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low rated"
securities) will likely have some quality and protective characteristics that,
in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While the
market values of low-rated securities tend to react less to fluctuations in
interest rate levels than the market values of higher-rated securities, the
market values of certain low-rated securities tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally present a
higher degree of credit risk. Issuers of low-rated securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater because
low-rated securities generally are unsecured and frequently are subordinated to
the prior payment of senior indebtedness. The Fund may incur additional expenses
to the extent that it is required to seek recovery upon a default in the payment
of principal or interest on its portfolio holdings. The existence of limited
markets for low-rated securities may diminish the Fund's ability to obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value. Further information regarding security ratings
is contained in the SAI.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consistent
with its investment objective and policies and permissible under the Investment
Company Act of 1940, as amended (the "1940 Act"). As a shareholder of another
investment company, the Fund would bear, along
....................... 13 .......................
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<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
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with other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with its
own operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreements
transactions in pursuit of its investment objective. A repurchase agreement
involves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from the
Fund at a specified price and date or upon demand. This technique offers a
method of earning income on idle cash. A risk associated with repurchase
agreements is the failure of the seller to repurchase the securities as agreed,
which may cause the Fund to suffer a loss if the market value of such securities
declines before they can be liquidated on the open market. Repurchase agreements
with a duration of more than seven days are considered illiquid securities and
are subject to the limit on illiquid securities stated above.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed put and
call options on stock indexes to hedge against risks of market-wide price
movements. A stock index measures the movement of a certain group of stocks by
assigning relative values to the common stocks included in the index. (Examples
of well-known stock indexes are the Standard & Poor's 500 Composite Stock Price
Index and the New York Stock Exchange Composite Index.) Options on stock indexes
are similar to options on securities. However, because options on stock indexes
do not involve the delivery of an underlying security, the option represents the
holder's right to obtain from the writer in cash a fixed multiple of the amount
by which the exercise price exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the underlying index on the exercise
date.
The advisability of using stock index options to hedge against the risk of
market-wide movements will depend on the extent of diversification of the Fund's
stock investments and the sensitivity of its stock investments to factors
influencing the underlying index. The effectiveness of purchasing or writing
stock index options as a hedging technique will depend upon the extent to which
price movements in the portion of the portfolio being hedged correlate with
price movements in the stock index selected. When the Fund writes an option on a
stock index, it will deposit cash or cash equivalents or a combination of both
in an amount equal to the market value of the option, in a segregated account
with the Fund's custodian and will maintain the account while the option is
open.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the basis
of potential for capital appreciation and not for short-term trading profits, in
the past the portfolio turnover rate of the Fund has exceeded 100% and may
exceed 100% in the future. A portfolio turnover rate of 100% would occur, for
example, if all the securities held by the Fund were replaced once
....................... 14 .......................
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<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
in a period of one year. In past years the Fund's rate of portfolio turnover
exceeded that of certain other mutual funds with the same investment objective.
A higher rate of portfolio turnover (100% or greater) involves correspondingly
greater brokerage commissions and other expenses which must be borne directly by
the Fund and, thus, indirectly by its shareholders. In addition, a high rate of
portfolio turnover may result in the realization of larger amounts of short-term
capital gains which, when distributed to the Fund's shareholders, are taxable to
them as ordinary income. (SEE "DISTRIBUTIONS" AND "TAXES.") Nevertheless,
security transactions for the Fund will be based only upon investment
considerations and will not be limited by any other considerations when the
Manager deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may not
be changed without the affirmative vote of the holders of a majority of the
Fund's outstanding Shares. The SAI describes all of the Fund's fundamental and
non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without shareholder
approval. If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the Fund
may make commitments more restrictive than the investment policies and
restrictions described in this Prospectus and the SAI. Should the Fund determine
that any such commitment is no longer in the best interests of the Fund, it may
consider terminating sales of its Shares in the states involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds Trust may in the future seek
to achieve the Fund's investment objective by investing all of the Fund's assets
in another investment company having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. Shareholders of the Fund will be given at least 30 days' prior
notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Trustees will consider, among
other things, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies. Although the Fund believes that the
Trustees will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
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HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy way
to do business with the Fund. By electing these services on your application or
by completing the appropriate forms, you may authorize:
-INVESTMENT BY PHONE.
-AUTOMATIC MONTHLY INVESTMENTS.
-EXCHANGES OR REDEMPTIONS BY PHONE.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment manager
from any loss, claim or expense you may incur as a result of their acting on
such instruction. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These include personal
identification procedures, recording of telephone conversations and providing
written confirmation of each transaction. A failure on the part of The Dreyfus
Family of Funds to employ such procedures may subject it to liability for any
loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours (9
a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions on
how to: (1) request a current prospectus or information booklets about The
Dreyfus Family of Funds' investment portfolios and services, (2) listen to net
asset values, yields and total return figures, and (3) talk with a customer
service representative during normal business hours. For more information about
direct access using a Touch-Tone phone, please contact The Dreyfus Family of
Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-owned subsidiary
of Institutional Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston Institutional
Group, Inc. Premier also serves as the Fund's sub-administrator and, pursuant to
a Sub-Administration Agreement, provides various administrative and corporate
secretarial services to the Fund.
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Premier has established various procedures for purchasing Institutional
Shares of the Fund. Institutional Shares are primarily sold to retail investors
by Premier and by Agents that have entered into a Shareholder Servicing and
Sales Support Agreement with Premier. Once an investor has established an
account, additional purchases may, in certain cases, be made directly through
the Fund's transfer agent. If Shares of the Fund are held in an account with an
Agent, such Agent may require you to place all Fund purchase, exchange and
redemption orders through them. All Agents have agreed to transmit your
transaction requests to the Fund's transfer agent or to Premier. You may
diversify your investments by choosing a combination of investment portfolios
offered by The Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and the
account number. Orders to purchase Shares are effective on the day the Fund
receives your check or money order. (SEE "WHEN SHARE PRICE IS DETERMINED.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by calling
1-800-548-2868 if you have elected the service authorizing the Fund to draw on
your bank account when you call with instructions. Investments made by phone in
any one account must be in an amount of at least $100 and are effective two days
after your call. (SEE "WHEN SHARE PRICE IS DETERMINED.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds.
To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston, BOS
SAFE DEP, Account No. 011001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(C) Your name.
(D) Your city and state.
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In order for a wire purchase to be effective on the same day it is received
both the trading instructions and the wire must be received before 4 p.m.,
Eastern time. (SEE "WHEN SHARE PRICE IS DETERMINED.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the Fund to
draw on your bank account regularly by paper or electronic draft. Such
investments must be in amounts of not less than $100 in any one account. You
should inquire at your bank whether it will honor a preauthorized paper or
electronic draft. Contact the Fund if your bank requires additional
documentation. Call 1-800-548-2868 or write The Dreyfus Family of Funds at One
Exchange Place, Boston, Massachusetts 02109 for more information about the
Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from other
sources (including government pension or social security payments). Note that it
may not be appropriate to Direct Deposit your entire paycheck into the Fund
because it has a fluctuating net asset value per share ("NAV"). Call
1-800-548-2868 or write The Dreyfus Family of Funds at One Exchange Place,
Boston, Massachusetts 02109 for more information or a Direct Deposit
authorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discretion,
permit you to purchase Shares through an "in-kind" exchange of securities you
hold. Any securities exchanged must meet the investment objective, policies and
limitations of the Fund, must have a readily ascertainable market value, must be
liquid and must not be subject to restrictions on resale. The market value of
any securities exchanged, plus any cash, must be at least equal to $25,000.
Shares purchased in exchange for securities generally cannot be redeemed for
fifteen days following the exchange in order to allow time for the transfer to
settle.
The basis of the exchange will depend upon the relative NAV of the Shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest earned on
the securities following their delivery to the Fund and prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at One Exchange Place, Boston, Massachusetts 02109 for more
information about "in-kind" purchases.
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WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of the
New York Stock Exchange ("NYSE") on each day that the NYSE is open (a "business
day"). Investments and requests to exchange or redeem Shares received by the
Fund before the close of regular trading on the NYSE (usually 4 p.m., Eastern
time) are effective on, and will receive the price determined, that day (except
investments made by electronic funds transfer which are effective two business
days after your call). Investment, exchange or redemption requests received
after the close of the NYSE are effective on, and receive the first Share price
determined, the next business day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction to
the Fund, it may not be modified or canceled. The Fund reserves the right to
reject any application or investment. The Fund reserves the right to make
exceptions to the minimum initial investment and account minimum amount from
time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement plans,
and Uniform Transfers (Gifts) to Minors Act accounts, for which the minimum
initial investment is $500. The Fund may suspend the offering of Shares of any
class of the Fund and reserves the right to vary initial and subsequent
investment minimums. Subsequent investments to purchase additional Shares in the
Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem Shares
in any account if the total value of the Shares is less than a specified
minimum, as a result of redemptions but not as a result of market action, unless
you have established an automatic monthly investment to purchase additional
Shares. The Fund reserves the right to change such minimum from time to time.
Any time the Shares of the Fund held in an account have a value of less than
$1,000 ($500 for Uniform Gifts/Transfers to Minors Acts accounts), a
notification may be sent advising you of the need to either make an investment
to bring the value of the Shares held in the account up to $1,000 ($500) or to
establish an automatic monthly investment to purchase additional Shares. If the
investment is not made or the automatic monthly investment is not established
within 60 days from the date of notification, the Shares held in the account
will be redeemed and the proceeds from the redemption will be sent by check to
your address of record.
The automatic redemption of Shares will not apply to IRAs, custodial
accounts under Section 403(b) of the Internal Revenue Code of 1986, as amended
(the "Code") ("403(b) accounts") and other types of tax-deferred retirement plan
accounts.
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HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV. (BEFORE
REDEEMING, PLEASE READ "ADDITIONAL INFORMATION ABOUT REDEMPTIONS.") Your
redemption proceeds may be delayed if you have owned your Shares less than 10
days. (SEE "REDEMPTION PROCEEDS.") The Fund imposes no charges when Shares are
redeemed. Agents or other institutions may charge their clients a nominal fee
for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone request
may not be modified or canceled. (BEFORE CALLING, READ "ADDITIONAL INFORMATION
ABOUT REDEMPTIONS," AND "WHEN SHARE PRICE IS DETERMINED.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the
following forms:
-A LETTER TO THE DREYFUS FAMILY OF FUNDS.
-AN ASSIGNMENT FORM OR STOCK POWER.
-AN ENDORSEMENT ON THE BACK OF YOUR NEGOTIABLE STOCK CERTIFICATE, IF YOU
HAVE ONE.
Once mailed to The Dreyfus Family of Funds, P.O. Box 9692, Providence, Rhode
Island 02940-9830, the redemption request is irrevocable and may not be modified
or canceled. A letter of instruction should state the number of Shares or the
dollar amount to be redeemed. The letter must include your account number, and
for redemptions in an amount in excess of $25,000, a signature guarantee of each
owner. The redemption request must be signed by each person in whose name the
Shares are registered; for example, in the case of joint ownership, each owner
must sign. All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as John Robert
Jones, he should sign that way and not as John R. Jones. Signature guarantees
can be obtained from commercial banks, credit unions if authorized by state
laws, savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other industry
recognized program approved by the Securities Transfer Association. (BEFORE
WRITING, SEE "ADDITIONAL INFORMATION ABOUT REDEMPTIONS.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough Shares
each month to provide you with a check for an amount which you specify (with a
minimum of $100). To set up an Automated Withdrawal Program, call the Fund at
1-800-548-2868 for instructions.
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Only shareholders with a Fund account balance of $10,000 or more may participate
in this program. Shares will be redeemed on the 15th day or 30th day of each
month or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital appreciation on
your Shares, the payments will deplete your investment. Amounts paid to you by
Automated Withdrawals are not a return on your investment. They are derived from
the redemption of Shares in your account, and you must report on your income tax
return, any gains or losses that you realize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be signed by
all owners.
When you make your first investment you may request that Automated
Withdrawals be sent to an address other than the address of record. Thereafter,
a request to send Automated Withdrawals to an address other than the address of
record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of the
Automated Withdrawal Program, by notice to the Fund in writing or by telephone.
Termination or change will become effective within five days following receipt
of your instruction. Your Automated Withdrawal Program plan may begin any time
after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not later than
seven days afterwards. When a redemption occurs shortly after a recent purchase,
the Fund may hold the redemption proceeds beyond seven days but only until the
purchase check clears, which may take up to 10 days or more. No dividend is paid
on the redemption proceeds after the redemption and before the check is mailed.
If you anticipate redemptions soon after you purchase your Shares, you are
advised to wire funds to avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Proceeds from
the redemption of the Fund's Shares will normally be transmitted on the first
business day, but not later than the seventh day, following the date of
redemption. Your bank usually will receive wired funds the day they are
transmitted. Electronically transferred funds will ordinarily be received within
two business days after transmission. Once the funds are transmitted, the time
of receipt and the
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availability of the funds are not within the Fund's control. If your bank
account changes, you must send a new "voided" check preprinted with the bank
registration with written instructions signed by all owners (with their
signatures guaranteed), including tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption can
be effected.
(3) All redemptions are made and the price is determined on the day when all
documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence
satisfactory to it of the authority of the individual signing the
request. Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as specified
by the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830 and request the
appropriate forms for:
-IRAS.
-403(B) ACCOUNTS FOR EMPLOYEES OF PUBLIC SCHOOL SYSTEMS AND NON-PROFIT
ORGANIZATIONS.
-PROFIT SHARING PLANS AND PENSION PLANS FOR CORPORATIONS AND OTHER
EMPLOYERS.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS' RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of Funds
from another custodian. Call 1-800-548-2868 or write The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830 for a request to
transfer form. If you direct The Dreyfus Family of Funds to transfer funds from
an existing non-retirement Dreyfus Family of Funds account into a retirement
account, the Shares in your non-retirement account will be redeemed. The
redemption proceeds will be invested in your Dreyfus Family of Funds IRA or
other tax-qualified retirement plan. The redemption is a taxable event resulting
in a taxable gain or loss.
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OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV for the
Institutional Shares of the Fund is computed by adding with respect to that
class of Shares the value of all the class' investments, cash, and other assets,
deducting liabilities and dividing the result by number of Shares of that class
outstanding. The valuation of assets for determining NAV for the Fund may be
summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no sale is
reported, the mean of the latest bid and asked prices is used. Securities traded
over-the-counter are priced at the mean of the latest bid and asked prices but
will be valued at the last sale price if required by regulations of the SEC.
When market quotations are not readily available, securities and other assets
are valued at fair value as determined in good faith in accordance with
procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
Pursuant to a determination by The Dreyfus/Laurel Funds Trust's Board of
Trustees that such value represents fair value, debt securities with maturities
of 60 days or less held by the Fund are valued at amortized cost. When a
security is valued at amortized cost, it is valued at its cost when purchased,
and thereafter by assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
The NAV of each class of Shares of most of The Dreyfus Family of Funds'
investment portfolios (other than the money market funds) is published in
leading newspapers daily. The yield of each class of Shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund may
also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the total return on a class of Shares.
TOTAL RETURN FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. The "total return" of a class of Shares of the Fund
may be calculated on an average annual total return basis or a cumulative total
return basis. Average annual total return refers to the average
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annual compounded rates of return on a class of Shares over one-, five-, and
ten-year periods or the life of the Fund (as stated in the advertisement) that
would equate an initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment, assuming the reinvestment of all
dividends and capital gains distributions. Cumulative total return reflects the
total percentage change in the value of the investment over the measuring
period, again assuming the reinvestment of all dividends and capital gains
distributions.
Total return quotations will be computed separately for each class of the
Fund's Shares. Because of the difference in the fees and expenses borne by Class
R, Institutional and Investor Shares of the Fund, the return on Class R Shares
will generally be higher than the return on Institutional and Investor Shares
and the return on Institutional Shares will generally be higher than the return
on Investor Shares. (SEE "THE FUND'S OTHER CLASSES OF SHARES.") Any fees charged
by an Agent directly to its customers' account in connection with investments in
the Fund will not be included in calculations of total return or yield. The
Fund's annual report and semi-annual report contain additional performance
information and is available upon request without charge from the Fund's Premier
or your Agent.
The Fund may compare the performance of its Institutional Shares with
various industry standards of performance including Lipper Analytical Services,
Inc. ratings, Standard & Poor's 500 Composite Stock Price Index, the Consumer
Price Index, and the Dow Jones Industrial Average. Performance rankings as
reported in CHANGING TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL
STREET JOURNAL, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE,
MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE,
BARRON'S and similar publications may also be used in comparing the Fund's
performance. Furthermore, the Fund may quote its Institutional Shares' returns
in advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total returns, for periods
other than those required to be shown or cumulative performance data.
DISTRIBUTIONS
The Fund declares dividends from its net investment income four times yearly and
distributes any net long-term capital gains on an annual basis. The Board of
Trustees may elect not to distribute capital gains in whole or in part to take
advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional Shares
of the Fund at the NAV. You may change the method of receiving distributions at
any time by writing to the Fund. Checks which are sent to shareholders who have
requested distributions to be paid in cash and which are subsequently returned
by the United States Postal Service as not deliverable or which remain
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uncashed for six months or more will be reinvested in additional Fund Shares in
the shareholder's account at the then current NAV. Subsequent Fund distributions
will be automatically reinvested in additional Fund Shares in the shareholder's
account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will not
begin to accrue dividends until the following business day. Redemption orders
effected on any particular day will receive all dividends declared through the
day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b)
accounts paid in cash only if you are at least 59 1/2 years old or are
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are subject to
taxes with respect to any such distribution. At any given time, the value of the
Fund's Shares includes the undistributed net gains, if any, realized by the Fund
on the sale of portfolio securities, and undistributed dividends and interest
received, less the Fund's expenses. Because such gains and income are included
in the value of your Shares, when they are distributed the value of your Shares
is reduced by the amount of the distribution. Accordingly, if your distribution
is reinvested in additional Shares, the distribution has no effect on the value
of your investment; while you own more Shares, the value of each Share has been
reduced by the amount of the distribution. Likewise, if you take your
distribution in cash, the value of your Shares immediately after the
distribution plus the cash received is equal to the value of the Shares
immediately before the distribution. For example, if you own a Fund Share that
immediately before a distribution has a value of $10, including $2 in
undistributed dividends and capital gains realized by the Fund during the year,
and if the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that, after
the distribution, you will have 1.250 Shares at $8 per Share, or $10, the same
as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment company
under the Code so that it will be relieved of Federal income tax on that part of
its investment company taxable income (consisting generally of taxable net
investment income and net short-term capital gain) and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) that is
distributed to its shareholders.
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Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such, are
taxable to you as long-term capital gains, regardless of the length of time you
have owned your Shares.
All or a portion of the dividends paid by the Fund may be eligible for the
dividends-received deduction allowed to corporations. The eligible portion may
not exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
alternative minimum tax.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if the
value of your Shares is below your cost. If you purchase Shares shortly before a
taxable distribution you must pay income taxes on the distribution, even though
the value of your investment (plus cash received, if any) remains the same. In
addition, the Share price at the time you purchase Shares may include unrealized
gains in the securities held in the Fund. If these portfolio securities are
subsequently sold and the gains are realized, they will, to the extent not
offset by capital losses, be paid to you as a capital gain distribution and will
be taxable to you.
Dividends paid by the Fund to qualified retirement plans ordinarily will not
be subject to taxation until the proceeds are distributed from the retirement
plans. The Fund will not report to the IRS dividends paid to such plans.
Generally, distributions from qualified retirement plans, except those
representing returns of non-deductible contributions thereto, will be taxable as
ordinary income and, if made prior to the time the participant reaches age
59 1/2, generally will be subject to an additional tax equal to 10% of the
taxable portion of the distribution. If the distribution from such a retirement
plan (other than certain governmental or church plans) for any taxable year
following the year in which the participant reaches age 70 1/2 is less than the
"minimum distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian of
such a retirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified retirement
plan in excess of the amounts permitted by law may be subject to an excise tax.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for Federal income tax purposes of your distributions for the
preceding year.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-reporting,
certified under penalties of perjury as prescribed by the Code and the
regulations thereunder. Unless previously furnished,
....................... 26 .......................
- --------------------------------------------------------------------------------
<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
investments received without such a certification will be returned. The Fund is
required to withhold a portion of all dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct TIN; withholding from
dividends and capital gain distributions also is required for such shareholders
who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
taxable ordinary income for that year and capital gain net income for the
one-year period ending on December 31 of that year, plus certain other amounts.
The Fund expects to make such distributions as are necessary to avoid the
imposition of this tax.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Fund and its shareholders; see the SAI for a further
discussion. There may be other Federal, state or local considerations applicable
to a particular investor. You therefore are urged to consult your own tax
adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the Fund with
a summary of its investments and performance. The Fund will send you a
confirmation statement after every transaction (except with regard to the
reinvestment of dividends and other distributions) that affect your Fund
account. In addition, an account statement will be mailed to you quarterly. You
may also request a statement of your account activity at any time. Carefully
review such confirmation statements and account statements and notify the Fund
immediately if there is an error. From time to time, to reduce expenses, only
one copy of the Fund's shareholder reports (such as the Fund's Annual Report)
may be mailed to your household. Please call The Dreyfus Family of Funds if you
need additional copies.
No later than January 31 of each year, the Fund will send you the following
reports, which you may use in completing your Federal income tax return:
Form 1099-DIV Reports taxable distributions (and returns of capital, if any)
during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding year
(for non-retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during the
preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498, which
reports contributions to your IRA for the previous calendar year. In addition,
the Fund may send you other relevant tax-related forms.
....................... 27 .......................
- --------------------------------------------------------------------------------
<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
- --------------------------------------------------------------------------------
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS TRUST.
The Dreyfus/Laurel Funds Trust offers Shares of beneficial interest of
separate investment portfolios without par value (each a "fund"). The Boston
Company Fund was organized as a Massachusetts business trust under the laws of
the Commonwealth of Massachusetts on March 30, 1979 and changed its name to The
Laurel Fund Trust, and then to The Dreyfus/Laurel Funds Trust on October 17,
1994. The Dreyfus/Laurel Funds Trust is registered with the SEC as an open-end
management investment company, commonly known as a mutual fund. The Trustees
have authorized Shares of the Fund to be issued in three classes--Investor
Shares, Class R Shares and Institutional Shares.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter for
which a separate vote of any fund or class is required by the 1940 Act, and
except as to any matter which affects the interests of one or more particular
fund or classes, in which case only the shareholders of the affected fund or
classes are entitled to vote, each as a separate class. At your written request,
the Fund will issue negotiable stock certificates.
At December 6, 1994, Mellon Bank Corporation, the investment manager's
parent, owned of record through its direct and indirect subsidiaries more than
25% of The Dreyfus/Laurel Funds Trust's outstanding voting Shares, and is
deemed, under the 1940 Act, to be a controlling shareholder.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Funds
Trust are managed under the direction of its Trustees. The SAI contains the
names and general background information concerning the Trustees and officers of
The Dreyfus/Laurel Funds Trust.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York, New
York 10166. As of November 30, 1994, the Manager managed or administered
approximately $71 billion in assets for more than 1.9 million investor accounts
nationwide. The Manager is a wholly-owned subsidiary of Mellon Bank (One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258), the Fund's prior investment
manager. Pursuant to an Investment Management Agreement, the Manager provides,
or arranges for one or more third parties to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As investment manager, the Manager manages the Fund by making investment
decisions based on the Fund's investment objective, policies and restrictions,
and is paid a fee.
....................... 28 .......................
- --------------------------------------------------------------------------------
<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
Under the Investment Management Agreement, the Fund is contractually
obligated to pay a fee computed daily, and paid monthly, at the annual rate of
..90% of the Fund's average daily net assets less certain expenses described
below. The Manager has voluntarily agreed to waive this fee to .88% of the
Fund's average daily net assets less certain expenses described below. The
Manager pays all of the expenses of the Fund except brokerage, taxes, interest,
fees, expenses of the non-interested Trustees (including counsel fees) and
extraordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Manager is
contractually required to reduce its investment management fee in an amount
equal to the Fund's allocable share of such expenses. In order to compensate the
Manager for paying virtually all of the Fund's expenses, the Fund's investment
management fee is higher than the investment advisory fees paid by most
investment companies. Most, if not all, such companies also pay for additional
non-investment advisory expenses that are not paid by such companies' investment
adviser. From time to time, the Manager may waive (either voluntarily or
pursuant to applicable state limitations) additional investment management fees
payable by the Fund. For the fiscal year ended December 31, 1993 the Fund paid
its investment adviser, The Boston Company Advisors, Inc. ("Boston Advisors")
(an indirect wholly-owned subsidiary of Mellon Bank Corporation), 0.75% in
investment advisory fees under the Fund's previous investment advisory contract
(such contract only covered the provision of investment advisory and certain
specified administrative services). For the fiscal year ended December 31, 1993
total operating expenses (excluding Rule 12b-1 fees) of the Fund were 0.89% of
the Fund's average daily net assets. It is anticipated that the current total
operating expenses of the Fund (excluding Rule 12b-1 fees) will be approximately
..88% of the Fund's average daily net assets.
The Manager is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Manager,
Premier or which have sold Shares of the Fund, if the Manager believes that the
quality of the transaction and the commission are comparable to what they would
be with other qualified brokerage firms. From time to time, to the extent
consistent with its investment objective, policies and restrictions, the Fund
may invest in securities of companies with which Mellon Bank has a lending
relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30, 1994
Mellon Bank Corporation was the 24th largest bank holding company in the United
States in terms of total assets. Through its bank subsidiaries, it operates 631
domestic retail banking locations including 432 branch offices. Mellon Bank
Corporation has 25 domestic representative offices. There are international
branches in Grand Cayman, British West Indies, and London, England, and two
....................... 29 .......................
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<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
- --------------------------------------------------------------------------------
international representative offices in Tokyo, Japan and Hong Kong. Mellon Bank
has a banking subsidiary, Mellon Bank Canada, in Toronto. Mellon Bank is a
registered municipal securities dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain
securities. The activities of Mellon Bank and the Manager may raise issues under
these provisions. However, Mellon Bank has been advised by its counsel that
these activities are consistent with these statutory and regulatory obligations.
For more information on the Glass-Steagall Act of 1933, see "FEDERAL LAW
AFFECTING MELLON BANK" in the SAI.
Guy R. Scott is an Officer of Mellon Bank, a Senior Vice President of The
Boston Company Advisors, Inc., and a Senior Vice President and Equity Portfolio
Manager of The Boston Company Asset Management, Inc. Mr. Scott is responsible
for the Fund and for managing over $280 million among various institutional
accounts. Mr. Scott is a portfolio manager at the Manager and has been employed
by the Manager since October 17, 1994. Mr. Scott also served on the Equity
Policy Group Committee. Previously, Mr. Scott held a position as an Equity
Portfolio Manager for Putnam Advisory, where he was responsible for more than $1
billion in pension assets. A Chartered Financial Analyst, Mr. Scott earned a
B.S. in Economics and an M.B.A. in Finance at the University of Wisconsin.
OTHER SERVICE PROVIDERS.
Under a Custody and Fund Accounting Agreement, Mellon Bank acts as custodian
and fund accountant, maintaining possession of the Fund's investment securities
and providing certain accounting and related services.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence, Rhode
Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the Fund's
sponsor and distributor. Premier is a registered broker-dealer with principal
offices at One Exchange Place, Boston, Massachusetts 02109. The Fund has entered
into a distribution agreement with Premier which provides that Premier has the
exclusive right to distribute Shares of the Fund. Premier may pay service and/or
distribution fees to Agents that assist customers in purchasing and servicing of
Shares of the Fund. (SEE "DISTRIBUTION PLAN (INVESTOR CLASS SHARES AND
INSTITUTIONAL SHARES ONLY.)")
THE FUND'S OTHER CLASSES OF SHARES.
In addition to Institutional Shares, the Fund also offers Investor and Class
R Shares. Investor Shares are not subject to a sales charge on purchases or on
redemptions. Investor
....................... 30 .......................
- --------------------------------------------------------------------------------
<PAGE>
P R O S P E C T U S
--------------------------------
- --------------------------------------------------------------------------------
Shares are subject to a Rule 12b-1 fee at an annual rate of up to 0.25% of the
Fund's average net assets attributable to Investor Shares. Class R Shares are
not subject to a sales charge on purchases and redemptions and are not subject
to a Rule 12b-1 fee. For more information about the Fund's Investor and Class R
Shares, see the current Prospectus for these classes of Shares of the Fund.
DISTRIBUTION PLAN (INVESTOR SHARES AND INSTITUTIONAL
SHARES ONLY).
Investor Shares and Institutional Shares are subject to a Distribution Plan
("Plan") adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Investor Shares and Institutional Shares of the Fund bear some of the cost of
selling those shares under the Plan. The Plan allows the Fund to spend annually
up to 0.25% of its average daily net assets attributable to Investor Shares, and
0.15% of its average daily net assets attributable to its Institutional Shares,
to compensate Premier, and in the case of the Investor Shares Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing activities
or expenses and/or for activities primarily intended to result in the sale of
those respective classes of the Fund. The Plan allows Premier to make payments
from the Rule 12b-1 fees it collects from the Fund to compensate Agents that
have entered into Selling Agreements ("Agreements") with Premier. Under the
Agreements, the Agents are obligated to provide distribution related services
with regard to the Fund and/or shareholder services to the Agent's clients that
own Investor Shares or the Institutional Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and the
Agreements described above. From time to time, the Agents, Premier and the Fund
may agree to voluntarily reduce the maximum fees payable under the Plan. See the
SAI for more details on the Plan.
The Fund understands that Agents may charge fees to their clients who are
owners of the Fund's Investor Shares or Institutional Shares for various
services provided in connection with a client's account. These fees would be in
addition to any amounts received by an Agent under its Agreement with Premier.
The Agreements require each Agent to disclose to its clients any compensation
payable to such Agent by Premier and any other compensation payable by the
client for various services provided in connection with their accounts.
Potential investors should read this Prospectus in light of the terms governing
Agreements with their Agents. An Agent entitled to receive compensation for
selling and servicing the Fund's Shares may receive different compensation with
respect to one class of Shares over another.
....................... 31 .......................
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<PAGE>
D R E F U S C O R E V A L U E F U N D
--------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (412) 234-0621)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
....................... 32 .......................
- --------------------------------------------------------------------------------
Dreyfus
Special Growth
Fund
Prospectus
- ------------------------------------------------------------------------------
PROSPECTUS DECEMBER 19, 1994
DREYFUS SPECIAL GROWTH FUND
- ------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
SPECIAL GROWTH FUND," IS A SEPARATE PORTFOLIO OF THE DREYFUS/LAUREL FUNDS
TRUST, A MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL FUND.
THE FUND IS A DIVERSIFIED EQUITY INVESTMENT PORTFOLIO THAT SEEKS ABOVE-AVERAGE
CAPITAL GROWTH WITHOUT REGARD TO INCOME THROUGH INVESTMENTS PRINCIPALLY IN
SECURITIES OF ISSUERS THOUGHT TO HAVE SIGNIFICANT GROWTH POTENTIAL.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR CLASS SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE
SERVICES OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE
SOLD PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF OF
CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP AT
SUCH INSTITUTION. INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE
FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER
FINANCIAL INSTITUTIONS ("SERVICE AGENTS") THAT HAVE ENTERED INTO A SELLING
AGREEMENT WITH THE FUND'S DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF THE
FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM INVESTOR SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
SHARES OF THE FUND ARE ALSO AVAILABLE THROUGH A SERVICING NETWORK
ASSOCIATED WITH MELLON BANK, N.A. ("MELLON BANK"), AN AFFILIATE OF DREYFUS.
EXCHANGE AND SHAREHOLDER SERVICES VARY DEPENDING UPON THE NETWORK THROUGH WHICH
YOU PURCHASE FUND SHARES. SEE "HOW TO BUY FUND SHARES."
--------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT YOU
SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU INVEST AND
RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED DECEMBER 19, 1994,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO
SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE
FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK, 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
--------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK OR ITS
AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK OR AN AFFILIATE MAY BE
PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS CUSTODIAN, TRANSFER
AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS DISTRIBUTED BY PREMIER MUTUAL
FUND SERVICES, INC.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
EXPENSE SUMMARY 3
FINANCIAL HIGHLIGHTS 4
DESCRIPTION OF THE FUND 6
MANAGEMENT OF THE FUND 9
HOW TO BUY FUND SHARES 11
SHAREHOLDER SERVICES 14
HOW TO REDEEM FUND SHARES 17
DISTRIBUTION PLAN (INVESTOR SHARES ONLY) 19
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES 20
PERFORMANCE INFORMATION 21
GENERAL INFORMATION 22
2
<TABLE>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
--------------- --------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
</TABLE>
<TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
<S> <C> <C>
Management Fee 1.15% 1.15%
12b-1 Fee1 0.25% none
Other Expense2 .00% .00%
----- -----
Total Fund Operating Expense 1.40% 1.15%
</TABLE>
<TABLE>
EXAMPLE:
You would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period: INVESTOR SHARES CLASS R
--------------- -------
<S> <C> <C> <C>
1 Year $ 14 $ 12
3 Years $ 44 $ 37
5 Years $ 77 $ 63
10 Years $168 $140
- --------------
</TABLE>
(1) See "Distribution Plan" for a description of the Fund's Distribution Plan
for the Investor Class.
(2) Does not include fees and expenses of the non-interested directors
(including counsel). The investment manager is contractually required to reduce
its Management Fee in an amount equal to the Fund's allocable portion of such
fees and expenses, which are estimated to be .02% of the Fund's net assets (See
"Management of the Fund.")
- -------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE
OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S
ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%.
- -------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that investors will bear, directly or indirectly,
the payment of which will reduce investors' return on an annual basis. Other
Expenses and Total Fund Operating Expenses are based on estimated amounts for
the current fiscal year. Long-term investors in Investor shares could pay more
in 12b-1 fees than the economic equivalent of paying the maximum front-end
sales charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. ("NASD"). The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Service Agents may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan."
The Company understands that banks, brokers, dealers or other financial
institutions (including Dreyfus and its affiliates) (collectively "Service
Agents") may charge fees to their clients who are owners of the Fund's Investor
shares for various services provided in connection with a client's account.
These fees would be in addition to any amounts received by a Service Agent
under its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. (the "Distributor"). The Agreement requires each Service Agent to disclose
to its clients any compensation payable to such Service Agent by the
Distributor and any other compensation payable by the client for various
services provided in connection with their accounts.
3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor or Class R Share outstanding
through each fiscal year and the six months ended June 30, 1994 (unaudited),
and should be read in conjunction with the financial statements and related
notes that appear in the Fund's Annual Report dated December 31, 1993 and
Semi-Annual Report (unaudited) dated June 30, 1994, each of which is
incorporated by reference in the SAI. The financial statements included in
the Fund's Annual Report for the year ended December 31, 1993, have been
audited by Coopers & Lybrand, L.L.P., independent accountants, whose report
appears in the Fund's Annual Report.
DREYFUS SPECIAL GROWTH FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD.*
<TABLE>
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
6/30/94 ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/93+++ 12/31/92 12/31/91 12/31/90+++ 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85 12/31/84
----------- ----------- -------- -------- ----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of period $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21 $20.95 $15.87 $18.05
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income /
(loss)# (0.05) (0.20) (0.10) (0.05) 0.03 0.14 0.37 0.63 0.13 0.36 0.38
Net realized and
unrealized gain/
(loss) on investments (2.03) 3.51 3.77 3.90 (0.72) 2.49 2.22 (0.91) 1.40 5.07 (2.36)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations (2.08) 3.31 3.67 3.85 (0.69) 2.63 2.59 (0.28) 1.53 5.43 1.98
Less distributions:
Distributions from net
investment income -- -- -- -- (0.03) (0.25) (0.34) (0.81) (0.31) (0.35) (0.09)
Distributions in
excess of net
investment income -- -- (0.19) -- -- -- -- -- -- -- --
Distributions from
net realized
capital gains -- (1.79) (1.62) (2.82) -- (2.37) -- (4.10) (4.96) -- (0.11)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions -- (1.79) (1.81) (2.82) (0.03) (2.62) (0.34) (4.91) (5.27) (0.35) (0.20)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $15.89 $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21 $20.95 $15.87
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return+ (11.57)% 20.01% 26.19% 29.22% (4.84)% 18.83% 21.49% (3.81)% 7.66% 34.80% (11.09)%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratios / Supplemental
Data:
Net assets, end of
period (in 000's) $79,733 $83,879 $64,071 $41,522 $43,591 $39,759 $35,227 $30,678 $35.860 $53,562 $27,646
Ratio of operating
expenses to
average net assets++ 1.54%** 1.73% 1.57% 1.70% 1.62% 1.72% 1.58% 1.49% 1.32% 1.35% 1.50%
Ratio of net investment
income/loss
to average net assets (.53)%** (1.09)% (0.71)% (0.34)% 0.19% 0.82% 2.70% 3.25% 1.16% 1.96% 2.38%
Portfolio turnover
rate++++ 69% 94% 112% 141% 222% 184% 180% 322% 192% 257% 261%
- --------------------
* On February 1, 1993 existing shares of the Fund were designated the
Retail Class and the Fund began offering the Institutional Class and the
Investment Class of shares. Effective April 4, 1994 the Retail and
Institutional Classes were reclassified as a single class of shares known as
Investor Shares. The amounts shown for the period ended June 30, 1994, were
calculated using the performance of a Retail Share outstanding from January 1,
1994, to April 3, 1994, and the performance of an Investor Share outstanding
from April 4, 1994 to June 30, 1994. The Financial Highlights for the year
ended December 31, 1993 and prior periods are based upon a Retail Share
outstanding.
** Annualized.
+ Total returns represent aggregate total returns for the periods
indicated.
++ Without the voluntary waiver of fees and reimbursement of expenses by
investment adviser the annualized ratio of expenses to average net assets for
the six months ended June 30, 1994 and the year ended December 31, 1993 would
have been 1.54% and 1.79%, respectively.
+++ Per share amounts have been calculated using the monthly average share
method.
++++ In accordance with the Securities and Exchange Commission's July 1985
rules amendment, the rate for 1986 and later periods include U.S. Government
long-term securities which were excluded from the calculations in prior years.
# Without the voluntary waiver of fees and/or reimbursement of the
expenses by investment adviser, net investment loss for the six months ended
June 30, 1994 and the year ended December 31, 1993 would have been $(0.05) and
$(0.21), respectively.
4
</TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
DREYFUS SPECIAL GROWTH FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
SIX MONTHS
ENDED PERIOD
6/30/94 ENDED
(UNAUDITED) 12/31/93*+++
----------- ------------
<S> <C> <C>
Net asset value, beginning of period $18.06 $17.31
------ ------
Income from investment operations:
Net investment loss# (0.01) (0.10)
Net realized and unrealized gain (loss) on investments (2.04) 2.64
------ ------
Total from investment operations (2.05) 2.54
Distributions from net realized capital gains -- (1.79)
Net asset value, end of period $16.01 $18.06
====== ======
Total return+ (11.35)% 15.78%
====== ======
Ratios / Supplemental data:
Net Assets, end of period (in 000's) $11,464 $14,941
Ratio of operating expenses to average net assets 1.21%** 1.19%**++
Ratio of net investment loss to average net assets (0.21)%** (0.55)%**
Portfolio turnover rate 69% 94%
- -----------------------------------------------------------------------------------------------------
(1) Effective April 4, 1994, the Investment Class of Shares was
reclassified as the Trust Class of Shares. The amounts shown for the period
ended June 30, 1994 were calculated using the performance of an Investment
Share outstanding from January 1, 1994 to April 3, 1994, and the performance of
a Trust Share, outstanding from April 4, 1994 to June 30, 1994. On October 17,
1994, Trust Shares were redesignated Class R Shares.
* The Fund commenced selling Investment shares on February 1, 1993.
** Annualized.
+ Total return represents aggregate total return for the period
indicated.
++ Without voluntary waiver of fees and reimbursement of expenses by
investment adviser the annualized ratio of expenses to average net assets
for the period ended December 31, 1993 would have been 1.25%.
+++ Per share amounts have been calculated using the monthly average share
method.
# Without the voluntary waiver of fees and/or reimbursement of expenses
by investment adviser, the net investment loss for the six months ended June
30, 1994 and the period ended December 31, 1993 would have been $(.01) and
$(0.11), respectively.
</TABLE>
5
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and Class R
shares. (Class R shares of the Fund were formerly called Trust Shares.)
Investor shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to Banks acting on behalf of customers having a qualified trust or
investment account or relationship at such institution. Investor shares are
primarily sold to retail investors by the Distributor and by Service Agents
that have entered into a Selling Agreement with the Distributor. If shares of
the Fund are held in an account at a Bank or with a Service Agent, such Bank or
Service Agent may require you to place all Fund purchase, exchange and
redemption orders through them. All Banks and Service Agents have agreed to
transmit transaction requests to the Fund's transfer agent or to the Fund's
Distributor. Distribution and shareholder servicing paid by Investor shares
will cause Investor shares to have a higher expense ratio and pay lower
dividends than Class R.
INVESTMENT OBJECTIVE
The Special Growth Fund is a diversified fund that seeks above-average
growth of capital through investment in securities selected solely on the basis
of potential for capital appreciation. Dividend income, if any, is incidental.
MANAGEMENT POLICIES
The Fund places emphasis on smaller companies believed to possess
above-average growth opportunities. Dreyfus will consider factors such as
current and anticipated economic cycles, cyclical changes in the industry and a
company's past performance (using a benchmark of performance that ranges
between 50% and 200% higher than the Standard & Poor's 500 Composite Stock
Price Index) in identifying companies believed to possess the potential for
above-average growth. Investments will also be made in larger, more established
companies which appear to have opportunities for above-average growth. In
addition, the Fund looks for issuers with unique or proprietary products or
services leading to a rapidly growing market share, and for issuers with
well-above-average sales and earnings growth expected for the next several
years.
The Fund normally expects to be substantially invested in common stocks
and securities convertible into common stocks and, to a minor degree, in cash
or U.S. Government Securities. The Fund may, however, temporarily invest a
substantial portion of its assets in U.S. Government Securities and other
high-grade, short-term money market instruments, including repurchase
agreements with respect to such instruments, when, in the opinion of Dreyfus, a
defensive posture is warranted. To this extent, the Fund may not achieve its
investment objective.
The Fund may write covered put and call options on its portfolio
securities and may purchase and write options on stock indexes to hedge its
Fund. The Fund may also lend its portfolio securities and invest up to 20% of
its total assets in foreign securities.
In pursuit of its investment objective, the Fund may purchase
securities carrying above-average risk, including the lack of a significant
operating history, greater volatility in share price and dependence on products
without an established market share. As a result, an investment in the Fund
should not be considered a complete investment program and is considered
suitable only for those investors who are in a position to assume such risks in
search of substantial long-term rewards and without regard to current income.
For additional information concerning certain of the Fund's investment
practices, see the Fund's SAI.
6
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the Fund may
employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. To increase return on Fund securities, the Fund may
lend its portfolio securities to broker-dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market value
of the securities loaned. There may be risks of delay in receiving additional
collateral or in recovering the securities loaned or even a loss of rights to
the collateral should the borrower of the securities fail financially.
Securities loans, however, are made only to borrowers deemed by Dreyfus to be
of good standing and when, in its judgment, the income to be earned from the
loan justifies the attendant risks.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. A
repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand. This
technique offers a method of earning income on idle cash. A risk associated
with repurchase agreements is the failure of the seller to repurchase the
securities as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the open
market. Repurchase agreements with a duration of more than seven days are
considered illiquid securities and are subject to the associated limits
discussed under "Certain Portfolio Securities -- Illiquid Securities."
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may attempt
to reduce the overall level of investment risk of particular securities and
attempt to protect itself against adverse market movements by investing in
futures, options and other derivative instruments. These include the purchase
and writing of options on securities (including index options) and options on
foreign currencies and investing in futures contracts for the purchase or sale
of instruments based on financial indices, including interest rate indices or
indices of U.S. or foreign governments, equity or fixed income securities
("futures contracts"), options on futures contracts, forward contracts and
swaps, and swap-related products such as equity index swap contracts, interest
rate swaps, currency swaps, caps, collars and floors.
The use of futures, options, forward contracts and swaps exposes the
Fund to additional investment risks and transaction costs. If Dreyfus
incorrectly analyzes market conditions or does not employ the appropriate
strategy with respect to these instruments, the Fund could be left in a less
favorable position than if such instruments had not been used. Additional risks
inherent in the use of futures, options, forward contracts and swaps include:
imperfect correlation between the price of futures, options and forward
contracts and movements in the prices of the securities or currencies being
hedged; the possible absence of a liquid secondary market for any particular
instrument at any time; and the possible need to defer closing out certain
hedged positions to avoid adverse tax consequences. The Fund may not purchase
put and call options that are traded on a national stock exchange in an amount
exceeding 5% of its net assets. Further information on the use of futures,
options and other derivative instruments, and the associated risks, is
contained in the SAI.
MASTER/FEEDER OPTION. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's net investable
assets in another investment company having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. Shareholders of the Fund will be given at least 30 days' prior
notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Company's Trustees will
consider, among
7
other things, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies. Although the Fund believes that the
Trustees will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
CERTAIN PORTFOLIO SECURITIES
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities presents
certain risks, including those resulting from fluctuations in currency exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers, and the fact that foreign issuers are not generally subject
to uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is the
possibility of expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes that
would reduce the yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time deposits
and repurchase agreements having maturities longer than seven days. Securities
that have readily available market quotations are not deemed illiquid for
purposes of this limitation (irrespective of any legal or contractual
restrictions on resale.) The Fund may invest in commercial obligations issued
in reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). The Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but that can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Section 4(2) paper is restricted as to disposition under the
federal securities laws, and generally is sold to institutional investors, such
as the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in the Section 4(2) paper, thus
providing liquidity. Rule 144A securities generally must be sold to other
qualified institutional buyers. Determinations as to the liquidity of
investments in Section 4(2) paper and Rule 144A securities will be made by the
Board of Trustees or by Dreyfus pursuant to guidelines established by the Board
of Trustees. The Board or Dreyfus will consider the availability of reliable
price information and other relevant information in making such determinations.
If a particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the percentage
limitation on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and it is
not possible to predict how this market will mature. Investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity to
the extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consistent
with the Fund's investment objective and policies and permissible under the
Investment Company Act of 1940, as amended ("1940 Act"). As a shareholder of
another investment company, the Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in
8
addition to the advisory and other expenses that the Fund bears directly in
connection with its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for above average capital growth and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio turnover
rate of 100% would occur, for example, if all the securities held by the Fund
were replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses that
must be borne directly by the Fund and, thus, indirectly by its shareholders.
In addition, a high rate of portfolio turnover may result in the realization of
larger amounts of short-term capital gains that, when distributed to the Fund's
shareholders, are taxable to them as ordinary income. Nevertheless, securities
transactions for the Fund will be based only upon investment considerations and
will not be limited by any other considerations when Dreyfus deems it
appropriate to make changes in the Fund's assets.
RISK FACTORS
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. The SAI describes all of the Fund's
fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain states, the
Fund may make commitments more restrictive than the investment policies and
restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interest of the
Fund, it may consider terminating sales of its shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
As of November 30, 1994, Dreyfus managed or administered approximately $71
billion in assets for more than 1.9 million investor accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises and
assists in the overall management of the Fund's affairs under an Investment
Management Agreement with the Fund, subject to the overall authority of the
Company's Board of Trustees in accordance with Massachusetts law. Pursuant to
the Investment Management Agreement, Dreyfus provides, or arranges for the
provision by one or more third parties of, investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. As the
Fund's investment manager, Dreyfus manages the Fund by making investment
decisions based on the Fund's investment objectives, policies and restrictions.
The Fund is managed by Guy R. Scott. Mr. Scott is an Officer of Mellon
Bank, a Senior Vice President of The Boston Company Advisors, Inc., and a
Senior Vice President and Equity Portfolio Manager of The Boston Company Asset
Management, Inc. Mr. Scott is a portfolio manager at the Manager and has been
employed by the Manager since October 17, 1994. In addition to managing the
Fund, he is responsible for managing over $280 million among various
institutional accounts. Mr. Scott also serves on the Equity Policy Group
Committee. Previously, Mr. Scott held a position as an Equity Portfolio Manager
for Putnam Advisory, where he was responsible for more than $1 billion in
pension assets. A Chartered Financial Analyst, Mr. Scott earned a B.S. in
Economics and an M.B.A. in Finance from the University of Wisconsin.
9
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Bank Holding Company Act of
1956, as amended. Mellon provides a comprehensive range of financial products
and services in domestic and selected international markets. Mellon is among
the twenty-five largest bank holding companies in the United States based on
total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, Mellon managed
approximately $201 billion in assets as of September 30, 1994, including $76
billion in mutual fund assets. As of September 30, 1994, Mellon, through
various subsidiaries including Dreyfus, provided non-investment services, such
as custodial or administration services, for approximately $659 billion in
assets, including approximately $108 billion in mutual fund assets.
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 1.15% of the value of the Fund's
daily net assets. Dreyfus pays all of the Fund's expenses, except brokerage,
taxes, interest, fees and expenses of the non-interested Trustees (including
counsel fees), Rule 12b-1 fees (if applicable) and extraordinary expenses.
Although Dreyfus does not pay for the fees and expenses of the non-interested
Trustees (including counsel fees), Dreyfus is contractually required to reduce
its investment management fee in an amount equal to the Fund's allocable share
of such fees and expenses. In order to compensate Dreyfus for paying virtually
all of the Fund's expenses, the Fund's investment management fee is higher than
the investment advisory fees paid by most investment companies. Most, if not
all, such companies also pay for a portion of the non-investment advisory
expenses that are not paid by such companies' investment advisers. From time to
time, Dreyfus may waive (either voluntarily or pursuant to applicable state
limitations) a portion of the investment management fees payable by the Fund.
From April 4, 1994, to October 17, 1994, the Fund was advised by Mellon Bank
under the Investment Management Agreement. Prior to April 4, 1994, the Fund was
advised by The Boston Company Advisors, Inc., pursuant to a written agreement
approved by the Company's Trustees. For the fiscal year ended December 31, 1993
the Fund paid its investment adviser, The Boston Company Advisers, Inc.
("Boston Advisers"), (an indirect wholly owned subsidiary of Mellon Bank
Corporation) 0.96% in investment advisory fees under the Fund's previous
investment advisory contract (such contract only covered the provision of
investment advisory and certain specified administrative services). For the
fiscal year ended December 31, 1993 total operating expenses (excluding Rule
12b-1 fees) of the Fund were 1.48%, 1.24% and 1.17% for the Retail,
Institutional and Investment Classes, respectively, of the Fund's average daily
net assets. It is anticipated that the current total operating expenses of the
Fund (excluding Rule 12b-1 fees) will be approximately 1.15% of the Fund's
daily net assets.
In addition, Investor shares may be subject to certain distribution and
service fees. See "Distribution Plan."
Dreyfus may pay the Distributor for shareholder services from Dreyfus's
own assets, including past profits but not including the management fee paid by
the Fund. The Distributor may use part or all of such payments to pay Service
Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions that are affiliated with Dreyfus
or Mellon Bank or that have sold shares of the Fund, if Dreyfus believes that
the quality of the transaction and the commission are comparable to what they
would be with other qualified brokerage firms. From time to time, to the extent
consistent with its investment objective, policies and restrictions, the Fund
may invest in securities of companies with which Mellon Bank has a lending
relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor is a wholly owned sub-
10
sidiary of Institutional Administration Services, Inc., a provider of mutual
fund administration services, the parent company of which is Boston
Institutional Group, Inc.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR--Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian. The Fund's Transfer and Dividend
Disbursing Agent is The Shareholder Services Group, Inc. (the "Transfer
Agent"), a subsidiary of First Data Corporation, One American Express Plaza,
Providence, Rhode Island 02903. Premier Mutual Fund Services, Inc. serves as
the Fund's sub-administrator and, pursuant to a Sub-Administration Agreement,
provides various administrative and corporate secretarial services to each
Fund.
HOW TO BUY FUND SHARES
GENERAL--Investor shares are offered to any investor and may be
purchased through the Distributor or Service Agents that have entered into
Selling Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution. A Retirement Plan is a certain qualified or non-qualified
employee benefit plan or other program, including pension, profit-sharing and
other deferred compensation plans, whether established by corporations,
partnerships, non-profit entities or state and local governments ("Retirement
Plan"). Class R shares may be purchased for a Retirement Plan only by a
custodian, trustee, investment manager or other entity authorized to act on
behalf of such 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.
Shares of the Fund are also available through a servicing network
associated with Mellon Bank, an affiliate of Dreyfus. For more information
about purchasing Fund shares through that network and a Prospectus, call
1-800-548-2868. Please read that Prospectus carefully. Exchange and Shareholder
Services, including the telephone purchase option and minimum and maximum
dollar amounts associated with such services, may vary depending upon the
network through which you purchase Fund shares.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client
of a Service Agent which has made an aggregate minimum initial purchase for its
customers of $2,500. Subsequent investments must be at least $100. However, the
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs
and 403(b)(7) Plans with only one participant is $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a non-working
spousal IRA with a minimum initial investment of $250. The initial investment
must be accompanied by the Fund's Account Application. For full-time or
part-time employees of Dreyfus or any of its affiliates or subsidiaries,
directors of Dreyfus, Board members of a fund advised by Dreyfus including
members of the Company's Board, or the spouse or minor child of any of the
foregoing, the minimum initial investment is $1,000. For full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries who elect to have
a portion of their pay directly deposited into their Fund account, the minimum
initial investment is $50. 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 Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to Retirement Plans.
These limitations apply with respect to participants
11
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.
You may purchase Fund shares by check or wire, or, with respect to
Investor shares only, through the Dreyfus TELETRANSFER Privilege described
below. Checks should be made payable to "The Dreyfus Family of Funds" or, if
for Dreyfus retirement plan accounts, to "The Dreyfus Trust Company,
Custodian." Payments to open new accounts which are mailed should be sent to
The Dreyfus Family of Funds, P.O. Box 9387, Providence, Rhode Island
02940-9387, together with your Account Application indicating which Class of
shares is being purchased. For subsequent investments, your Fund account number
should appear on the check and an investment slip should be enclosed and sent
to The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus retirement plan accounts, both initial and subsequent investments
should be sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Neither initial nor subsequent investments
should be made by third party check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON
ONLY TO A DREYFUS FINANCIAL CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND
AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR THE LOCATION OF THE
NEAREST DREYFUS FINANCIAL CENTER, PLEASE CALL ONE OF THE TELEPHONE NUMBERS
LISTED UNDER "GENERAL INFORMATION."
Wire payments may be made if your bank account is in a commercial bank
that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. To purchase Investor Shares in your name,
immediately available funds may be transmitted by wire to The Bank of New York,
DDA# 8900104317. For wire information with respect to Class R shares, please
call 1-800-548-2868. The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call 1-800-645-6561
after completing your wire payment in order to obtain your Fund account number.
Please include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may obtain further
information about remitting funds in this manner from your bank. All payments
should be made in U.S. dollars and, to avoid fees and delays, should be drawn
only on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial institution
that is an Automated Clearing House ("ACH") member. You must direct the
institution to transmit immediately available funds through the ACH system to
The Bank of New York with instructions to credit your Fund account. The
instructions must specify your Fund account registration and Fund account
number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified 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 one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for participation in a plan
or program shall be made on the date Fund shares are first purchased by or on
behalf of employees participating in such plan or program and on each
subsequent January 1st. All present holdings of shares of funds in the Dreyfus
Family of Funds by Eligible Benefit Plans will be aggregated to determine the
fee payable with respect to each purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The
12
Distributor will pay such fees from its own funds, other than amounts received
from the Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and Taxes"
and the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
NET ASSET VALUE ("NAV") -- An investment portfolio's NAV refers to the
worth of one share. The NAV for Investor and Class R shares is computed by
adding, with respect to such Class of shares, the value of the Fund's
investments, cash, and other assets attributable to that Class, deducting
liabilities of the Class and dividing the result by number of shares of that
Class outstanding. The valuation of assets for determining NAV for the Fund may
be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid and
asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
Pursuant to a determination by the Board of Trustees that such value
represents fair value, debt securities with maturities of 60 days or less held
by the Fund are valued at amortized cost. When a security is valued at
amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument.
NAV is determined on each day that the New York Stock Exchange ("NYSE")
is open (a "business day"), as of the close of business of the regular session
of the NYSE (usually 4 p.m. Eastern Time). Investments and requests to exchange
or redeem shares received by the Fund in proper form before the close of
business on the NYSE (usually 4 p.m., Eastern Time) are effective on, and will
receive the price determined on, that day (except investments made by
electronic funds transfer, which are effective two business days after your
call). Investment, exchange and redemption requests received after the close of
the NYSE are effective on and receive the share price determined on the next
business day.
The NAV of most shares of investment portfolios advised by Dreyfus
(other than money market funds) is published in leading newspapers daily. The
yield of most of The Dreyfus Funds' money market funds is published weekly in
leading financial publications and in most local newspapers. The NAV of any
Fund may also be obtained by calling 1-800-645-6561.
The public offering price of Investor and Class R shares is the net
asset value per share of that Class.
DREYFUS TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES)-- You
may purchase Fund shares (minimum $500 and maximum $150,000 per day) by
telephone if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is an
ACH member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated.
13
If you have selected the Dreyfus TeleTransfer Privilege, you may
request a Dreyfus TeleTransfer purchase of Investor shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the same
class of certain other funds managed or administered by Dreyfus, to the extent
such shares are offered for sale in your state of residence. These funds have
different investment objectives which may be of interest to you. If you desire
to use this service, please call 1-800-645-6561 to determine if it is available
and whether any conditions are imposed on its use. Shareholders are limited to
six exchanges out of the Fund during the calendar year. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Service Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing, or by
telephone. Before any exchange, you must obtain and should review a copy of the
current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current value
of at least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "NO" box on the
Account Application, indicating that you specifically refuse this Privilege.
The telephone exchange privilege may be established for an existing account by
written request, signed by all shareholders on the account, or by a separate
signed Shareholder Services Form, also available by calling 1-800-645-6561. If
you have established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-800-221-4060 or, if calling from overseas,
1-401-455-3306. See "How to Redeem Fund Shares--Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the fund
into which the exchange is made: Telephone Exchange Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and
the dividends and distributions payment option (except for Dreyfus Dividend
Sweep) selected by you.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges of Investor shares into funds
sold with a sales load. If you are exchanging Investor shares into a fund that
charges a sales load, you may qualify for share prices which do not include the
sales load or which reflect a reduced sales load, if the shares of the fund
from which you are exchanging were: (a) purchased with a sales load, (b)
acquired by a previous exchange from shares purchased with a sales load or, (c)
acquired through reinvestment of dividends or other distributions paid with
respect to the foregoing categories of shares. To qualify, at the time of the
exchange you must notify the Transfer Agent or your Service Agent must notify
the Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services" in
the SAI. No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the SEC. The Fund reserves the right to reject any exchange
request in whole
14
or in part. The availability of Fund exchanges may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result in,
a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in terms
of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however a sales load may be charged with respect to exchanges of Investor
shares into funds sold with a sales load. The right to exercise this Privilege
may be modified or canceled by the Fund or the Transfer Agent. You may modify
or cancel your exercise of this Privilege at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. The exchange of shares of one
fund for shares of another is treated for Federal income tax purposes as a sale
of the shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize, or an exchange on behalf of a Retirement
Plan which is not tax exempt may result in, a taxable gain or loss. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain an Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-Automatic Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the bank
account designated by you. At your option, the bank account designated by you
will be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on both
days. Only an account maintained at a domestic financial institution which is
an ACH member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561. You
may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares of
the same class of certain other funds in the Dreyfus Family of Funds of which
you are an investor. Shares of the other fund will be purchased at the
then-current net asset value; however, a sales load may be charged with respect
to investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share
15
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you
to transfer electronically on the payment date 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 ACH
member may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these Privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dreyfus Dividend Options Form.
Enrollment in or cancellation of these Privileges is effective three business
days following receipt. These Privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or
terminate these Privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. You should
consider whether Direct Deposit of your entire payment into a fund with
fluctuating NAV, such as the Fund, may be appropriate for you. To enroll in
Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you desire
to include in this Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your participation in
this privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your employer's
payroll department. Your employer must complete the reverse side of the form
and return it to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. You may obtain the necessary authorization form by calling
1-800-645-6561. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the sole
responsibility of the your employer, not the Distributor, Dreyfus, the Fund,
the Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not eligible
for this Privilege.
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.
Particular 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
16
Automatic Withdrawal Plan. An application for the Automatic Withdrawal Plan can
be obtained by calling 1-800-645-6561. The Automatic Withdrawal Plan may be
ended at any time by the shareholder, the Fund or the Transfer Agent. Shares
for which certificates have been issued may not be redeemed through the
Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and
profit-sharing plans, including Keogh
Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k) Salary Reduction
Plans and 403(b)(7) Plans. Plan support services also are available. You can
obtain details on the various plans by calling the following numbers toll free:
for Keogh Plans, please call 1-800-358-5566; for IRAs and IRA "Rollover
Accounts," please call 1-800-645-6561; for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When a
request is received in proper form, the Fund will redeem the shares at the next
determined net asset value as described below. 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 Service Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Service Agents or other institutions may charge their clients
a nominal 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 NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS
TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE
UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS
TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE
TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE
ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will
not be redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account is
$500 or less and remains so during the notice period.
PROCEDURES--You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, the Wire Redemption Privilege, the
Telephone Redemption Privilege, or, for Investor shares only, through the
Dreyfus TeleTransfer Privilege. Other redemption procedures may be in effect
for
17
clients of certain Service Agents and institutions. The Fund makes available to
certain large institutions the ability to issue redemption instructions through
compatible computer facilities.
You may redeem or exchange Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select Teletransfer
Privilege or telephone exchange privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Service 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 telephone 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.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. These requests will be
forwarded to the Fund and will be processed only upon receipt thereby. For the
location of the nearest financial center, please call the telephone number
listed under "General Information." Redemption requests must be signed by each
shareholder, including each owner of a joint account, and each signature must
be guaranteed. The Transfer Agent has adopted standards and procedures pursuant
to which signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank
of the Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your bank
is not a member. To establish the Wire Redemption Privilege, you must check the
appropriate box and supply the necessary information on the Fund's Account
Application or file a Shareholder Services Form with the Transfer Agent. You
may direct that redemption proceeds be paid by check (maximum $150,000 per day)
made out to the owners of record and mailed to your address. Redemption
proceeds of less than $1,000 will be paid automatically by check. Holders of
jointly registered Fund or bank accounts may have redemption proceeds of only
up to $250,000 wired within any 30-day period. You may telephone redemption
requests by calling 1-800-221-4060 or, if calling from overseas,
1-401-455-3306. The Fund reserves the right to refuse any redemption request,
including requests made shortly after a change of address, and may limit the
amount involved or the number of such requests. This Privilege may be modified
or terminated at any time by the Transfer Agent or the
18
Fund. The Fund's SAI sets forth instructions for transmitting redemption
requests by wire. Shares held under Keogh Plans, IRAs or other retirement
plans, and shares for which certificates have been issued, are not eligible for
this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfer
Agent. The redemption proceeds will be paid by check and mailed to your
address. You may telephone redemption instructions by calling 1-800-221-4060
or, if calling from overseas, 1-401-455-3306. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at anytime by the
Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE--INVESTOR SHARES. You may redeem Fund
shares (minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between your Fund account and the bank account designated
in one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus TeleTransfer
Privilege for transfer to their bank account only up to $250,000 within any
30-day period. The Fund reserves the right to refuse any request made by
telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TeleTransfer Privilege, you may
request a Dreyfus TeleTransfer redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
DISTRIBUTION PLAN
(INVESTOR SHARES ONLY)
Investor shares are subject to a Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The Investor shares
of the Fund bear some of the cost of selling those shares under the Plan. The
Plan allows the Fund to spend annually up to 0.25% of its average daily net
assets attributable to Investor shares to compensate Dreyfus Service
Corporation, an affiliate of Dreyfus, for shareholder servicing activities and
the Distributor for shareholder servicing activities and expenses primarily
intended to result in the sale of Investor shares of the Fund. The Plan allows
the Distributor to make payments from the Rule 12b-1 fees it collects from the
Fund to compensate Service Agents that have entered into Selling Agreements
("Agreements") with the Distributor. Under the Agreements, the Service Agents
are obligated to provide distribution related services with regard to the Fund
and/or shareholder services to the Service Agent's clients that own Investor
shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. From time to time, the Service Agents,
the Distributor and the Fund may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
19
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Service Agents. A Service Agent entitled to
receive compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares dividends from its net investment income quarterly
and distributes any net long-term capital gains on an annual basis, but it may
make distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized gains unless capital loss carryovers, if any, have been utilized or
have expired. Investors other than qualified Retirement Plans may choose
whether to receive dividends and other distributions in cash or to reinvest
them in additional Fund shares; dividends and other distributions paid to
qualified Retirement Plans are reinvested automatically in additional Fund
shares at NAV. All expenses are accrued daily and deducted before declaration
of dividends to investors. Dividends paid by each Class will be calculated at
the same time and in the same manner and will be in the same amount, except
that the expenses attributable solely to a particular Class will be borne
exclusively by that Class. Investor shares will receive lower per share
dividends than Class R shares because of the higher expenses borne by the
Investor Class. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated investment
company" under the Code so long as such qualification is in the best interests
of its shareholders. Such qualification will relieve the Fund of any liability
for Federal income tax to the extent its earnings are distributed in accordance
with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund will be taxable to U.S. shareholders,
including certain non-qualified Retirement Plans, as ordinary income whether
received in cash or reinvested in Fund shares. Distributions from the Fund's
net realized long-term capital gains will be taxable to such shareholders as
long-term capital gains for Federal income tax purposes, regardless of how long
the shareholders have held their Fund shares and whether such distributions are
received in cash or reinvested in Fund shares. The net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and other distributions also may be subject to state
and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund to a foreign investor generally are subject to
U.S. withholding tax at the rate of 30%, unless the foreign investor claims the
benefit of a lower rate specified in a tax treaty. Distributions from net
realized long-term capital gains paid by the Fund to a foreign investor, as
well as the proceeds of any redemptions from a foreign investor's account,
regardless of the extent to which gain or loss may be realized, generally will
not be subject to U.S. withholding tax. However, such distributions may be
subject to backup withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and distributions
from net realized, long-term capital gains, if any, paid during the year.
Dividends paid by the Fund to qualified Retirement Plans ordinarily
will not be subject to taxation until the proceeds are distributed from the
Retirement Plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified Retirement Plans, except those
representing returns of non-deductible contributions thereto, will be taxable
as ordinary income and, if made
20
prior to the time the participant reaches age 591/2, generally will be subject
to an additional tax equal to 10% of the taxable portion of the distribution.
If the distribution from such a Retirement Plan (other than certain
governmental or church plans) for any taxable year following the year in which
the participant reaches age 701/2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian
of such a Retirement Plan will be responsible for reporting distributions from
such plans to the IRS. Moreover, certain contributions to a qualified
Retirement Plan in excess of the amounts permitted by law may be subject to an
excise tax.
With respect to individual investors and certain non-qualified
Retirement Plans, Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized long-term capital gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may notify
the Fund to institute backup withholding if the IRS determines a shareholder's
TIN is incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account and may be claimed as a credit on the record owner's
Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income and
capital gains.
You should consult your tax advisers regarding specific questions as to
Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by the
Fund during the measuring period were reinvested in shares of the same Class.
These figures also take into account any applicable service and distribution
fees. As a result, at any given time, the performance of the Investor Class
should be expected to be lower than that of Class R. Performance for each Class
will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial payment
of $1,000 and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and other
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, or for shorter periods depending upon the length of time
during which the Fund has operated. Computations of average annual total return
for periods of less than one year represent an annualization of the Fund's
actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income and
principal changes for a specified period and dividing by the net asset value
(or maximum
21
offering price in the case of Investor shares) per share at the beginning of
the period. Advertisements may include the percentage rate of total return or
may include the value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return. Total
return also may be calculated by using 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 Investor shares.
The Fund may also advertise the yield on a Class of shares. The Fund's
yield is calculated by dividing a Class of shares' annualized net investment
income per share during a recent 30-day (or one month) period by the maximum
public offering price per Class of such share on the last day of that period.
Since yields fluctuate, yield data cannot necessarily be used to compare an
investment in a Class of shares with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, Standard and Poor's 500 Composite Stock Price Index, the Consumer
Price Index, and the Dow Jones Industrial Average. Performance rankings as
reported in CHANGING TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL
STREET JOURNAL, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE,
MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE,
BARRON'S and similar publications may also be used in comparing the Fund's
performance. Furthermore, the Fund may quote its shares' total returns and
yields in advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total return for periods
other than those required to be shown or cumulative performance data. The Fund
may advertise a quotation of yield or other similar quotation demonstrating the
income earned or distributions made by the Fund.
GENERAL INFORMATION
The Company was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 under the name The
Laurel Funds Trust, and changed its name to The Dreyfus/Laurel Funds Trust on
October 17, 1994. The Company is registered with the SEC under the 1940 Act, as
a managed investment company. The Fund's shares are classified into two
classes--Investor shares and Class R shares. The Company's Agreement and
Declaration of Trust permits the Board of Trustees to create an unlimited
number of investment portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of all funds
(and Classes thereof) vote together as a single Class, except as to any matter
for which a separate vote of any fund or Class is required by the 1940 Act, and
except as to any matter which affects the interests of one or more particular
funds or Classes, in which case only the shareholders of the affected fund or
Classes are entitled to vote, each as a separate Class. Only holders of
Investor shares will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution Plan relating to that Class.
At December 6, 1994, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the Fund's
outstanding voting shares, and is deemed, under the 1940 Act, to be a
controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election
22
of Trustees 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
purposes of removing a Trustee from office and for any other purpose. Fund
shareholders may remove a Trustee by the affirmative vote of a majority of the
Fund's outstanding voting shares. In addition, the Board of Trustees will call
a meeting of shareholders for the purpose of electing Trustees if, at any time,
less than a majority of the Trustees then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing
to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York, 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
23
Copyright 1994, Dreyfus Service Corporation 322/722P1121994
Dreyfus Special Growth Fund
Investor and Class R Shares
December 19, 1994
DREYFUS SPECIAL GROWTH FUND is a diversified equity investment portfolio
seeking above-average capital growth without regard to income through in-
vestments principally in securities of issuers thought to have significant
growth potential.
THIS PROSPECTUS describes Dreyfus Special Growth Fund (the "Fund") of The
Dreyfus/Laurel Funds Trust (formerly The Laurel Funds Trust and previously
The Boston Company Fund), an open-end management investment company that
is part of The Dreyfus Family of Funds. This Prospectus describes two
classes of shares--Investor Shares and Class R Shares (collectively, the
"Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional infor-
mation about the Fund is contained in a Statement of Additional Informa-
tion (the "SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same
date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
In addition to this Fund, The Dreyfus Family of Funds also offer other
funds that provide investment opportunities for you in the equity, fixed
income and money markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868.
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSI-
BLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE SUM-
MARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary 5
Financial Highlights 6
Alternative Purchase Methods 9
Investment Objective and Policies 9
Other Investment Policies and Risk Factors 10
HOW TO DO BUSINESS WITH US
Special Shareholder Services 13
Investor Line 14
How to Invest in the Fund 14
By Mail 14
By Telephone 15
By Wire 15
By Automatic Monthly Investments 15
By Direct Deposit 15
By In-Kind Purchases 16
When Share Price is Determined 16
Additional Information About Investments 16
How to Exchange Your Investment From One Fund to Another 17
By Telephone 17
By Mail 17
Additional Information About Exchanges 18
How to Redeem Shares 18
By Telephone 19
By Mail 19
By Automated Withdrawal Program 19
Redemption Proceeds 20
Additional Information About Redemptions 20
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan 21
How to Transfer an Investment to a Dreyfus Family of
Funds' Retirement Plan 21
OTHER INFORMATION
Share Price 21
Performance Advertising 22
Distributions 23
Taxes 24
Other Services 26
Further Information About The Fund 26
The Dreyfus/Laurel Funds Trust 26
Management 27
Distribution Plan (Investor Shares Only) 29
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various
costs and expenses that you, as a Shareholder, will bear directly or indi-
rectly in connection with an investment in the Investor or Class R Shares
of the Fund. (See "Management.")
<TABLE>
<CAPTION>
Investor Class R
Shares Shares
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Management Fee 1.15% 1.15%
12b-1 Fee* 0.25% none
Other Expense** 0.00% 0.00%
Total Fund Operating Expenses 1.40% 1.15%
EXAMPLES
You would pay the following 1 year $ 14 $ 12
on a $1,000 investment, 3 years $ 44 $ 37
assuming (1) a 5% annual return 5 years $ 77 $ 63
and (2) redemption at the end of 10 years $168 $140
each time period:
<FN>
* See "Distribution Plan (Investor Shares Only)" for a description of
the Fund's Plan of Distribution for Investor Shares.
** Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is contractually required
to reduce its Management Fee in an amount equal to the Fund's alloca-
ble portion of such fees and expenses, which are estimated to be
0.02% of the Fund's net assets. (See "Management.")
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.
The Fund understands that Premier Mutual Fund Services, Inc., ("Pre-
mier") and banks, securities brokers or dealers and other financial in-
stitutions (including Mellon Bank and its affiliates) ("Agents") may
charge fees to their clients who are owners of the Fund's Investor
Shares for various services provided in connection with a client's ac-
count. These fees would be in addition to any amounts received by an
Agent under its agreement with Premier. The agreement requires each
Agent to disclose to its clients any compensation payable to such Agent
by Premier and any other compensation payable by the client for various
services provided in connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule
12b-1 fees than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the National Asso-
ciation of Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Class R Share
outstanding through each fiscal year and the six months ended June 30,
1994 (unaudited) and should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report dated
December
DREYFUS SPECIAL GROWTH FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD(1)
<TABLE>
<CAPTION>
Six Months
Ended Year Year Year
6/30/94 Ended Ended Ended
(unaudited) 12/31/93+++ 12/31/92 12/31/91
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 17.97 $ 16.45 $ 14.59 $13.56
Income from investment opera-
tions:
Net investment income/(loss)# (0.05) (0.20) (0.10) (0.05)
Net realized and unrealized
gain/(loss) on investments (2.03) 3.51 3.77 3.90
Total from investment operations (2.08) 3.31 3.67 3.85
Less distributions:
Distributions from net invest-
ment income -- -- -- --
Distributions in excess of net
investment income -- -- (0.19) --
Distributions from net realized
capital gains -- (1.79) (1.62) (2.82)
Total Distributions -- (1.79) (1.81) (2.82)
Net asset value, end of period $ 15.89 $ 17.97 $ 16.45 $14.59
Total Return+ (11.57)% 20.01% 26.19% 29.22%
Ratios/supplemental data:
Net assets, end of period (in
000's) $79,733 $83,879 $64,071 $41,522
Ratio of operating expenses to
average net assets++ 1.54%** 1.73% 1.57% 1.70%
Ratio of net investment in-
come/(loss) to average net as-
sets (.53)%** (1.09)% (0.71)% (0.34)%
Portfolio turnover rate++++ 69% 94% 112% 141%
<FN>
(1) On February 1, 1993 existing shares of the Fund were designated the
Retail Class and the Fund began offering the Institutional Class and
the Investment Class of Shares. Effective April 4, 1994 the Retail
and Institutional classes of Shares were reclassified as a single
class of Shares known as Investor Shares. The amounts shown for the
period ended June 30, 1994, were calculated using the performance of
a Retail Share outstanding from January 1, 1994, to April 3, 1994,
and the performance of an Investor Share outstanding from April 4,
1994 to June 30, 1994. The Financial Highlights for the year ended
December 31, 1993 and prior periods are based upon a Retail Share
outstanding.
** Annualized.
+ Total return represents aggregate total returns for the periods indi-
cated.
++ Without the voluntary waiver of fees and reimbursement of expenses by
the investment adviser the annualized ratio of expenses to average
net assets for the six months ended June 30, 1994 and year ended De-
cember 31, 1993 would have been 1.54% and 1.79%, respectively.
</TABLE>
31, 1993 and Semi-Annual Report (unaudited) dated June 30, 1994, each of
which is incorporated by reference in the SAI. The financial statements
included in the Fund's Annual Report for the year ended December 31, 1993
have been audited by Coopers & Lybrand L.L.P., independent accountants,
whose report appears in the Fund's Annual Report.
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
12/31/90+++ 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85 12/31/84
<S> <C> <C> <C> <C> <C> <C>
$ 14.28 $ 14.27 $ 12.02 $ 17.21 $ 20.95 $ 15.87 $ 18.05
0.03 0.14 0.37 0.63 0.13 0.36 0.38
(0.72) 2.49 2.22 (0.91) 1.40 5.07 (2.36)
(0.69) 2.63 2.59 (0.28) 1.53 5.43 (1.98)
(0.03) (0.25) (0.34) (0.81) (0.31) (0.35) (0.09)
-- -- -- -- -- -- --
-- (2.37) -- (4.10) (4.96) -- (0.11)
(0.03) (2.62) (0.34) (4.91) (5.27) (0.35) (0.20)
$ 13.56 $ 14.28 $ 14.27 $ 12.02 $ 17.21 $ 20.95 $ 15.87
4.84% 18.83% 21.49% (3.81)% 7.66% 34.80% (11.09)%
$43,591 $39,759 $35,227 $30,678 $35,860 $53,562 $27,646
1.62% 1.72% 1.58% 1.49% 1.32% 1.35% 1.50%
0.19% 0.82% 2.70% 3.25% 1.16% 1.96% 2.38%
222% 184% 180% 322% 192% 257% 261%
<FN>
+++ Per share amounts have been calculated using the monthly average
share method.
++++ In accordance with the Securities and Exchange Commission's July 1985
rules amendment, the rate for 1986 and later periods include U.S.
Government long-term securities which were excluded from the calcula-
tions in prior years.
# Without the voluntary waiver of fees and/or reimbursement of the ex-
penses by the investment adviser, net investment loss per share for
the six months ended June 30, 1994 and year ended December 31, 1993
would have been $(0.05) and $(0.21), respectively.
</TABLE>
DREYFUS SPECIAL GROWTH FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD(1)
<TABLE>
<CAPTION>
Six Months Period
Ended Ended
6/30/94 12/31/93*+++
(unaudited)
<S> <C> <C>
Net asset value, beginning of period $ 18.06 $ 17.31
Income from investment operations:
Net investment loss# (0.01) (0.10)
Net realized and unrealized gain/(loss) on
investments (2.04) 2.64
Total from investment operations (2.05) 2.54
Distributions from net realized capital gains -- (1.79)
Net asset value, end of period $ 16.01 $ 18.06
Total Return+ (11.35)% 15.78%
Ratios/Supplemental data:
Net assets, end of period (in 000's) $11,464 $14,941
Ratio of operating expenses to average net assets 1.21%** 1.19%**++
Ratio of net investment loss to average net assets (0.21)%** (0.55)%**
Portfolio turnover 69% 94%
<FN>
(1) Effective April 4, 1994 the Investment class of Shares were reclassi-
fied as the Trust class of Shares. The amounts shown for the period
ended June 30, 1994, were calculated using the performance of an In-
vestment Share outstanding from January 1, 1994, to April 3, 1994,
and the performance of a Trust Share outstanding from April 4, 1994
to June 30, 1994. On October 17, 1994, Trust Shares were redesignated
Class R Shares.
* The Fund commenced selling Investment shares on February 1, 1993.
** Annualized.
+ Total return represents aggregate total return for the period indi-
cated.
++ Without the voluntary waiver of fees and reimbursement of expenses by
the investment adviser, the annualized ratio of expenses to average
net assets for the period ended December 31, 1993 would have been
1.25%.
+++ Per share amounts have been calculated using the monthly average share
method.
# Without the voluntary waiver of fees and/or reimbursement of expenses
by the investment adviser, net investment loss for the six months
ended June 30, 1994 and the period ended December 31, 1993 would have
been $(0.01) and $(0.11), respectively.
</TABLE>
DREYFUS SPECIAL GROWTH FUND
ALTERNATIVE PURCHASE METHODS
Investor Shares are also offered through a servicing network associated
with The Dreyfus Service Corporation, (the "Manager") pursuant to a sepa-
rate Prospectus. For more information and a Prospectus relating to shares
offered through that network, call 1-800-645-6561. Please read that Pro-
spectus carefully. Exchange and shareholder services vary depending upon
the network through which you purchase your Fund shares.
INVESTMENT OBJECTIVE AND POLICIES
Dreyfus Special Growth Fund is a diversified fund that seeks above-average
growth of capital through investment in securities selected solely on the
basis of potential for capital appreciation. Dividend income, if any, is
incidental.
The Fund places emphasis on smaller companies believed to possess above-
average growth opportunities. The Manager, will consider factors such as
current and anticipated economic cycles, cyclical changes in the industry
and a company's past performance (using a benchmark of performance that
ranges between 50% and 200% higher than the Standard & Poor's 500 Compos-
ite Stock Price Index) in identifying companies believed to possess the
potential for above-average growth. Investments will also be made in
larger, more established companies which appear to have opportunities for
above- average growth. In addition, the Fund looks for issuers with unique
or proprietary products or services leading to a rapidly growing market
share, and for issuers with well-above-average sales and earnings growth
expected for the next several years.
The Fund normally expects to be substantially invested in common stocks
and securities convertible into common stocks and, to a minor degree, in
cash or U.S. Government Securities. The Fund may, however, temporarily in-
vest a substantial portion of its assets in U.S. Government Securities and
other high-grade, short-term money market instruments, including repur-
chase agreements with respect to such instruments, when, in the opinion of
the Manager, a defensive posture is warranted. To this extent, the Fund
may not achieve its investment objective.
The Fund may write covered put and call options on its portfolio securi-
ties and may purchase and write options on stock indexes to hedge its
Fund. The Fund may also lend its portfolio securities and invest up to 20%
of its total assets in foreign securities. (See "Other Investment Poli-
cies.")
In pursuit of its investment objective, the Fund may purchase securities
carrying above-average risk, including the lack of a significant operating
history, greater volatility in share price and dependence on products
without an established market share. As a result, an investment in the
Fund should not be considered a complete investment program and is consid-
ered suitable only for those investors who are in a position to assume
such risks in search of substantial long-term rewards and without regard
to current income. For additional information concerning certain of the
Fund's investment practices, see the Fund's SAI.
OTHER INVESTMENT POLICIES AND RISK FACTORS
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities pre-
sents certain risks, including those resulting from fluctuations in cur-
rency exchange rates, revaluation of currencies, future political and eco-
nomic developments and the possible imposition of currency exchange block-
ages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and re-
quirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices
more volatile than those of securities of comparable domestic issuers. In
addition, with respect to certain foreign countries, there is the possi-
bility of expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes
that would reduce the yield on such securities.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may attempt
to reduce the overall level of investment risk of particular securities
and attempt to protect the Fund against adverse market movements by in-
vesting in futures, options and other derivative instruments. These in-
clude the purchase and writing of options on securities (including index
options) and options on foreign currencies and investing in futures con-
tracts for the purchase or sale of instruments based on financial indices,
including interest rate indices or indices of U.S. or foreign government,
equity or fixed income securities ("futures contracts"), options on fu-
tures contracts, forward contracts and swaps and swap- related products
such as equity swap contracts, interest rate swaps, currency swaps, caps,
collars and floors.
The use of futures, options, forward contracts and swaps exposes the Fund
to additional investment risks and transaction costs. Successful use of
futures contracts by the Fund is subject to the ability of the Manager to
correctly predict movements in the direction of interest rates. If the
Manager incorrectly analyzes market conditions or does not employ the ap-
propriate strategy with respect to these instruments, the Fund could be
left in a less favorable position. Additional risks inherent in the use of
futures, options, forward contracts and swaps include: imperfect correla-
tion between the price of futures, options and forward contracts and move-
ments in the prices of the securities or currencies being hedged; the pos-
sible absence of a liquid secondary market for any particular instrument
at any time; and the possible need to defer closing out certain hedged po-
sitions to avoid adverse tax consequences. The Fund may not purchase put
and call options which are traded on a national stock exchange in an
amount exceeding 5% of its net assets. Further information on the use of
futures, options and other derivative instruments, and the associated
risks is contained in the SAI.
ILLIQUID SECURITIES. The Fund will not knowingly invest more that 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale). The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and Rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion and other relevant information in making such determinations. If a
particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the per-
centage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buy-
ers become, for a time, uninterested in purchasing these securities.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
Investment Company Act of 1940, as amended (the "1940 Act"). As a share-
holder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement trans-
actions in pursuit of its investment objective. A repurchase agreement in-
volves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from
the Fund at a specified price and date or upon demand. This technique of-
fers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
SECURITIES LENDING. To increase return on Fund securities, the Fund may
lend its portfolio securities to broker-dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market
value of the securities loaned. There may be risks of delay in receiving
additional collateral or in recovering the securities loaned or even a
loss of rights in the collateral should the borrower of the securities
fail financially. However, loans are made only to borrowers deemed by the
Manager to be of good standing and when, in its judgment, the income to be
earned from the loan justifies the attendant risks.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds Trust may in the future
seek to achieve the Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment ob-
jective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and not for short-term trading
profits, in the past the portfolio turnover rate of the Fund has exceeded
100% and may exceed 100% in the future. A portfolio turnover rate of 100%
would occur, for example, if all the securities held by the Fund were re-
placed once in a period of one year. In past years the Fund's rate of
portfolio turnover exceeded that of certain other mutual funds with the
same investment objective. A higher rate of portfolio turnover (100% or
greater) involves correspondingly greater brokerage commissions and other
expenses which must be borne directly by the Fund and, thus, indirectly by
its shareholders. In addition, a high rate of portfolio turnover may re-
sult in the realization of larger amounts of short-term capital gains
which, when distributed to the Fund's shareholders, are taxable to them as
ordinary income. (See "Distributions" and "Taxes.") Nevertheless, security
transactions for the Fund will be based only upon investment consider-
ations and will not be limited by any other considerations when the Man-
ager deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies, restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of the Fund to employ such procedures may subject it to liability
for any loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Dreyfus Family of Funds' investment portfolios and services, (2) lis-
ten to net asset values, yields and total return figures, and (3) talk
with a customer service representative during normal business hours. For
more information about direct access using a Touch-Tone phone, please con-
tact The Dreyfus Family of Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and In-
vestor Shares of the Fund. Class R Shares are sold primarily to bank trust
departments and other financial service providers (including Mellon Bank
and its affiliates) ("Banks") acting on behalf of customers having a qual-
ified trust or investment account or relationship at such institution. In-
vestor Shares are primarily sold to retail investors by Premier and by
Agents that have entered into a Shareholder Servicing and Sales Support
Agreement with Premier. Once an investor has established an account, addi-
tional purchases may, in certain cases, be made directly through the
Fund's transfer agent. If Shares of the Fund are held in an account at a
Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit your transaction requests to the Fund's
transfer agent or to Premier. You may diversify your investments by choos-
ing a combination of investment portfolios offered by The Dreyfus Family
of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in The Dreyfus Family
of Funds by wiring funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Dreyfus Funds 080071.
(2) Be sure to specify on the wire:
(a) The Dreyfus Funds.
(b) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(c) Your name.
(d) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Dreyfus Family
of Funds, One Exchange Place, Boston, Massachusetts 02109 for more infor-
mation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value. Call 1-800-
548-2868 or write The Dreyfus Family of Funds, One Exchange Place, Boston,
Massachusetts 02109 for more information or a Direct Deposit authorization
form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able market value, must be liquid and must not be subject to restrictions
on resale. The market value of any securities exchanged, plus any cash,
must be at least equal to $25,000. Shares purchased in exchange for secu-
rities generally cannot be redeemed for fifteen days following the ex-
change in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative net asset value of
the Shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securi-
ties become the property of the Fund, along with the securities. Call
1-800-548-2868 or write The Dreyfus Family of Funds, One Exchange Place,
Boston, Massachusetts 02109 for more information about "in-kind" pur-
chases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of
the New York Stock Exchange ("NYSE") on each day that the NYSE is open (a
"business day"). Investments and requests to exchange or redeem Shares re-
ceived by the Fund before the close of regular trading on the NYSE (usu-
ally 4 p.m., Eastern time) are effective on, and will receive the price
determined, that day (except investments made by electronic funds transfer
which are effective two business days after your call). Investment, ex-
change or redemption requests received after the close of the NYSE are ef-
fective on, and receive the first Share price determined, the next busi-
ness day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. The Fund may suspend the offering of
Shares of any class of the Fund and reserves the right to vary initial and
subsequent investment minimums. Subsequent investments to purchase addi-
tional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Fund reserves the right to change such
minimum from time to time. Any time the Shares of the Fund held in an ac-
count have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), a notification may be sent advising you of the
need to either make an investment to bring the value of the Shares held in
the account up to $1,000 ($500) or to establish an automatic monthly in-
vestment to purchase additional Shares. If the investment is not made or
the automatic monthly investment is not established within 60 days from
the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address
of record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund shares for shares of the same class of certain
other funds advised by the Manager and that were previously advised by
Mellon Bank. As noted below, exchanges from any one fund may be limited in
any one calendar year. In addition, the Shares being exchanged and the
Shares of each fund being acquired must have a current value of at least
$100 and otherwise meet the minimum investment requirement of the fund
being acquired. Call the Investor Line for additional information and a
prospectus describing other investment portfolios offered by The Dreyfus
Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calen-
dar year. The Fund reserves the right to make exceptions to an ex-
change limitation from time to time. An exchange limitation will not
apply to the exchange of Shares of a money market fund, the Shares of
any of the funds exchanged pursuant to an Automatic Withdrawal Pro-
gram, and to Shares held in 403(b) accounts.
(3) Shareholders are limited to six exchanges out of the Fund during the
calendar year. This limit is intended to protect the Fund against po-
tential disruptions in portfolio management resulting from market
timing activity, while enabling shareholders to make changes in their
investment program when market conditions or personal circumstances
warrant.
(4) The Shares being acquired must be qualified for sale in your state of
residence.
(5) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(6) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(7) An exchange is based on the next calculated net asset value per Share
of each fund after receipt of your exchange order.
(8) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(9) An exchange of the Fund's Shares is, for federal income tax purposes,
a sale of the Shares, on which you may realize a taxable gain or
loss.
(10) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Shareholders will be given 60 days notice prior to any material changes in
the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.") The Fund imposes no
charges when Shares are redeemed. Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Dreyfus Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and
request the appropriate forms for:
* IRAs.
* 403(b) plans for employees of public school systems and non-profit or-
ganizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS'
RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Dreyfus Family of Funds to
transfer funds from an existing non-retirement Dreyfus Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Dreyfus
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Investor and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash, and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Funds Trust's Board of
Trustees that such value represents fair value, the securities held in a
money market fund and the debt securities with maturities of 60 days or
less held by the Fund are valued at amortized cost. When a security is
valued at amortized cost, it is valued at its cost when purchased, and
thereafter by assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the
market value of the instrument.
The NAV of each class of Shares of most of The Dreyfus Family of Funds'
investment portfolios other than money market funds is published in lead-
ing newspapers daily. The yield of each class of Shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the total return on a class of
Shares. Total return figures are based on historical earnings and are not
intended to indicate future performance. The "total return" of a class of
Shares of the Fund may be calculated on an average annual total return
basis or a cumulative total return basis. Average annual total return re-
fers to the average annual compounded rates of return on a class of Shares
over one-, five-, and ten-year periods or the life of the Fund (as stated
in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the invest-
ment, assuming the reinvestment of all dividends and capital gains distri-
butions. Cumulative total return reflects the total percentage change in
the value of the investment over the measuring period, again assuming the
reinvestment of all dividends and capital gains distributions.
Total return quotations will be computed separately for each class of the
Fund's Shares. Because of the difference in the fees and expenses borne by
Class R and Investor Shares of the Fund, the return on Class R Shares will
generally be higher than the return on Investor Shares. Any fees charged
by a Bank or Agent directly to its customers' account in connection with
investments in the Fund will not be included in calculations of total re-
turn. The Fund's Annual Report and Semi-Annual Report contain additional
performance information and is available upon request without charge from
the Fund's distributor or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, Standard & Poor's 500 Composite Stock Price Index,
the Consumer Price Index, and the Dow Jones Industrial Average. Perfor-
mance rankings as reported in Changing Times, Business Week, Institutional
Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load Inves-
tor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and World
Report, Forbes, Fortune, Barron's and similar publications may also be
used in comparing the Fund's performance. Furthermore, the Fund may quote
its Investor and Class R Shares' returns in advertisements or in share-
holder reports. The Fund may also advertise non- standardized performance
information, such as total return, for periods other than those required
to be shown or cumulative performance data.
DISTRIBUTIONS
The Fund declares dividends from its net investment income four times
yearly and distributes any net long-term capital gains on an annual basis.
The Board of Trustees may elect not to distribute capital gains in whole
or in part to take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per Share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will not
begin to accrue dividends until the following business day. Redemption or-
ders effected on any particular day will receive all dividends declared
through the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment com-
pany under the Code so that it will be relieved of federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
All or a portion of the dividends paid by the Fund may be eligible for the
dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S. cor-
porations. However, dividends received by a corporate shareholder and de-
ducted by it pursuant to the dividends-received deduction are subject in-
directly to the alternative minimum tax.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant reaches age 70 1/2 is less than the "minimum required distribution"
for that taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other federal, state or local consider-
ations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly. You may also request a statement of your account activity at
any time. Carefully review such confirmation statements and account state-
ments and notify the Fund immediately if there is an error. From time to
time, to reduce expenses, only one copy of the Fund's shareholder reports
(such as the Fund's Annual Report) may be mailed to your household. Please
call the Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS TRUST.
The Dreyfus/Laurel Funds Trust offers Shares of beneficial interest of
separate investment portfolios without par value (each a "fund"). The Bos-
ton Company Fund was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 and changed
its name to The Laurel Funds Trust, and then to the Dreyfus/Laurel Funds
Trust on October 17, 1994. The Dreyfus/Laurel Funds Trust is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The Trustees have authorized Shares of the Fund to be
issued in two classes--Investor Shares and Class R Shares.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular fund or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
At December 6, 1994, Mellon Bank Corporation, the Manager's parent, owned
of record through its direct and indirect subsidiaries more than 25% of
The Dreyfus/Laurel Funds Trust's outstanding voting shares, and is deemed
under the 1940 Act, to be a controlling shareholder.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Funds
Trust are managed under the direction of its Trustees. The SAI contains
the names and general background information concerning the Trustees and
officers of The Dreyfus/Laurel Funds Trust.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on this
investment objective, policies and restrictions, and is paid a fee as de-
scribed in this Prospectus. The Fund continues to be managed by the same
individual who was the portfolio manager of the Fund prior to the transfer
of the Investment Management Agreement.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of 1.15% of the Fund's average
daily net assets less certain expenses described below. The Manager pays
all of the expenses of the Fund except brokerage, taxes, interest, fees,
expenses of the non-interested Trustees (including counsel fees) and ex-
traordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Man-
ager is contractually required to reduce its investment management fee in
an amount equal to the Fund's allocable share of such expenses. In order
to compensate the Manager for paying virtually all of the Fund's expenses,
the Fund's investment management fee is higher than the investment advi-
sory fees paid by most investment companies. Most, if not all, such compa-
nies also pay for additional non-investment advisory expenses that are not
paid by such companies' investment adviser. From time to time, the Manager
may waive (either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the fiscal
year ended December 31, 1993 the Fund paid its investment adviser, The
Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect wholly-
owned subsidiary of Mellon Bank Corporation) 0.96% in investment advisory
fees under the Fund's previous investment advisory contract (such contract
only covered the provision of investment advisory and certain specified
administrative services). For the fiscal year ended December 31, 1993
total operating expenses (excluding Rule 12b-1 fees) of the Fund were
1.48%, 1.24% and 1.17% for the Retail, Institutional and Investment
Classes, respectively, of the Fund's average daily net assets. It is an-
ticipated that the current total operating expenses of the Fund (excluding
Rule 12b-1 fees) will be approximately 1.15% of the Fund's average daily
net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager or which have sold Shares of the Fund, if the Manager believes
that the quality of the transaction and the commission are comparable to
what they would be with other qualified brokerage firms. From time to
time, to the extent consistent with its investment objective, policies and
restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994, Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon has a banking subsidiary, Mellon Bank Canada,
in Toronto. Mellon Bank is a registered municipal securities dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager may raise issues
under these provisions. However, Mellon Bank has been advised by its coun-
sel that these activities are consistent with these statutory and regula-
tory obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
The Fund is managed by Guy R. Scott. Mr. Scott is an Officer of Mellon
Bank, a Senior Vice President of The Boston Company Advisors, Inc., and a
Senior Vice President and Equity Portfolio Manager of The Boston Company
Asset Management, Inc. Mr. Scott is a portfolio manager at the Manager and
has been employed by the Manager since October 17, 1994. In addition to
managing the Fund, he is responsible for managing over $280 million among
various institutional accounts. Mr. Scott also serves on the Equity Policy
Group Committee. Previously, Mr. Scott held a position as an Equity Port-
folio Manager for Putnam Advisory, where he was responsible for more than
$1 billion in pension assets. A Chartered Financial Analyst, Mr. Scott
earned a B.S. in Economics and an M.B.A. in Finance at the University of
Wisconsin.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant, maintaining possession
of the Fund's investment securities and providing certain accounting and
related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Fund has entered into a distribution agreement with Premier which provides
that Premier has the exclusive right to distribute Shares of the Fund.
Premier may pay service and/or distribution fees to Agents that assist
customers in purchasing and servicing of Shares of the Fund. (See "Inves-
tor Shares' Distribution Plan.")
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).
Investor Shares are subject to a Distribution Plan ("Plan") adopted pursu-
ant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The Investor Shares
of the Fund may bear some of the cost of selling those Shares under the
Plan. The Plan allows the Fund to spend annually up to 0.25% of its aver-
age daily net assets attributable to Investor Shares to compensate Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servic-
ing activities and Premier for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Inves-
tor Shares of the Fund. The Plan allows Premier to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with Premier. Under the
Agreements, the Agents are obligated to provide distribution related ser-
vices with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Agents, Premier and
the Fund may agree to voluntarily reduce the maximum fees payable under
the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms gov-
erning Agreements with their Agents. An Agent entitled to receive compen-
sation for selling and servicing the Fund's Shares may receive different
compensation with respect to one class of Shares over another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
PREMIER LIMITED TERM
GOVERNMENT SECURITIES FUND
PROSPECTUS DECEMBER 19, 1994
Premier Limited Term Government Securities Fund (the "Fund"),
formerly called the "Laurel Intermediate Term
Government Securities Fund," is a separate portfolio of The
Dreyfus/Laurel Funds Trust, a management investment company (the
"Company"), known as a mutual fund. The Fund is a diversified income fund
seeking high current income consistent with the preservation of capital
by investing primarily in debt obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities.
By this Prospectus, the Fund is offering four Classes of
shares -- Class A, Class B, Class C and Class R.
The Dreyfus Corporation serves as the Fund's investment
manager. The Dreyfus Corporation is referred to as "Dreyfus."
This Prospectus sets forth concisely information about the
Fund that you should know before investing. It should be read carefully
before you invest and retained for future reference.
A Statement of Additional Information ("SAI") dated December
19, 1994, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which
may be of interest to some investors. It has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated herein by
reference. For a free copy, write to the Funds at 144 Glenn Curtiss
Boulevard Uniondale, New York 11556-0144, or call 1-800-554-4611. When
telephoning, ask for Operator 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON
BANK OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK OR AN
AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS
CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS DISTRIBUTED
BY PREMIER MUTUAL FUND SERVICES, INC.
- ----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ----------------------------------------------------------------------------
(CONTINUED FROM PAGE 1)
Class A shares are subject to a sales charge imposed at the
time of purchase. (Class A shares of each Fund were formerly called
Investor Shares.) Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within five years of purchase.
Class C shares are subject to a .75% contingent deferred sales charge
imposed on redemptions made within the first year of purchase. Class R
shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank, N.A. and its affiliates)
("Banks") acting on behalf of customers having a qualified trust or
investment account or similar relationship at such institution. (Class R
shares of each Fund were formerly called Trust Shares.) Other differences
between the Classes include the services offered to and the expenses
borne by each Class and certain voting rights, as described herein. These
alternatives are offered so an investor may choose the method of
purchasing shares that is most beneficial given the amount of purchase,
the length of time the investor expects to hold the shares and other
circumstances.You can purchase or redeem all Classes of shares, except
Class R shares, by telephone using the TELETRANSFER Privilege.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate
of Dreyfus. Exchange and shareholder services vary depending upon the
network through which you purchase Fund shares. See "How to Buy Fund
Shares".
TABLE OF CONTENTS
Expense Summary.................................... 4
Financial Highlights............................... 5
Alternative Purchase Methods....................... 8
Description of the Fund............................ 9
Management of the Fund............................. 13
How to Buy Fund Shares............................. 14
Shareholder Services............................... 19
How to Redeem Fund Shares.......................... 23
Distribution Plans(Class A Plan, Class B and Class C Plans Only).. 26
Dividends, Other Distributions and Taxes........... 27
Performance Information............................ 29
General Information................................ 30
(4)
<TABLE>
EXPENSE SUMMARY
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) .none 3.00% .75% none
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees(1)...................... .60% .60% .60% .60%
12b-1 Fee(2)............................ ..25% .75% .75% none
Other Expenses ......................... 0.00% 0.00% 0.00% 0.00%
Total Fund Operating Expenses........... .85% 1.35% 1.35% .60%
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) except where noted, redemption
at the end of each time period:
1 YEAR $38 $44/$14(3) $21/$14(3) $6
3 YEARS $56 $63/$43(3) $43 $19
5 YEARS $76 $84/$74(3) $74 $33
10 YEARS $132 $136 $162 $75
</TABLE>
Assuming no redemption of shares.
1 See "Distribution Plans" for a description of the Fund's Distributions for
Class A, B and C shares.
2 Does not include fees and expenses of the non-interested directors
(including counsel). The investment manager is contractually
required to reduce its Management Fee in an amount equal to the Fund's
allocable portion of such fees and expenses, which are estimated to be .02%
of the Fund's net assets. (See "Management of the Fund.")
3 Assuming no redemption of shares.
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S
ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%.
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Other Expenses and Total Fund Operating Expenses are based on
estimated amounts for the current fiscal year. Long-term investors in Class
A, B or C shares could pay more in 12b-1 fees than the economic equivalent of
paying the maximum front-end sales charges applicable to mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD"). The
information in the foregoing table does not reflect any fee waivers or
expense reimbursement arrangements that may be in effect. Certain Service
Agents may charge their clients direct fees for effecting transactions in
Fund shares; such fees are not reflected in the foregoing table. See
"Management of the Fund," "How to Buy Fund Shares" and "Distribution Plans."
The Company understands that banks, brokers, dealers or other
financial institutions (including Dreyfus and its affiliates) (collectively
"Service Agents") may charge fees to their clients who are owners of the
Fund's Class A, B or C shares for various services provided in connection
with a client's account. These fees would be in addition to any amounts
received by a Service Agent under its Selling Agreement ("Agreement") with
Premier Mutual Fund Services, Inc. (the "Distributor"). The Agreement requires
each Service Agent to disclose to its clients any compensation payable to
such Service Agent by the Distributor and any other compensation payable by
the client for various services provided in connection with their accounts.
(5)
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A or Class R
Share outstanding through each fiscal year and should be read in
conjunction with the financial statements and related notes that appear
in the Fund's Annual Report dated December 31, 1993, and Semi-Annual
Report (unaudited) dated June 30, 1994 each of which is incorporated by
reference into the SAI. The financial statements included in the Fund's
Annual Report for the year ended December 31, 1993 have been audited by
Coopers & Lybrand L.L.P., independent accountants whose report appears in
the Fund's Annual Report.Financial Highlights are not included for Class
R shares because the Fund did not offer Class R shares at period ended
June 30, 1994.
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND*
FOR A INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.(1)
<TABLE>
SIX MONTHS YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $13.14 $12.76 $12.81 $11.99 $11.97 $11.66 $11.75 $12.63 $12.50
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income# 0.35 0.75 0.72 0.74 0.81 .90 0.81 0.99 0.88
Net realized and unrealized gains/(loss)
on investments (0.93) 0.40 (0.05) 0.82 0.02 0.33 (0.09) (0.88) 0.13
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations (0.58) 1.15 0.67 1.56 0.83 1.23 0.72 0.11 1.01
Less Distributions:
Distributions from net
investment income (0.34) (0.74) (0.72) (0.74) (0.81) (0.91) (0.81) (0.99) (0.88)
Distributions in excess of net
investment income -- (0.03) -- -- -- -- -- -- --
Distributions from net realized gains -- (0.00)** -- -- -- -- -- -- --
Distributions in excess of net
realized gains -- -- -- -- -- (0.01) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (0.34) (0.77) (0.72) (0.74) (0.81) (0.92) (0.81) (0.99) (0.88)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of period $12.22 $13.14 $12.76 $12.81 $11.99 $11.97 $11.66 $11.75 $12.63
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return (4.48)% 9.10% 5.47% 13.51% 7.29% 10.89% 6.25% 1.01% 8.39%
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
Ratios/Supplemental data:
Net assets, end of period (in 000's) $19,828 $8,776 $22,914 $15,797 $15,526 $13,841 $13,759 $13,618 $15,434
Ratio of expenses to average
net assets 1.51% 1.40% 1.67% 1.91% 1.92% 1.85% 1.63% 1.04% 0.65%
Ratio of net income to average
net assets 8.08% 5.56% 5.70% 6.09% 6.87% 7.61% 6.91% 8.20% 8.21%
Portfolio turnover rate 105% 74% 30% 50% 300% 321% 65% 122% 85%
(1) ON FEBRUARY 1, 1993 EXISTING SHARES OF THE FUND WERE DESIGNATED THE RETAIL CLASS AND THE FUND BEGAN OFFERING
THE INSTITUTIONAL CLASS OF SHARES. EFFECTIVE APRIL 4, 1994 THE RETAIL AND INSTITUTIONAL CLASSES OF SHARES WERE
RECLASSIFIED AS A SINGLE CLASS OF SHARES KNOWN AS INVESTOR SHARES. THE AMOUNTS SHOWN FOR THE SIX MONTHS
ENDED JUNE 30, 1994, WERE CALCULATED USING THE PERFORMANCE OF A RETAIL SHARE OUTSTANDING FROM JANUARY 1,
1994 TO APRIL 3, 1994, AND THE PERFORMANCE OF AN INVESTOR SHARE OUTSTANDING FROM APRIL 4, 1994 TO JUNE 30,
1994. THE FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 1993 AND PRIOR PERIODS ARE BASED UPON A
RETAIL SHARE OUTSTANDING. ON OCTOBER 17, 1994, INVESTOR SHARES WERE REDESIGNATED CLASS A SHARES.
* The Fund commenced operations on March 3, 1986. Effective May 1, 1990, the investment policies of this
fund (prior to that date, the "GNMA Fund") were changed to the current investment objectives and policies
described under "Investment Objective and Policies" in the prospectus.
** AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
+ Total return represents less than $0.01 per share.
++ Annualized.
+++ WITHOUT THE REIMBURSEMENT BY THE INVESTMENT ADVISER THE RATIO OF EXPENSES TO AVERAGE NET FEES AND/OR
THE VOLUNTARY REIMBURSEMENT OF EXPENSES BY THE INVESTMENT ADVISER AND TRANSFER AGENT, THE RATIO OF
EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.74% AND 1.5% FOR THE YEARS ENDED DECEMBER 31, 1986.
# Net investment income before voluntary reimbursement by the investment adviser for the six
months ended June 30, 1994 was $0.33. Net investment income before the voluntary waiver of
fees and/or the voluntary reimbursement of expenses by the investment adviser, transfer agent
and distributor, for the years ended December 31, 1993 and 1987, and for the period ended
December 31, 1986 were $0.70, $0.93 and $0.81, respectively
</TABLE>
(6)
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares;
you may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 3.0% of the public offering price imposed
at the time of purchase. The initial sales charge may be reduced or
waived for certain purchases. See "How to Buy Fund Shares-Class A
shares." These shares are subject to an annual 12b-1 fee at the rate of
0.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan-Class A shares."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 3% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within five years of
purchase. See "How to Buy Fund Shares - Class B shares" and "How to
Redeem Fund Shares - Contingent Deferred Sales Charge - Class B shares."
These shares also are subject to an annual distribution fee at the rate
of 0.50 of 1% of the value of the average daily net assets of Class B. In
addition, Class B shares are subject to an annual service fee at the rate
of 0.25 of 1% of the value of the average daily net assets of Class B.
See "Distribution and Service Plans - Class B and C." The distribution
fee paid by Class B will cause such Class to have a higher expense ratio
and to pay lower dividends than Class A. 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, and will no longer be subject to the distribution fee. (Such
conversion is subject to suspension by the Board of Trustees if adverse
tax consequences might result.) Class B shares that have been acquired
through the reinvestment of dividends and other 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 other distributions.
Class C shares are subject to a .75% CDSC, which is assessed
only if you redeem Class C shares within one year of purchase. See "How
to Redeem Fund Shares - Class C shares." These shares also are subject to
an annual distribution fee at the rate of 0.50 of 1% of the value of the
average daily net assets of Class C. Class C shares are also subject to
an annual service fee at the rate of 0.25 of 1% of the value of the
average daily net assets of Class C. See "Distribution and Service Plans
- Class B and C." The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
Class R shares generally may not be purchased directly by
individuals, although eligible institutions may purchase Class R shares
for accounts maintained by individuals. Class R shares are sold at net
asset value per share primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
("Banks") acting on behalf of customers having a qualified trust or
investment account or similar relationship at such institution. Class A,
Class B and Class C shares are primarily sold to retail investors by
Service Agents that have entered into Selling Agreements with the
Distributor.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the
(7)
investment. Finally, you should consider the effect of the
CDSC period and any conversion rights of the Classes in the context of
your own investment time frame. For example, while Class C shares have a
shorter CDSC period than Class B shares, Class C shares do not have a
conversion feature and, therefore, are subject to an ongoing distribution
fee. Thus, Class B shares may be more attractive than Class C shares to
investors with longer term investment outlooks. Generally, Class A shares
may be more appropriate for investors who invest $1,000,000 or more in
Fund shares, but will not be appropriate for investors who invest less
than $100,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Premier Limited Term Government Securities Fund is a
diversified fund that seeks to provide investors with current income
consistent with preservation of capital. The Fund seeks to achieve its
objectives by investing in a professionally managed, diversified
portfolio consisting of debt obligations of varying maturities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
MANAGEMENT POLICIES
Under normal circumstances, the Fund will invest at least 65%
of its total assets in U.S. Government Securities with remaining
maturities of between three and eight years after purchase. U.S.
Government Securities in which the Fund invests include obligations
issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the full faith and credit of the United States.
In addition to direct obligations of the U.S. Treasury, these include
securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States,
Small Business Administration, Government National Mortgage Association,
General Services Administration and Maritime Administration. The Fund
will also invest in U.S. Government Securities that do not carry the full
and credit guarantee, such as mortgage-backed securities issued by the
Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal National
Mortgage Association ("FNMA"). The Fund will invest in securities of an
instrumentality to which the U.S. Government is not obligated by law to
provide support only if the Fund's investment manager, Dreyfus,
determines that the credit risk with respect to the instrumentality does
not make its securities unsuitable for investment by the Fund.
The Fund may invest up to 35% of its total assets in
mortgage-backed securities issued by the Government National Mortgage
Association ("GNMA"), FHLMC, and FNMA. These mortgage-related securities
provide a monthly payment consisting of interest and principal payments.
Additional payments may be made out of unscheduled repayment of principal
resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-related securities may tend to
increase due to refinancing of mortgages as interest rates decline.
Prompt payment of principal and interest on GNMA mortgage pass-through
certificates is backed by the full faith and credit of the United States.
FNMA guaranteed mortgage pass-through certificates and FHLMC
participation certificates are solely the obligations of those entities
but are supported by the discretionary authority of the U.S. Government
to purchase the agencies' obligations.
To the extent that the Fund purchases mortgage-related
securities at a premium, mortgage foreclosures and prepayments of
principal by mortgagors (which may be made at any time without penalty)
may result in some loss of the Fund's principal investment to the extent
of the premium paid. The yield of the Fund that invests in
mortgage-related securities may be affected by reinvestment of
prepayments at higher or lower rates that the original investment. In
addition, like other debt securities, the values of mortgage-related
securities, including gov
(8)
ernment and government-related mortgage pools, generally will
fluctuate in response to market interest rates.
While the Fund intends to invest primarily in U.S. Government
Securities with remaining maturities of between three and eight years,
the Fund may also invest in U.S. Government Securities of all maturities:
short (12 months or less), intermediate (one to ten years), or long (more
than ten years), and will maintain an average weighted maturity of
between three and ten years. Under normal market conditions, the longer
the average maturity of the Fund's holdings the greater its price
volatility. As noted above, given the monthly prepayments of principal
and interest on mortgage-backed certificates, these securities may be
considered to have a shorter effective maturity. The effective maturity
of the Fund's portfolio will vary, depending on the principal prepayments
of the mortgage-backed certificates. The Fund may invest up to 100% of
its assets in short-term U.S. Government Securities, including repurchase
agreements involving U.S. Government Securities, as Dreyfus believes is
advisable for temporary defensive purposes.
From time to time, the Fund may write covered put and call
options on its portfolio securities and may enter into futures contracts
and related options. The Fund may also purchase U.S. Government
Securities on a when-issued basis, may purchase or sell U.S. Government
Securities for delayed delivery, or lend its portfolio securities. For
further discussion of the risks associated with the types of securities
in which the Fund invests, including covered option writing, futures and
options on futures, illiquid securities, repurchase agreements and
when-issued securities and delayed delivery transactions. See "Investment
Techniques".
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the
Fund may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits,
to borrow money for temporary administrative purposes and to pledge its
assets in connection with such borrowings.
COVERED OPTION WRITING. From time to time, the Fund may write
covered put and call options on portfolio securities. The Fund could
realize fees (referred to as "premiums") for granting the rights
evidenced by the options. However, in return for the premium, the Fund
forfeits the right to any appreciation in the value of the underlying
security while the option is outstanding. A put option embodies the right
of its purchaser to compel the writer of the option to purchase from the
option holder an underlying security at the specified price at any time
during the option period. In contrast, a call option embodies the right
of its purchaser to compel the writer of the option to sell the option
holder an underlying security at a specified price at any time during the
option period.
Upon the exercise of a put option written by the Fund, the
Fund may suffer a loss equal to the difference between the price at which
the Fund is required to purchase the underlying security and its market
value at the time of the option exercise, less the premium received for
writing the option. Upon the exercise of a call option written by the
Fund, the Fund may suffer a loss equal to the excess of the security's
market value at the time of the option exercise over the Fund's
acquisition cost of the security less the premium received for writing
the option.
Whenever the Fund writes a call option it will continue to
own or have the present right to acquire the underlying security for as
long as it remains obligated as the writer of the option. To support its
obligation to purchase the underlying security if a put option is
exercised, the Fund will either (a) deposit with the Fund's custodian in
a segregated account, cash, U.S. Government Securities or other high
grade debt obligations having a value at least equal to the exercise
price of the underlying securities or (b) continue to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
security having the same exercise prices and expiration dates as those
written by the Fund), or an equivalent number of puts of the same "class"
(that is, puts on the same underlying security) with exercise prices
greater
(9)
than those that it has written (or, if the exercise prices of
the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
The Fund may engage in a closing purchase transaction to
realize a profit, to prevent an underlying security from being called or
put or, in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the
security prior to the outstanding option's expiration). To effect a
closing purchase transaction, the Fund would purchase, prior to the
holder's exercise of an option that the Fund has written, an option of
the same series as that on which the Fund desires to terminate its
obligation. The obligation of the Fund under an option that it has
written would be terminated by a closing purchase transaction, but the
Fund would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Fund will be able to
effect closing purchase transactions at a time when it wishes to do so.
To facilitate closing purchase transactions, however, the Fund ordinarily
will write options only if a secondary market for the options exists on a
national securities exchange or in the over-the-counter market.
FUTURES AND OPTIONS ON FUTURES. The Fund may enter into
futures contracts as hedges when deemed advisable by Dreyfus. The Fund
may purchase and sell interest rate futures contracts, and purchase and
write related options, that are traded on a United States exchange or
board of trade. These investments, if any, by the Fund will be made
solely for the purpose of hedging against changes in the value of its
portfolio securities due to anticipated changes in interest rates and
market conditions, and when the transactions are economically appropriate
to the reduction of risks inherent in the management of the Fund. The use
of futures contracts and options on futures contracts as a hedging device
involves several risks. There can be no assurance that there will be a
correlation between price movements in the underlying securities, on the
one hand, and price movements in the securities which are the subject to
the hedge, on the other hand. Positions in futures contracts and options
on futures contracts may be closed out only on an exchange or board of
trade that provides an active market for them, and there can be no
assurance that a liquid market will exist for the contract or the option
at any particular time. Losses incurred by hedging transactions and the
cost of these transactions will affect the Fund's performance. Successful
use of futures contracts by the Fund is subject to the ability of Dreyfus
to correctly predict movements in the direction of interest rates. The
Fund may not purchase or sell futures contracts or purchase options on
futures if, immediately thereafter, more than 33 1/3% of its net assets
would be hedged. In addition, the Fund may not enter into futures and
related options contracts for which aggregate initial margin deposits and
premiums exceed 5% of the fair market value of the Fund's assets, after
taking into account unrealized profits and unrealized losses on futures
contracts into which it has entered.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund
may led portfolio securities to brokers, dealers and other financial
organizations. Such loans will not exceed 33 1/3% of the Fund's total
assets, taken at value. Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies, which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S.
Government Securities on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by
the other party to the transaction. The purchase of securities on a
when-issued or delayed delivery basis involves the risk that, as a result
of an increase in yields available in the marketplace, the value of the
securities purchased will decline prior to the settlement date. The sale
of securities for delayed
(10)
delivery involves the risk that the prices available in the
market on the delivery date may be greater than those obtained in the
sale transaction. The Fund will establish a segregated account consisting
of cash, U.S. Government Securities or other high-grade debt obligations
in an amount equal to the amounts of its when-issued and delayed delivery
commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to
achieve the Fund's investment objective by investing all of the Fund's
assets in another investment company having the same investment objective
and substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least
30 days' prior notice of any such investment. Such investment would be
made only if the Company's Board of Trustees determine it to be in the
best interest of the Fund and its shareholders. In making that
determination, the Board of Trustees will consider, among other things,
the benefits to shareholders and/or the opportunity to reduce costs and
achieve operational efficiencies. Although the Fund believes that the
Board of Trustees will not approve an arrangement that is likely to
result in higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.
CERTAIN PORTFOLIO SECURITIES
ILLIQUID SECURITIES. The Fund will not knowingly invest more
than 15% of the value of its net assets in illiquid securities, including
time deposits and repurchase agreements having maturities longer than
seven days. Securities that are readily marketable are not deemed illiquid
for purposes of this limitation (irrespective of any legal or contractual
restrictions on resale.) The Fund may invest in commercial obligations
issued in reliance on the so-called "private placement" exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities
that are not registered under the Securities Act of 1933, as amended, but
that can be sold to qualified institutional buyers in accordance with Rule
144A under that Act ("Rule 144A securities"). Section 4(2) paper is
restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors (such as the Fund) that
agree that they are purchasing the paper for investment and not with a
view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in the Section 4(2)
paper, thus providing liquidity. Rule 144A securities generally must be
sold to other qualified institutional buyers. Determinations as to the
liquidity of investments in Section 4(2) paper and rule 144A securities
will be made by the Board of Trustees or Dreyfus. The Board will consider
availability of reliable price information and other relevant information
in making such determinations. If a particular investment in Section 4(2)
paper or Rule 144A securities is not determined to be liquid, that
investment will be included within the percentage limitation on
investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and
it is not possible to predict how this market will mature. Investing in
Rule 144A securities could have the effect of increasing the level of
Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities.
COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage
obligations ("CMOs") are a type of bond secured by an underlying pool of
mortgages or mortgage pass-through certificates that are structured to
direct payments on underlying collateral to different series or classes
of the obligations. CMO classes may be specially structured in a manner
that provides any of a wide variety of investment characteristics, such
as yield, effective maturity and interest rate sensitivity. CMO
structuring is accomplished by in effect stripping out portions of the
cash flows (comprised of principal and interest payments) on the
underlying mortgage assets and prioritizing the payments of those cash
flows. In the most extreme case, one class will be a "principal-only"
(PO) security, the holder of which receives the principal payments made
by the
(11)
underlying mortgage-backed security, while the holder of the
"interest-only" (IO) security receives interest payments from the same
underlying security. CMOs may be structured in other ways that, based on
mathematical modeling or similar techniques, is expected to provide
certain results. As market conditions change, however, and particularly
during periods of rapid or unanticipated changes in market interest
rates, the attractiveness of a CMO class, and the ability of a structure
to provide the anticipated investment characteristics, may be
significantly reduced. Such changes can result in volatility in the
market value, and in some instances reduced liquidity, of the CMO class.
Inverse floaters are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the
value of an index. Changes in the interest rate on the other security or
index inversely affect the residual interest rate paid on the inverse
floater, with the result that the inverse floater's price will be
considerably more volatile than that of a fixed-rate bond. For example,
an issuer may decide to issue two variable rate instruments instead of a
single long-term, fixed-rate bond. The interest rate on one instrument
reflects short-term interest rates, while the interest rate on the other
instrument (the inverse floater) reflects the approximate rate the issuer
would have paid on a fixed-rate bond, multiplied by two, minus the
interest rate paid on the short-term instrument. The market for inverse
floaters is relatively new.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase
agreements. A repurchase agreement involves the purchase of a security by
the Fund and a simultaneous agreement (generally with a bank or
broker-dealer) to repurchase that security from the Fund at a specified
price and date or upon demand. This technique offers a method of earning
income on idle cash. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may
cause the Fund to suffer a loss if the market value of such securities
declines before they can be liquidated on the open market. Repurchase
agreements with a duration of more than seven days are considered
illiquid securities and are subject to the associated limits discussed
under "Certain Portfolio Securities - Illiquid Securities."
OTHER INVESTMENT COMPANIES. The Fund may invest in securities
issued by other investment companies to the extent that such investments
are consistent with the Fund's investment objective and policies and
permissible under the Investment Company Act of 1940, as amended (the
"1940 Act"). As a shareholder of another investment company, the Fund
would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These
expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the
Fund on the basis of high current income and for short-term trading
profits, in the past the portfolio turnover rate of the Fund has exceeded
100% and may exceed 100% in the future. A portfolio rate of 100% would
occur, for example, if all the securities held by the Fund were replaced
once in a period of one year. In past years the Fund's rate of portfolio
turnover exceeded that of certain other mutual funds with the same
investment objective. A higher rate of portfolio turnover (100% or greater)
involves correspondingly greater brokerage commissions and other expenses
that must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result
in the realization of larger amounts of short-term capital gains that,
when distributed to the Fund's shareholders, are taxable to them as
ordinary income. Nevertheless, security transactions for the Fund will be
based only upon investment considerations and will not be limited by any
other considerations when Dreyfus deems it appropriate to make changes in
the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the holders
of a majority of the Fund's outstanding shares. The SAI describes all of
the Fund's fundamental and non-fundamental restrictions.
(12)
The investment objective, policies, restrictions, practices
and procedures of the Fund, unless otherwise specified, may be changed
without shareholder approval. If the Fund's investment objective,
policies, restrictions, practices or procedures change, shareholders
should consider whether the Fund remains an appropriate investment in
light of the shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the
investment policies and restrictions described in this Prospectus and the
SAI. Should the Fund determine that any such commitment is no longer in
the best interest of the Fund, it may consider terminating sales of its
shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, which is a wholly- owned subsidiary of Mellon
Bank Corporation ("Mellon"). As of November 30, 1994, Dreyfus managed or
administered approximately $71 billion in assets for more than 1.9
million investor accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus
supervises and assists in the overall management of the Fund's affairs
under an Investment Management Agreement with the Fund, subject to the
overall authority of the Company's Board of Trustees in accordance with
Massachusetts law. Pursuant to the Investment Management Agreement,
Dreyfus provides, or arranges for the provision by one or more third
parties of, investment advisory, administrative, custody, fund accounting
and transfer agency services to the Fund. As the Fund's investment
manager, Dreyfus manages the Fund by making investment decisions based on
the Fund's investment objective, policies and restrictions.
The Fund is managed by Almond G. Goduti, Jr., an officer of
Mellon Bank and Vice President of The Boston Company Advisors, Inc. Mr.
Goduti has been employed by Dreyfus as portfolio manager of the Fund
since October 17, 1994. Mr. Goduti also a bond portfolio manager in the
Fixed Income Management Division. In this position, he is responsible for
research of the mortgage-backed securities market. He is a member of the
Fixed Income Strategy Committee. Mr. Goduti holds a Bachelor of Science
Degree in Finance and Computer Science from Boston College and is a
Chartered Financial Analyst.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Bank
Holding Company Act of 1956, as amended. Mellon provides a comprehensive
range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO
Credit Corporation and a number of companies known as Mellon Financial
Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed approximately $201 billion in assets as of September 30,
1994, including $76 billion in mutual fund assets. As of September 30,
1994, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for approximately
$659 billion in assets, including approximately $108 billion in mutual
fund assets.
Under the Investment Management Agreement, the Fund has
agreed to pay Dreyfus a monthly fee at the annual rate of 0.60 of 1% of
the value of the Fund's average daily net assets. Dreyfus pays all of the
Fund's expenses, except brokerage fees, taxes, interest, fees and
expenses of the non-interested Trustees (including counsel fees), Rule
12b-1 fees (if applicable) and extraordinary expenses. Although Dreyfus
does not pay for the fees and expenses of the non-interested Trustees
(including counsel fees), Dreyfus is contractually required to reduce its
investment management fee in an amount equal to the Fund's allocable
share of such fees
(13)
and expenses. In order to compensate Dreyfus for paying
virtually all of the Fund's expenses, the Fund's investment management
fee is higher than the investment advisory fees paid by most investment
companies. Most, if not all, such companies also pay for additional
non-investment advisory expenses that are not paid by such companies'
investment advisers. From time to time, Dreyfus may waive (either
voluntarily or pursuant to applicable state limitations) a portion of the
investment management fees payable by the Fund. Prior to October 17,
1994, the Fund was advised by Mellon Bank under the Investment Management
Agreement. For the fiscal year ended December 31, 1993 the Fund paid its
investment adviser, The Boston Company Advisors, Inc. ("Boston Advisors"),
(an indirect wholly-owned subsidiary of Mellon Bank Corporation) 0.58% in
investment advisory fees under the Fund's previous investment advisory
contract (such contract only covered the provision investment advisory
and certain specified administrative services. For the fiscal year ended
December 31, 1993 total operating expenses (excluding Rule 12b-1 fees) of
the Fund were 1.25% and 1.50% for the Retail and Institutional Classes,
respectively, of the Fund's average daily net assets.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans."
Dreyfus may pay the Distributor for shareholder services from
Dreyfus's own assets, including past profits but not including the
management fee paid by the Fund. The Distributor may use part or all of
such payments to pay Service Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders
for portfolio securities to certain financial institutions, including, in
the case of agency transactions, financial institutions that are
affiliated with Dreyfus or Mellon Bank or that have sold shares of the
Fund, if Dreyfus believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
brokerage firms. From time to time, to the extent consistent with its
investment objective, policies and restrictions, the Fund may invest in
securities of companies with which Dreyfus has a lending relationship.
Premier Mutual Fund Services, Inc. is the Fund's Distributor.
The Distributor is located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
CUSTODIAN; TRANSFER AND DIVIDEND DISBURSING AGENT; AND SUB-ADMINISTRATOR-
Mellon Bank, One Mellon Bank Center Pittsburgh, PA 15258 is the Fund's
custodian. The Fund's Transfer and Dividend Disbursing Agent is The
Shareholder Services Group, Inc. (the "Transfer Agent"), a subsidiary of
First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671.
Premier Mutual Fund Services, Inc. serves as the Fund's sub-administrator
and, pursuant to a Sub-Administration Agreement, provides various
administrative and corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL- Class A shares, Class B shares and Class C shares
may be purchased only by clients of certain financial institutions (which
may include banks), securities dealers ("Selected Dealers") and Service
Agents, except that full-time or part-time employees or directors of
Dreyfus or any of its affiliates or subsidiaries, directors of Dreyfus,
Board members of a fund advised by Dreyfus, including members of the
Company'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 Service
Agent.
Class R shares are sold primarily to Banks acting on behalf
of customers having a qualified trust or investment account or
relationship at such institution. In addition, holders of Class R shares
of the Fund who have held their shares since April 4, 1994, may continue
to purchase Class R shares of the Fund, whether or not they otherwise
would be eligible to do so. Class R
(14)
shares may be purchased for a retirement plan only by a
custodian, trustee, investment manager or other entity authorized to act
on behalf of such 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.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, an affiliate of Dreyfus. For more
information about purchasing Fund shares through the affiliate network,
call 1-800-548-2868. Please read the Prospectus carefully. Exchange and
Shareholder Services, including the telephone purchase options, and
minimum and maximum dollar amounts associated with such services, may
vary depending upon the network through which you purchase Fund shares.
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.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and, to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Distribution and Service Plans. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and
403(b)(7) Plans with only one participant is $750, with no minimum on subs
equent purchases. Individuals who open an IRA also may open a non-working
spousal IRA with a minimum initial investment of $250. The initial
investment must be accompanied by the Fund's 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 Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
certain qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("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.
You may purchase Fund shares by check or wire, or, with the
exception of Class R shares, through the TELETRANSFER Privilege described
below. Checks should be made payable to "Premier Limited Term Government
Securities Fund." Payments to open new accounts which are mailed should
be sent to Premier Limited Term Government Securities Fund, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to Premier
Limited Term Government Securities Fund, P.O. Box 105, Newark, New Jersey
07101-0105. Neither initial nor subsequent investments should be made by
third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Class' DDA # as shown below, for purchase of
Fund shares in your name:
(15)
DDA #8900104341 Premier Limited Government Securities Fund/Class A shares;
DDA #8900227974 Premier Limited Term Government Securities/Class B shares;
DDA #8900227982 Premier Limited Term Government Securities/Class C shares; or
DDA #8900104295 Premier Limited Term Government Securities/Class R shares.
The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call
1-800-548-2868 after completing your wire payment in order to obtain your
Fund account number. Please include your Fund account number on the
Fund's Account Application and promptly mail the Account Application to
the Fund, as no redemptions will be permitted until the Account
Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House ("ACH") member.
You must direct the institution to transmit immediately available funds
through the ACH system to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Fund shares by employees
participating in qualified 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 one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for participation in a
plan or program shall be made on the date Fund shares are first purchased
by or on behalf of employees participating in such plan or program and on
each subsequent January 1st. All present holdings of shares of funds in
the Dreyfus Family of Funds by Eligible Benefit Plans will be aggregated
to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at
any time. The Distributor will pay such fees from its own funds, other
than amounts received from the Fund, including past profits or any other
source available to it.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange ("NYSE")
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 NYSE 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 before the close of its business day.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Other Distributions
and Taxes" and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN to the
Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
NET ASSET VALUE ("NAV")- An investment portfolio's NAV refers to the
worth of one share. The NAV for shares of each Class of the Fund is
computed by adding, with respect to such Class of shares, the value of
the Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by number of
shares of that
(16)
Class outstanding. The valuation of assets for determining NAV for
the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise
noted, listed or traded on a stock exchange, are valued at the latest
sale price. If no sale is reported, the mean of the latest bid and asked
prices is used. Securities traded over-the-counter are priced at the mean
of the latest bid and asked prices but will be valued at the last sale
price if required by regulations of the SEC. When market quotations are
not readily available, securities and other assets are valued at a fair
value as determined in good faith in accordance with procedures
established by the Board of Trustees.
Bonds are valued through valuations obtained from a
commercial pricing service or at the most recent mean of the bid and
asked prices provided by investment dealers in accordance with procedures
established by the Board of Trustees.
Pursuant to a determination by the Board of Trustees that
such value represents fair value, debt securities with maturities of 60
days or less held by the Fund are valued at amortized cost. When a
security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
NAV is determined on each day that the NYSE is open (a
"business day"), as of the close of business of the regular session of
the NYSE (usually 4 p.m. Eastern Time). Investments and requests to
exchange or redeem shares received by the Fund in proper form before the
close of business on the NYSE (usually 4 p.m., Eastern Time) are
effective on, and will receive the price determined on, that day (except
investments made by electronic funds transfer, which are effective two
business days after your call). Investment, exchange and redemption
requests received after the close of the NYSE are generally effective on
and receive the share price determined on the next business day.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the NYSE 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 NYSE 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.
The NAV of each Class of shares of most of The Premier Funds'
investment portfolios (other than the money market funds) is published in
leading newspapers daily. The yield of each Class of shares of most
Dreyfus money market funds is published weekly in leading financial
publications and in many newspapers. The NAV of any Fund may also be
obtained by calling 1-800-645-6561.
CLASS A SHARES - The public offering price of Class A shares is the
net asset value per share of that Class plus a sales load as shown below:
<TABLE>
TOTAL SALES LOAD
As a % of As a % of Dealers' Reallowance
offering price net asset value as a % of
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
-------------- --------------- --------------------
<S> <C> <C> <C>
Less than $100,000 3.00 3.00 4.25
$100,000 to less than $250,000 2.75 2.80 2.50
$250,000 to less than $500,000 2.25 2.30 2.00
$500,000 to less than $1,000,000 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or
more of Class A shares. However, if you purchase
Class A shares without an initial sales charge as part of an investment
of at least $1,000,000 and redeem all or a portion of those shares within
two years after
(17)
purchase, a CDSC of 1.00% will be imposed at the time of
redemption. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares - Contingent Deferred Sales Charge -
Class B" (other than the amount of the CDSC and its time periods) are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
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, NAV, provided that 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 NAV. In addition, Class A shares are offered at net
asset value to full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing.
Class A shares will be offered at NAV without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also
may be purchased (including by exchange) at NAV 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 that, 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 Family of Funds or
certain other products made available by the Distributor to such plans,
or (b) invested all of its assets in certain funds in the Premier Family
of Funds or the Dreyfus Family of Funds or certain other products made
available by the Distributor to such plans.
Holders of Class A accounts of the Fund as of December 19,
1994, may continue to purchase Class A shares of the Fund at NAV.
However, investments by such holders in OTHER Funds advised by Dreyfus
will be subject to the applicable front end sales load.
Class A shares may be purchased at NAV 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.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
shares. Dealers receive a larger percentage of the sales load from the
Distributor than they receive for selling most other funds.
CLASS B SHARES-The public offering price for Class B shares is the
NAV 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 under "How to Redeem Fund Shares." The
Distributor compensates certain Service Agents for selling Class B shares
at the time of purchase from the Distributor's own assets. The proceeds
of the CDSC and the distribution fee, in part, are used to defray these
expenses.
CLASS C SHARES-The public offering price for Class C shares is the
NAV per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC, however, is imposed on redemptions of Class C
shares made within the first year of purchase. See "Class
(18)
B shares" above and "How to Redeem Fund Shares."
CLASS R SHARES-The public offering price for Class R shares is the
NAV per share of that Class.
RIGHT OF ACCUMULATION-Class A shares-Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Premier Family
of Funds, shares of certain other funds advised by Dreyfus 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 in the SAI, where the aggregate
investment, including such purchase, is $100,000 or more. If, for
example, you previously purchased and still hold Class A shares, or
shares of any other Eligible Fund or combination thereof, with an
aggregate current market value of $80,000 and subsequently purchase Class
A shares or shares of an Eligible Fund having a current value of $40,000,
the sales load applicable to the subsequent purchase would be reduced to
2.75% of the offering price. 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 Service 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.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES) -
You may purchase Fund shares (minimum $500 and maximum $150,000 per day)
by telephone if you have checked the appropriate box and supplied the
necessary information on the Fund's Account Application or have a filed
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 ACH member may be so designated. The
Fund may modify or terminate this privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares
of the same class of certain other funds managed or administered by
Dreyfus, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be
of interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions
are imposed on its use. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT
PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOT
HER FUND.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of Personal Retirement Plans, the shares being
exchanged must have a current value
(19)
of at least $500; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value of at
least the minimum initial investment required for the fund into which the
exchange is being made. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless you
check the relevant "No" box on the Account Application, indicating that
you specifically refuse this Privilege. The Telephone Exchange Privilege
may be established for an existing account by written request, signed by
all shareholders on the account, or by a separate Shareholder Services
Form, also available by calling 1-800-645-6561. If you previously have
established the Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-800-221-4060 or, if calling from overseas,
1-401-455-3306. See "How to Redeem Fund Shares-Procedures." Upon an
exchange, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made: Telephone Exchange Privilege, TELETR
ANSFER Privilege and the dividends and distributions payment option (except
for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however,
a sales load may be charged with respect to exchanges of Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or
C shares at the time of an exchange; however, Class B or C shares
acquired through an exchange will be subject to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or C shares will be calculated from
the date of the initial purchase of the Class B or C shares exchanged, as
the case may be. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a
sales load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange your Service Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services
" in the SAI. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee
in accordance with rules promulgated by the SEC. The Fund reserves the
right to reject any exchange request in whole or in part. The
availability of fund exchanges may be modified or terminated at any time
upon notice to shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same class of other funds in the Premier
Family of Funds or certain other funds in the Dreyfus Family of Funds of
which you are currently an investor. WITH RESPECT TO CLASS R SHARES HELD BY
RETIREMENT PLANS, EXCHANGES PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE MAY BE
MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND
SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges of Class A
shares into funds sold with a sales load. No
(20)
CDSC will be imposed on Class B or C shares at the time of an
exchange; however, Class B or C shares acquired through an exchange will
be subject to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or C
shares will be calculated from the date of the initial purchase of the
Class B or C shares exchanged, as the case may be. See "Shareholder
Services" in the SAI. The right to exercise this privilege may be
modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this privilege at any time by mailing written
notification to Premier Limited Term Government Securities Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587. The Fund may charge a service
fee for the use of this Privilege. No such fee currently is contemplated.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize, or
an exchange on behalf of a Retirement Plan which is not tax exempt may
result in, a taxable gain or loss. For more information concerning this
privilege and the funds in the Premier Family of Funds or the Dreyfus
Family of Funds eligible to participate in this privilege, or to obtain
an Auto-Exchange Authorization Form, please call toll free
1-800-645-6561.
AUTOMATIC ASSET BUILDER
AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and
Fund shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained
at a domestic financial institution which is an ACH member may be so
designated. To establish an AUTOMATIC Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may cancel
your participation in this privilege or change the amount of purchase at
any time by mailing written notification to Premier Limited Term
Government Securities Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587, and the notification will be effective three business days
following receipt. The Fund may modify or terminate this privilege at any
time or charge a service fee. No such fee currently is contemplated.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or certain of the Dreyfus Family of Funds of which you are an investor.
Shares of the other fund will be purchased at the then-current net asset
value; however, a sales load may be charged with respect to investments
in shares of a fund sold with a sales load. If you are investing in a
fund that charges a sales load, such shareholder may qualify for share
prices which do not include the sales load or which reflect a reduced
sales load. If you are investing in a fund or class that charges a CDSC,
the shares purchased will be subject on redemption to the CDSC, if any,
applicable to the purchased shares. See "Shareholder Services" in the
SAI. Dividend ACH permits you to transfer electronically on the payment
date 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 ACH member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Limited Term Government Securities Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. To select a new fund after
cancellation, you must submit a new Dividend Options Form. Enrollment in
or cancellation of these privileges is effective three
(21)
business days following receipt. These Privileges are
available only for existing accounts and may not be used to open new
accounts. Minimum subsequent investments do not apply for Dividend Sweep.
The Fund may modify or terminate these privileges at any time or charge a
service fee. No such fee currently is contemplated. Shares held under
Keogh Plans, IRAs or other retirement plans are not eligible for Dividend
Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
You should consider whether Direct Deposit of your entire payment into a
fund with fluctuating NAV, such as the Fund, may be appropriate for you.
To enroll in Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this privilege. The appropriate form may be
obtained by calling 1-800-645-6561. Death or legal incapacity will
terminate your participation in this privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
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.
Particular 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. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Class B and C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services
also are available. You can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call
1-800-358-5566; for IRAs and IRA "Rollover Accounts," please call
1-800-645-6561; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7)
Plans, please call 1-800-322-7880.
LETTER OF INTENT-CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, 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
(22)
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 shares of the Fund 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 shares,
you must indicate your intention to do so under a Letter of Intent.
HOW TO REDEEM FUND SHARES
GENERAL-You may request redemption of your shares at any
time. Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined NAV as described below. 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
Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed directly through the Distributor. Service Agents
or other institutions may charge their clients a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original
cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the SEC. HOWEVER,
IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE TELETRANSFER PRIVILEGE OR
THROUGH AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO
YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE
OR AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
TELETRANSFER PURCHASE OR THE AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE,
AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received your
Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if the net asset value
of your account is $500 or less and remains so during the notice period.
(23)
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 other 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 from 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:
<TABLE>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
WAS MADE PROCEEDS
---------------- ----------------------
<S> <C>
First.................................................... 3.00
Second................................................... 3.00
Third.................................................... 2.00
Fourth................................................... 2.00
Fifth.................................................... 1.00
Sixth.................................................... .00
</TABLE>
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 other 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 five years; then of amounts representing the cost of shares
purchased five years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10
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 his or her
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 3%
(the applicable rate in the second year after purchase) for a total CDSC
of $7.20.
CONTINGENT DEFERRED SALES CHARGE-CLASS C SHARES-A CDSC of
.75% 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 applicable to Class B and Class C
shares will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined
(24)
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 by such shareholders as the Securities and Exchange
Commission or its staff may permit. If the Fund's Trustees determine to
discontinue the waiver of the CDSC, the disclosure in the Fund's
prospectus 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 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 Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES-You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for Class R
shares, through the TELETRANSFER Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your
Service Agent authority to instruct the Transfer Agent to redeem shares
and to credit the proceeds of such redemptions to a designated account at
your Service Agent, you may redeem shares only in this manner and in
accordance with the regular redemption procedure described below. If you
wish to use the other redemption methods described below, you must
arrange with your Service Agent for delivery of the required
application(s) to the Transfer Agent. Other redemption procedures may be
in effect for clients of certain Service Agents and institutions. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the TELET
RANSFER Privilege or telephone exchange privilege, which is granted
automatically unless you refuse it, you authorize the Transfer Agent to
act on telephone instructions from any person representing himself or
herself to be you, or a representative of your Service 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 TELETRANSFER 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 TELETRANSFER redemption had been used. During the delay, the
Fund's NAV may fluctuate.
REGULAR REDEMPTION- Under the regular redemption procedure,
you may redeem your shares by written request mailed to Premier Limited
Term Government Securities Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. Redemption Requests may be delivered in person only to a
Dreyfus Financial Center. These requests will be forwarded to the Fund
and will be processed only upon receipt thereby. For the location of the
nearest financial center, please call the telephone number listed under
"General Information." Redemption requests must be signed by each
shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations,
(25)
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. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed
under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES)-
You may redeem Fund shares (minimum $500 per day) by telephone if you
have checked the appropriate box and supplied the necessary information
on the Fund's Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between
your Fund account and the bank account designated in one of these
documents. Only such an account maintained in a domestic financial
institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank
ordinarily two days after receipt of the redemption request or, at your
request, paid by check (maximum $150,000 per day) and mailed to your
address. Holders of jointly registered Fund or bank accounts may redeem
through the TELETRANSFER Privilege for transfer to their bank account
only up to $250,000 within any 30-day period. The Fund reserves the right
to refuse any request made by telephone, including requests made shortly
after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or terminate this privilege
at any time or charge a service fee upon notice to shareholders. No such
fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this privilege.
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 NYSE (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 NYSE, 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. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it 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 NYSE 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 NYSE 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-CLASS A SHARES. Upon written request,
you may reinvest up to the number of Class A shares you have redeemed,
within 30 days of redemption, at the then-prevailing net asset value
without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
(26)
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLANS)
Class A shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C
shares are subject to a Distribution Plan and a Service Plan, each
adopted pursuant to Rule 12b-1. Potential investors should read this
Prospectus in light of the terms governing Agreements with their Service
Agents. A Service Agent entitled to receive compensation for selling and
servicing the Fund's shares may receive different compensation with
respect to one class of shares over another.
DISTRIBUTION PLAN-CLASS A SHARES-The Class A shares of the
Fund bear some of the cost of selling those shares under the Distribution
Plan (the "Plan"). The Plan allows the Fund to spend annually up to 0.25%
of its average daily net assets attributable to Class A shares to compensa
te Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing
activities and expenses primarily intended to result in the sale of Class
A shares of the Fund. The Plan allows the Distributor to make payments
from the Rule 12b-1 fees it collects from the Fund to compensate Service
Agents that have entered into Selling Agreements ("Agreements") with the
Distributor. Under the Agreements, the Service Agents are obligated to
provide distribution related services with regard to the Fund and/or
shareholder services to the Service Agent's clients that own Class A
shares of the Fund.
The Fund and the Distributor may suspend or reduce payments
under the Plan at any time, and payments are subject to the continuation
of the Fund's Plan and the Agreements described above. From time to time,
the Service Agents, the Distributor and the Fund may agree to voluntarily
reduce the maximum fees payable under the Plan. See the SAI for more
details on the Plan.
DISTRIBUTION AND SERVICE PLANS-CLASS B AND C. Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and C shares at an
aggregate annual rate of .50 of 1% of the value of the average daily net
assets of Class B and C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B and C shares
a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B and C. 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 providing services related to the maintenance of such shareholder
accounts. With regard to such services, each Service Agent is required to
disclose to its clients any compensation payable to it by the Fund and
any other compensation payable by their clients in connection with the
investment of their assets in Class B and C shares. The Distributor may
pay one or more Service Agents in respect of distribution and other
services for these Classes of shares. The Distributor determines the
amounts, if any, to be paid to Service Agents under the Distribution and
Service Plans and the basis on which such payments are made. The fees
payable under the Distribution and Service Plans are payable without
regard to actual expenses incurred.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays dividends monthly from its
net investment income, if any, and distributes net realized gains, if
any, once a year, but it may make distributions on a more frequent basis
to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the 1940 Act. The Fund will
not make distributions from net realized gains unless capital loss
carryovers, if any, have been utilized or have expired. Investors other
than qualified Retirement Plans may choose whether to receive dividends
and other distributions in cash or to reinvest them in additional Fund
shares; dividends
(27)
and other distributions paid to qualified Retirement Plans
are reinvested automatically in additional Fund shares at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors. Shares purchased on a day on which the Fund
calculates its NAV will begin to accrue dividends on that day, and
redemption orders effected on any particular day will receive dividends
declared only through the business day prior to the day of redemption.
Dividends paid by each Class will be calculated at the same time and in
the same manner and will be in the same amount, except that the expenses
attributable solely to a particular Class will be borne exclusively by
that Class. Class B and C shares will receive lower per share dividends
than Class A shares which will receive lower per share dividends than
Class R shares, because of the higher expenses borne by the relevant
Class. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated
investment company" under the Code so long as such qualification is in
the best interests of its shareholders. Such qualification will relieve
the Fund of any liability for Federal income tax to the extent its
earnings are distributed in accordance with applicable provisions of the
Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders, including certain non-qualified Retirement Plans, as
ordinary income whether received in cash or reinvested in Fund shares.
Distributions from the Fund's net realized long-term capital gains will
be taxable to such shareholders as long-term capital gains for Federal
income tax purposes, regardless of how long the shareholders have held
their Fund shares and whether such distributions are received in cash or
reinvested in Fund shares. The net capital gain of an individual generally
will not be subject to Federal income tax at a rate in excess of 28%.
Dividends and other distributions also may be subject to state and local
taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. withholding tax at the rate of 30%, unless
the foreign investor claims the benefit of a lower rate specified in a
tax treaty. Distributions from net realized long-term capital gains paid
by the Fund to a foreign investor, as well as the proceeds of any
redemptions from a foreign investor's account, regardless of the extent
to which gain or loss may be realized, generally will not be subject to
U.S. withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from net realized, long-term capital gains,
if any, paid during the year.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if (1) an investor redeems those
shares or exchanges those shares for shares of another fund advised or
administered by Dreyfus within 91 days of purchase and (2) in the case of
a redemption, acquires other Fund Class A shares through exercise of the
Reinvestment Privilege or, in the case of an exchange, such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charged the
investor for the original Class A shares, up to the amount of the
reduction of the sales load pursuant to the Reinvestment Privilege or on
the exchange, as the case may be, is not included in the basis of such
shares for purposes of computing gain or loss on the redemption or the
exchange, and instead is added to the basis of the fund shares received
pursuant to the Reinvestment Privilege or the exchange.
Dividends paid by the Fund to qualified Retirement Plans
ordinarily will not be subject to taxation until the proceeds are
distributed from the Retirement Plans. The Fund will not
(28)
report to the IRS dividends paid to such plans. Generally,
distributions from qualified Retirement Plans, except those representing
returns of non-deductible contributions thereto, will be taxable as
ordinary income and, if made prior to the time the participant reaches
age 59-1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. If the distribution from such
a Retirement Plan (other than certain governmental or church plans) for
any taxable year following the year in which the participant reaches age
70-1/2 is less than the "minimum required distribution" for that taxable
year, an excise tax equal to 50% of the deficiency may be imposed by the
IRS. The administrator, trustee or custodian of such a Retirement Plan
will be responsible for reporting distributions from such plans to the
IRS. Moreover, certain contributions to a qualified Retirement Plan in
excess of the amounts permitted by law may be subject to an excise tax.
With respect to individual investors and certain
non-qualified Retirement Plans, Federal regulations generally require the
Fund to withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends, distributions from net realized long-term capital gains
and the proceeds of any redemption, regardless of the extent to which
gain or loss may be realized, paid to a shareholder if such shareholder
fails to certify either that the TIN furnished in connection with opening
an account is correct or that such shareholder has not received notice
from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify the Fund to
institute backup withholding if the IRS determines a shareholder's TIN is
incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account and may be
claimed as a credit on the record owner's Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax advisers regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may
be calculated on the basis of average annual total return and/or total
return. These total return figures reflect changes in the price of the
shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and C should be expected to be
lower than that of Class A and the performance of Class A, B and C should
be expected to be lower than that of Class R. Performance for each Class
will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was purchased with
an initial payment of $1,000 and that the investment was redeemed at the
end of a stated period of time, after giving effect to the reinvestment
of dividends and other distributions during the period. The return is
expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end
of the period. Advertisements of the Fund's performance will include the
Fund's average annual total return for one, five and ten year periods, or
for shorter periods depending upon the length of time during which the
Fund has operated. Computations of average annual total return for
periods of less than one year represent an annualization of the Fund's
actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends
(29)
and other distributions. Total return generally is expressed
as a percentage rate which is calculated by combining the income and
principal changes for a specified period and dividing by the NAV (or
maximum offering price in the case of Class A shares) per share at the
beginning of the period. Advertisements may include the percentage rate
of total return or may include the value of a hypothetical investment at
the end of the period which assumes the application of the percentage
rate of total return. Total return also may be calculated by using the
NAV 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
shares or without giving effect to any applicable CDSC at the end of the
period for Class B or C shares. Calculations based on the NAV per share
do not reflect the deduction of the sales load on the Fund's Class A
shares, which, if reflected, would reduce the performance quoted.
The Fund may also advertise the yield on a Class of shares.
The Fund's yield is calculated by dividing a Class of shares' annualized
net investment income per share during a recent 30-day (or one month)
period by the maximum public offering price per Class of such share on
the last day of that period. Since yields fluctuate, yield data cannot
necessarily be used to compare an investment in a Class of shares with
bank deposits, savings accounts, and similar investment alternatives
which often provide an agreed-upon or guaranteed fixed yield for a stated
period of time.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
The Fund may compare the performance of its shares with
various industry standards of performance including Lipper Analytical
Services, Inc. ratings. Performance rankings as reported in CHANGING TIMES,
BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL, MUTUAL FUND
FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALU
ES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE, BARRON'S and similar
publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its shares' total returns and yields in
advertisements or in shareholder reports. The Fund may advertise
non-standardized performance information, such as total return, for
periods other than those required to be shown or cumulative performance
data. The Fund may advertise a quotation of yield or other similar
quotation demonstrating the income earned or distributions made by the
Fund.
GENERAL INFORMATION
The Company was organized as a Massachusetts business trust
under the laws of the Commonwealth of Massachusetts on March 30, 1979
under the name The Laurel Funds Trust, and changed its name to The
Dreyfus/Laurel Funds Trust on October 17, 1994. The Company is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The Fund's shares are classified into four
classes-Class A, Class B, Class C and Class R. The Company's Declaration
of Trust permits the Board of Trustees to create an unlimited number of
investment portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of
a fund (and Classes thereof) vote together as a single Class, except as
to any matter for which a separate vote of any fund or Class is required
by the 1940 Act, and except as to any matter which affects the interests
of one or more particular funds or Classes, in which case only the
shareholders of the affected fund or Classes are entitled to vote, each
as a separate Class. Only holders of Class A, B or C
(30)
shares, as the case may be, will be entitled to vote on
matters submitted to shareholders pertaining to the Distribution and
Service Plan relating to that Class.
At December 6, 1994, Mellon Bank, Dreyfus' parent, owned of
record through its direct and indirect subsidiaries more than 25% of the
Fund's outstanding voting shares, and is deemed, under the 1940 Act, to
be a controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will
not be necessary for the Fund to hold annual meetings of shareholders. As
a result, Fund shareholders may not consider each year the election of
Trustees 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 purposes of removing a Trustee from office and for any
other purpose. Fund shareholders may remove a Trustee by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition,
the Board of Trustees will call a meeting of shareholders for the purpose
of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and
will send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN
THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE
FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
(31)
PLG/P1121994
Premier Limited Term Government Securities Fund
Class A and Class R Shares
December 19, 1994
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND is a diversified income
fund seeking high current income consistent with the preservation of capi-
tal by investing primarily in debt obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities.
THIS PROSPECTUS describes Premier Limited Term Government Securities Fund
(the "Fund") of The Dreyfus/Laurel Funds Trust (formerly The Laurel Funds
Trust and previously The Boston Company Fund), a management investment
company that is part of The Premier Family of Funds. This Prospectus de-
scribes two classes of shares--Class A Shares and Class R Shares (collec-
tively, the "Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. The Fund offers
you four methods of purchasing Fund Shares, but only Class A and Class R
Shares are offered by this Prospectus. See "Alternative Purchase Methods."
Additional information about the Fund is contained in a Statement of Addi-
tional Information (the "SAI"), which has been filed with the Securities
and Exchange Commission (the "SEC") and is available upon request without
charge by calling or writing to The Premier Family of Funds. The SAI bears
the same date as the Prospectus and is incorporated by reference in its
entirety into this Prospectus.
In addition to this Fund, The Premier Family of Funds Funds also offer
other funds that provide investment opportunities for you in the equity
and fixed income markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868.
The Premier Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSI-
BLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE SUM-
MARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary 5
Financial Highlights 8
Alternative Purchase Methods 11
Investment Objective and Policies 13
Other Investment Policies and Risk Factors 14
HOW TO DO BUSINESS WITH US
Special Shareholder Services 19
Investor Line 20
How to Buy Fund Shares 20
By Mail 20
By Telephone 21
By Wire 21
By Automatic Monthly Investments 21
By Direct Deposit 21
By In-Kind Purchases 22
Offering Price 22
When Share Price is Determined 25
Additional Information About Investments 25
How to Exchange Your Investment From One Fund to Another 26
By Telephone 26
By Mail 26
Additional Information About Exchanges 27
How to Redeem Shares 27
By Telephone 29
By Mail 29
By Automated Withdrawal Program 30
Redemption Proceeds 31
Additional Information About Redemptions 31
How To Use The Premier Family of Funds in a Tax-Qualified
Retirement Plan 32
How to Transfer an Investment to a Premier Family of
Funds' Retirement Plan 32
OTHER INFORMATION
Share Price 32
Performance Advertising 33
Distributions 34
Taxes 35
Other Services 36
Further Information About The Fund 37
The Dreyfus/Laurel Funds Trust 37
Management 37
Distribution Plans (Class A Plan and Class B and C Plan) 39
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
EXPENSE SUMMARY
<TABLE>
<CAPTION>
Class A Class B Class C Class R
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Deferred Sales Charge Imposed on
Redemptions (as a percentage of the amount
subject to charge) none 3.00% 0.75% none
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fee 0.60% 0.60% 0.60% 0.60%
12b-1 Fee* 0.25% 0.75% 0.75% none
Other Expenses** 0.00% 0.00% 0.00% 0.00%
Total Fund Operating Expenses 0.85% 1.35% 1.35% 0.60%
EXAMPLES
You would pay the following 1 year $ 38 $ 44/14+ $ 21/14+ $ 6
expenses on a $1,000 investment, 3 years $ 56 $ 63/43+ $ 43 $19
assuming (1) a 5% annual return 5 years $ 76 $ 84/74+ $ 74 $33
and (1) except where noted, 10 years $132 $136 $162 $75
redemption at the end of
each time period:
<FN>
* See "Distribution Plans" for a description of the Fund's Distribution
and Service Plans for Class A, B and C Shares.
** Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is contractually required
to reduce its Management Fee in an amount equal to the Fund's alloca-
ble portion of such fees and expenses, which are estimated to be
0.02% of the Fund's net assets. See "Further Information About the
Fund--Management."
+ Assuming no redemption of Shares.
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or in-
directly, the payment of which will reduce investors' return on an an-
nual basis. Other Expenses and Total Fund Operating Expenses are based
on estimated amounts for the current fiscal year. Long-term investors in
Class A, B or C Shares could pay more in 12b-1 fees than the economic
equivalent of paying the maximum front-end sales charges applicable to
mutual funds sold by members of the National Association of Securities
Dealers, Inc. ("NASD"). The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may
be in effect. Certain Service Agents (as defined herein) may charge
their clients direct fees for effecting transactions in Fund Shares;
such fees are not reflected in the foregoing table. See "Further Infor-
mation About the Fund--Management," "How to Buy Fund Shares" and "Dis-
tribution Plans."
The Fund understands that banks, brokers, dealers or other financial
institutions (including The Dreyfus Corporation (the "Manager") and its
affiliates) (collectively "Service Agents") may charge fees to their
clients who are owners of the Fund's Class A, B or C Shares for various
services provided in connection with a client's account. These fees
would be in addition to any amounts received by a Service Agent under
its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. ("Premier"). The Agreement requires each Service Agent to disclose
to its clients any compensation payable to such Service Agent by Premier
and any other compensation payable by the client for various services
provided in connection with their accounts.
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
The table below is based upon a single Class A Share outstanding through
each fiscal year and should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report dated
December 31, 1993 and Semi-Annual Report (unaudited) dated June 30, 1994,
each of
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND*
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
<TABLE>
<CAPTION>
Six Months Year Year
Ended Ended Ended
6/30/94 12/31/93 12/31/92
(unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.14 $12.76 $ 12.81
Income from investment operations:
Net investment income# 0.35 0.75 0.72
Net realized and unrealized gain/(loss) on
investments (0.93) 0.40 (0.05)
Total from investment operations (0.58) 1.15 0.67
Less distributions:
Dividends from net investment income (0.34) (0.74) (0.72)
Distributions from net realized gains -- (0.03) --
Distributions in excess of net realized
gains -- (0.00)** --
Distributions from capital -- -- --
Total distributions (0.34) (0.77) (0.72)
Net asset value, end of period $ 12.22 $13.14 $ 12.76
Total return+ (4.48)% 9.10% 5.47%
Ratios/Supplemental data:
Net assets, end of period (in 000's) $19,828 $8,776 $22,914
Ratio of operating expenses to average net
assets+++ 1.51%++ 1.40% 1.67%
Ratio of net investment income to average net
assets 8.08%++ 5.56% 5.70%
Portfolio turnover rate++++ 105% 74% 30%
<FN>
(1) On February 1, 1993, exisiting Shares of the Fund were designated
Retail Class and the Fund began offering the Institutional Class of
Shares. Effective April 4, 1994 the Retail and Institutional classes
of Shares were reclassified as a single class of Shares known as In-
vestor Shares. The amounts shown for the six months ended June 30,
1994, were calculated using the performance of a Retail Share out-
standing from January 1, 1994 to April 3, 1994, and the performance
of an Investor Share outstanding from April 4,1994 to June 30, 1994.
The Financial Highlights for the year ended December 31, 1993 and
prior periods are based upon a Retail Share outstanding. On October
17, 1994, Investor Shares were redesignated Class A Shares.
* The Fund commenced operations on March 3, 1986. Effective May 1,
1990, the investment policies of this fund (prior to that date, the
"GNMA Fund") were changed to the current investment objectives and
policies described under "Investment Objective and Policies" in the
prospectus.
** Amount represents less than $0.01 per share.
+ Total return represents aggregate total return for the periods indi-
cated.
++ Annualized.
</TABLE>
which is incorporated by reference in the SAI. The financial statements
included in the Fund's Annual Report for the year ended December 31, 1993
have been audited by Coopers & Lybrand L.L.P., independent accountants,
whose report appears in the Fund's Annual Report. Financial Highlights are
not included for Class R Shares because the Fund did not offer Class R
Shares at period ended June 30, 1994.
<TABLE>
<CAPTION>
Year Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
<S> <C> <C> <C> <C> <C>
$11.99 $11.97 $11.66 $11.75 $12.63 $12.50
0.74 0.81 0.90 0.81 0.99 0.88
0.82 0.02 0.33 (0.09) (0.88) 0.13
1.56 0.83 1.23 0.72 0.11 1.01
(0.74) (0.81) (0.91) (0.81) (0.99) (0.88)
-- -- -- -- -- --
-- -- -- -- -- --
-- -- (0.01) -- -- --
(0.74) (0.81) (0.92) (0.81) (0.99) (0.88)
$12.81 $11.99 $11.97 $11.66 $11.75 $12.63
13.51% 7.29% 10.89% 6.25% 1.01% 8.39%
$15,797 $15,526 $13,841 $13,759 $13,618 $15,434
1.91% 1.92% 1.85% 1.63% 1.04% 0.65%++
6.09% 6.87% 7.61% 6.91% 8.20% 8.21%++
50% 300% 321% 65% 122% 85%
<FN>
+++ Without the reimbursement by the investment adviser, the ratio of ex-
penses to average net assets for the six months ended June 30, 1994
was 1.92%. Without the voluntary waiver of fees and/or the voluntary
reimbursement of expenses by the investment adviser and transfer
agent, the ratio of expenses to average net assets would have been
1.74% and 1.57% for the years ended December 31, 1993 and 1987, re-
spectively, and 1.30% for the period ended December 31, 1986.
++++ In accordance with the SEC's July 1985 rules amendment, the rates for
1986 and later periods include U.S. Government long-term securities
which were excluded from the calculations in prior years.
# Net investment income before voluntary reimbursement by the invest-
ment adviser for the six months ended June 30, 1994 was $0.33. Net
investment income before the voluntary waiver of fees and/or the vol-
untary reimbursement of expenses by the investment adviser, transfer
agent and distributor, for the years ended December 31, 1993 and
1987, and for the period ended December 31, 1986 were $0.70, $0.93
and $0.81, respectively.
</TABLE>
Additional Classes of Shares--designated Class B and Class C--have been
added to the previously existing Class A (formerly Investor Class) and
Class R (formerly Trust Class) Shares of the Fund. Class A and Class R
Shares are offered by this Prospectus. Class B and Class C Shares are of-
fered through a servicing network associated with the Manager pursuant to
a separate Prospectus. Class A and Class R Shares are also offered through
that network pursuant to a separate Prospectus. For more information call
1-800-645-6561. Please read that Prospectus carefully. Exchange and share-
holder services vary depending upon the network through which you purchase
Fund Shares. See "How to Buy Fund Shares."
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund Shares, but only Class
A and Class R Shares are offered by this Prospectus. You may choose the
class of Shares for which you are eligible that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your Shares and any other relevant circumstances. Each Fund Share repre-
sents an identical pro rata interest in the Fund's investment portfolio.
Class A Shares are sold at net asset value per share ("NAV") plus a maxi-
mum initial sales charge of 3.00% of the public offering price imposed at
the time of purchase. The initial sales charge may be reduced or waived
for certain purchases. See "Offering Price--Class A Shares." These Shares
are subject to an annual 12b-1 fee at the rate of 0.25 of 1% of the value
of the average daily net assets of Class A. See "Distribution Plan--Class
A."
Class A Shares (and Class B and Class C Shares described below) are prima-
rily sold to retail investors by Service Agents that have entered into
Selling Agreements with Premier Mutual Funds Services, Inc. ("Premier"),
except that full-time or part-time employees or directors of the Manager
or any of its affiliates or subsidiaries, 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 Premier. Subsequent purchases may be sent directly to the Transfer
Agent or your Service Agent.
Class R Shares generally may not be purchased directly by individuals, al-
though eligible institutions may purchase Class R Shares for accounts
maintained by individuals. Class R Shares are sold at net asset value per
share primarily to bank trust departments and other financial service pro-
viders (including Mellon Bank and its affiliates) acting on behalf of cus-
tomers having a qualified trust or investment account or similar relation-
ship at such institution. Class R Shares may be purchased for a retirement
plan only by a custodian, trustee, investment manager or other entity au-
thorized to act on behalf of such Plan. Institutions effecting transac-
tions in Class R Shares for the accounts of their clients may charge their
clients direct fees in connection with such transactions.
In addition to the classes of Shares offered by this Prospectus, the Fund
offers two other classes of Shares designated Class B and Class C avail-
able, together with the Shares offered by this Prospectus, through a ser-
vicing network associated with the Manager. For more information and a
Prospectus relating to Shares offered through that network, call 1-800-
645-6561. Please read that Prospectus carefully. Exchange and shareholder
services vary depending upon the network through which you purchase Fund
Shares.
Class B Shares are sold at NAV with no initial sales charge at the time of
purchase; as a result, the entire purchase price is immediately invested
in the Fund. Class B Shares are subject to a maximum 3% Contingent De-
ferred Sales Charge ("CDSC"), which is assessed only if you redeem Class B
Shares within five years of purchase. See "Offering Price--Class B Shares"
and "How to Redeem Fund Shares--Contingent Deferred Sales Charge--Class B
Shares." These Shares also are subject to an annual distribution fee at
the rate of 0.50 of 1% of the value of the average daily net assets of
Class B. In addition, Class B Shares are subject to an annual service fee
at the rate of 0.25 of 1% of the value of the average daily net assets of
Class B. See "Distribution and Service Plans--Class B and C." The distri-
bution fee paid by Class B will cause such class to have a higher expense
ratio and to pay lower dividends than Class A. Approximately six years
after the date of purchase, Class B Shares automatically will convert to
Class A Shares based on the relative NAV for Shares of each such class,
and will no longer be subject to the distribution fee. (Such conversion is
subject to suspension by the Fund's Board of Directors if adverse tax con-
sequences might result.) 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 are subject to a 0.75% CDSC, which is assessed only if a
shareholder redeems Class C Shares within one year of purchase. See "How
to Redeem Fund Shares--Class C Shares." These Shares also are subject to
an annual distribution fee at the rate of 0.50 of 1% of the value of the
average daily net assets of Class C. Class C Shares are also subject to an
annual service fee at the rate of 0.25 of 1% of the value of the average
daily net assets of Class C. See "Distribution and Service Plans--Class B
and C." The distribution fee paid by Class C will cause such class to have
a higher expense ratio and to pay lower dividends than Class A.
The decision as to which class of Shares is more beneficial to an investor
depends on the amount and the intended length of his or her investment. An
investor should consider whether, during the anticipated life of his or
her investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C Shares would be less than the initial sales
charge on Class A Shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A Shares.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A Shares because the accumulated continuing dis-
tribution fees on Class B or Class C Shares may exceed the initial sales
charge on Class A Shares during the life of the investment. Finally, an
investor should consider the effect of the CDSC period and any conversion
rights of the classes in the context of his or her investment time frame.
For example, while Class C Shares have a shorter CDSC period than Class B
Shares, Class C Shares do not have a conversion feature and, therefore,
are subject to an ongoing distribution fee. Thus, Class B Shares may be
more attractive than Class C Shares to investors with longer term invest-
ment outlooks. Generally, Class A Shares may be more appropriate for in-
vestors who invest $1,000,000 or more in Fund Shares, but will not be ap-
propriate for investors who invest less than $100,000 in Fund Shares.
INVESTMENT OBJECTIVE AND POLICIES
Premier Limited Term Government Securities Fund is a diversified fund that
seeks to provide investors with current income consistent with preserva-
tion of capital. The Fund seeks to achieve its objectives by investing in
a professionally managed, diversified portfolio consisting of debt obliga-
tions of varying maturities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in U.S. Government Securities with remaining maturities of between
three and eight years after purchase. U.S. Government Securities in which
the Fund invests include obligations issued or guaranteed as to both prin-
cipal and interest by the U.S. Government or backed by the full faith and
credit of the United States. In addition to direct obligations of the U.S.
Treasury, these include securities issued or guaranteed by the Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of
the United States, Small Business Administration, Government National
Mortgage Association, General Services Administration and Maritime Admin-
istration. The Fund will also invest in U.S. Government Securities that do
not carry the full faith and credit guarantee, such as mortgage-backed se-
curities issued by the Federal Home Loan Mortgage Corporation ("FHLMC")
and the Federal National Mortgage Association ("FNMA"). The Fund will in-
vest in securities of an instrumentality to which the U.S. Government is
not obligated by law to provide support only if the Manager determines
that the credit risk with respect to the instrumentality does not make its
securities unsuitable for investment by the Fund.
The Fund may invest up to 35% of its total assets in mortgage-backed secu-
rities issued by the Government National Mortgage Association ("GNMA"),
FHLMC, and FNMA. These mortgage-related securities provide a monthly pay-
ment consisting of interest and principal payments. Additional payments
may be made out of unscheduled repayment of principal resulting from the
sale of the underlying residential property, refinancing or foreclosure,
net of fees or costs that may be incurred. Prepayments of principal on
mortgage-related securities may tend to increase due to refinancing of
mortgages as interest rates decline. Prompt payment of principal and in-
terest on GNMA mortgage pass-through certificates is backed by the full
faith and credit of the United States. FNMA guaranteed mortgage pass-
through certificates and FHLMC participation certificates are solely the
obligations of those entities but are supported by the discretionary au-
thority of the U.S. Government to purchase the agencies' obligations.
To the extent that the Fund purchases mortgage-related securities at a
premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of
the Fund's principal investment to the extent of the premium paid. The
yield of the Fund that invests in mortgage-related securities may be af-
fected by reinvestment of prepayments at higher or lower rates than the
original investment. In addition, like other debt securities, the values
of mortgage-related securities, including government and government-
related mortgage pools, generally will fluctuate in response to market in-
terest rates. (See "Other Investment Policies.")
While the Fund intends to invest primarily in U.S. Government Securities
with remaining maturities of between three and eight years, the Fund may
also invest in U.S. Government Securities of all maturities: short (12
months or less), intermediate (one to ten years) or long (more than ten
years), and will maintain an average weighted maturity of between three
and ten years. Under normal market conditions, the longer the average ma-
turity of the Fund's holdings the greater its price volatility. As noted
above, given the monthly prepayments of principal and interest on
mortgage-backed certificates, these securities may be considered to have a
shorter effective maturity. The effective maturity of the Fund's portfolio
will vary, depending on the principal prepayments of the mortgage-backed
certificates. The Fund may invest up to 100% of its assets in short-term
U.S. Government Securities, including repurchase agreements involving U.S.
Government Securities, as the Manager believes is advisable for temporary
defensive purposes.
From time to time, the Fund may write covered put and call options on its
portfolio securities and may enter into futures contracts and related op-
tions. The Fund may also purchase U.S. Government Securities on a when-
issued basis, may purchase or sell U.S. Government Securities for delayed
delivery, or lend its portfolio securities. For further discussion of the
risks associated with the types of securities in which the Fund invests,
including covered option writing, futures and options on futures, illiquid
securities, repurchase agreements and when-issued securities and delayed
delivery transactions. (See "Other Investment Policies.")
OTHER INVESTMENT POLICIES AND RISK FACTORS
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
COVERED OPTION WRITING. From time to time, the Fund may write covered put
and call options on portfolio securities. The Fund could realize fees (re-
ferred to as "premiums") for granting the rights evidenced by the options.
However, in return for the premium, the Fund forfeits the right to any ap-
preciation in the value of the underlying security while the option is
outstanding. A put option embodies the right of its purchaser to compel
the writer of the option to purchase from the option holder an underlying
security at the specified price at any time during the option period. In
contrast, a call option embodies the right of its purchaser to compel the
writer of the option to sell the option holder an underlying security at a
specified price at any time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may suffer
a loss equal to the difference between the price at which the Fund is re-
quired to purchase the underlying security and its market value at the
time of the option exercise, less the premium received for writing the op-
tion. Upon the exercise of a call option written by the Fund, the Fund may
suffer a loss equal to the excess of the security's market value at the
time of the option exercise over the Fund's acquisition cost of the secu-
rity, less the premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to pur-
chase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account,
cash, U.S. Government Securities or other high-grade debt obligations hav-
ing a value at least equal to the exercise price of the underlying securi-
ties or (b) continue to own an equivalent number of puts of the same "se-
ries" (that is, puts on the same underlying security having the same exer-
cise prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying security) with exercise prices greater than those that it has
written (or, if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, it will deposit the difference
with the Fund's custodian in a segregated account).
The Fund may engage in a closing purchase transaction to realize a profit,
to prevent an underlying security from being called or put or, in the case
of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the out-
standing option's expiration). To effect a closing purchase transaction,
the Fund would purchase, prior to the holder's exercise of an option that
the Fund has written, an option of the same series as that on which the
Fund desires to terminate its obligation. The obligation of the Fund under
an option that it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as the re-
sult of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to
do so. To facilitate closing purchase transactions, however, the Fund or-
dinarily will write options only if a secondary market for the options ex-
ists on a national securities exchange or in the over-the-counter market.
FUTURES AND OPTIONS ON FUTURES. The Fund may enter into futures contracts
as hedges when deemed advisable by the Manager. The Fund may purchase and
sell interest rate futures contracts, and purchase and write related op-
tions, that are traded on a United States exchange or board of trade.
These investments, if any, by the Fund will be made solely for the purpose
of hedging against changes in the value of its portfolio securities due to
anticipated changes in interest rates and market conditions, and when the
transactions are economically appropriate to the reduction of risks inher-
ent in the management of the Fund. The use of futures contracts and op-
tions on futures contracts as a hedging device involves several risks.
There can be no assurance that there will be a correlation between price
movements in the underlying securities, on the one hand, and price move-
ments in the securities which are the subject of the hedge, on the other
hand. Positions in futures contracts and options on futures contracts may
be closed out only on an exchange or board of trade that provides an ac-
tive market for them, and there can be no assurance that a liquid market
will exist for the contract or the option at any particular time. Losses
incurred by hedging transactions and the cost of these transactions will
affect the Fund's performance. Successful use of futures contracts by the
Fund is subject to the ability of the Manager to correctly predict move-
ments in the direction of interest rates. The Fund may not purchase or
sell futures contracts or purchase options on futures if, immediately
thereafter, more than 33 1/3 % of its net assets would be hedged. In addi-
tion, the Fund may not enter into futures and related options contracts
for which aggregate initial margin deposits and premiums exceed 5% of the
fair market value of the Fund's assets, after taking into account unreal-
ized profits and unrealized losses on futures contracts into which it has
entered.
COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage obligations
("CMOs") are a type of bond secured by an underlying pool of mortgages or
mortgage pass-through certificates that are structured to direct payments
on underlying collateral to different series or classes of the obliga-
tions. CMO classes may be specially structured in a manner that provides
any of a wide variety of investment characteristics, such as yield, effec-
tive maturity and interest rate sensitivity. CMO structuring is accom-
plished by in effect stripping out portions of the cash flows (comprised
of principal and interest payments) on the underlying mortgage assets and
prioritizing the payments of those cash flows. In the most extreme case,
one class will be a "principal-only" (PO) security, the holder of which
receives the principal payments made by the underlying mortgage-backed se-
curity, while the holder of the "interest- only" (IO) security receives
interest payments from the same underlying security. CMOs may be struc-
tured in other ways that, based on mathematical modeling or similar tech-
niques, is expected to provide certain results. As market conditions
change, however, and particularly during periods of rapid or unanticipated
changes in market interest rates, the attractiveness of a CMO class, and
the ability of a structure to provide the anticipated investment charac-
teristics, may be significantly reduced. Such changes can result in vola-
tility in the market value, and in some instances reduced liquidity, of
the CMO class.
Inverse floaters are instruments whose interest rates bear an inverse re-
lationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index in-
versely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, an issuer may decide
to issue two variable rate instruments instead of a single long-term,
fixed-rate bond. The interest rate on one instrument reflects short-term
interest rates, while the interest rate on the other instrument (the in-
verse floater) reflects the approximate rate the issuer would have paid on
a fixed-rate bond, multiplied by two, minus the interest rate paid on the
short-term instrument. The market for inverse floaters is relatively new.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale.) The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion and other relevant information in making such determinations. If a
particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the per-
centage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buy-
ers become, for a time, uninterested in purchasing these securities.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organiza-
tions. Such loans will not exceed 33 1/3 % of the Fund's total assets,
taken at value. Loans of portfolio securities by the Fund will be collat-
eralized by cash, letters of credit or securities issued or guaranteed by
the U.S. Government or its agencies, which will be maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
Investment Company Act of 1940 (the "1940 Act"). As a shareholder of an-
other investment company, the Fund would bear, along with other sharehold-
ers, its pro rata portion of the other investment company's expenses, in-
cluding advisory fees. These expenses would be in addition to the advisory
and other expenses that the Fund bears directly in connection with its own
operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement trans-
actions in pursuit of its investment objectives. A repurchase agreement
involves the purchase of a security by the Fund and a simultaneous agree-
ment (generally with a bank or broker-dealer) to repurchase that security
from the Fund at a specified price and date or upon demand. This technique
offers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure ad-
vantageous prices or yields, the Fund may purchase U.S. Government Securi-
ties on a when-issued basis or may purchase or sell securities for delayed
delivery. In such transactions, delivery of the securities occurs beyond
the normal settlement periods, but no payment or delivery is made by the
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed deliv-
ery basis involves the risk that, as a result of an increase in yields
available in the marketplace, the value of the securities purchased will
decline prior to the settlement date. The sale of securities for delayed
delivery involves the risk that the prices available in the market on the
delivery date may be greater than those obtained in the sale transaction.
The Fund will establish a segregated account consisting of cash, U.S. Gov-
ernment Securities or other high-grade debt obligations in an amount equal
to the amounts of its when-issued and delayed delivery commitments.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of high current income and for short-term trading profits, in the
past the portfolio turnover rate of the Fund has exceeded 100% and may ex-
ceed 100% in the future. A portfolio turnover rate of 100% would occur,
for example, if all the securities held by the Fund were replaced once in
a period of one year. In past years the Fund's rate of portfolio turnover
exceeded that of certain other mutual funds with the same investment ob-
jective. A higher rate of portfolio turnover (100% or greater) involves
correspondingly greater brokerage commissions and other expenses which
must be borne directly by the Fund and, thus, indirectly by its sharehold-
ers. In addition, a high rate of portfolio turnover may result in the re-
alization of larger amounts of short-term capital gains which, when dis-
tributed to the Fund's shareholders, are taxable to them as ordinary in-
come. (See "Distributions" and "Taxes.") Nevertheless, security
transactions for the Fund will be based only upon investment consider-
ations and will not be limited by any other considerations when the Man-
ager deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies, restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds Trust may in the future
seek to achieve the Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment ob-
jective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with The Premier Family of Funds. By electing these
services on your application or by completing the appropriate forms, you
may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of The Premier Family of Funds to employ such procedures may sub-
ject it to liability for any loss due to unauthorized or fraudulent in-
structions.
INVESTOR LINE
You may reach The Premier Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Premier Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Premier Family of Funds' investment portfolios and services, (2) lis-
ten to NAVs, yields and total return figures, and (3) talk with a customer
service representative during normal business hours. For more information
about direct access using a Touch-Tone phone, please contact The Premier
Family of Funds.
HOW TO BUY FUND SHARES
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and
Class A Shares of the Fund. Class R Shares are sold primarily to bank
trust departments and other financial service providers (including Mellon
Bank and its affiliates) ("Banks") acting on behalf of customers having a
qualified trust or investment account or relationship at such institution.
Class A Shares are primarily sold to retail investors by Premier and by
Agents that have entered into a Shareholder Servicing and Sales Support
Agreement with Premier. Once an investor has established an account, addi-
tional purchases may, in certain cases, be made directly through the
Fund's transfer agent. If Shares of the Fund are held in an account at a
Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit your transaction requests to the Fund's
transfer agent or to Premier. You may diversify your investments by choos-
ing a combination of investment portfolios offered by The Premier Family
of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Premier Family of
Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must
be payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in The Premier Funds
by wiring funds.
To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Premier Family of Funds
080071.
(2) Be sure to specify on the wire:
(a) The Dreyfus Funds.
(b) The Fund name and the class of Shares of the Fund you are buy-
ing and account number (if you have one).
(c) Your name.
(d) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Premier Family
of Funds at One Exchange Place, Boston, Massachusetts 02109 for more in-
formation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating NAV. Call 1-800-548-2868 or
write The Premier Family of Funds at One Exchange Place, Boston, Massachu-
setts 02109 for more information or a Direct Deposit authorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able market value, must be liquid and must not be subject to restrictions
on resale. The market value of any securities exchanged, plus any cash,
must be at least equal to $25,000. Shares purchased in exchange for secu-
rities generally cannot be redeemed for fifteen days following the ex-
change in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the Shares
purchased and securities exchanged. Securities accepted by the Fund will
be valued in the same manner as the Fund values its assets. Any interest
earned on the securities following their delivery to the Fund and prior to
the exchange will be considered in valuing the securities. All interest,
dividends, subscription or other rights attached to the securities become
the property of the Fund, along with the securities. Call 1-800- 548-2868
or write The Premier Family of Funds at One Exchange Place, Boston, Massa-
chusetts 02109 for more information about "in-kind" purchases.
OFFERING PRICE.
CLASS A SHARES. The public offering price of Class A Shares is the NAV of
that class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
Dealers'
As a % of As a % of Net Reallowance
Offering Price Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
<S> <C> <C> <C>
Less than $100,000 3.00 3.10 2.75
$100,000 to less than $250,000 2.75 2.80 2.50
$250,000 to less than $500,000 2.25 2.30 2.00
$500,000 to less than $1,000,000 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more of
Class A Shares. However, if you purchase Class A Shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem
all or a portion of those Shares within two years after purchase, a CDSC
of 1.00% will be imposed at the time of redemption. The terms contained in
the section of the Fund's Prospectus entitled "How to Redeem Fund Shares--
Contingent Deferred Sales Charge--Class B" (other than the amount of the
CDSC and its time periods) are applicable to the Class A Shares subject to
a CDSC. Letter of Intent and Right of Accumulation apply to such purchases
of Class A Shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with Premier
pertaining to the sale of Fund Shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial in-
stitution 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 NAV, provided
that they have furnished Premier 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 NAV. In addition, Class A Shares are offered
at NAV to full-time or part-time employees or directors of the Manager or
any of its affiliates of subsidiaries, 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 will be offered at NAV without a sales load to employees
participating in certain eligible benefit plans. Class A Shares may be
purchased at NAV through certain broker-dealers and other financial insti-
tutions which have entered into an agreement with Premier, which includes
a requirement that such Shares be sold for the benefit of clients partici-
pating in a "wrap account" or a similar program under which such clients
pay a fee to such broker-dealer or other financial institution. Holders of
accounts with Class A Shares of the Fund as of December 19, 1994, may also
purchase additional Class A Shares of the Fund in the same account at NAV.
The dealer reallowance may be changed from time to time but will remain
the same for all dealers. Premier, at its 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 Shares. In some
instances, those incentives may be offered only to certain dealers who
have sold or may sell significant amounts of shares. Dealers receive a
larger percentage of the sales load from Premier than they receive for
selling most other funds.
CLASS R SHARES. The public offering for Class R Shares is the NAV of that
Class.
CLASS B SHARES. The public offering price for Class B Shares is the NAV
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 under "How to Redeem Fund Shares--Contingent Deferred Sales
Charges--Class B Shares." Premier compensates certain Service Agents for
selling Class B Shares at the time of purchase from Premier's own assets.
The proceeds of the CDSC and the distribution fee, in part, are used to
defray these expenses.
CLASS C SHARES. The public offering price for Class C Shares is the NAV
of that Class. No initial sales charge is imposed at the time of purchase.
A CDSC, however, is imposed on redemptions of Class C Shares made within
the first year of purchase. See "How to Redeem Fund Shares--Contingent De-
ferred Sales Charges--Class C Shares."
RIGHT OF ACCUMULATION--CLASS A SHARES. Reduced sales loads apply to any
purchase of Class A Shares, shares of other funds in the Premier Family of
Funds, shares of certain other funds advised by the Manager 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 re-
lated "purchaser" as defined in the SAI, where the aggregate investment,
including such purchase, is $100,000 or more. If, for example, you previ-
ously purchased and still hold Class A Shares, or shares of any other Eli-
gible Fund or combination thereof, with an aggregate current market value
of $80,000 and subsequently purchase Class A Shares or shares of an Eligi-
ble Fund having a current value of $40,000, the sales load applicable to
the subsequent purchase would be reduced to 2.75% of the offering price.
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
Service Agent must notify Premier if orders are made by wire, or the
transfer agent if orders are made by mail. The reduced sales is subject to
confirmation of your holdings through a check of appropriate records.
LETTER OF INTENT--CLASS A SHARES. By signing a Letter of Intent form,
available from Premier, you become eligible for the reduced sales load ap-
plicable 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 re-
leased 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 spec-
ified, 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 Shares of the Fund 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 purhcase Class A Shares, you must indicate your in-
tention to do so under a Letter of Intent.
WHEN SHARE PRICE IS DETERMINED.
NAV is determined at the close of the New York Stock Exchange ("NYSE") on
each day that the NYSE is open (a "business day"). Investments and re-
quests to exchange or redeem Shares received by the Fund before the close
of regular trading on the NYSE (usually 4 p.m., Eastern time) are effec-
tive on, and will receive the price determined, that day (except invest-
ments made by electronic funds transfer which are effective two business
days after your call). Investment, exchange or redemption requests re-
ceived after the close of the NYSE are effective on, and receive the first
Share price determined, the next business day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. The Fund may suspend the offering of
Shares of any class of the Fund and reserves the right to vary initial and
subsequent investment minimums. Subsequent investments to purchase addi-
tional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Fund reserves the right to change such
minimum from time to time. Any time the Shares of the Fund held in an ac-
count have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), unless the deficiency amount is the result of a
decrease in the NAV, a notification may be sent advising you of the need
to either make an investment to bring the value of the Shares held in the
account up to $1,000 ($500) or to establish an automatic monthly invest-
ment to purchase additional Shares. If the investment is not made or the
automatic monthly investment is not established within 60 days from the
date of notification, the Shares held in the account will be redeemed and
the proceeds from the redemption will be sent by check to your address of
record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403 (b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds advised by the Manager and that were previously advised by
Mellon Bank. As noted below, exchanges from any one fund account may be
limited in any one calendar year. In addition, the Shares being exchanged
and the Shares of each fund being acquired must have a current value of at
least $100 and otherwise meet the minimum investment requirement of the
fund being acquired. Call the Investor Line for additional information and
a prospectus describing other investment portfolios offered by The Premier
Family of Funds.
Shares will be exchanged at the next determined NAV; however, a sales load
may be charged with respect to exchanges of Class A Shares into funds sold
with a sales load. No CDSC will be imposed on Class B or C Shares at the
time of an exchange; however, Class B or C Shares acquired through an ex-
change will be subject to the higher CDSC applicable to the exchanged or
acquired Shares. The CDSC applicable on redemption of the acquired Class B
or C Shares will be calculated from the date of the initial purchase of
the Class B or C Shares exchanged, as the case may be. If you are exchang-
ing Class A Shares into a fund that charges a sales load, you may qualify
for share prices which do not include the sales load or which reflect a
reduced sales load, if the shares of the fund from which you are exchang-
ing were: (a) purchased with a sales load, (b) acquired by a previous ex-
change from shares purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to the fore-
going categories of shares. To qualify, at the time of the exchange your
Service Agent must notify Premier. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. No
fees currently are charged shareholders directly in connection with ex-
changes, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with
rules and promulgated by the SEC. The Fund reserves the right to reject
any exchange request in whole or in part.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Premier
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of a money market fund, the Shares of any of
the funds exchanged pursuant to an Automatic Withdrawal Program, and
to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(6) An exchange is based on the next calculated NAV of each fund after re-
ceipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(8) An exchange of the Fund's Shares is, for Federal income tax purposes,
sale of the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given 60 days notice prior to any material changes in
the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.")
If an investor fails to specify the class of shares to be redeemed or if
he or she owns fewer shares of the class than specified to be redeemed,
the redemption request may be delayed until the Transfer Agent receives
further instructions from the investor or his or her Service Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed directly through Premier. Service Agents or other institu-
tions may charge their clients a nominal fee for effecting redemptions of
Fund shares.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. A CDSC payable to Pre-
mier is imposed on any redemption of Class B Shares which reduces the cur-
rent NAV of your Class B Shares to an amount which is lower than the dol-
lar 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 NAV of the Class B Shares redeemed does not exceed (i)
the current NAV of Class B Shares acquired through reinvestment of divi-
dends or capital gain distributions, plus (ii) increases in the NAV 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 NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from 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 pur-
chase 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:
<TABLE>
<CAPTION>
CDSC as a
% of Amount
Year Since Invested or
Purchase Payment Redemption
Was Made Proceeds
<S> <C>
First 3.00
Second 3.00
Third 2.00
Fourth 2.00
Fifth 1.00
Sixth 0.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the calcula-
tion 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 distribu-
tions; then of amounts representing the increase in NAV of Class B Shares
above the total amount of payments for the purchase of Class B Shares made
during the preceding five years; then of amounts representing the cost of
Shares purchased five years prior to the redemption; and finally, of
amounts representing the cost of Shares held for the longest period of
time within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10 a 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 his or her investment. As-
suming at the time of the redemption the NAV 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 rein-
vested 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 3% (the applicable rate in the second year
after purchase) for a total CDSC of $7.20.
CONTINGENT DEFERRED SALES CHARGE--CLASS C SHARES. A CDSC of .75% payable
to Premier 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 applicable to Class B and Class C Shares will 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 certain eligi-
ble benefit plans, (c) redemptions as a result of a combination of any in-
vestment company with the Fund by merger, acquisition of assets or other-
wise, (d) a distribution following retirement under a tax-deferred retire-
ment 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) re-
demptions by such shareholders as the SEC or its staff may permit. If the
Fund's Trustees determine to discontinue the waiver of the CDSC, the dis-
closure in the Fund's Prospectus 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
at the time of the purchase of such Shares.
To qualify for a waiver of the CDSC, at the time of redemption an investor
must notify the Transfer Agent or his or her Service Agent must notify
Premier. Any such qualification is subject to confirmation of the inves-
tor's entitlement.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Premier Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if
you have one.
Once mailed to The Premier Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Funds' Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE PREMIER FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Premier Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Premier
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and
request the appropriate forms for:
* IRAs.
* 403(b) accounts for employees of public school systems and non-profit
organizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A PREMIER FAMILY
OF FUNDS' RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Premier Family of
Funds from another custodian. Call 1-800-548-2868 or write The Premier
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Premier Family of Funds to
transfer funds from an existing non-retirement Premier Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Premier
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Class A and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash, and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Funds Trust's Board of
Trustees that such value represents fair value, debt securities with matu-
rities of 60 days or less held by the Fund are valued at amortized cost.
When a security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating inter-
est rates on the market value of the instrument.
The NAV of each class of Shares of most of The Premier Family of Funds'
investment portfolios (other than money market funds) are published in
leading newspapers daily. The yield of each class of Shares of most of The
Premier Family of Funds' money market funds are published weekly in lead-
ing financial publications and in many local newspapers. The NAV of the
Fund may also be obtained by calling The Premier Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the yield and total return on a
class of Shares. Total return and yield figures are based on historical
earnings and are not intended to indicate future performance. The "total
return" of a class of Shares of the Fund may be calculated on an average
annual total return basis or a cumulative total return basis. Average an-
nual total return refers to the average annual compounded rates of return
on a class of Shares over one-, five-, and ten-year periods or the life of
the Fund (as stated in the advertisement) that would equate an initial
amount invested at the beginning of a stated period to the ending redeem-
able value of the investment, assuming the reinvestment of all dividends
and capital gains distributions. Cumulative total return reflects the
total percentage change in the value of the investment over the measuring
period, again assuming the reinvestment of all dividends and capital gains
distributions.
The Fund's "yield" is calculated by dividing a class of Shares' annualized
net investment income per Share during a recent 30-day (or one month) pe-
riod by the maximum public offering price per class of such Share on the
last day of that period. Since yields fluctuate, yield data cannot neces-
sarily be used to compare an investment in a class of Shares with bank de-
posits, savings accounts, and similar investment alternatives which often
provide an agreed-upon or guaranteed fixed yield for a stated period of
time.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and ex-
penses borne by Class R and Class A Shares of the Fund, the return and
yield on Class R Shares will generally be higher than the return and yield
on Class A Shares. Any fees charged by a Bank or Agent directly to its
customers' account in connection with investments in the Fund will not be
included in calculations of total return or yield. The Fund's Annual Re-
port and Semi-Annual Report contain additional performance information and
is available upon request without charge from the Fund's distributor or
your Bank or Agent.
The Fund may compare the performance of its Class A and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings. Performance rankings as reported in Changing
Times, Business Week, Institutional Investor, The Wall Street Journal, Mu-
tual Fund Forecaster, No Load Investor, Money Magazine, Morningstar Mutual
Fund Values, US. News and World Report, Forbes, Fortune, Barron's and sim-
ilar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Class A and Class R Shares' returns
and yields in advertisements or in shareholder reports. The Fund may ad-
vertise non-standardized performance information, such as total return,
for periods other than those required to be shown or cumulative perfor-
mance data.
DISTRIBUTIONS
The Fund declares daily and pays monthly (on the first business day of the
following month) dividends from its net investment income, if any, and
distributes any net long-term capital gains on an annual basis. The Board
of Trustees may elect not to distribute capital gains in whole or in part
to take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will begin
to accrue dividends on that day, and redemption orders effected on any
particular day will receive dividends declared only through the business
day prior to the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distri- bution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment com-
pany under the Code so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by a Fund of net capital gain, when designated as such, are
taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for Federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant reaches age 70 1/2 is less than the "minimum required distribution"
for that taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other Federal, state or local consider-
ations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly or monthly depending on the Fund's reporting schedule. You may
also request a statement of your account activity at any time. Carefully
review such confirmation statements and account statements and notify the
Fund immediately if there is an error. From time to time, to reduce ex-
penses, only one copy of the Fund's shareholder reports (such as the
Fund's Annual Report) may be mailed to your household. Please call the
Fund if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your Federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS TRUST.
The Dreyfus/Laurel Funds Trust offers Shares of beneficial interest of
separate investment portfolios without par value (each a "fund"). The Bos-
ton Company Fund was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 and changed
its name to The Laurel Funds Trust, and then to the Dreyfus/Laurel Funds
Trust on October 17, 1994. The Dreyfus/Laurel Funds Trust is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The trustees of the Dreyfus/Laurel Funds Trust have au-
thorized Shares of the Fund to be issued in four classes--Class A, Class
R, Class B and Class C.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular fund or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
At December 6, 1994, Mellon Bank Corporation, the investment manager's
parent, owned of record through its direct and indirect subsidiaries more
than 25% of The Dreyfus/Laurel Funds Trust's outstanding voting shares,
and is deemed, under the 1940 Act, to be a controlling shareholder.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Funds
Trust are managed under the direction of its Trustees. The SAI contains
the names and general background information concerning the Trustees and
officers of The Dreyfus/Laurel Fund Trust.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank, (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258) the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on the
Fund's investment objectives, policies and restrictions, and is paid a
fee.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of .60% of the Fund's average
daily net assets less certain expenses described below. The Manager pays
all of the expenses of the Fund except brokerage, taxes, interest, fees,
expenses of the non-interested Trustees (including counsel fees) and ex-
traordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Man-
ager is contractually required to reduce its investment management fee in
an amount equal to the Fund's allocable share of such expenses. In order
to compensate the Manager for paying virtually all of the Fund's expenses,
the Fund's investment management fee is higher than the investment advi-
sory fees paid by most investment companies. Most, if not all, such compa-
nies also pay for additional non-investment advisory expenses that are not
paid by such companies' investment adviser. From time to time, the Manager
may waive (either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the fiscal
year ended December 31, 1993 the Fund paid its investment adviser, The
Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect wholly-
owned subsidiary of Mellon Bank Corporation) 0.58% in investment advisory
fees under the Fund's previous investment advisory contract (such contract
only covered the provision of investment advisory and certain specified
administrative services). For the fiscal year ended December 31, 1993
total operating expenses (excluding Rule 12b-1 fees) of the Fund were
1.25% and 1.50% for the Retail and Institutional Classes, respectively, of
the Fund's average daily net assets. It is anticipated that the current
total operating expenses of the Fund (excluding Rule 12b-1 fees) will be
approximately .60% of the Fund's average daily net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager, or which have sold Shares of the Fund, if the Manager be-
lieves that the quality of the transaction and the commission are compara-
ble to what they would be with other qualified brokerage firms. From time
to time, to the extent consistent with its investment objective, policies
and restrictions, the Fund may invest in securities of companies with
which Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994 Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager may raise issues
under these provisions. However, Mellon Bank has been advised by its coun-
sel that these activities are consistent with these statutory and regula-
tory obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
Almond G. Goduti Jr. is an Officer of Mellon Bank and Vice President of
The Boston Company Advisors, Inc. Mr. Goduti has been employed by the Man-
ager as portfolio manager of the Fund since October 17, 1994. Mr. Goduti
is also a bond portfolio manager in the Fixed Income Management Division.
In this position, he is responsible for research of the mortgage-backed
securities market. He is a member of the Fixed Income Strategy Committee.
Mr. Goduti holds a Bachelor of Science Degree in Finance and Computer Sci-
ence from Boston College and is a Chartered Financial Analyst.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant, maintaining possession
of the Fund's investment securities and providing certain accounting and
related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's Shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Fund has entered into a distribution agreement with Premier which provides
that Premier has the exclusive right to distribute Shares of the Fund.
Premier may pay service and/or distribution fees to Agents that assist
customers in purchasing and servicing of Shares of the Fund. (See "Inves-
tor Shares' Distribution Plan.")
DISTRIBUTION PLANS (CLASS A PLAN AND CLASS B AND C PLAN).
Class A Shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C Shares are subject
to a Distribution Plan and a Service Plan, each adopted pursuant to Rule
12b-1. Potential investors should read this Prospectus in light of the
terms governing Agreements with their Service Agents. A Service Agent en-
titled to receive compensation for selling and servicing the Fund's Shares
may receive different compensation with respect to one class of Shares
over another.
DISTRIBUTION PLAN--CLASS A. The holders of the Class A Shares of the Fund
bear some of the cost of selling those shares under the Distribution Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of
its average daily net assets attributable to Class A Shares to compensate
Dreyfus Service Corporation, an affiliate the Manager, for shareholder
servicing activities and Premier for shareholder servicing activities and
for activities or expenses primarily intended to result in the sale of
Class A Shares of the Fund. The Plan allows Premier to make payments from
the Rule 12b-1 fees it collects from the Fund to compensate Service Agents
that have entered into Selling Agreements ("Agreements") with Premier.
Under the Agreements, the Service Agents are obligated to provide distri-
bution related services with regard to the Fund and/or shareholder ser-
vices to the Service Agent's clients that own Class A Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Service Agents,
Premier and the Fund may agree to voluntarily reduce the maximum fees pay-
able under the Plan. See the SAI for more details on the Plan.
DISTRIBUTION PLANS--CLASS B AND C. Under a Distribution Plan adopted pur-
suant to Rule 12b-1, the Fund pays Premier for distributing the Fund's
Class B and C Shares, at an aggregate annual rate of .50 of 1% of the
value of the average daily net assets of Class B and C. Under a Service
Plan adopted pursuant to Rule 12b-1, the Fund pays Dreyfus Service Corpo-
ration or Premier for the provision of certain services to the holders of
Class B and C Shares a fee at the annual rate of .25 of 1% of the value of
the average daily net assets of Class B and C. The services provided may
include personal services relating to shareholder accounts, such as an-
swering shareholder inquiries regarding the Fund and providing reports and
other information, and providing services related to the maintenance of
such shareholder accounts. With regard to such services, each Service
Agent is required to disclose to its clients any compensation payable to
it by the Fund and any other compensation payable by their clients in con-
nection with the investment of their assets in Class B and C Shares. Pre-
mier may pay one or more Service Agents in respect of distribution and
other services for these classes of Shares. Premier determines the
amounts, if any, to be paid to Service Agents under the Distribution Plans
and the basis on which such payments are made. The fees payable under the
Distribution Plans are payable without regard to actual expenses incurred.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Premier Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Premier Family of Funds
One Exchange Place
Boston, Massachusetts 02109
- ----------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
(Lion Logo)
PROSPECTUS DECEMBER 19, 1994
- -----------------------------------------------------------------------------
Premier Managed Income Fund, (the "Fund"), formerly called
the "Laurel Managed Income Fund," is a separate portfolio of the
Dreyfus/Laurel Funds Trust, a management investment company (the
"Company"), known as a mutual fund. The Fund is a
diversified income fund that seeks high current income consistent with
what is believed to be prudent risk of capital primarily through
investments in investment-grade corporate and U.S. Government obligations
and in obligations having maturities of 10 years or less.
By this Prospectus, the Fund is offering four Classes of
shares -- Class A, Class B, Class C and Class R.
The Dreyfus Corporation serves as the Fund's investment
manager. The Dreyfus Corporation is referred to as "Dreyfus."
This Prospectus sets forth concisely information about the
Fund that you should know before investing. It should be read carefully
before you invest and retained for future reference.
A Statement of Additional Information ("SAI") dated December
19, 1994, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which
may be of interest to some investors. It has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated herein by
reference. For a free copy, write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call 1-800-554-4611. When
telephoning, ask for Operator 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON
BANK OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK OR AN
AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH AS
CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- ----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
(CONTINUED FROM PAGE 1)
Class A shares are subject to a sales charge imposed at the
time of purchase. (Class A shares of the Fund were formerly called
Investor Shares.) Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within six years of purchase.
Class C shares are subject to a 1.00% contingent deferred sales charge
imposed on redemptions made within the first year of purchase. Class R
shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank, N.A. and its affiliates)
("Banks") acting on behalf of customers having a qualified trust or
investment account or similar relationship at such institution. (Class R
shares of the Fund were formerly called Trust Shares.) Other differences
between the Classes include the services offered to and the expenses
borne by each Class and certain voting rights, as described herein. These
alternatives are offered so an investor may choose the method of
purchasing shares that is most beneficial given the amount of purchase,
the length of time the investor expects to hold the shares and other
circumstances.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate
of Dreyfus. Exchange and shareholder services vary depending upon the
network through which you purchase Fund shares. See "How to Buy Fund
Shares".
TABLE OF CONTENTS
Expense Summary.................................... 4
Financial Highlights............................... 5
Alternative Purchase Methods....................... 8
Description of the Fund............................ 9
Management of the Fund............................. 14
How to Buy Fund Shares............................. 16
Shareholder Services............................... 21
How to Redeem Fund Shares.......................... 25
Distribution Plans (Class A, Class B and Class C Only) 28
Dividends, Other Distributions and Taxes........... 29
Performance Information............................ 31
General Information................................ 32
Page 3
<TABLE>
EXPENSE SUMMARY
CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge).... -_ 4.00% 1.00% -_
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees......................... .70% .70% .70% .70%
12b-1 Fees1............................. .25% 1.00% 1.00% -_
Other Expenses2 ........................ none none none none
Total Fund Operating Expenses........... .95% 1.70% 1.70% .70%
</TABLE>
<TABLE>
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) except where noted, redemption
at the end of each time period:
<S> <C> <C> <C> <C>
1 YEAR $54 $ 57/17 3 $27/173 $7
3 YEARS $74 $ 84/54 3 $54 $22
5 YEARS $95 $112/92 3 $92 $39
10 YEARS $157 $162 $201 $87
</TABLE>
1 See "Distribution Plans" for a description of the Fund's Distributions for
Class A, B and C shares.
2 Does not include fees and expenses of the non-interested directors
(including counsel). The investment manager is contractually
required to reduce its Management Fee in an amount equal to the Fund's
allocable portion of such fees and expenses, which are estimated to be .02%
of the Fund's net assets. (See "Management of the Fund.")
3 Assuming no redemption of shares.
- ----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Other Expenses and Total Fund Operating Expenses are based on
estimated amounts for the current fiscal year. Long-term investors in Class
A, B or C shares could pay more in 12b-1 fees than the economic equivalent of
paying the maximum front-end sales charges applicable to mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD"). The
information in the foregoing table does not reflect any fee waivers or
expense reimbursement arrangements that may be in effect. Certain Service
Agents may charge their clients direct fees for effecting transactions in
Fund shares; such fees are not reflected in the foregoing table. See
"Management of the Fund," "How to Buy Fund Shares" and "Distribution Plans."
The Company understands that banks, brokers, dealers or other
financial institutions (including Dreyfus and its affiliates) (collectively
"Service Agents") may charge fees to their clients who are owners of the
Fund's Class A, B or C shares for various services provided in connection
with a client's account. These fees would be in addition to any amounts
received by a Service Agent under its Selling Agreement ("Agreement") with
Premier Mutual Fund Services, Inc. (the "Distributor"). The Agreement requires
each Service Agent to disclose to its clients any compensation payable to
such Service Agent by the Distributor and any other compensation payable by
the client for various services provided in connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A or Class R
Share outstanding through each fiscal year and the six months ended June
30, 1994 (unaudited) and should be read in conjunction with the financial
statements and related notes that appear in the Fund's Annual Report
dated December 31, 1993 and Semi Annual Report (unaudited) dated June 30,
each of which is incorporated by reference in the SAI.
The financial statements included in the Fund's Annual Report dated
December 31, 1993 have been audited by Coopers & Lybrand L.L.P.
independent accountants, whose report appears in the Fund's Annual Report.
<TABLE>
PREMIER MANAGED INCOME FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/94 12/31/93*## 12/31/92 12/31/91 12/31/90 12/31/89
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $11.38 $11.45 $11.41 $10.55 $11.12 $11.43
-------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income # 0.34 0.78 0.87 0.86 0.93 0.98
Net realized and unrealized gains/(loss)
on investments (0.97) 0.83 0.10 0.86 (0.47) (0.36)
-------- -------- -------- -------- -------- -------
Total from investment operations (0.63) 1.61 0.97 1.72 0.46 0.62
Less distributions:
Distributions from net
investment income (0.34) (0.75) (0.87) (0.86) (1.03) (0.93)
Distributions in excess of net
investment income -_ -_ (0.06) -_ -- --
Distributions from net realized gains -_ (0.57) -_ -- -_ -_
Distributions in excess of net
realized gains -_ (0.36) -_ -_ -- --
-------- -------- -------- -------- -------- -------
Total Distributions (0.34) (1.68) (0.93) (0.86) (1.03) (0.93)
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period $10.41 $11.38 $11.45 $11.41 $10.55 $11.12
-------- -------- -------- -------- -------- -------
Total Return+ (5.61)% 14.54% 8.77% 17.03% 4.40% 5.56%
======== ======== ========= ======= ======= =======
Ratios/Supplemental data:
Net assets, end of period (in 000's) $84,355 $58,052 $98,207 $84,203 $71,132 $83,912
Ratio of expenses to average
net assets+++ 1.01%++ 1.14% 1.02% 1.13% 1.19% 1.15%
Ratio of net income to average
net assets 6.15%++ 6.55% 7.58% 7.91% 8.65% 8.76%
Portfolio turnover rate+++ 128% 333% 216% 119% 183% 142%
</TABLE>
(1) On February 1, 1993 existing shares of the Fund were designated the Retail
Class and the Fund began offering the Institutional Class and the Investment
Class of shares. Effective April 4, 1994 the Retail and Institutional Classes
were reclassified as a single class of shares known as Investor shares. The
amounts shown for the period ended June 30, 1994, were calculated using the
performance of a Retail Share outstanding from January 1, 1994, to April 3,
1994, and the performance of an Investor Share outstanding from April 4, 1994
to June 30, 1994. The Financial Highlights for the year ended December 31,
1993 and prior periods are based upon a Retail Share outstanding. On
October 17, 1994, the Investor shares were redesignated Class A shares.
** Effective November 2, 1984, the investment objectives and policies of this
Fund (prior to that date, the "Government Income Fund") were changed to the
current investment objectives and policies described in this prospectus. A
prior change to the Fund's investment objectives and policies occurred on
May 3, 1982.
1 Dagger Total return represents aggregate total return for the periods
indicated.
2 Daggers Annualized.
Page5
<TABLE>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/88 12/31/87 12/31/86 12/31/85 12/31/84**
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $11.29 $11.91 $11.80 $10.60 $10.60
-------- ------- ------- -------- -------
Income from investment operations:
Net investment income # 1.01 1.20 0.86 1.20 1.03
Net realized and unrealized gains/(loss)
on investments 0.09 (0.52) 0.28 0.99 0.14
-------- ------- ------- -------- -------
Total from investment operations 1.10 0.68 1.14 2.19 1.17
Less distributions:
Distributions from net
investment income (0.96) (1.20) (0.96) (0.99) (1.17)
Distributions in excess of net
investment income -_ -_ -_ -_ -_
Distributions from net realized gains -_ (0.10) (0.07) -_ -_
Distributions in excess of net
realized gains -_ -_ -_ -_ --
-------- ------- ------- -------- -------
Total Distributions (0.96) (1.30) (1.03) (0.99) (1.17)
-------- ------- ------- -------- -------
Net Asset Value, End of Period $11.43 $11.29 $11.91 $11.80 $10.60
-------- ------- ------- -------- -------
Total Return+ 10.05% 5.96% 10.09% 21.83% 12.00%
======= ======== ======== ========= =======
Ratios/Supplemental data:
Net assets, end of period (in 000's) $65,105 $51,765 $49,272 $16,721 $6,318
Ratio of expenses to average
net assets+++ 1.14% 0.94% 0.88% 1.48% 1.50%
Ratio of net income to average
net assets 8.81% 10.30% 10.01% 10.77% 10.02%
Portfolio turnover rate+++ 139% 306% 71% 173% --
</TABLE>
3 Daggers Without the voluntary reimbursement by the investment adviser the
ratio of operating expenses to average net assets for the six months ended
June 30, 1994 would have been 1.02%. Without the voluntary waiver of fees by
the transfer agent and distributor and the voluntary reimbursement of expenses
by the investment adviser, the ratio of operating expenses to average net
assets would have been 1.27% for the year ended December 31, 1993.
4 Daggers In accordance with the SEC's July 1985 rules amendment, the rates
for 1986 and later periods include U.S. Government long-term securities
which were excluded from the calculations in prior years.
#Net investment income before voluntary reimbursement by the investment
adviser for the six months ended June 30, 1994 was $0.34 and the voluntary
waiver of fees by the transfer agent and distributor and the voluntary
reimbursement of expenses by the investment adviser, for the year ended
December 31, 1993 was $0.77.
## Per share amounts have been calculated using the average share method.
Page 6
<TABLE>
FINANCIAL HIGHLIGHTS
PREMIER MANAGED INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.(1)
SIX MONTHS YEAR
ENDED ENDED
6/30/94 12/31/93*##
(unaudited)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, beginning of period $11.38 $11.62
-------- --------
Income from investment operations:
Net investment income# 0.35 0.74
Net Realized and unrealized gains/(loss) on investments (0.96) 0.67
-------- --------
Total from investment (0.61) 1.41
Less Distributions:
Distributions from net investment income (0.36) (0.71)
Distributions from net realized gains -_ (0.61)
Distributions in excess of net realized gains -_ (0.33)
-------- --------
Total Distributions (0.36) (1.65)
Net Asset Value, end of period(in 000s) $10.41 $11.38
-------- --------
Total Return (5.47)% 12.59%
Ratios/Supplemental data:
Net Assets, end of period $12,256 $11,338
Ratios of expenses to average net assets 0.73%++ 0.83%++
Ratios of net investment income to average net assets 6.43%++ 6.86%++
Portfolio turnover rate 128% 333%
</TABLE>
(1) The Financial Highlights for the year ended December 31, 1993 are
based upon an Investment Share outstanding. Effective April 4,1994 the
Investment Class was reclassified as Trust
shares. On October 17, 1994, the Trust shares were redesignated
Class R shares. The amounts shown for the period ended June 30, 1994,
were calculated using the performance of an Investment Share outstanding
from January 1, 1994, to April 3, 1994, and the performance of a Trust
Share outstanding from April 4, 1994 to June 30, 1994.
*The Fund commenced selling Investment Shares on February 1, 1993.
1 Dagger Total return represents aggregate total return for the period
indicated.
2 Daggers Annualized.
3 Daggers Without the voluntary reimbursement of expenses by the invest-
ment adviser, the annualized ratio of operating expenses to
average net assets would have been 0.74% and 0.87% for the six months
ended June 30, 1994 and the period ended December 31, 1993, respectively.
#Net investment income before the voluntary reimbursement of expenses by
the investment adviser for the six months ended June
30, 1994 was $0.35 and net investment income before voluntary waiver of
fees by the transfer agent and the voluntary reimbursement of expenses by
the investment adviser for the period ended December 31, 1993 was $0.74.
##Per share amounts hove been calculated using the average share method.
Page 7
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares; you
may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 4.50% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Fund Shares -- Class A
shares." These shares are subject to an annual 12b-1 fee at the rate of
0.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan -- Class A shares."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Fund Shares -- Class B shares" and "How to
Redeem Fund Shares -- Contingent Deferred Sales Charge -- Class B
shares." These shares also are subject to an annual distribution fee at
the rate of 0.75 of 1% of the value of the average daily net assets of
Class B. In addition, Class B shares are subject to an annual service fee
at the rate of 0.25 of 1% of the value of the average daily net assets of
Class B. See "Distribution and Service Plans -- Class B and C." The
distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. 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, and will no longer be subject to the
distribution fee. (Such conversion is subject to suspension by the Board
of Directors if adverse tax consequences might result.) Class B shares
that have been acquired through the reinvestment of dividends and other
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 other distributions.
Class C shares are subject to a 1% CDSC, which is assessed
only if you redeem Class C shares within one year of purchase. See "How
to Redeem Fund Shares -- Class C shares." These shares also are subject
to an annual distribution fee at the rate of 0.75 of 1% of the value of
the average daily net assets of Class C. Class C shares are also subject
to an annual service fee at the rate of 0.25 of 1% of the value of the
average daily net assets of Class C. See "Distribution and Service Plans
-- Class B and C." The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
Class R shares generally may not be purchased directly by
individuals, although eligible institutions may purchase Class R shares
for accounts maintained by individuals. Class R shares are sold at net
asset value per share primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
("Banks") acting on behalf of customers having a qualified trust or
investment account or similar relationship at such institution. Class A,
Class B and Class C shares are primarily sold to retail investors by
Service Agents that have entered into Selling Agreements with the
Distributor.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or
Page 8
Class C shares may exceed the initial sales charge on Class A shares
during the life of the investment. Finally, you should consider the
effect of the CDSC period and any conversion rights of the Classes in the
context of your own investment time frame. For example, while Class C
shares have a shorter CDSC period than Class B shares, Class C shares do
not have a conversion feature and, therefore, are subject to an ongoing
distribution fee. Thus, Class B shares may be more attractive than Class
C shares to investors with longer term investment outlooks. Generally,
Class A shares may be more appropriate for investors who invest $1,000,000
or more in Fund shares, but will not be appropriate for investors who
invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
Premier Managed Income Fund is a diversified fund that seeks
high current income consistent with what is believed to be prudent risk
of capital through investments in the following types of securities:
corporate debt obligations, such as bonds, debentures, obligations
convertible into common stocks and money market instruments; preferred
stocks and obligations issued or guaranteed by the U.S. Government and
its agencies and instrumentalities.
U.S. Government Securities in which the Fund may invest are
limited to obligations issued or guaranteed as to both principal and
interest by the U.S. Government or backed by the full faith and credit of
the United States. In addition to direct obligations of the U.S.
Treasury, these include securities issued or guaranteed by the Federal
Housing Administration, Farmers Home Administration, Export-Import Bank
of the United States, Small Business Administration, Government National
Mortgage Association, General Services Administration and Maritime
Administration.
MANAGEMENT POLICIES
Under normal market conditions, (1) at least 65% of the
Fund's total assets will be invested in U.S. Government Securities and in
investment-grade corporate debt obligations rated within the four highest
ratings of Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P") or in unrated obligations of comparable
quality; and (2) at least 65% of the Fund's total assets will be invested
in debt obligations having maturities of 10 years or less. It should be
noted that obligations rated in the lowest of the top four ratings (Baa
by Moody's or BBB by S&P) are considered to have some speculative
characteristics. Unrated securities will be considered of
investment-grade if deemed by Dreyfus to be comparable in quality to
instruments so rated, or if other outstanding obligations of the issuers
of such securities are rated Baa/BBB or better. (See "Appendix.") A
discussion of the Moody's and S&P rating categories is contained in the
SAI.
The Fund may also invest up to 35% of its total assets in
obligations rated below the four highest ratings of Moody's or S&P, with
no minimum rating required. Such securities, which are considered to have
speculative characteristics, include securities rated in the lowest
rating categories of Moody's or S&P (commonly known as "junk bonds")
which are extremely speculative and may be in default with respect to
payment of principal or interest.
The Fund may also invest up to 35% of its total assets in
fixed-income obligations having maturities longer than 10 years, up to
25% of its total assets in convertible debt obligations and preferred
stocks, and up to 20% of its total assets in securities of foreign
issuers, including foreign governments. The Fund will not invest in
common stocks, and any common stocks received through conversion of
convertible debt obligations will be sold in an orderly manner. Changes
in interest rates will affect the value of the Fund's portfolio
investments.
When, in the opinion of Dreyfus, a "defensive" investment
posture is warranted, the Fund is permitted to invest temporarily and
without limitation in high-grade, short-term money market instruments,
consisting exclusively of U.S. Government Securities, bank certificates of
Page 9
deposit and time deposits, bankers' acceptances, prime commercial
paper, and high-grade, short-term corporate securities and repurchase
agreements with respect to these instruments. To this extent, the Fund
may not achieve its investment objective.
Bank certificates of deposit and bankers' acceptances in
which the Fund may invest are limited to U.S. dollar-denominated
instruments of domestic banks, including their branches located outside
the United States and of domestic branches of foreign banks. In addition,
the Fund may invest in U.S. dollar-denominated, non-negotiable time
deposits issued by foreign branches of domestic banks and London branches
of foreign banks; and negotiable certificates of deposit issued by London
branches of foreign banks. The foregoing investments may be made provided
that the bank has capital, surplus and undivided profits (as of the date
of its most recently published annual financial statements) in excess of
$100 million as of the date of investment. Investments in obligations of
foreign branches of domestic banks, foreign banks, and domestic branches
of foreign banks involve risks that are different from investments in
securities of domestic banks.
The Fund is permitted to enter into repurchase agreements
with respect to U.S. Government Securities, to purchase portfolio
securities on a when-issued basis, to purchase or sell portfolio
securities for delayed delivery, and to lend its portfolio securities. In
addition, the Fund may invest up to 25% of its total assets in securities
representing interests in pools of assets such as mortgage loans, motor
vehicle installment purchase obligations and credit card receivables
("Asset Backed Securities"), which include classes of obligations
collateralized by mortgage loans or mortgage pass-through certificates
("collateralized mortgage obligations"). Investment in the Fund should
not be considered a complete investment program.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the
Fund may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits,
to borrow money for temporary administrative purposes and to pledge its
assets in connection with such borrowings.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund
may lend portfolio securities to brokers, dealers and other financial
organizations. Such loans will not exceed 33 1/3% of the Fund's total
assets, taken at value. Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies, which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S.
Government Securities on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by
the other party to the transaction. The purchase of securities on a
when-issued or delayed delivery basis involves the risk that, as a result
of an increase in yields available in the marketplace, the value of the
securities purchased will decline prior to the settlement date. The sale
of securities for delayed delivery involves the risk that the prices
available in the market on the delivery date may be greater than those
obtained in the sale transaction. The Fund will establish a segregated
account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to
achieve the Fund's investment objective by investing all of the Fund's
assets in another investment company having the same investment objective
and substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least
30 days' prior notice of any such investment. Such investment would be
made only if the Company's Board
Page 10
of Trustees determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Board of Trustees will
consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Board of Trustees will not approve an
arrangement that is likely to result in higher costs, no assurance is
given that costs will be materially reduced if this option is implemented.
CERTAIN PORTFOLIO SECURITIES
ASSET-BACKED SECURITIES--GENERAL. The Fund may invest in
Asset-Backed Securities arising through the grouping by governmental,
government-related and private organizations of loans, receivables and
other assets originated by various lenders. Interests in pools of these
assets differ form other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal paid at
maturity or specified call dates. Instead, Asset-Backed Securities
provide periodic payments which generally consist of both interest and
principal payments. The estimated life of an Asset-Backed Security varies
with the prepayment experience with respect to the underlying debt
instruments. The rate of such prepayments, and hence the life of an
Asset-Backed Security, will be primarily a function of current market
interest rates, although other economic and demographic factors may be
involved. For example, falling interest rates generally result in an
increase in the rate of prepayments of mortgage loans while rising
interest rates generally decrease the rate of prepayments. An
acceleration in prepayments in response to sharply falling interest rates
will shorten the security's average maturity and limit the potential
appreciation in the security's value relative to a conventional debt
security. Consequently, Asset-Backed Securities are not as effective in
locking in high long-term yields. Conversely, in periods of sharply
rising rates, prepayments generally slow, increasing the security's
average life and its potential for price depreciation.
FOREIGN SECURITIES. The Fund may purchase securities of
foreign issuers and may invest in obligations of foreign branches of
domestic banks and domestic branches of foreign banks. Investment in
foreign securities presents certain risks, including those resulting from
fluctuations in currency exchange rates, revaluation of currencies,
future political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements comparable to those
applicable to domestic issuers. Moreover, securities of many foreign
issuers may be less liquid and their prices more volatile than those of
comparable domestic issuers. In addition, with respect to certain foreign
countries, there is the possibility of expropriation, confiscatory
taxation and limitations on the use or removal of funds or other assets
of the Fund, including withholding of dividends. Foreign securities may
be subject to foreign government taxes that would reduce the yield on
such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more
than 15% of the value of its net assets in illiquid securities, including
time deposits and repurchase agreements having maturities longer than
seven days. Securities that have readily available market quotations are
not deemed illiquid for purposes of this limitation (irrespective of any
legal or contractual restrictions on resale.) The Fund may invest in
commercial obligations issued in reliance on the so-called "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund may
also purchase securities that are not registered under the Securities Act
of 1933, as amended, but that can be sold to qualified institutional
buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional
investors (such as the Fund) that agree that they are purchasing the
paper for investment and not with a view to public distribution. Any
resale by the pur-
Page 11
chaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers.
Determinations as to the liquidity of investments in Section 4(2)
paper and Rule 144A securities will be made by the Board of Trustees or
by Dreyfus. The Board will consider availability of reliable price
information and other relevant information in making such determinations.
If a particular investment in Section 4(2) paper or Rule 144A securities
is not determined to be liquid, that investment will be included within
the percentage limitation on investment in illiquid securities. The
ability to sell Rule 144A securities to qualified institutional buyers is
a recent development and it is not possible to predict how this market
will mature. Investing in Rule 144A securities could have the effect of
increasing the level of Fund illiquidity to the extent that qualified
buyers become, for a time, uninterested in purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and
comparable unrated securities (collectively referred to in this
discussion as "low-rated" securities) will likely have some quality and
protective characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions; and are predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While the market values of
low-rated securities tend to react less to fluctuations in interest rate
levels than the market values of higher rated securities, the market
values of certain low-rated securities tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally
present a higher degree of credit risk. Issuers of low-rated securities
are often highly leveraged and may not have more traditional methods of
financing available to them so that their ability to service their debt
obligations during an economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by
such issuers is significantly greater because low-rated securities
generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. The Fund may incur additional expenses to
the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence
of limited markets for low-rated securities may diminish the Fund's
ability to obtain accurate market quotations for purposes of valuing such
securities and calculating its net asset value. Further information
regarding security ratings is contained in the SAI.
MORTGAGE-BACKED SECURITIES. The mortgage-backed securities in
which the Fund will invest represents pools of mortgage loans assembled
for sale to investors by various governmental agencies and
government-related organizations, such as Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by private
issuers such as commercial banks, savings and loan institutions, mortgage
bankers and private mortgage insurance companies. Mortgage-backed
securities provide a monthly payment consisting of interest and principal
payments. Additional payment may be made out of unscheduled repayments of
principal resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-backed securities may tend to
increase due to refinancing of mortgages as interest rates decline.
Prompt payment of principal and interest on GNMA mortgage pass-through
certificates is backed by the full faith and credit of the United States.
FNMA guaranteed mortgage pass-through certificates and FHLMC
participation certificates are solely the obligations of those entities
but are supported by the discretionary authority of the U.S. Government
to purchase the agencies' obligations. Mortgage pools created by private
organizations generally offer a higher rate of interest than governmental
and government-related pools because there are no direct or indirect
guarantees of payments in the former pools. Timely payment of inter-
Page 12
est and principal in these pools, however, may be supported by various
forms of private insurance or guarantees, including individual loan,
title, pool and hazard insurance. There can be no assurance that the
private insurers can meet their obligations under the policies.
Collateralized mortgage obligations ("CMOs") are a type of
bond secured by an underlying pool of mortgages or mortgage pass-through
certificates that are structured to direct payments on underlying
collateral to different series or classes of the obligations. CMO classes
may be specially structured in a manner that provides any of a wide
variety of investment characteristics, such as yield, effective maturity
and interest rate sensitivity. CMO structuring is accomplished by in
effect stripping out portions of the cash flows (comprised of principal
and interest payments) on the underlying mortgage assets and prioritizing
the payments of those cash flows. In the most extreme case, one class
will be a "principal-only" (PO) security, the holder of which receives
the principal payments made by the underlying mortgage-backed security,
while the holder of the "interest-only" (IO) security receives interest
payments from the same underlying security. CMOs may be structured in
other ways that, based on mathematical modeling or similar techniques, is
expected to provide certain results. As market conditions change,
however, and particularly during periods of rapid or unanticipated
changes in market interest rates, the attractiveness of a CMO class, and
the ability of a structure to provide the anticipated investment
characteristics, may be significantly reduced. Such changes can result in
volatility in the market value, and in some instances reduced liquidity,
of the CMO class.
Inverse floaters are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the
value of an index. Changes in the interest rate on the other security or
index inversely affect the residual interest rate paid on the inverse
floater, with the result that the inverse floater's price will be
considerably more volatile than that of a fixed-rate bond. For example,
an issuer may decide to issue two variable rate instruments instead of a
single long-term, fixed-rate bond. The interest rate on one instrument
reflects short-term interest rates, while the interest rate on the other
instrument (the inverse floater) reflects the approximate rate the issuer
would have paid on a fixed-rate bond, multiplied by two, minus the
interest rate paid on the short-term instrument. The market for inverse
floaters is relatively new.
To the extent that the Fund purchases mortgage-related
securities at a premium, mortgage foreclosures and prepayments of
principal by mortgagors (which may be made at any time without penalty)
may result in some loss of the Fund's principal investment to the extent
of the premium paid. The yield of the Fund that invests in
mortgage-related securities may be affected by reinvestment of
prepayments at higher or lower rates than the original investment.
NON-MORTGAGE BACKED SECURITIES. The Fund may also invest in
non-mortgage backed securities including interests in pools of
receivables, such as motor vehicle installment purchase obligations and
credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities may also be
debt instruments, which are also known as collateralized obligations and
are generally issued as the debt of a special purpose entity organized
solely for the purpose of owning such assets and issuing such debt.
Non-mortgage backed securities are not issued or guaranteed by the U.S.
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to
certain amounts and for a certain time period by a letter of credit
issued by a financial institution (such as a bank or insurance company)
unaffiliated with the issuers of such securities. Non-mortgage backed
securities will be purchased by the Fund only when such securities are
readily marketable and generally will have remaining estimated lives at
the time of purchase of 5 years or less.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by
the Fund and a simultaneous agreement
Page 13
(generally with a bank or broker-dealer) to repurchase that security from
the Fund at a specified price and date or upon demand. This technique
offers a method of earning income on idle cash. A risk associated with
repurchase agreements is the failure of the seller to repurchase the
securities as agreed, which may cause the Fund to suffer a loss if the
market value of such securities declines before they can be liquidated on
the open market. Repurchase agreements with a duration of more than seven
days are considered illiquid securities and are subject to the associated
limits discussed under "Certain Portfolio Securities --
Illiquid Securities."
OTHER INVESTMENT COMPANIES. The Fund may invest in securities
issued by other investment companies to the extent that such investments
are consistent with the Fund's investment objective and policies and
permissible under the Investment Company Act of 1940, as amended (the
"1940 Act"). As a shareholder of another investment company, the Fund
would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These
expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the
Fund on the basis of potential for high current income and not for
short-term trading profits, the Fund's turnover rate may exceed 100%. A
portfolio turnover rate of 100% would occur, for example, if all the
securities held by the Fund were replaced once in a period of one year. A
higher rate of portfolio turnover involves correspondingly greater
brokerage commissions and other expenses that must be borne directly by
the Fund and, thus, indirectly by its shareholders. In addition, a high
rate of portfolio turnover may result in the realization of larger
amounts of short-term capital gains that, when distributed to the Fund's
shareholders, are taxable to them as ordinary income. Nevertheless,
securities transactions for the Fund will be based only upon investment
considerations and will not be limited by any other considerations when
Dreyfus deems it appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the holders
of a majority of the Fund's outstanding shares. The SAI describes all of
the Fund's fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices
and procedures of the Fund, unless otherwise specified, may be changed
without shareholder approval. If the Fund's investment objective,
policies, restrictions, practices or procedures change, shareholders
should consider whether the Fund remains an appropriate investment in
light of the shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the
investment policies and restrictions described in this Prospectus and the
SAI. Should the Fund determine that any such commitment is no longer in
the best interest of the Fund, it may consider terminating sales of its
shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER
Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of November 30, 1994, Dreyfus managed or administered
approximately $71 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus
supervises and assists in the overall management of the Fund's affairs
under an Investment Management Agreement with the Fund, subject to the
overall authority of the Company's Board of Trustees in accordance with
Massachusetts law. Pursuant to the Investment Management Agreement,
Dreyfus pro-
Page 14
vides, or arranges for the provision by one or more third
parties of, investment advisory, administrative, custody, fund accounting
and transfer agency services to the Fund. As the Fund's investment
manager, Dreyfus manages the Fund by making investment decisions based on
the Fund's investment objectives, policies and restrictions.
The Fund is managed by a team of portfolio managers
consisting of three individuals, Almond G. Goduti, Jr., William R. Leach
and Arthur J. MacBride, III. Mr. Goduti and Mr. MacBride are officers of
Mellon Bank. Each individual has been employed by Dreyfus as a portfolio
manager of the Fund since October 17, 1994. Almond Goduti, Vice President
of Boston Advisors is a member of the Fixed Income Strategy Committee and
is also responsible for the taxable fixed income investment portfolio of
Boston Safe Deposit and Trust Company. Mr. Goduti began his career with
The Boston Company in 1984 as Portfolio Manager in the Personal Trust
Division. He holds a B.S. in Finance and Computer Science from Boston
College.
Mr. Leach is Chairman of the Fixed Income Strategy Committee.
He is also responsible for the investment and research of mortgage
derivatives and convertible securities. Prior to joining The Boston
Company in 1988, Mr. Leach was Vice President of Fixed Income Investments
for Beneficial Standard Life Insurance Company, a subsidiary of CalFed,
Inc. Mr. Leach graduated from Pomona College, Claremont, with a B.A. in
Economics. He also holds a Master of Science degree in Industrial
Administration (MSIA) from Carnegie-Mellon University in Pittsburgh. He
was a member of the Los Angeles Society of Financial Analysts and taught
fixed income analysis for LASFA's CFA Review course at the University of
Southern California from 1988 to 1991.
Prior to joining The Boston Company in 1988, Mr. MacBride was
a Principal and the National Sales Manager at Manufacturers Hanover
Securities Corporation, where he was responsible for the sale of all
fixed income securities. Previously, he did corporate finance/underwriting
work in both the U.S. and Europe. In London and Toronto, he worked
extensively on the Eurobond Market (coupon and currency swaps). He is a
graduate from Franklin and Marshall College and holds an MBA from Fordham
University.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Bank
Holding Company Act of 1956, as amended. Mellon provides a comprehensive
range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO
Credit Corporation and a number of companies known as Mellon Financial
Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed approximately $201 billion in assets as of September 30,
1994, including $76 billion in mutual fund assets. As of September 30,
1994, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for approximately
$659 billion in assets, including approximately $108 billion in mutual
fund assets.
Under the Investment Management Agreement, the Fund has
agreed to pay Dreyfus a monthly fee at the annual rate of 0.70 of 1% of
the value of the Fund's average daily net assets. Dreyfus pays all of the
Fund's expenses, except brokerage fees, taxes, interest, fees and
expenses of the non-interested Trustees (including counsel fees), Rule
12b-1 fees (if applicable) and extraordinary expenses. Although Dreyfus
does not pay for the fees and expenses of the non-interested Trustees
(including counsel fees), Dreyfus is contractually required to reduce its
investment management fee in an amount equal to the Fund's allocable
share of such fees and expenses. In order to compensate Dreyfus for
paying virtually all of the Fund's expenses, the Fund's investment
management fee is higher than the investment advisory fees paid by most
investment companies. Most, if not all, such companies also pay for
additional non-investment advisory expenses that are not paid by such
companies' investment advisers. From time to time, Dreyfus may waive
(either voluntarily or pursuant to applicable state limitations) a
portion of the investment management fees payable by the Fund. For the
fiscal year ended December 31, 1993 the Fund paid its investment adviser,
The Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect
wholly-owned subsidiary of Mellon Bank Corporation) 0.60% in investment
advisory fees under the Fund's previous investment advisory contract
(such contract only covered the provision of investment advisory and
certain specified administrative services). For the fiscal year ended
December 31, 1993 total operating expenses (excluding 12b-1 fees) of the
Fund were 1.07%, 0.93% and 0.83% for the Retail, Institutional and
Investment Classes, respectively, of the Fund's average daily net assets.
It is anticipated that the current total operating expenses of the Fund
(excluding Rule 12b-1 fees) will approximately .70% of the Fund's average
daily net assets.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans."
Dreyfus may pay the Distributor for shareholder services from
Dreyfus's own assets, including past profits but not including the
management fee paid by the Fund. The Distributor may use part or all of
such payments to pay Service Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders
for portfolio securities to certain financial institutions, including, in
the case of agency transactions, financial institutions that are
affiliated with Dreyfus or Mellon Bank or that have sold shares of the
Fund, if Dreyfus believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
brokerage firms. From time to time, to the extent consistent with its
investment objective, policies and restrictions, the Fund may invest in
securities of companies with which Mellon Bank has a lending
relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"). The Distributor is located at One Exchange Place,
Boston, Massachusetts 02109. The Distributor is a wholly owned subsidiary
of Institutional Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston
Institutional Group, Inc.
CUSTODIAN; TRANSFER AND DIVIDEND DISBURSING AGENT; AND
SUB-ADMINISTRATOR -- Mellon Bank, One Mellon Bank Center, Pittsburgh, PA
15258, is the Fund's Custodian. The Fund's Transfer and Dividend
Disbursing Agent is The Shareholder Services Group, Inc. (the "Transfer
Agent"), a subsidiary of First Data Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671. Premier Mutual Fund Services, Inc.
serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement, provides various administrative and
corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL -- Class A shares, Class B shares and Class C shares
may be purchased only by clients of certain financial institutions (which
may include banks), securities dealers ("Selected Dealers") and Service
Agents, except that full-time or part-time employees or directors of
Dreyfus or any of its affiliates or subsidiaries, Board members of a fund
advised by Dreyfus, including members of the Company's Board, or the
spouse or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor.
Class R shares are sold primarily to Banks acting on behalf
of customers having a qualified trust or investment account or
relationship at such institution. In addition, holders of Class R shares
of the Fund who have held their shares since April 4, 1994, may continue
to purchase Class R shares of the Fund, whether or not they otherwise
would be eligible to do so. Class R shares may be purchased for a
retirement plan only by a custodian, trustee, investment manager or other
entity authorized to act on behalf of such 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.
Page 16
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, an affiliate of Dreyfus. For more
information about purchasing Fund shares through the affiliate network,
call 1-800-548-2868. Please read that Prospectus carefully. Exchange and
Shareholder Services, including the telephone purchase options, and
minimum and maximum dollar amounts associated with such services, may
vary depending upon the network through which you purchase Fund shares.
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.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and, to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Distribution and Service Plans. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and
403(b)(7) Plans with only one participant is $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application.
The Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualifies 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 Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
certain qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("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.
You may purchase Fund shares by check or wire, or, with the
exception of Class R shares, through the TELETRANSFER Privilege described
below. Checks should be made payable to "Premier Managed Income Fund."
Payments to open new accounts which are mailed should be sent to Premier
Managed Income Fund, P.O. Box 9387, Providence, Rhode Island 02940-9387,
together with your Account Application indicating which Class of shares
is being purchased. For subsequent investments, your Fund account number
should appear on the check and an investment slip should be enclosed and
sent to Premier Managed Income Fund, P.O. Box 105, Newark, New Jersey
07101-0105. Neither initial nor subsequent investments should be made by
third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Class' DDA # as shown below, for purchase of
Fund shares in your name:
DDA# 8900104260 Premier Managed Income Fund/Class A shares;
DDA# 8900227923 Premier Managed Income Fund/Class B shares;
DDA# 8900227931 Premier Managed Income Fund/Class C shares;
DDA# 8900104198 Premier Managed Income Fund/Class R shares.
Page 17
The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call
1-800-645-6561 after completing your wire payment to obtain your Fund
account number. Please include your Fund account number on the Fund's
Account Application and promptly mail the Account Application to the
Fund, as no redemptions will be permitted until the Account Application
is received. You may obtain further information about remitting funds in
this manner from your bank. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. A
charge will be imposed if any check used for investment in your account
does not clear. The Fund makes available to certain large institutions
the ability to issue purchase instructions through compatible computer
facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House ("ACH") member.
You must direct the institution to transmit immediately available funds
through the ACH system to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Fund shares by employees
participating in qualified 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 one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for participation in a
plan or program shall be made on the date Fund shares are first purchased
by or on behalf of employees participating in such plan or program and on
each subsequent January 1st. All present holdings of shares of funds in
the Dreyfus Family of Funds by Eligible Benefit Plans will be aggregated
to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at
any time. The Distributor will pay such fees from its own funds, other
than amounts received from the Fund, including past profits or any other
source available to it.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Other Distributions
and Taxes" and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN to the
Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
NET ASSET VALUE ("NAV") -- An investment portfolio's NAV
refers to the worth of one share. The NAV for shares of each Class of the
Fund is computed by adding, with respect to such Class of shares, the
value of the Fund's investments, cash, and other assets attributable to
that Class, deducting liabilities of the Class and dividing the result by
number of shares of that Class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise
noted, listed or traded on a stock exchange, are valued at the latest
sale price. If no sale is reported, the mean of the latest bid and asked
prices is used. Securities traded over-the-counter are priced at the mean
of the latest bid and asked prices but will be valued at the last sale
price if required by regulations of the SEC. When market quotations are
not readily available, securities and other assets are valued at fair
value as determined in good faith in accordance with procedures
established by the Board of Trustees.
Bonds are valued through valuations obtained from a
commercial pricing service or at the most recent mean of the bid and
asked prices provided by investment dealers in accordance with procedures
established by the Board of Trustees.
Pursuant to a determination by the Board of Trustees that
such value represents fair value, debt securities with maturities of 60
days or less held by the Fund are valued at amortized cost. When a
security is valued at amortized
Page 18
cost, it is valued at its cost when purchased, and thereafter by assuming
a constant amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value of the
instrument.
NAV is determined on each day that the NYSE is open (a
"business day"), as of the close of business of the regular session of
the NYSE (usually 4 p.m. Eastern Time). Investments and requests to
exchange or redeem shares received by the Fund in proper form before the
close of business on the NYSE (usually 4 p.m., Eastern Time) are
effective on, and will receive the price determined on, that day (except
investments made by electronic funds transfer, which are effective two
business days after your call). Investment, exchange and redemption
requests received after the close of the NYSE are generally effective on
and receive the share price determined on the next business day.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the NYSE 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 NYSE 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.
The NAV of any Fund may be obtained by calling
1-800-645-6561.
The NAV of each Class of shares of most of The Premier Funds'
investment portfolios (other than the money market funds) is published in
leading newspapers daily. The yield of each Class of shares of most of
The Premier Funds' money market funds is published weekly in leading
financial publications and in most newspapers.
CLASS A SHARES -- The public offering price of Class A shares
is the net asset value per share of that class plus a sales load as shown
below:
<TABLE>
Total Sales Load
--------------------------------------
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
----------------------- ---------------- ---------------- --------------------------
<S> <C> <C> <C>
Less than $50,000......... 4.50 4.70 4.25
$50,000 to less than $100,000.... 4.00 4.20 3.75
$100,000 to less than $250,000.... 3.00 3.10 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
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or
more of Class A shares. However, if you purchase Class A shares without
an initial sales charge as part of an investment of at least $1,000,000
and redeem all or a portion of those shares within
two years after purchase, a CDSC of 1.00% will be imposed at the time of
redemption. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares -- Contingent Deferred Sales Charge
-- Class B" (other than the amount of the CDSC and its time periods) are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
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 that 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 eli-
Page 19
gible to purchase Class A shares at NAV. In addition, Class A shares are
offered at net asset value to full-time or part-time employees of Dreyfus
or any of its affiliates or subsidiaries, directors of Dreyfus, Board
members of a fund advised by Dreyfus, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing.
Class A shares will be offered at NAV without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also
may be purchased (including by exchange) at NAV 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 that, 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 Family of Funds or
certain other products made available by the Distributor to such plans,
or (b) invested all of its assets in certain funds in the Premier Family
of Funds or the Dreyfus Family of Funds or certain other products made
available by the Distributor to such plans.
Holders of Class A accounts of the Fund as of December 19,
1994 may continue to purchase Class A shares of the Fund at NAV. However,
investments by such holders in other funds advised by Dreyfus will be
subject to the applicable front end sales load.
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.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
shares. Dealers receive a larger percentage of the sales load from the
Distributor than they receive for selling most other funds.
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 under "How to Redeem Fund Shares." The
Distributor compensates certain Service Agents for selling Class B shares
at the time of purchase from the Distributor's own assets. The proceeds
of the CDSC and the distribution fee, in part, are used to defray these
expenses.
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, however, is imposed on redemptions of Class C
shares made within the first year of purchase. See "Class B Shares" above
and "How to Redeem Fund Shares."
CLASS R SHARES
The public offering price for Class R shares is the net asset
value per share of that Class.
RIGHT OF ACCUMULATION -- CLASS A SHARES-
Reduced sales loads apply to any purchase of Class A shares,
shares of other funds in the Premier Family of Funds, shares of certain
other funds advised by Dreyfus 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 in the SAI, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased
and still hold Class A shares, or shares of any other Eligible Fund or
combination thereof, with an aggregate current market value of $40,000
and subsequently
Page 20
purchase Class A shares 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 4.00% of the offering price. 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 Service 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.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES)
You may purchase Fund shares (minimum $500 and maximum
$150,000 per day) by telephone if you have checked the appropriate box
and supplied the necessary information on the Fund's Account Application
or have a filed 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 ACH member may be so
designated. The Fund may modify or terminate this privilege at any time
or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares
of the same class of certain other funds managed or administered by
Dreyfus, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be
of interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions
are imposed on its use. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT
PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of Personal Retirement Plans, the shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the relevant "No" box on the Account Application,
indicating that you specifically refuse this privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, or by a separate
Shareholder Services Form, also available by calling 1-800-645-6561. If
you previously have established the Telephone Exchange Privilege, you may
telephone exchange instructions by calling 1-800-221-4060 or, if calling
from overseas, 1-401-455-3306. See "How to Redeem Fund Shares --
Procedures." Upon an exchange, the
Page 21
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, TELETRANSFER Privilege
and the dividends and distributions payment option (except for Dividend
Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however,
a sales load may be charged with respect to exchanges of Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or
C shares at the time of an exchange; however, Class B or C shares
acquired through an exchange will be subject to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or C shares will be calculated from
the date of the initial purchase of the Class B or C shares exchanged, as
the case may be. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares of the fund from which you are exchanging were: (a) purchased with
a sales load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestment of dividends or
other distributions paid with respect to the foregoing categories of
shares. To qualify, at the time of the exchange your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your holdings through a check of appropriate records. See "Shareholder
Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the
right, upon not less than 60 days' written notice, to charge shareholders
a nominal fee in accordance with rules promulgated by the SEC. The Fund
reserves the right to reject any exchange request in whole or in part.
The availability of fund exchanges may be modified or terminated at any
time upon notice to shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same class of other funds in the Premier
Family of Funds or certain other funds in the Dreyfus Family of Funds of
which you are currently an investor. WITH RESPECT TO CLASS R SHARES HELD
BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE
MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE
FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to
the schedule you have selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales load.
No CDSC will be imposed on Class B or C shares at the time of an
exchange; however, Class B or C shares acquired through an exchange will
be subject to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or C
shares will be calculated from the date of the initial purchase of the
Class B or C shares exchanged, as the case may be. See "Shareholder
Services" in the SAI. The right to exercise this Privilege may be
modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this privilege at any time by mailing written
notification to Premier Managed Income Fund, P.O. Box 6587, Providence,
Rhode Island 02940-6587. The Fund may charge a service fee for the use of
this privilege. No such fee currently is contemplated. The exchange of
shares of one fund for shares of another is treated for Federal income
tax purposes as a sale of the shares given in exchange by the shareholder
and, there-
Page 22
fore, an exchanging shareholder may realize, or an exchange on
behalf of a Retirement Plan which is not tax exempt may result in, a
taxable gain or loss. For more information concerning this privilege and
the funds in the Premier Family of Funds or the Dreyfus Family of Funds
eligible to participate in this privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDER
AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and
Fund shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained
at a domestic financial institution which is an ACH member may be so
designated. To establish an AUTOMATIC Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may cancel
your participation in this privilege or change the amount of purchase at
any time by mailing written notification to Premier Managed Income Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587, and the notification
will be effective three business days following receipt. The Fund may
modify or terminate this privilege at any time or charge a service fee.
No such fee currently is contemplated.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or the Dreyfus Family of Funds of which you are an investor. Shares of
the other fund will be purchased at the then-current NAV; however, a
sales load may be charged with respect to investments in shares of a fund
sold with a sales load. If you are investing in a fund that charges a
sales load, such shareholder may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund or class that charges a CDSC, the shares purchased
will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the SAI. Dividend ACH
permits you to transfer electronically on the payment date 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 ACH member may be so designated. Banks
may charge a fee for this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Managed Income Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a
new Dividend Options Form. Enrollment in or cancellation of these
Privileges is effective three business days following receipt. These
Privileges are available only for existing accounts and may not be used
to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
You should consider whether Direct Deposit of your entire payment into a
fund with fluctuating NAV, such as the Fund, may be appropriate for you.
To enroll in Government Direct
Page 23
Deposit, you must file with the Transfer Agent a completed Direct
Deposit Sign-Up Form for each type of payment that you desire to include
in this privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your
participation in this privilege. You may elect at any time to terminate
your participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice
to you.
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.
Particular 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. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Class B and C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services
also are available. You can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call
1-800-358-5566; for IRAs and IRA "Rollover Accounts," please call
1-800-645-6561; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7)
Plans, please call 1-800-322-7880.
LETTER OF INTENT--CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, 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 shares of the Fund 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 shares, you must indicate your intention to do so under a Letter of
Intent.
Page 24
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. 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 Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed directly through the Distributor. Service Agents
or other institutions may charge their clients a nominal 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 NAV.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the SEC.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE TELETRANSFER
PRIVILEGE OR THROUGH AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A
WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS
WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE
CHECK, TELETRANSFER PURCHASE OR AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT
BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER PURCHASE OR
THE AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED
BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if the net asset value
of your account is $500 or less and remains so during the notice period.
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 from 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
Page 25
and deemed to have been made on the first day of the month. The following
table sets forth the rates of the CDSC:
<TABLE>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
----------------- ------------------------
<S> <C>
First.................................................... 4.00
Second................................................... 4.00
Third.................................................... 3.00
Fourth................................................... 3.00
Fifth.................................................... 2.00
Sixth.................................................... 1.00
</TABLE>
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
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 his or her
investment. Assuming at the time of the redemption the NAV 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 1.00%
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 applicable to Class B and Class C shares
will 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 by such shareholders as the Securities and Exchange
Commission or its staff may permit. If the Fund's Trustees determine to
discontinue the waiver of the CDSC, the disclosure in the Fund's
prospectus 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 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 Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES -- You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for Class R
shares, through the TELETRANSFER Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your
Page 26
Service Agent authority to instruct the Transfer Agent to redeem shares
and to credit the proceeds of such redemptions to a designated account at
your Service Agent, you may redeem shares only in this manner and in
accordance with the regular redemption procedure described below. If you
wish to use the other redemption methods described below, you must
arrange with your Service Agent for delivery of the required
application(s) to the Transfer Agent. Other redemption procedures may be
in effect for clients of certain Service Agents and institutions. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER Privilege or telephone exchange privilege, which is granted
automatically unless you refuse it, you authorize the Transfer Agent to
act on telephone instructions from any person representing himself or
herself to be you, or a representative of your Service 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 TELETRANSFER 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 TELETRANSFER redemption had been used. During the delay, the
Fund's NAV may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure,
you may redeem your shares by written request mailed to Premier Managed
Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
Redemption Requests may be delivered in person only to a Dreyfus
Financial Center. These requests will be forwarded to the Fund and will
be processed only upon receipt thereby. For the location of the nearest
financial center, please call the telephone number listed under "General
Information." Redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the
New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed
under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES).
You may redeem Fund shares (minimum $500 per day) by telephone if you
have checked the appropriate box and supplied the necessary information
on the Fund's Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between
your Fund account and the bank account designated in one of these
documents. Only such an account maintained in a domestic financial
institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank
ordinarily two days after receipt of the redemption request or, at your
request, paid by check (maximum $150,000 per day) and mailed to your
address. Holders of jointly registered Fund or bank accounts may redeem
through the TELETRANSFER Privilege for transfer to their bank
Page 27
account only up to $250,000 within any 30-day period. The Fund reserves
the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
this privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this privilege.
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 NYSE (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 NYSE, 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. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it 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 NYSE 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 NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. 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 -- CLASS A SHARES. Upon written
request, you may reinvest up to the number of Class A shares you have
redeemed, within 30 days of redemption, at the then-prevailing net asset
value without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
DISTRIBUTION PLANS
(CLASS A, CLASS B AND CLASS C ONLY)
Class A shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C
shares are subject to a Distribution Plan and a Service Plan, each
adopted pursuant to Rule 12b-1. Potential investors should read this
Prospectus in light of the terms governing Agreements with their Service
Agents. A Service Agent entitled to receive compensation for selling and
servicing the Fund's shares may receive different compensation with
respect to one class of shares over another.
DISTRIBUTION PLAN -- CLASS A SHARES -- The Class A shares of the Fund
bear some of the cost of selling those shares under the Distribution Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of
its average daily net assets attributable to Class A shares to compensate
Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing
activities and expenses primarily intended to result in the sale of Class
A shares of the Fund. The Plan allows the Distributor to make payments
from the Rule 12b-1 fees it collects from the Fund to compensate Service
Agents that have entered into Selling Agreements ("Agreements") with the
Distributor. Under the Agreements, the Service Agents are obligated to
provide distribution related services with
Page 28
regard to the Fund and/or shareholder services to the Service Agent's
clients that own Class A shares of the Fund.
The Fund and the Distributor may suspend or reduce payments
under the Plan at any time, and payments are subject to the continuation
of the Fund's Plan and the Agreements described above. From time to time,
the Service Agents, the Distributor and the Fund may agree to voluntarily
reduce the maximum fees payable under the Plan. See the SAI for more
details on the Plan.
DISTRIBUTION AND SERVICE PLANS -- CLASS B AND C -- Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and C shares at an
aggregate annual rate of .75 of 1% of the value of the average daily net
assets of Class B and C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B and C shares
a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B and C. 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 providing services related to the maintenance of such shareholder
accounts. With regard to such services, each Service Agent is required to
disclose to its clients any compensation payable to it by the Fund and
any other compensation payable by their clients in connection with the
investment of their assets in Class B and C shares. The Distributor may
pay one or more Service Agents in respect of distribution and other
services for these Classes of shares. The Distributor determines the
amounts, if any, to be paid to Service Agents under the Distribution and
Service Plans and the basis on which such payments are made. The fees
payable under the Distribution and Service Plans are payable without
regard to actual expenses incurred.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays dividends monthly from its
net investment income, if any, and distributes net realized gains, if
any, once a year, but it may make distributions on a more frequent basis
to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the 1940 Act. The Fund will
not make distributions from net realized gains unless capital loss
carryovers, if any, have been utilized or have expired. Investors other
than qualified Retirement Plans may choose whether to receive dividends
and other distributions in cash or to reinvest them in additional Fund
shares; dividends and other distributions paid to qualified Retirement
Plans are reinvested automatically in additional Fund shares at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors. Shares purchased on a day on which the Fund
calculates its NAV will begin to accrue dividends on that day, and
redemption orders effected on any particular day will receive dividends
declared only on through the business day prior to the day of redemption.
Dividends paid by each Class will be calculated at the same time and in
the same manner and will be in the same amount, except that the expenses
attributable solely to a particular Class will be borne exclusively by
that Class. Class B and C shares will receive lower per share dividends
than Class A shares which will receive lower per share dividends than
Class R shares, because of the higher expenses borne by the relevant
Class. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated
investment company" under the Code so long as such qualification is in
the best interests of its shareholders. Such qualification will relieve
the Fund of any liability for Federal income tax to the extent its
earnings are distributed in accordance with applicable provisions of the
Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders, including certain non-qualified Retirement Plans, as
ordinary income whether received in cash or reinvested in Fund shares.
Distributions from the Fund's net realized long-
Page 29
term capital gains will be taxable to such shareholders as long-term
capital gains for Federal income tax purposes, regardless of how long
the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in Fund shares. The net
capital gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%. Dividends and other distributions
also may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. withholding tax at the rate of 30%, unless
the foreign investor claims the benefit of a lower rate specified in a
tax treaty. Distributions from net realized long-term capital gains paid
by the Fund to a foreign investor, as well as the proceeds of any
redemptions from a foreign investor's account, regardless of the extent
to which gain or loss may be realized, generally will not be subject to
U.S. withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from net realized, long-term capital gains,
if any, paid during the year.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if (1) an investor redeems those
shares or exchanges those shares for shares of another fund advised or
administered by Dreyfus within 91 days of purchase and (2) in the case of
a redemption, acquires other Fund Class A shares through exercise of the
Reinvestment Privilege or, in the case of an exchange, such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charged the
investor for the original Class A shares, up to the amount of the
reduction of the sales load pursuant to the Reinvestment Privilege or on
the exchange, as the case may be, is not included in the basis of such
shares for purposes of computing gain or loss on the redemption or the
exchange, and instead is added to the basis of the fund shares received
pursuant to the Reinvestment Privilege or the exchange.
Dividends paid by the Fund to qualified Retirement Plans
ordinarily will not be subject to taxation until the proceeds are
distributed from the Retirement Plans. The Fund will not report to the
IRS dividends paid to such plans. Generally, distributions from qualified
Retirement Plans, except those representing returns of non-deductible
contributions thereto, will be taxable as ordinary income and, if made
prior to the time the participant reaches age 59-1/2, generally will be
subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the
year in which the participant reaches age 70-1/2 is less than the
"minimum required distribution" for that taxable year, an excise tax
equal to 50% of the deficiency may be imposed by the IRS. The
administrator, trustee or custodian of such a Retirement Plan will be
responsible for reporting distributions from such plans to the IRS.
Moreover, certain contributions to a qualified Retirement Plan in excess
of the amounts permitted by law may be subject to an excise tax.
With respect to individual investors and certain
non-qualified Retirement Plans, Federal regulations generally require the
Fund to withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends, distributions from net realized long-term capital gains
and the proceeds of any redemption, regardless of the extent to which
gain or loss may be realized, paid to a shareholder if such shareholder
fails to certify either that the TIN furnished in connection with opening
an account is correct or that such shareholder has not received notice
from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify the Fund to
institute backup withholding if the IRS determines a shareholder's TIN is
Page 30
incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account and may be
claimed as a credit on the record owner's Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax advisers regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may
be calculated on the basis of average annual total return and/or total
return. These total return figures reflect changes in the price of the
shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and C should be expected to be
lower than that of Class A and the performance of Class A, B and C should
be expected to be lower than that of Class R. Performance for each Class
will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was purchased with
an initial payment of $1,000 and that the investment was redeemed at the
end of a stated period of time, after giving effect to the reinvestment
of dividends and other distributions during the period. The return is
expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end
of the period. Advertisements of the Fund's performance will include the
Fund's average annual total return for one, five and ten year periods, or
for shorter periods depending upon the length of time during which the
Fund has operated. Computations of average annual total return for
periods of less than one year represent an annualization of the Fund's
actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally
is expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (or maximum offering price in the case of Class A shares)
per share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return. Total return also may
be calculated by using 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 shares or without giving effect to
any applicable CDSC at the end of the period for Class B or C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the sales load on the Fund's Class A shares, which, if
reflected, would reduce the performance quoted.
The Fund may also advertise the yield on a Class of shares.
The Fund's yield is calculated by dividing a Class of shares' annualized
net investment income per share during a recent 30-day (or one month)
period by the maximum public offering price per Class of such share on
the last day of that period. Since yields fluctuate, yield data cannot
necessarily be used to compare an investment in a Class of shares with
bank deposits, savings accounts, and similar investment alternatives
which often provide an agreed-upon or guaranteed fixed yield for a stated
period of time.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for
Page 31
comparison with other investments or other investment
companies using a different method of calculating performance.
The Fund may compare the performance of its shares with
various industry standards of performance including Lipper Analytical
Services, Inc. ratings and the Lehman Government/Corporate Index.
Performance rankings as reported in CHANGING TIMES, BUSINESS WEEK,
INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL, IBC/DONOGHUE'S MONEY
FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE,
MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES,
FORTUNE, BARRON'S and similar publications may also be used in comparing
the Fund's performance. Furthermore, the Fund may quote its shares' total
returns and yields in advertisements or in shareholder reports. The Fund
may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or
cumulative performance data. The Fund may advertise a quotation of yield
or other similar quotation demonstrating the income earned or
distributions made by the Fund.
GENERAL INFORMATION
The Company was organized as a Massachusetts business trust
under the laws of the Commonwealth of Massachusetts on March 30, 1979
under the name The Laurel Funds Trust, and changed its name to The
Dreyfus/Laurel Funds Trust on October 17, 1994. The Company is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The Fund's shares are classified into four
classes--Class A, Class B, Class C and Class R. The Company's Declaration
of Trust permits the Board of Trustees to create an unlimited number of
investment portfolios (each a "fund").
Each share (regardless of Class) has one vote. All Shares of
a fund (and Classes thereof) vote together as a single Class, except as
to any matter for which a separate vote of any fund or Class is required
by the 1940 Act, and except as to any matter which affects the interests
of one or more particular funds or Classes, in which case only the
shareholders of the affected fund or Classes are entitled to vote, each
as a separate Class. Only holders of Class A, B or C shares, as the case
may be, will be entitled to vote on matters submitted to shareholders
pertaining to its Distribution and Service Plan relating to that Class.
At December 6, 1994, Mellon Bank, Dreyfus' parent, owned of
record through its direct and indirect subsidiaries more than 25% of the
Fund's outstanding voting shares, and is deemed, under the 1940 Act, to
be a controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will
not be necessary for the Fund to hold annual meetings of shareholders. As
a result, Fund shareholders may not consider each year the election of
Trustees 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 purposes of removing a Trustee from office and for any
other purpose. Fund shareholders may remove a Trustee by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition,
the Board of Trustees will call a meeting of shareholders for the purpose
of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and
will send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
MIF/P1121994
Page 32
Premier Managed Income Fund
Class A and Class R Shares
December 19, 1994
PREMIER MANAGED INCOME FUND is a diversified income fund investing prima-
rily in investment-grade corporate and U.S. Government obligations and in
obligations having maturities of 10 years or less.
THIS PROSPECTUS describes Premier Managed Income Fund (the "Fund") of The
Dreyfus/Laurel Funds Trust (formerly The Laurel Funds Trust and previously
The Boston Company Fund), a management investment company that is part of
The Premier Family of Funds. This Prospectus describes two classes of
Shares--Class A Shares and Class R Shares (collectively, the "Shares")--of
the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. The Fund offers
four methods of purchasing Fund Shares, but only Class A and Class R
Shares are offered by this Prospectus. See "Alternative Purchase Methods."
Additional information about the Fund is contained in a Statement of Addi-
tional Information (the "SAI"), which has been filed with the Securities
and Exchange Commission (the "SEC") and is available upon request without
charge by calling or writing to The Premier Family of Funds. The SAI bears
the same date as the Prospectus and is incorporated by reference in its
entirety into this Prospectus.
In addition to this Fund, The Premier Family of Funds also offer other
funds that provide investment opportunities for you in the equity, and
fixed income. For more information about these additional investment op-
portunities, call 1-800-548-2868
The Premier Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSI-
BLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE SUM-
MARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON
BANK OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE
FUND, SUCH AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE
FUND IS DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary 5
Financial Highlights 8
Alternative Purchase Methods 12
Investment Objective and Policies 14
Other Investment Policies and Risk Factors 15
HOW TO DO BUSINESS WITH US
Special Shareholder Services 21
Investor Line 22
How to Buy Fund Shares 22
By Mail 22
By Telephone 23
By Wire 23
By Automatic Monthly Investments 23
By Direct Deposit 23
By In-Kind Purchases 24
Offering Price 24
When Share Price is Determined 27
Additional Information About Investments 27
How to Exchange Your Investment From One Fund to Another 28
By Telephone 28
By Mail 28
Additional Information About Exchanges 29
How to Redeem Shares 29
By Telephone 31
By Mail 31
By Automated Withdrawal Program 32
Redemption Proceeds 33
Additional Information About Redemptions 33
How To Use The Premier Family of Funds in a Tax-Qualified
Retirement Plan 34
How to Transfer an Investment to a Premier Family of Funds'
Retirement Plan 34
OTHER INFORMATION
Share Price 34
Performance Advertising 35
Distributions 36
Taxes 37
Other Services 38
Further Information About The Fund 39
The Dreyfus/Laurel Funds Trust 39
Management 39
Distribution Plans (Class A Plan and Class B and C Plans) 42
Appendix 43
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
EXPENSE SUMMARY
<TABLE>
<CAPTION>
Class A Class B Class C Class R
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Deferred Sales Charge Imposed on
Redemptions (as a percentage of the amount
subject to charge) none 4.00% 1.00% none
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees 0.70% 0.70% 0.70% 0.70%
12b-1 Fees* 0.25% 1.00% 1.00% none
Other Expenses** 0.00% 0.00% 0.00% 0.00%
Total Fund Operating Expenses 0.95% 1.70% 1.70% 0.70%
EXAMPLES
You would pay the following 1 year $ 54 $ 57/17+ $ 27/17+ $ 7
expenses on a $1,000 investment, 3 years $ 74 $ 84/54+ $ 54 $22
assuming (1) a 5% annual return 5 years $ 95 $112/92+ $ 92 $39
and (2) except where noted, 10 years $157 $162 $201 $87
redemption at the end of
each time period:
<FN>
* See "Distribution Plans" for a description of the Fund's Distribution
and Service Plans for Class A, B and C Shares.
** Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is contractually required
to reduce its Management Fee in an amount equal to the Fund's alloca-
ble portion of such fees and expenses, which are estimated to be
0.02% of the Fund's net assets. See "Further Information About the
Fund--Management."
+ Assuming no redemption of Shares.
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or in-
directly, the payment of which will reduce investor's return on an an-
nual basis. Other Expenses and Total Fund Operating Expenses are based
on estimated amounts for the current fiscal year. Long-term investors in
Class A, B or C Shares could pay more in 12b-1 fees than the economic
equivalent of paying the maximum front-end sales charges applicable to
mutual funds sold by members of the National Association of Securities
Dealers, Inc. ("NASD"). The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may
be in effect. Certain Service Agents (as defined herein) may charge
their clients direct fees for effecting transactions in Fund Shares;
such fees are not reflected in the foregoing table. See "Further Infor-
mation About the Fund--Management," "How to Buy Fund Shares" and "Dis-
tribution Plans."
The Fund understands that banks, brokers, dealers or other financial
institutions (including The Dreyfus Corporation (the "Manager") and its
affiliates) (collectively "Service Agents") may charge fees to their
clients who are owners of the Fund's Class A, B or C Shares for various
services provided in connection with a client's account. These fees
would be in addition to any amounts received by a Service Agent under
its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. ("Premier"). The Agreement requires each Service Agent to disclose
to its clients any compensation payable to such Service Agent by Premier
and any other compensation payable by the client for various services
provided in connection with their accounts.
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
The table below is based upon a single Class A or Class R Share outstand-
ing through each fiscal year and the six months ended June 30, 1994 (unau-
dited) and should be read in conjunction with the financial statements and
related notes that appear in the Fund's Annual Report dated December 31,
PREMIER MANAGED INCOME FUND(1)
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
Six Months
Ended Year Year Year
6/30/94 Ended Ended Ended
(unaudited) 12/31/93## 12/31/92 12/31/91
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.38 $ 11.45 $ 11.41 $ 10.55
Income from investment operations:
Net investment income# 0.34 0.78 0.87 0.86
Net realized and unrealized
gain/(loss) on investments (0.97) 0.83 0.10 0.86
Total from investment operations (0.63) 1.61 0.97 1.72
Less distributions:
Distributions from net investment
income (0.34) (0.75) (0.87) (0.86)
Distributions in excess of net
investment income -- -- (0.06) --
Distributions from net realized
gains -- (0.57) -- --
Distributions in excess of net
realized gains -- 0.36 -- --
Total distributions (0.34) (1.68) (0.93) (0.86)
Net asset value, end of period $ 10.41 $ 11.38 $ 11.45 $ 11.41
Total return+ (5.61)% 14.54% 8.77% 17.03%
Ratios/supplemental data:
Net assets, end of period (in 000's) $84,355 $58,052 $98,207 $84,203
Ratios of expenses to average net
assets+++ 1.01%++ 1.14% 1.02% 1.13%
Ratio of net income to average net
assets 6.15%++ 6.55% 7.58% 7.91%
Portfolio turnover rate++++ 128% 333% 216% 119%
<FN>
(1) The Fund commenced selling Institutional Shares on February 1,
1993. Effective April 4, 1994 the Retail and Institutional
classes of Shares were reclassified as a single class of
shares known as Investor Shares. The amounts shown for the pe-
riod ended June 30, 1994, were calculated using the perfor-
mance of a Retail Share outstanding from January 1, 1994, to
April 3, 1994, and the performance of an Investor Share out-
standing from April 4, 1994 to June 30, 1994. The Financial
Highlights for the year ended December 31, 1993 and prior pe-
riods are based upon a Retail Share outstanding. On October
17, 1994, the Investor Shares were redesignated Class A
Shares.
** Effective November 2, 1984, the investment objectives and pol-
icies of this Fund (prior to that date, the "Government Income
Fund") were changed to the current investment objectives and
policies described under "Investment Objective and Policies"
in this Prospectus. A prior change to the Fund's investment
objectives and policies occurred on May 3, 1982.
+ Total return represents aggregate total return for the periods
indicated.
++ Annualized.
</TABLE>
1993 and Semi-Annual Report (unaudited) dated June 30, 1994, each of which
is incorporated by reference in the SAI. The financial statements included
in the Fund's Annual Report for the year ended December 31, 1993 have been
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
appears in the Fund's Annual Report.
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85 12/31/84**
<S> <C> <C> <C> <C> <C> <C>
$ 11.12 $11.43 $11.29 $11.91 $11.80 $10.60 $10.60
0.93 0.98 1.01 1.20 0.86 1.20 1.03
(0.47) (0.36) 0.09 (0.52) 0.28 0.99 0.14
0.46 0.62 1.10 0.68 1.14 2.19 1.17
(1.03) (0.93) (0.96) (1.20) (0.96) (0.99) (1.17)
-- -- -- -- -- -- --
-- -- -- (0.10) (0.07) -- --
-- -- -- -- -- -- --
(1.03) (0.93) (0.96) (1.30) (1.03) (0.99) (1.17)
$ 10.55 $11.12 $11.43 $11.29 $11.91 $11.80 $10.60
4.40% 5.56% 10.05% 5.96% 10.09% 21.83% 12.00%
$71,132 $83,912 $65,105 $51,765 $49,272 $16,721 $6,318
1.19% 1.15% 1.14% 0.94% 0.88% 1.48% 1.50%
8.65% 8.76% 8.81% 10.30% 10.01% 10.77% 10.02%
183% 142% 139% 306% 71% 173% --
<FN>
+++ Without the voluntary reimbursement by the investment adviser
the ratio of operating expenses to average net assets for the
six months ended June 30, 1994 would have been 1.02%. Without
the voluntary waiver of fees by the transfer agent and dis-
tributor and the voluntary reimbursement of expenses by the
investment adviser, the ratio of operating expenses to average
net assets would have been 1.27% for the year ended December
31, 1993.
++++ In accordance with the Securities and Exchange Commission's
July 1985 rules amendment, the rates for 1986 and later peri-
ods include U.S. Government long-term securities which were
excluded from the calculations in prior years.
# Net investment income before voluntary reimbursement by the
investment adviser for the six months ended June 30, 1994 was
$0.34. Net investment income per share before the voluntary
waiver of fees by the transfer agent and distributor and the
voluntary reimbursement of expenses by the investment ad-
viser, for the year ended December 31, 1993 was $0.77.
## Per share amounts have been calculated using the average
share method.
</TABLE>
PREMIER MANAGED INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD(1)
<TABLE>
<CAPTION>
Six Months
Ended Year
6/30/94 Ended
(unaudited) 12/31/93*##
<S> <C> <C>
Net asset value, beginning of period $ 11.38 $ 11.62
Income from investment operations:
Net investment income# 0.35 0.74
Net realized and unrealized gain/(loss) on
investments (0.96) 0.67
Total from investment operations (0.61) 1.41
Less distributions:
Distributions from net investment income (0.36) (0.71)
Distributions from net realized gains -- (0.61)
Distributions in excess of net realized gains -- (0.33)
Total distributions (0.36) (1.65)
Net asset value, end of period $ 10.41 $ 11.38
Total return+ (5.47)% 12.59%
Ratios/supplemental data:
Net assets, end of period (in 000's) $12,256 $11,338
Ratio of expenses to average net assets+++ 0.73%++ 0.83%++
Ratio of net income to average net assets 6.43%++ 6.86%++
Portfolio turnover rate 128% 333%
<FN>
(1) Effective April 4, 1994 the Investment class of Shares was reclas-
sified as the Trust class of Shares. The amounts shown for the pe-
riod ended June 30, 1994, were calculated using the performance of
an Investment Share outstanding from January 1, 1994 to April 3,
1994, and the performance of a Trust Share outstanding from April
4,1994 to June 30, 1994. On October 17, 1994, the Trust Shares
were redesignated Class R Shares.
* The Fund commenced selling Investment Shares on February 1, 1993.
+ Total return represents aggregate total return for the periods in-
dicated.
++ Annualized.
+++ Without the voluntary waiver of fees by the transfer agent and the
voluntary reimbursement of expenses by the investment adviser, the
annualized ratios of operating expenses to average net assets would
have been 0.74% and 0.87% for the six months ended June 30, 1994
and the period ended December 31, 1993, respectively.
# Net investment income per share before the voluntary reimbursement
of expenses by the investment adviser for the six months ended June
30, 1994 was $0.35 and net investment income before the voluntary
waiver of fees by the transfer agent and the voluntary reimburse-
ment of expenses by the investment adviser for the year ended De-
cember 31, 1993 was $0.74.
## Per share amounts have been calculated using the average share
method.
</TABLE>
Additional classes of Shares--designated Class B and Class C--have been
added to the previously existing Class A (formerly Investor Class) and
Class R (formerly Trust Class) Shares of the Fund. Class A and Class R
Shares are offered by this Prospectus. Class B and Class C Shares are of-
fered through a servicing network associated with the Manager pursuant to
a separate Prospectus. Class A and Class R Shares are also offered through
that network pursuant to a separate Prospectus. For more information call
1-800-645-6561. Please read that Prospectus carefully. Exchange and share-
holder services vary depending upon the network through which you purchase
Fund Shares. See "How to Buy Fund Shares."
PREMIER MANAGED INCOME FUND
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund Shares, but only Class
A and Class R Shares are offered by this Prospectus. You may choose the
class of Shares for which you are eligible that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your Shares and any other relevant circumstances. Each Fund Share repre-
sents an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share ("NAV") plus a maxi-
mum initial sales charge of 4.50% of the public offering price imposed at
the time of purchase. The initial sales charge may be reduced or waived
for certain purchases. See "Offering Price--Class A Shares." These shares
are subject to an annual 12b-1 fee at the rate of 0.25 of 1% of the value
of the average daily net assets of Class A. See "Distribution Plan--Class
A."
Class A Shares (and Class B and Class C Shares described below) are prima-
rily sold to retail investors by Service Agents that have entered into
Selling Agreements with Premier, except that full-time or part time em-
ployees or directors of the Company or any of its affiliates or subsidiar-
ies of the Manager, 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 Premier. Subsequent
purchases may be sent directly to the Transfer Agent or your Service
Agent.
Class R Shares generally may not be purchased directly by individuals, al-
though eligible institutions may purchase Class R Shares for accounts
maintained by individuals. Class R Shares are sold at NAV primarily to
bank trust departments and other financial service providers (including
Mellon Bank and its affiliates) acting on behalf of customers having a
qualified trust or investment account or similar relationship at such in-
stitution. Class R Shares may be purchased for a retirement plan only by a
custodian, trustee, investment manager or other entity authorized to act
on behalf of such 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.
In addition to the classes of Shares offered by this Prospectus, the Fund
offers two other classes of Shares designated Class B and Class C avail-
able, together with the Shares offered by this Prospectus, through a ser-
vicing network associated with the Manager. For more information and a
Prospectus relating to shares offered through that network, call 1-800-
645-6561. Please read that Prospectus carefully. Exchange and shareholder
services vary depending upon the network through which you purchase Fund
Shares.
Class B Shares are sold at NAV with no initial sales charge at the time of
purchase; as a result, the entire purchase price is immediately invested
in the Fund. Class B Shares are subject to a maximum 4% Contingent De-
ferred Sales Charge ("CDSC"), which is assessed only if you redeem Class B
Shares within six years of purchase. See "Offering Price--Class B Shares"
and "How to Redeem Fund Shares--Contingent Deferred Sales Charge--Class B
Shares." These Shares also are subject to an annual distribution fee at
the rate of 0.75 of 1% of the value of the average daily net assets of
Class B. In addition, Class B Shares are subject to an annual service fee
at the rate of 0.25 of 1% of the value of the average daily net assets of
Class B. See "Distribution--Class B and C." The distribution fee paid by
Class B will cause such class to have a higher expense ratio and to pay
lower dividends than Class A. Approximately six years after the date of
purchase, Class B Shares automatically will convert to Class A Shares
based on the relative NAVs for shares of each such class, and will no
longer be subject to the distribution fee. (Such conversion is subject to
suspension by the Fund's Board of Trustees if adverse tax consequences
might result.) Class B Shares that have been acquired through the rein-
vestment of dividends and distributions will be converted on a pro rata
basis together with other Class B Shares, in the proportion that a share-
holder's Class B Shares converting to Class A Shares bears to the total
Class B Shares not acquired through the reinvestment of dividends and dis-
tributions.
Class C Shares are subject to a 1.00% CDSC, which is assessed only if a
shareholder redeems Class C Shares within one year of purchase. See "How
to Redeem Fund Shares--Class C Shares." These Shares also are subject to
an annual distribution fee at the rate of 0.75 of 1% of the value of the
average daily net assets of Class C. Class C Shares are also subject to an
annual service fee at the rate of 0.25% of 1% of the value of the average
daily net assets of Class C. See "Distribution--Class B and C." The dis-
tribution fee paid by Class C will cause such class to have a higher ex-
pense ratio and to pay lower dividends than Class A.
The decision as to which class of Shares is more beneficial to an investor
depends on the amount and the intended length of his or her investment. An
investor should consider whether, during the anticipated life of his or
her investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C Shares would be less than the initial sales
charge on Class A Shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A Shares.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A Shares because the accumulated continuing dis-
tribution fees on Class B or Class C Shares may exceed the initial sales
charge on Class A Shares during the life of the investment. Finally, an
investor should consider the effect of the CDSC period and any conversion
rights of the classes in the context of his or her investment time frame.
For example, while Class C Shares have a shorter CDSC period than Class B
Shares, Class C Shares do not have a conversion feature and, therefore,
are subject to an ongoing distribution fee. Thus, Class B Shares may be
more attractive than Class C Shares to investors with longer term invest-
ment outlooks. Generally, Class A Shares may be more appropriate for in-
vestors who invest $1,000,000 or more in Fund Shares, but will not be ap-
propriate for investors who invest less than $50,000 in Fund Shares.
INVESTMENT OBJECTIVE AND POLICIES
Premier Managed Income Fund is a diversified fund that seeks high current
income consistent with what is believed to be prudent risk of capital
through investments in the following types of securities: corporate debt
obligations, such as bonds, debentures, obligations convertible into com-
mon stocks and money market instruments; preferred stocks; and obligations
issued or guaranteed by the U.S. Government and its agencies and instru-
mentalities.
U.S. Government Securities in which the Fund may invest are limited to ob-
ligations issued or guaranteed as to both principal and interest by the
U.S. Government or backed by the full faith and credit of the United
States. In addition to direct obligations of the U.S. Treasury, these in-
clude securities issued or guaranteed by the Federal Housing Administra-
tion, Farmers Home Administration, Export- Import Bank of the United
States, Small Business Administration, Government National Mortgage Asso-
ciation, General Services Administration and Maritime Administration.
Under normal market conditions, (1) at least 65% of the Fund's total as-
sets will be invested in U.S. Government Securities and in investment-
grade corporate debt obligations rated within the four highest ratings of
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Group ("S&P") or in unrated obligations of comparable quality; and (2) at
least 65% of the Fund's total assets will be invested in debt obligations
having maturities of 10 years or less. It should be noted that obligations
rated in the lowest of the top four ratings (Baa by Moody's or BBB by S&P)
are considered to have some specu- lative characteristics. Unrated securi-
ties will be considered of investment-grade if deemed by the Manager to be
comparable in quality to instruments so rated, or if other outstanding ob-
ligations of the issuers of such securities are rated Baa/BBB or better.
(See "Appendix.") A discussion of the Moody's and S&P rating categories is
contained in the SAI.
The Fund may invest up to 35% of its total assets in obligations rated
below the four highest ratings of Moody's or S&P, with no minimum rating
required. Such securities, which are considered to have speculative char-
acteristics, include securities rated in the lowest rating categories of
Moody's or S&P (commonly known as "junk bonds") which are extremely specu-
lative and may be in default with respect to payment of principal or in-
terest. (See "Other Investment Policies.")
The Fund may also invest up to 35% of its total assets in fixed-income ob-
ligations having maturities longer than 10 years, up to 25% of its total
assets in convertible debt obligations and preferred stocks, and up to 20%
of its total assets in securities of foreign issuers, including foreign
governments. (See "Other Investment Policies.") The Fund will not invest
in common stocks, and any common stocks received through conversion of
convertible debt obligations will be sold in an orderly manner. Changes in
interest rates will affect the value of the Fund's portfolio investments.
When, in the opinion of the Manager, a "defensive" investment posture is
warranted, the Fund is permitted to invest temporarily and without limita-
tion in high-grade, short-term money market instruments, consisting exclu-
sively of U.S. Government Securities, bank certificates of deposit and
time deposits, bankers' acceptances, prime commercial paper, and high-
grade, short-term corporate securities and repurchase agreements with re-
spect to these instruments. To this extent, the Fund may not achieve its
investment objective.
Bank certificates of deposit and bankers' acceptances in which the Fund
may invest are limited to U.S. dollar-denominated instruments of domestic
banks, including their branches located outside the United States and of
domestic branches of foreign banks. In addition, the Fund may invest in
U.S. dollar- denominated, non-negotiable time deposits issued by foreign
branches of domestic banks and London branches of foreign banks; and nego-
tiable certificates of deposit issued by London branches of foreign banks.
The foregoing investments may be made provided that the bank has capital,
surplus and undivided profits (as of the date of its most recently pub-
lished annual financial statements) in excess of $100 million as of the
date of investment. Investments in obligations of foreign branches of do-
mestic banks, foreign banks, and domestic branches of foreign banks in-
volve risks that are different from investments in securities of domestic
banks. (See "Other Investment Policies.")
The Fund is permitted to enter into repurchase agreements with respect to
U.S. Government Securities, to purchase portfolio securities on a when-
issued basis, to purchase or sell portfolio securities for delayed deliv-
ery, and to lend its portfolio securities. In addition, the Fund may in-
vest up to 25% of its total assets in securities representing interests in
pools of assets such as mortgage loans, motor vehicle installment purchase
obligations and credit card receivables ("Asset Backed Securities"), which
include classes of obligations collateralized by mortgage loans or mort-
gage pass-through certificates ("collateralized mortgage obligations").
(See "Other Investment Policies.") Investment in the Fund should not be
considered a complete investment program.
OTHER INVESTMENT POLICIES AND RISK FACTORS
ASSET-BACKED SECURITIES--GENERAL. The Fund may invest in Asset-Backed Se-
curities arising through the grouping by governmental, government-related
and private organizations of loans, receivables and other assets origi-
nated by various lenders. Interests in pools of these assets differ from
other forms of debt securities, which normally provide for periodic pay-
ment of interest in fixed amounts with principal paid at maturity or spec-
ified call dates. Instead, Asset-Backed Securities provide periodic pay-
ments which generally consist of both interest and principal payments. The
estimated life of an Asset-Backed Security varies with the prepayment ex-
perience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of an Asset-Backed Security, will be pri-
marily a function of current market interest rates, although other eco-
nomic and demographic factors may be involved. For example, falling inter-
est rates generally result in an increase in the rate of prepayments of
mortgage loans while rising interest rates generally decrease the rate of
prepayments. An acceleration in prepayments in response to sharply falling
interest rates will shorten the security's average maturity and limit the
potential appreciation in the security's value relative to a conventional
debt security. Consequently, Asset- Backed Securities are not as effective
in locking in high long-term yields. Conversely, in periods of sharply
rising rates, prepayments generally slow, increasing the security's aver-
age life and its potential for price depreciation.
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers,
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities pre-
sents certain risks, including those resulting from fluctuations in cur-
rency exchange rates, revaluation of currencies, future political and eco-
nomic developments and the possible imposition of currency exchange block-
ages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and re-
quirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issues may be less liquid and their prices more
volatile than those of securities of comparable domestic issuers. In addi-
tion, with respect to certain foreign counties, there is the possibility
of expropriation, confiscatory taxation and limitations on the use or re-
moval of funds or other assets of the Fund, including withholding of divi-
dends. Foreign securities may be subject to foreign government taxes that
would reduce the yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more that 15% of
the value of its net assets in illiquid securities, including time depos-
its and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for pur-
poses of this limitation (irrespective of any legal or contractual re-
strictions on resale.) The Fund may invest in commercial obligations is-
sued in reliance on the so-called "private placement" exemption from reg-
istration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but which
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold
to institutional investors (such as the Fund) that agree that they are
purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Sec-
tion 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment deal-
ers who make a market in the Section 4(2) paper, thus providing liquidity.
Rule 144A securities generally must be sold to other qualified institu-
tional buyers. Determinations as to the liquidity of investments in Sec-
tion 4(2) paper and Rule 144A securities will be made by the Board of
Trustees. The Board will consider availability of reliable price informa-
tion and other relevant information in making such determinations. If a
particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the per-
centage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified buyers become, for
a time, uninterested in purchasing these securities.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organiza-
tions. Such loans will not exceed 33 1/3 % of the Fund's total assets,
taken at value. Loans of portfolio securities by the Fund will be collat-
eralized by cash, letters of credit or securities issued or guaranteed by
the U.S. Government or its agencies, which will be maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable un-
rated securities (collectively referred to in this discussion as "low-
rated" securities) will likely have some quality and protective character-
istics that, in the judgment of the rating organization, are outweighed by
large uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay in-
terest and repay principal in accordance with the terms of the obligation.
While the market values of low-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher-
rated securities, the market values of certain low- rated securities tend
to be more sensitive to individual corporate developments and changes in
economic conditions than higher-rated securities. In addition, low-rated
securities generally present a higher degree of credit risk. Issuers of
low-rated securities are often highly leveraged and may not have more tra-
ditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during sus-
tained periods of rising interest rates may be impaired. The risk of loss
due to default by such issuers is significantly greater because low-rated
securities generally are unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional ex-
penses to the extent that it is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings. The ex-
istence of limited markets for low-rated securities may diminish the
Fund's ability to obtain accurate market quotations for purposes of valu-
ing such securities and calculating its NAV. Further information regarding
security ratings is contained in the SAI.
MORTGAGE-BACKED SECURITIES. The mortgage-backed securities in which the
Fund will invest represent pools of mortgage loans assembled for sale to
investors by various governmental agencies and government-related organi-
zations, such as Government National Mortgage Association ("GNMA"), Fed-
eral National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"), as well as by private issuers such as commercial
banks, savings and loan institutions, mortgage bankers and private mort-
gage insurance companies. Mortgage-backed securities provide a monthly
payment consisting of interest and principal payments. Additional payment
may be made out of unscheduled repayments of principal resulting from the
sale of the underlying residential property, refinancing or foreclosure,
net of fees or costs that may be incurred. Prepayments of principal on
mortgage-backed securities may tend to increase due to refinancing of
mortgages as interest rates decline. Prompt payment of principal and in-
terest on GNMA mortgage pass-through certificates is backed by the full
faith and credit of the United States. FNMA guaranteed mortgage pass-
through certificates and FHLMC participation certificates are solely the
obligations of those entities but are supported by the discretionary au-
thority of the U.S. Government to purchase the agencies' obligations.
Mortgage pools created by private organizations generally offer a higher
rate of interest than governmental and government-related pools because
there are no direct or indirect guarantees of payments in the former
pools. Timely payment of interest and principal in these pools, however,
may be supported by various forms of private insurance or guarantees, in-
cluding individual loan, title, pool and hazard insurance. There can be no
assurance that the private insurers can meet their obligations under the
policies.
Collateralized mortgage obligations ("CMOs") are a type of bond secured by
an underlying pool of mortgages or mortgage pass-through certificates that
are structured to direct payments on underlying collateral to different
series or classes of the obligations. CMO classes may be specially struc-
tured in a manner that provides any of a wide variety of investment char-
acteristics, such as yield, effective maturity and interest rate sensitiv-
ity. CMO structuring is accomplished by in effect stripping out portions
of the cash flows (comprised of principal and interest payments) on the
underlying mortgage assets and prioritizing the payments of those cash
flows. In the most extreme case, one class will be a "principal-only" (PO)
security, the holder of which receives the principal payments made by the
underlying mortgage-backed security, while the holder of the "interest-
only" (IO) security received interest payments from the same underlying
security. CMOs may be structured in other ways that, based on mathematical
modeling or similar techniques, is expected to provide certain results. As
market conditions change, however, and particularly during periods of
rapid or unanticipated changes in market interest rates, the attractive-
ness of a CMO class, and the ability of a structure to provide the antici-
pated investment characteristics, may be significantly reduced. Such
changes can result in volatility in the market value, and in some in-
stances reduced liquidity, of the CMO class.
Inverse floaters are instruments whose interest rates bear an inverse re-
lationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index in-
versely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, an issuer may decide
to issue two variable rate instruments instead of a single long-term,
fixed-rate bond. The interest rate on one instrument reflects short-term
interest rates, while the interest rate on the other instrument (the in-
verse floater) reflects the approximate rate the issuer would have paid on
a fixed-rate bond, multiplied by two, minus the interest rate paid on the
short-term instrument. The market for inverse floaters is relatively new.
To the extent that the Fund purchases mortgage-related securities at a
premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of
the Fund's principal investment to the extent of the premium paid. The
yield of the Fund that invests in mortgage-related securities may be af-
fected by reinvestment of prepayments at higher or lower rates than the
original investment. In addition, like other debt securities, the values
of mortgage-related securities, including government and government re-
lated mortgage pools, generally will fluctuate in response to market in-
terest rates.
NON-MORTGAGE BACKED SECURITIES. The Fund may also invest in non-mortgage
backed securities including interests in pools of receivables, such as
motor vehicle installment purchase obligations and credit card receiv-
ables. Such securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in the underlying
pools of assets. Such securities may also be debt instruments, which are
also known as collateralized obligations and are generally issued as the
debt of a special purpose entity organized solely for the purpose of own-
ing such assets and issuing such debt. Non-mortgage backed securities are
not issued or guaranteed by the U.S. Government or its agencies or instru-
mentalities; however, the payment of principal and interest on such obli-
gations may be guaranteed up to certain amounts and for a certain time pe-
riod by a letter of credit issued by a financial institution (such as a
bank or insurance company) unaffiliated with the issuers of such securi-
ties. Non-mortgage backed securities will be purchased by the Fund only
when such securities are readily marketable and generally will have re-
maining estimated lives at the time of purchase of 5 years or less.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent with its investment objective and policies and permissible under the
Investment Company Act of 1940, as amended (the "1940 Act"). As a share-
holder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement trans-
actions in pursuit of its investment objective. A repurchase agreement in-
volves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from
the Fund at a specified price and date or upon demand. This technique of-
fers a method of earning income on idle cash. A risk associated with re-
purchase agreements is the failure of the seller to repurchase the securi-
ties as agreed, which may cause the Fund to suffer a loss if the market
value of such securities declines before they can be liquidated on the
open market. Repurchase agreements with a duration of more than seven days
are considered illiquid securities and are subject to the limit on illiq-
uid securities stated above.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure ad-
vantageous prices or yields, the Fund may purchase U.S. Government Securi-
ties on a when-issued basis or may purchase or sell securities for delayed
delivery. In such transactions, delivery of the securities occurs beyond
the normal settlement periods, but no payment or delivery is made by the
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed deliv-
ery basis involves the risk that, as a result of an increase in yields
available in the marketplace, the value of the securities purchased will
decline prior to the settlement date. The sale of securities for delayed
delivery involves the risk that the prices available in the market on the
delivery date may be greater than those obtained in the sale transaction.
The Fund will establish a segregated account consisting of cash, U.S. Gov-
ernment Securities or other high-grade debt obligations in an amount equal
to the amounts of its when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds Trust may in the future
seek to achieve the Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment ob-
jective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Trustees determine it to be in the best interest of
the Fund and its shareholders. In making that determination, the Trustees
will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Trustees will not approve an arrangement that
is likely to result in higher costs, no assurance is given that costs will
be materially reduced if this option is implemented.
PORTFOLIO TURNOVER. While securities are purchased by the Fund on the
basis of high current income and not for short-term trading profits, in
the past the portfolio turnover rate of the Fund has exceeded 100% and it
may exceed 100% in the future. A portfolio turnover rate of 100% would
occur, for example, if all the securities held by the Fund were replaced
once in a period of one year. In past years the Fund's rate of portfolio
turnover exceeded that of certain other mutual funds with the same invest-
ment objective. A higher rate of portfolio turnover (100% or greater) in-
volves correspondingly greater brokerage commissions and other expenses
which must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result in
the realization of larger amounts of short-term capital gains which, when
distributed to the Fund's shareholders, are taxable to them as ordinary
income. (See "Distributions" and "Taxes.") Nevertheless, security transac-
tions for the Fund will be based only upon investment considerations and
will not be limited by any other considerations when the Manager deems it
appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding Shares. The SAI describes all of the Fund's fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective,policies, restric-
tions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's Shares in certain states, the
Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of
the Fund, it may consider terminating sales of its Shares in the states
involved.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of The Premier Family of Funds to employ such procedures may sub-
ject it to liability for any loss due to unauthorized or fraudulent in-
structions.
INVESTOR LINE
You may reach The Premier Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Premier Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
The Premier Family of Funds' investment portfolios and services, (2) lis-
ten to NAVs, yields and total return figures, and (3) talk with a customer
service representative during normal business hours. For more information
about direct access using a Touch-Tone phone, please contact The Premier
Family of Funds.
HOW TO BUY FUND SHARES
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and
Class A Shares of the Fund. Class R Shares are sold primarily to bank
trust departments and other financial service providers (including Mellon
Bank and its affiliates) ("Banks") acting on behalf of customers having a
qualified trust or investment account or relationship at such institution.
Class A Shares are primarily sold to retail investors by Premier and by
Agents that have entered into a Shareholder Servicing and Sales Support
Agreement with Premier. Once an investor has established an account, addi-
tional purchases may, in certain cases, be made directly through the
Fund's transfer agent. If Shares of the Fund are held in an account at a
Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit your transaction requests to the Fund's
transfer agent or to Premier. You may diversify your investments by choos-
ing a combination of investment portfolios offered by The Premier Family
of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Premier Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account when you call with instructions. Investments
made by phone in any one account must be in an amount of at least $100 and
are effective two days after your call. (See "When Share Price is Deter-
mined.")
BY WIRE.
You may make your initial or subsequent investments in The Premier Family
of Funds by wiring funds. To do so:
(1) Instruct your bank to wire funds to Federal Reserve Bank of Boston,
BOS SAFE DEP, Account Number 011001234, The Premier Family of Funds
080071.
(2) Be sure to specify on the wire:
(a) The Premier Funds.
(b) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(c) Your name.
(d) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Premier Family
of Funds at One Exchange Place, Boston, Massachusetts 02109 for more in-
formation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value. Call 1-800-
548-2868 or write The Premier Family of Funds at One Exchange Place, Bos-
ton, Massachusetts 02109 for more information or a Direct Deposit authori-
zation form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may, at its discre-
tion, permit you to purchase Shares through an "in-kind" exchange of secu-
rities you hold. Any securities exchanged must meet the investment objec-
tive, policies and limitations of the Fund, must have a readily ascertain-
able market value, must be liquid and must not be subject to restrictions
on resale. The market value of any securities exchanged, plus any cash,
must be at least equal to $25,000. Shares purchased in exchange for secu-
rities generally cannot be redeemed for fifteen days following the ex-
change in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative net asset value of
the Shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securi-
ties become the property of the Fund, along with the securities. Call
1-800-548-2868 or write The Premier Family of Funds at One Exchange Place,
Boston, Massachusetts 02109 for more information about "in-kind" pur-
chases.
OFFERING PRICE
CLASS A SHARES. The public offering price of Class A Shares is the NAV of
that class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
Dealers'
As a % of As a % of Net Reallowance
Offering Price Asset Value As a % of
Amount of Transaction Per Share Per Share Offering Price
<S> <C> <C> <C>
Less than $50,000 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.75
$500,000 to less than $1,000,000 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more of
Class A Shares. However, if you purchase Class A Shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem
all or a portion of those shares within two years after purchase, a CDSC
of 1.00% will be imposed at the time of redemption. The terms contained in
the section of the Fund's Prospectus entitled "How to Redeem Fund Shares--
Contingent Deferred Sales Charge--Class B" (other than the amount of the
CDSC and its time periods) are applicable to the Class A Shares subject to
a CDSC. Letter of Intent and Right of Accumulation apply to such purchases
of Class A Shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with Premier
pertaining to the sale of Fund Shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial in-
stitution 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 NAV, provided
that they have furnished Premier 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 NAV. In addition, Class A Shares are offered
at NAV to full-time or part-time employees or directors of the Manager or
any of its affiliates or subsidiaries, 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 will be offered at NAV without a sales load to employees
participating in certain eligible benefit plans. Class A Shares may be
purchased at NAV through certain broker-dealers and other financial insti-
tutions which have entered into an agreement with Premier, which includes
a requirement that such Shares be sold for the benefit of clients partici-
pating in a "wrap account" or a similar program under which such clients
pay a fee to such broker-dealer or other financial institution. Holders of
accounts with Class A Shares of the Fund as of December 19, 1994, may also
purchase additional Class A Shares of the Fund in the same account at NAV.
The dealer reallowance may be changed from time to time but will remain
the same for all dealers. Premier, at its expense, may provide additional
promotional incentive to dealers that sell shares of funds advised by the
Manager which are sold with a sales load, such as Class A Shares. In some
instances, those incentives may be offered only to certain dealers who
have sold or may sell significant amounts of shares. Dealers receive a
larger percentage of the sales load from Premier than they receive for
selling most other funds.
CLASS R SHARES. The public offering for Class R Shares is the NAV of that
class.
CLASS B SHARES. The public offering price for Class B Shares is the NAV
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 under "How to Redeem Fund Shares--Contingent Deferred Sales
Charges--Class B Shares." Premier compensates certain Service Agents for
selling Class B Shares at the time of purchase from Premier's own assets.
The proceeds of the CDSC and the distribution fee, in part, are used to
defray these expenses.
CLASS C SHARES. The public offering price for Class C Shares is the NAV
of that class. No initial sales charge is imposed at the time of purchase.
A CDSC, however, is imposed on redemptions of Class C Shares made within
the first year of purchase. See "How to Redeem Fund Shares--Contingent De-
ferred Sales Charges--Class C Shares."
RIGHT OF ACCUMULATION--CLASS A SHARES. Reduced sales loads apply to any
purchase of Class A Shares, shares of other funds in the Premier Family of
Funds, shares of certain other funds advised by the Manager 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 re-
lated "purchaser" as defined in the SAI, where the aggregate investment,
including such purchase, is $50,000 or more. If, for example, you previ-
ously purchased and still hold Class A Shares, or shares of any other Eli-
gible Fund or combination thereof, with an aggregate current market value
of $40,000 and subsequently purchase Class A Shares or shares of an Eligi-
ble Fund having a current value of $20,000, the sales load applicable to
the subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the cur-
rent 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
Service Agent must notify the Premier if orders are made by wire, or the
Transfer Agent if orders are made by mail. The reduced sales is subject to
confirmation of your holdings through a check of appropriate records.
LETTER OF INTENT--CLASS A SHARES. By signing a Letter of Intent form,
available from the Premier, 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 no purchase
the full amount indicated in the Letter of Intent. The escrow will be re-
leased 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 spec-
ified, 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 Shares of the Fund 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 purhcase Class A Shares, you must indicate your in-
tention to do so under a Letter of Intent.
WHEN SHARE PRICE IS DETERMINED.
NAV is determined at the close of the New York Stock Exchange ("NYSE") on
each day that the NYSE is open (a "business day"). Investments and re-
quests to exchange or redeem Shares received by the Fund before the close
of regular trading on the NYSE (usually 4 p.m., Eastern time) are effec-
tive on, and will receive the price determined, that day (except invest-
ments made by electronic funds transfer which are effective two business
days after your call). Investment, exchange or redemption requests re-
ceived after the close of the NYSE are effective on, and receive the first
Share price determined, the next business day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instruction
to the Fund, it may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. The Fund may suspend the offering of
Shares of any class of the Fund and reserves the right to vary initial and
subsequent investment minimums. Subsequent investments to purchase addi-
tional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum, as a result of redemptions but not as a result of mar-
ket action, unless you have established an automatic monthly investment to
purchase additional Shares. The Premier Family of Funds reserves the right
to change such minimum from time to time. Any time the Shares of the Fund
held in an account have a value of less than $1,000 ($500 for Uniform
Gifts/Transfers to Minors Acts accounts), a notification may be sent ad-
vising you of the need to either make an investment to bring the value of
the Shares held in the account up to $1,000 ($500) or to establish an au-
tomatic monthly investment to purchase additional Shares. If the invest-
ment is not made or the automatic monthly investment is not established
within 60 days from the date of notification, the Shares held in the ac-
count will be redeemed and the proceeds from the redemption will be sent
by check to your address of record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds advised by the Manager and that were previously advised by
Mellon Bank. As noted below, exchanges from any one fund may be limited in
any one calendar year. In addition, the Shares being exchanged and the
Shares of each fund being acquired must have a current value of at least
$100 and otherwise meet the minimum investment requirement of the fund
being acquired. Call the Investor Line for additional information and a
prospectus describing other investment portfolios offered by The Premier
Family of Funds. Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A Shares into funds sold with a sales load. No CDSC will be imposed
on Class B or C Shares at the time of an exchange; however, Class B or C
Shares acquired through an exchange will be subject to the higher CDSC ap-
plicable to the exchanged or acquired shares. The CDSC applicable on re-
demption of the acquired Class B or C Shares will be calculated from the
date of the initial purchase of the Class B or C Shares exchanged, as the
case may be. If you are exchanging Class A Shares into a fund that charges
a sales load, you may qualify for share prices which do not include the
sales load or which reflect a reduced sales load, if the shares of the
fund from which you are exchanging were: (a) purchased with a sales load,
(b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or distributions
paid with respect to the foregoing categories of shares. To qualify, at
the time of the exchange your Service Agent must notify Premier. Any such
qualification is subject to confirmation of your holdings through a check
of appropriate records. No fees currently are charged shareholders di-
rectly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nomi-
nal fee in accordance with rules and promulgated by the SEC. The Fund re-
serves the right to reject any exchange request in whole or in part.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Premier
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of a money market fund, the Shares of any of
the funds exchanged pursuant to an Automatic Withdrawal Program, and
to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(6) An exchange is based on the next calculated net asset value per Share
of each fund after receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and the regulations thereunder. (See "Taxes.")
(8) An exchange of the Fund's Shares is, for federal income tax purposes,
a sale of the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given 60 days notice prior to any material changes in
the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.")
If an investor fails to specify the class of Shares to be redeemed or if
he or she owns fewer Shares of the class than specified to be redeemed,
the redemption request may be delayed until the Transfer Agent receives
further instructions from the investor or his or her Service Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed directly through Premier. Service Agents or other institu-
tions may charge their clients a nominal fee for effecting redemptions of
Fund Shares.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. A CDSC payable to Pre-
mier is imposed on any redemption of Class B Shares which reduces the cur-
rent NAV of your Class B Shares to an amount which is lower than the dol-
lar 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 NAV of the Class B Shares redeemed does not exceed (i)
the current NAV of Class B Shares acquired through reinvestment of divi-
dends or capital gain distributions, plus (ii) increases in the NAV 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 NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from 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 pur-
chase 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:
<TABLE>
<CAPTION>
CDSC as a
% of Amount
Year Since Invested or
Purchase Payment Redemption
Was Made Proceeds
<S> <C>
First 4.00
Second 4.00
Third 3.00
Fourth 3.00
Fifth 2.00
Sixth 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the calcula-
tion 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 distribu-
tions; then of amounts representing the increase in NAV 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 a 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 his or her investment. As-
suming at the time of the redemption the NAV 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 rein-
vested 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 1.00% payable
to Premier 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 applicable to Class B and Class C Shares will 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 certain eligi-
ble benefit plans, (c) redemptions as a result of a combination of any in-
vestment company with the Fund by merger, acquisition of assets or other-
wise, (d) a distribution following retirement under a tax-deferred retire-
ment 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) re-
demptions by such shareholders as the SEC or its staff may permit. If the
Fund's Trustees determine to discontinue the waiver of the CDSC, the dis-
closure in the Fund's Prospectus 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
at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption an investor
must notify the Transfer Agent or his or her Service Agent must notify
Premier. Any such qualification is subject to confirmation of the inves-
tor's entitlement.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Premier Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Premier Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with a Fund account balance of $10,000 or more may participate in this
program. Shares will be redeemed on the 15th day or 30th day of each month
or the next business day, and your check will be mailed the next day. If
your monthly checks exceed the dividends, interest and capital apprecia-
tion on your Shares, the payments will deplete your investment. Amounts
paid to you by Automated Withdrawals are not a return on your investment.
They are derived from the redemption of Shares in your account, and you
must report on your income tax return, any gains or losses that you real-
ize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instruction. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of the Fund's Shares will normally be transmit-
ted on the first business day, but not later than the seventh day, follow-
ing the date of redemption. Your bank usually will receive wired funds the
day they are transmitted. Electronically transferred funds will ordinarily
be received within two business days after transmission. Once the funds
are transmitted, the time of receipt and the availability of the funds are
not within the Fund's control. If your bank account changes, you must send
a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), in-
cluding tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE PREMIER FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Premier Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Premier
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and
request the appropriate forms for:
* IRAs.
* 403(b) accounts for employees of public school systems and non-profit
organizations.
* Profit sharing plans and pension plans for corporations and other em-
ployers.
HOW TO TRANSFER AN INVESTMENT TO A PREMIER FAMILY OF FUNDS'
RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to The Premier Family of
Funds from another custodian. Call 1-800-548-2868 or write The Premier
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 for
a request to transfer form. If you direct The Premier Family of Funds to
transfer funds from an existing non-retirement Premier Family of Funds ac-
count into a retirement account, the Shares in your non-retirement account
will be redeemed. The redemption proceeds will be invested in your Premier
Family of Funds IRA or other tax-qualified retirement plan. The redemption
is a taxable event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Class A and Class R Shares of the Fund is computed by adding with re-
spect to each class of Shares the value of all the class' investments,
cash, and other assets, deducting liabilities and dividing the result by
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no
sale is reported, the mean of the latest bid and asked prices is used. Se-
curities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Trustees.
Pursuant to a determination by The Dreyfus/Laurel Funds Trust's Board of
Trustees that such value represents fair value, the debt securities with
maturities of 60 days or less held by the Fund are valued at amortized
cost. When a security is valued at amortized cost, it is valued at its
cost when purchased, and thereafter by assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuat-
ing interest rates on the market value of the instrument.
The NAV of each class of Shares of most of The Premier Family of Funds'
investment portfolios (other than money market funds) is published in
leading newspapers daily. The yield of each class of Shares of most of The
Premier Family of Fund's money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Premier Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise the yield and total return, on a
class of Shares. Total return and yield figures are based on historical
earnings and are not intended to indicate future performance. The "total
return" of a class of Shares of the Fund may be calculated on an average
annual total return basis or a cumulative total return basis. Average an-
nual total return refers to the average annual compounded rates of return
on a class of Shares over one-, five-, and ten-year periods or the life of
the Fund (as stated in the advertisement) that would equate an initial
amount invested at the beginning of a stated period to the ending redeem-
able value of the investment, assuming the reinvestment of all dividends
and capital gains distributions. Cumulative total return reflects the
total percentage change in the value of the investment over the measuring
period, again assuming the reinvestment of all dividends and capital gains
distributions.
The "yield" of the Fund is calculated by dividing a class of Shares' annu-
alized net investment income per Share during a recent 30-day (or one
month) period by the maximum public offering price per class of such Share
on the last day of that period. Since yields fluctuate, yield data cannot
necessarily be used to compare an investment in a class of Shares with
bank deposits, savings accounts, and similar investment alternatives which
often provide an agreed-upon or guaranteed fixed yield for a stated period
of time.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and ex-
penses borne by Class R and Class A Shares of the Fund, the return and
yield on Class R Shares will generally be higher than the return and yield
on Class A Shares. Any fees charged by a Bank or Agent directly to its
customers' account in connection with investments in the Fund will not be
included in calculations of total return or yield. The Fund's Annual Re-
port and semi-annual report contain additional performance information and
is available upon request without charge from the Fund's distributor or
your Bank or Agent.
The Fund may compare the performance of its Class A and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings and the Lehman Government/Corporate Index. Perfor-
mance rankings as reported in Changing Times, Business Week, Institutional
Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load Inves-
tor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and World
Report, Forbes, Fortune, Barron's and similar publications may also be
used in comparing the Fund's performance. Furthermore, the Fund may quote
its Class A and Class R Shares' returns and yields in advertisements or in
shareholder reports. The Fund may also advertise non-standardized perfor-
mance information, such as total return, for periods other than those re-
quired to be shown or cumulative performance data.
DISTRIBUTIONS
The Fund declares daily and pays monthly (on the first business day of the
following month) dividends from its net investment income, if any, and
distributes any net long-term capital gains on an annual basis. The Board
of Trustees may elect not to distribute capital gains in whole or in part
to take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain distributions in
cash, your distributions will be automatically reinvested in additional
Shares of the Fund at the NAV. You may change the method of receiving dis-
tributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested in additional Fund Shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of Shares may be
greater or less per Share than those paid with respect to another class of
Shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will begin
to accrue dividends on that day, and redemption orders effected on any
particular day will receive dividends declared only through the business
day prior to the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will reduce
each Share's NAV by the amount of the distribution. Shareholders are sub-
ject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if
any, realized by the Fund on the sale of portfolio securities, and undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause such gains and income are included in the value of your Shares, when
they are distributed the value of your Shares is reduced by the amount of
the distribution. Accordingly, if your distribution is reinvested in addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; while you own more Shares, the value of each Share has been reduced
by the amount of the distribution. Likewise, if you take your distribution
in cash, the value of your Shares immediately after the distribution plus
the cash received is equal to the value of the Shares immediately before
the distribution. For example, if you own a Fund Share that immediately
before a distribution has a value of $10, including $2 in undistributed
dividends and capital gains realized by the Fund during the year, and if
the $2 is distributed, the value of the Share will decline to $8. If the
$2 is reinvested at $8 per Share, you will receive .250 Shares, so that,
after the distribution, you will have 1.250 Shares at $8 per Share, or
$10, the same as before.
TAXES
The Fund intends to qualify for treatment as a regulated investment com-
pany under the Code so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your Shares.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund Shares, even if
the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash re-
ceived, if any) remains the same. In addition, the Share price at the time
you purchase Shares may include unrealized gains in the securities held in
the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a capital gain distribution and will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV notifying
you of the status for federal income tax purposes of your distributions
for the preceding year.
Dividends paid by the Fund to qualified retirement plans ordinarily will
not be subject to taxation until the proceeds are distributed from the re-
tirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the partici-
pant reaches age 59 1/2 , generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant reaches age 70 1/2 is less than the "minimum required distribution"
for that taxable year, an excise tax equal to 50% of the deficiency may be
imposed by the IRS. The administrator, trustee or custodian of such a re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement plan in excess of the amounts permitted by law may be subject to
an excise tax.
You must furnish the Fund with your taxpayer identification number ("TIN")
and state whether you are subject to withholding for prior under-
reporting, certified under penalties of perjury as prescribed by the Code
and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is re-
quired to withhold a portion of all dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other non-
corporate shareholders who do not provide the Fund with a correct TIN;
withholding from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of
its taxable ordinary income for that year and capital gain net income for
the one-year period ending on December 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax consider-
ations generally affecting the Fund and its shareholders; see the SAI for
a further discussion. There may be other Federal, state or local consider-
ations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affect your
Fund account. In addition, an account statement will be mailed to you
quarterly or monthly depending on the Fund's reporting schedule. You may
also request a statement of your account activity at any time. Carefully
review such confirmation statements and account statements and notify the
Fund immediately if there is an error. From time to time, to reduce ex-
penses, only one copy of the Fund's shareholder reports (such as the
Fund's Annual Report) may be mailed to your household. Please call the
Fund if you need additional copies.
No later than January 31 of each year, The Premier Family of Funds will
send you the following reports, which you may use in completing your Fed-
eral income tax return:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year (for non- retirement plan accounts).
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS TRUST.
The Dreyfus/Laurel Funds Trust offers Shares of beneficial interest of
separate investment portfolios without par value (each a "fund"). The Bos-
ton Company Fund was organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts on March 30, 1979 and changed
its name to the Laurel Funds Trust, and then to the Dreyfus/Laurel Funds
Trust on October 17, 1994. The Dreyfus/Laurel Funds Trust is registered
with the SEC as an open-end management investment company, commonly known
as a mutual fund. The Trustees have authorized Shares of the Fund to be
issued in four classes--Class A, Class R, Class B and Class C.
Each Share (regardless of class) has one vote. All Shares of a fund (and
classes thereof) vote together as a single class, except as to any matter
for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or
more particular fund or classes, in which case only the shareholders of
the affected fund or classes are entitled to vote, each as a separate
class. At your written request, the Fund will issue negotiable stock cer-
tificates.
At December 6, 1994, Mellon Bank Corporation, the Manager's parent, owned
of record through its direct and indirect subsidiaries more than 25% of
The Dreyfus/Laurel Funds Trust's outstanding voting shares, and is deemed,
under the 1940 Act, to be a controlling shareholder.
MANAGEMENT.
THE BOARD OF TRUSTEES. The business affairs of The Dreyfus/Laurel Funds
Trust are managed under the direction of its Trustees. The SAI contains
the names and general background information concerning the Trustees and
officers of The Dreyfus/Laurel Funds Trust.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of November 30, 1994, the Manager managed or adminis-
tered approximately $71 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the
Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. As investment manager,
the Manager manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions, and is paid a fee.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of .70% of the Fund's average
daily net assets less certain expenses described below. The Manager pays
all of the expenses of the Fund except brokerage fees, taxes, interest,
fees, expenses of the non-interested Trustees (including counsel fees) and
extraordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), the Man-
ager is contractually required to reduce its investment management fee in
an amount equal to the Fund's allocable share of such expenses. In order
to compensate the Manager for paying virtually all of the Fund's expenses,
the Fund's investment management fee is higher than the investment advi-
sory fees paid by most investment companies. Most, if not all, such compa-
nies also pay for additional non-investment advisory expenses that are not
paid by such companies' investment adviser. From time to time, the Manager
may waive (either voluntarily or pursuant to applicable state limitations)
additional investment management fees payable by the Fund. For the fiscal
year ended December 31, 1993 the Fund paid its investment adviser, The
Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect wholly-
owned subsidiary of Mellon Bank Corporation) 0.60% in investment advisory
fees under the Fund's previous investment advisory contract (such contract
only covered the provision of investment advisory and certain specified
administrative services). For the fiscal year ended December 31, 1993
total operating expenses (excluding Rule 12b-1 fees) of the Fund were
1.07%, 0.93% and 0.83% for the Retail, Institutional and Investment
Classes, respectively, of the Fund's average daily net assets. It is an-
ticipated that the current total operating expenses of the Fund (excluding
Rule 12b-1 fees) will be approximately .70% of the Fund's average daily
net assets.
The Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager or which have sold Shares of the Fund, if the Manager believes
that the quality of the transaction and the commission are comparable to
what they would be with other qualified brokerage firms. From time to
time, to the extent consistent with its investment objective, policies and
restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
Mellon Bank is a subsidiary of Mellon Bank Corporation. As of June 30,
1994 Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager may raise issues
under these provisions. However, Mellon Bank has been advised by its coun-
sel that these activities are consistent with these statutory and regula-
tory obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
The Fund is managed by a team of portfolio managers consisting of three
individuals, Almond G. Goduti, Jr., William R. Leach and Arthur J. Mac-
Bride, III. Mr. Goduti and Mr. MacBride are officers of Mellon Bank. Each
individual has been employed by the Fund as a portfolio manager since Oc-
tober 17, 1994. Almond Goduti, Vice President of Boston Advisors is a mem-
ber of the Fixed Income Strategy Committee and is also responsible for the
taxable fixed income investment portfolio of Boston Safe Deposit and Trust
Company. Mr. Goduti began his career with The Boston Company in 1984 as a
Portfolio Manager in the Personal Trust Division. He holds a BS in Finance
and Computer Science from Boston College.
Mr. Leach is Chairman of the Fixed Income Strategy Committee. He is also
responsible for the investment and research of mortgage derivatives and
convertible securities. Prior to joining The Boston Company in 1988, Mr.
Leach was Vice President of Fixed Income Investments for Beneficial Stan-
dard Life Insurance Company, a subsidiary of CalFed, Inc. Mr. Leach gradu-
ated from Pomona College, Claremont, with a BA in Economics. He also holds
a Master of Science degree in Industrial Administration (MSIA) from
Carnegie-Mellon University in Pittsburgh. He was a member of the Los Ange-
les Society of Financial Analysts and taught fixed income analysis for
LASFA's CFA Review course at the University of Southern California from
1988 to 1991.
Prior to joining The Boston Company in 1988, Mr. MacBride was a Principal
and the National Sales Manager at Manufacturers Hanover Securities Corpo-
ration, where he was responsible for the sale of all fixed income securi-
ties. Previously, he did corporate finance/underwriting work in both the
U.S. and Europe. In London and Toronto, he worked extensively on the Euro-
bond Market (coupon and currency swaps). He is a graduate from Franklin
and Marshall College and holds a MBA from Fordham University.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and Fund accountant, maintaining possession
of the Fund's investment securities and providing certain accounting and
related services.
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the
Fund's sponsor and distributor. Premier is a registered broker-dealer with
principal offices at One Exchange Place, Boston, Massachusetts 02109. The
Fund has entered into a distribution agreement with Premier which provides
that Premier has the exclusive right to distribute Shares of the Fund.
Premier may pay service and/or distribution fees to Agents that assist
customers in purchasing and servicing of Shares of the Fund. (See "Distri-
bution Plan.")
DISTRIBUTION PLANS (CLASS A PLAN AND CLASS B AND C PLANS).
Class A Shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C Shares are subject
to a Distribution Plan and a Service Plan, each adopted pursuant to Rule
12b-1. Potential investors should read this Prospectus in light of the
terms governing Agreements with their Service Agents. A Service Agent en-
titled to receive compensation for selling and servicing the Fund's Shares
may receive different compensation with respect to one class of Shares
over another.
DISTRIBUTION PLAN--CLASS A. The holders of the Class A Shares of the Fund
bear some of the cost of selling those Shares under the Distribution Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of
its average daily net assets attributable to Class A Shares to compensate
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and Premier for shareholder servicing activities and
for activities or expenses primarily intended to result in the sale of
Class A Shares of the Fund. The Plan allows Premier to make payments from
the Rule 12b-1 fees it collects from the Fund to compensate Service Agents
that have entered into Selling Agreements ("Agreements") with Premier.
Under the Agreements, the Service Agents are obligated to provide distri-
bution related services with regard to the Fund and/or shareholder ser-
vices to the Service Agent's clients that own Class A Shares of the Fund.
The Fund and Premier may suspend or reduce payments under the Plan at any
time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Service Agents,
Premier and the Fund may agree to voluntarily reduce the maximum fees pay-
able under the Plan. See the SAI for more details on the Plan.
DISTRIBUTION AND SERVICE PLANS--CLASS B AND C. Under a Distribution Plan
adopted pursuant to Rule 12b-1, the Fund pays Premier for distributing the
Fund's Class B and C Shares, at an aggregate annual rate of .75% of 1% of
the value of the average daily net assets of Class B and C. Under a Ser-
vice Plan adopted pursuant to Rule 12b-1, the Fund pays the Manager or
Premier for the provision of certain services to the holders of Class B
and C Shares a fee at the annual rate of .25 of 1% of the value of the av-
erage daily net assets of Class B and C. 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 providing services related to the maintenance of such
shareholder accounts. With regard to such services, each Service Agent is
required to disclose to its clients any compensation payable to it by the
Fund and any other compensation payable by their clients in connection
with the investment of their assets in Class B and C Shares. Premier may
pay one or more Service Agents in respect of distribution and other ser-
vices for these classes of Shares. Premier determines the amounts, if any,
to be paid to Service Agents under the Distribution and Service Plans and
the basis on which such payments are made. The fees payable under the Dis-
tribution and Service Plans are payable without regard to actual expenses
incurred.
APPENDIX.
The table below shows the percentage of the Fund's assets invested during
fiscal 1993 in securities assigned to the various rating categories by
Moody's and Standard & Poor's and in unrated securities determined by the
Manager to be of comparable quality.
<TABLE>
<CAPTION>
Rated securities Unrated securities of
as percentage of comparable quality, as
Rating Fund's assets percentage of Fund's assets
<S> <C> <C>
"AAA"/"AAA" 0.76% 43.38%
"AA"/"AA" 0.85% --
"A"/"A" 10.87% --
"BBB"/"BAA" 15.17% --
"BB"/"BA" 12.26% --
"B"/"B" 8.50% --
"CCC"/"CAA" 1.56% --
"N/R" 6.65% --
Total 56.62% 43.38%
</TABLE>
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money.
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Premier Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Premier Family of Funds
One Exchange Place
Boston, Massachusetts 02109
_________________________________________________________________________
DREYFUS CORE VALUE FUND
INVESTOR ^ AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
^ December 19, 1994
_________________________________________________________________________
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of the Dreyfus Core Value Fund (formerly the Laurel Capital
Appreciation Fund) (the "Fund"), dated ^ December 19, 1994, as it may be
revised from time to time. The Fund is a separate portfolio of The
Dreyfus/Laurel Funds Trust, a ^ management investment company (the " ^
Trust"), known as a mutual fund. To obtain a copy of the Fund's
Prospectus, please write to the Fund at ^ 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-^ 645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
DC-172733.1
B-1
<PAGE>
TABLE OF CONTENTS
Investment Objective and Management Policies . . . . . . . . . . . . B-3
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . B-16
Controlling Shareholder . . . . . . . . . . . . . . . . . . . . . . . B-16
Management Arrangements . . . . . . . . . . . . . . . . . . . . . . . B-20
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . B-21
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . B-24
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . B-26
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . B-29
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . B-30
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . B-34
Performance Information . . . . . . . . . . . . . . . . . . . . . . . B-37
Information About the Fund . . . . . . . . . . . . . . . . . . . . . B-39
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors . . . . . . . . . . . . . . B-40
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-40
B-2
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Portfolio Securities
Foreign Securities. The Core Value and Special Growth Funds may
invest in securities of foreign issuers, including investments in
obligations of foreign branches of domestic banks and domestic branches of
foreign banks. Investment in foreign securities presents certain risks,
including those resulting from fluctuations in currency exchange rates,
reevaluation of currencies, future political and economic developments and
the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public
information concerning issuers and the fact that foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to domestic issuers. Moreover, securities of many
foreign issuers may be less liquid and their prices more volatile than
those of securities of comparable domestic issuers. In addition, with
respect to certain foreign countries, there is the possiblity of
expropriation, confiscatory taxation and limitations on the use or removal
of funds or other assets of the Fund including withholding dividends.
U.S. Government Securities. The Fund may invest in U.S.
Government Securities that are direct obligations of the U. S. Treasury,
or that are issued by agencies and instrumentalities of the U.S.
Government and supported by the full faith and credit of the U.S.
Government. These include Treasury notes, bills and bonds and securities
issued by the Government National Mortgage Association ("GNMA"), the
Federal Housing Administration, the Department of Housing and Urban
Development, the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration and the Small
Business Administration.
The Fund may also invest in U.S. Government Securities that are
not supported by the full faith and credit of the U.S. Government. These
include securities issued by the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Home Loan Banks, Tennessee Valley Authority, Student Loan Marketing
Association and District of Columbia Armory Board. Because the U.S.
Government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in obligations issued by
such an instrumentality only when Dreyfus determines that the credit risk
with respect to the instrumentality does not make its securities
unsuitable for investment by the Fund.
B-3
<PAGE>
GNMA certificates represent ownership interests in a pool of
mortgages issued by a mortgage banker or other mortgagee. Distributions
on GNMA certificates include principal and interest components. GNMA, a
corporate instrumentality of the U.S. Department of Housing and Urban
Development, guarantees timely payment of principal and interest on GNMA
certificates; this guarantee is deemed a general obligation of the United
States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans
Administration. The mortgages have maximum maturities of 40 years.
Government statistics indicate, however, that the average life of the
underlying mortgages is shorter, due to scheduled amortization and
unscheduled prepayments (attributable to voluntary prepayments or
foreclosures). Since these statistics indicate that the average life of
the mortgages backing most GNMA certificates (which are single-family
mortgages with 25- to 30-year maturities) is approximately 12 years,
yields on pools of single-family mortgages are often quoted on a 12-year
prepayment assumption. (The actual maturity of specific GNMA certificates
will vary based on the prepayment experience of the underlying mortgage
pool.) Based on a 12-year prepayment assumption, GNMA certificates have
had historical yields at least 3/4 of 1% greater than Treasury bonds and
U.S. Government agency bonds and 1/4 of 1% greater than the highest grade
corporate bonds. Actual yield comparisons will vary with the prepayment
experience of specific GNMA certificates.
GNMA has introduced a pass-through security backed by
adjustable-rate mortgages. These securities will bear interest at a rate
which will be adjusted annually. The prepayment experience of the
mortgages underlying these securities may vary from that for fixed-rate
mortgages.
FHLMC is a corporate instrumentality of the U.S. Government and
was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing.^ FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
FNMA is a Government sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal
and interest by FNMA.
B-4
<PAGE>
Bank Obligations. The Fund is permitted to invest in
high-quality, short-term money market instruments. The Fund may invest
temporarily, and without limitation in bank certificates of deposit, time
deposits, and bankers' acceptances when, in Dreyfus' opinion, a
"defensive" investment posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable
obligations of commercial banks; time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for specified periods of time
at stated interest rates; and bankers' acceptances are time drafts drawn
on commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may
be purchased by the Trust are insured by the FDIC and are subject to
Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches of
foreign banks are, among other things, generally required to maintain
specified levels of reserves, and are subject to other supervision and
regulations designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs
and TDs, may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific obligation
and by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
Low-Rated Securities. The Fund may invest in low-rated and
comparable unrated securities. The effect a recession might have on such
securities is not known. Any such recession, however, could severely
disrupt the market for such securities and adversely affect the value of
such securities. Any such economic downturn also could adversely affect
B-5
<PAGE>
the ability of the issuers of such securities to repay principal and pay
interest thereon.
The ratings of the various nationally recognized statistical
rating organizations ("NRSROs") such as Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") generally represent
the opinions of those organizations as to the quality of the securities
that they rate. Such ratings, however, are relative and subjective, are
not absolute standards of quality and do not evaluate the market risk of
the securities. Although Dreyfus uses these ratings as a criterion for the
selection of securities for the Fund, Dreyfus also relies on its
independent analysis to evaluate potential investments for the Fund. The
Fund's achievement of ^ its investment objective may be more dependent on
Dreyfus' credit analysis of low-rated and unrated securities than would be
the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. In addition, it is possible that an
NRSRO might not timely change its ratings of a particular issue to reflect
subsequent events. None of these events will require the sale of the
securities by the Fund, although Dreyfus will consider these events in
determining whether the Fund should continue to hold the securities. To
the extent that the ratings given by an NRSRO for securities may change as
a result of changes in the rating systems or due to a corporate
reorganization of the NRSRO, the Fund will attempt to use comparable
ratings as standards for its investments in accordance with the investment
objectives and policies of the Fund.
The Fund intends to invest in these securities when their issuers
will be close to, or already have entered, reorganization proceedings. As
a result, it is expected that at or shortly after the time of acquisition
by the Fund, these securities will have ceased to meet their interest
payment obligations, and accordingly would trade in much the same manner
as an equity security. Consequently, the Fund intends to make such
investments on the basis of potential appreciation in the price of these
securities, rather than any expectation of realizing income.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Currency Transactions. The Core Value and Special Growth Funds
may engage in currency transactions as a means of managing certain risks
associated with purchasing and selling securities denominated in foreign
securities. Generally, the currency exchange transactions of the Funds
B-6
<PAGE>
will be conducted on a spot (i.e., cash) basis at the spot rate for
purchasing or selling currency prevailing in the currency exchange market.
This rate under normal market conditions differs from the prevailing
exchange rate in an amount generally less than 0.1% due to the cost of
converting from one currency to another. The Funds also may deal in
forward exchanges between currencies of the different countries in which
it invests as a hedge against possible variations in the exchange rates
between these currencies. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future
date and price set at the time of the contract.
Dealings in forward currency exchanges by each of the Funds are
limited to hedging involving either specific transactions or aggregate
portfolio positions. Transaction hedging is the purchase or sale of
foreign currency with respect to specific receivables or payables of a
Fund generally arising in connection with the purchase or sale of its
portfolio securities. Position hedging is the sale of foreign currency
with respect to portfolio security positions denominated or quoted in such
currency. the Funds will not speculate in foreign currency exchanges. A
Fund may position hedge with respect to a particular currency to an extent
greater than the aggregate market value (at the time of making such sale)
of the securities held in its portfolio denominated or quoted in or
currently convertible into that particular currency. If a Fund enters
into a position hedging transaction, its custodian or sub-custodian bank
will place cash or readily marketable securities in a segregated account
of the Fund in an amount equal to the value of the Fund's total assets
committed to the consummation of such forward contract. If the value of
the securities placed in the segregated account declines, additional cash
or securities will be placed in the account so that the value of the
account will equal the amount of the fund's commitment with respect to
such contracts. A Fund will not attempt to hedge all of its foreign
portfolio positions and will enter into such transactions only to the
extent , if any, deemed appropriate by Dreyfus. The Funds will not enter
into a positions hedging commitment if, as a result thereof, the Fund
would have more than 15% of the value of its total assets committed to
such contracts. The Funds will not enter into a forward contract with a
term of more than one year.
It may not be possible for the Funds to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to a Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
committed to such contracts. The Funds will not enter into a forward
contract with a term of more than one year.
B-7
<PAGE>
It may not be possible for the Funds to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to a Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
At or before the maturity of a forward contract, a Fund may
either sell a portfolio security and make delivery of the currency, or it
may retain the security and offset its contractual obligation to deliver
the currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If a Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If
a Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the currency. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The use of forward currency contracts by each Fund will be
limited to the transactions described above. The Fund is not required to
enter into such transactions with regard to its portfolio securities,
regardless of currency denomination, and will not do so unless deemed
appropriate by Dreyfus. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some future
point in time. In addition, although forward currency contracts tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they also tend to limit any potential gain which might result
should the value of the currency increase.
Because the Funds invest in foreign securities, a Fund will hold
from time to time various foreign currencies pending its investment in
foreign securities or conversion into U.S. dollars. Although a Fund values
its assets daily in terms of U.S. dollars, it does not convert its
holdings of foreign currencies into U.S. dollars on a daily basis. When
converting foreign currencies to U.S. dollars, the Fund may incur costs of
currency conversion. A foreign exchange dealer does not charge a fee for
conversion, but it does realize a profit based on the difference, which is
B-8
<PAGE>
known as the spread, between the prices at which the dealer is buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
Options on Securities. The Fund has the ability to write covered
put and call options on ^ its portfolio securities as part of its
investment strategy.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a
greater return than would be realized on the security alone. In return
for a premium, the writer of a covered call option forfeits the right to
any appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase transaction
can be effected). Nevertheless, the call writer retains the risk of a
decline in the price of the underlying security. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. The writer of a covered put option accepts the risk of a
decline in the price of the underlying security. The size of the premiums
that the Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase
their option-writing activities.
The Fund will write only covered options. Accordingly, whenever
the Fund writes a call option it will continue to own or have the present
right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, whenever
the Fund writes a put option it will either (a) deposit with the Fund's
custodian in a segregated account, cash, U.S. Government Securities or
other high grade debt obligations having a value equal to or greater than
the exercise price of the underlying securities or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates
as those written by the Fund), or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise
prices greater than those that it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of
the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case
of call options, these exercise prices are referred to as "in-the-money",
"at-the-money" and "out-of-the-money", respectively.
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<PAGE>
The Fund may write (a) in-the-money call options when Dreyfus
expects that the price of the underlying security will remain flat or
decline moderately during the option period, (b) at-the-money call options
when Dreyfus expects that the price of the underlying security will remain
flat or advance moderately during the option period and (c)
out-of-the-money call options when Dreyfus expects that the premiums
received from writing the call option, plus the appreciation in market
price of the underlying security up to the exercise price, will be greater
than the appreciation in the price of the underlying security alone. In
any of the preceding situations, if the market price of the underlying
security declines and the security is sold at this lower price, the amount
of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the obligation of the Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring it to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. The Fund can no longer effect a closing purchase transaction
with respect to an option once it has been assigned an exercise notice.
To secure its obligation to deliver the underlying security when it writes
a call option, or to pay for the underlying security when it writes a put
option, the Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and the securities
exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Fund expects to write only call
or put options issued by the Clearing Corporation. The Fund expects to
write options only on national securities exchanges.
The Fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the Fund has written an option, it
will realize a profit if the cost of the closing purchase transaction is
less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Fund generally will write only those options for
which Dreyfus believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities
exchange will exist for any particular option or at any particular time,
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<PAGE>
and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, have at times rendered certain of
the facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be
possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the Fund and other clients of Dreyfus and
certain of their affiliates may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. At
the date of this Statement of Additional Information, the position and
exercise limits for common stocks were 3,000, 5,500 or 8,000 options per
stock (i.e., options representing 300,000, 550,000 or 800,000 shares),
depending on various factors relating to the underlying security. Dollar
amount limits apply to U. S. Government Securities. These limits may
restrict the number of options the Fund will be able to purchase on a
particular security.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable
preferred stock or debt securities, the time required to convert or
exchange and obtain physical delivery of the underlying common stocks with
respect to which the Fund has written options may exceed the time within
which the Fund must make delivery in accordance with an exercise notice.
In these instances, the Fund may purchase or temporarily borrow the
underlying securities for purposes of physical delivery. By so doing, the
Fund will not bear any market risk, since the Fund will have the absolute
right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Although Dreyfus will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of put and call options,
there can be no assurance that the Fund will succeed in its option-writing
program.
B-11
<PAGE>
Stock Index Options. The Fund has the authority to purchase and
write put and call options on stock indexes listed on national securities
exchanges to hedge its portfolio.
A stock index fluctuates with changes in the market values of the
stocks included in the index. Some stock index options are based on a
broad market index such as the NYSE Composite Index, or on a narrower
market index such as the Standard & Poor's 100. Indexes are also based on
an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index.
Options on stock indexes are similar to options on stock except
that (a) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier". Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is
based being greater than, in the case of a call, or less than, in the case
of a put, the exercise price of the option. The amount of cash received
will be equal to such difference between the closing price of the index
and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may
offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option expire
unexercised. The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent to which price
movements in the portion of a securities portfolio being hedged correlate
with price movements of the stock index selected. Because the value of an
index option depends upon movements in the level of the index rather than
the price of a particular stock, whether the Fund will realize a gain or
loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or,
in the case of certain indexes, in an industry or market segment, rather
than movements in the price of a particular stock. Thus, successful use
by the Fund of options on stock indexes will be subject to Dreyfus'
ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
stocks, and there can be no assurance that the Fund will be successful in
its use of stock index options.
The Fund will engage in stock index options transactions only
when determined by Dreyfus to be consistent with the Fund's efforts to
control risk. There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies will be successful.
B-12
<PAGE>
When the Fund writes an option on a stock index, the Fund will establish a
segregated account with the Fund's custodian in an amount equal to the
market value of the option and will maintain the account while the option
is open.
^
Lending of Portfolio Securities. The Fund may lend securities
from its portfolio to brokers, dealers and other financial organizations.
Such loans, if and when made, may not exceed 33 1/3% of the Fund's total
assets, taken at value. The Fund may not lend portfolio securities to its
affiliates without specific authorization from the SEC. Loans of portfolio
securities by the Fund will be collateralized by cash, letters of credit
or securities issued or guaranteed by the U.S. Government or its agencies
which will be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities. From time to time,
the Fund may return a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third
party, which is unaffiliated with the Fund and which is acting as a
"finder."
By lending portfolio securities, a Fund can increase its income
by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when
Government securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees
must terminate the loan and regain the right to vote the securities. The
risks in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
Investment Restrictions
B-13
<PAGE>
The following limitations have been adopted by the Fund. The Fund
may not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to
be invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities, and state or
municipal governments and their political subdivisions are not
considered members of any industry. ^ In addition, this
limitation does not apply to investments in domestic banks,
including U.S. branches of foreign banks and foreign branches of
U.S. banks).
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) the Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowings, and (b) the Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets
securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that
issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such
loans. For purposes of this limitation debt instruments and
repurchase agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of ^ securities or other instruments (but this shall
not prevent the Fund from investing in securities or other
instruments backed by real estate, including mortgage loans, or
securities of companies that engage in real estate business or
invest or deal in real estate or interests therein).
B-14
<PAGE>
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of
such securities in accordance with the Fund's investment program
may be deemed an underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts
and other similar instruments.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts to
the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases (the Fund
may, however, purchase and sell the securities of companies
engaging in the exploration, development, production, refining,
transportation, and marketing of oil, gas, or minerals.)
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Trustees of the Fund, its advisers, or managers,
owning beneficially more than one half of one percent of the ^
securities of such issuer, together own beneficially more than 5%
of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof, the value of the Fund's investment
in securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners,
B-15
<PAGE>
guarantors and originators of underlying assets may be treated as
the issuer of a security.
6. The Fund will invest no more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days and other securities
which are not readily marketable. For purposes of this
limitation, illiquid securities shall not include Section 4(2)
paper and securities which may be resold under Rule 144A under
the Securities Act of 1933, provided that the Board of Trustees,
or its delegate, determines that such securities are liquid based
upon the trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets and except to the extent
otherwise permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are
outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets
would be invested in warrants, or (b) more than 2% of the value
of the Fund's assets would be invested in warrants that are not
listed on the New York or American Stock Exchange (for purposes
of this undertaking, warrants acquired by the Fund in units or
attached to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and
any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets except that: (a) this limitation shall not
apply to standby commitments, and (b) this limitation shall not
apply to the Fund's transactions in futures contracts and related
options.
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in such percentage resulting from
a change in the values of assets will not constitute a violation of such
restriction, except as otherwise required by the 1940 Act.
In order to permit the sale of the Fund's shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above. Accordingly, pursuant to such
commitments, the Fund has undertaken not to invest in oil, gas, or other
mineral leases. Should the Trust determine that any such commitment is no
longer in the best interests of the Trust and its shareholders, it will
revoke the commitment by terminating sales of its shares in the state
B-16
<PAGE>
involved. In addition, the ^ Fund has undertaken not to invest in
warrants (other than warrants acquired by the Fund as part of a unit or
attached to securities at the time of purchase) if, as a result, the
investments (valued at the lower of cost or market), would exceed 5% of
the value of the Fund's net assets or if, as a result, more than 2% of the
Fund's net assets would be invested in warrants not listed on the AMEX or
NYSE. Further, the ^ Fund has given a representation that investments
will not be made in real estate limited partnerships. Should the Trust
determine that any such commitment is no longer in the best interests of
the Trust and its shareholders, it will revoke the commitment by
terminating sales of its shares in the state involved.
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDER
^ At November 30, 1994, there were no controlling shareholders,
as that term is defined under the 1940 Act^, of the Dreyfus/Laurel Funds
Trust.
PRINCIPAL SHAREHOLDERS
^ At December 8, 1994, no shareholder owned of record 5% of the
Fund.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging in
the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian and ^ fund accountant, as well
as Dreyfus' investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that its activities
contemplated under this arrangement are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
B-17
<PAGE>
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities, the Board of Trustees would seek an alternative provider(s) of
such services.
^ Trustees and Officers of the Trust
^ The Trustees and executive officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. Each Trustee
who is an "interested person" of the Trust as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") is indicated by an
asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Funds Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and as Director of The Dreyfus/Laurel Funds, Inc.
(collectively "The Dreyfus/Laurel Family of Funds").
^ o + RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and
Vice President ^ Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa;^ Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Trust; Director ^ and Chairman,
Massachusetts Business Development ^ Corp.; Director, Boston
Mutual Insurance Company; Director and Vice Chairman of the
Board, Home Owners Federal Savings ^ and Loan (prior to May
1990). Address: Massachusetts Business Development Corp., One
Liberty Square, Boston, Massachusetts 02109.
^ o + JAMES M. FITZGIBBONS. Trustee of the Trust; President and
Director, Amoskeag Company; Chairman, Howes Leather Company,
Inc.; ^ Director, Fiduciary Trust Company^; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
B-18
<PAGE>
^ o * J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith,
Shaw & McClay (law firm). Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon
Carbon Corporation; Director, National Picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993;
Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Trustee of the Trust; Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. ^ and Florida Hospitality
Group; Managing Partner, Himmel/MKDG, Franklin Federal Partners,
Reston Town Center Associates and Grill 23 & Bar. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Trustee of the Trust; ^ President and ^
CEO, LDG Management Company ^ Inc.; CEO, LDG Reinsurance
Underwriters, SRRF Management Inc. and Medical Reinsurance
Underwriters ^ Inc. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
^ o + ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
B-19
<PAGE>
o + JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and
Professor of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson
Ventures, Inc.^, prior to February, 1993^; Real Estate
Development Project Manager and Vice President, The Gunwyn
Company. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
# MARIE ^ E. ^ CONNOLLY. President and Treasurer ^ of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds
Trust and The Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. ^ (since 1992); Treasurer,
Funds Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services,^ Inc. (since April 1994); Senior
Vice President ^ and Director of Financial Administration, The
Boston Company Advisors, Inc. ^ (December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, Premier Mutual Fund
Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994);Vice President and Associate General Counsel,
Premier Mutual Fund Services, Inc. (Since August 1994); Vice
President and Associate General Counsel, Funds Distributor, Inc.
B-20
<PAGE>
(since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166
RICHARD W. HEALEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
March 1994); Senior Vice President, Funds Distributor, Inc.
(since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994); Associate,
Ropes & Gray (August 1990 to February 1992); Associate, Sidley &
Austin (June 1989 to August 1990). Address: One Exchange Place,
Boston, Massachusetts 02109.
___________________________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of December 1, 1994.
B-21
<PAGE>
No officer or employee of TSSG or Premier (or of any parent or
subsidiary thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent or subsidiary thereof) serves as an officer
or Trustee of the Trust. The Dreyfus Family of Funds pays each
Trustee/Director who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Fund
Family). In addition, the Dreyfus/Laurel Fund Family pays each
Trustee/Director $ 1,000 per joint Dreyfus/Laurel Fund Family meeting
attended, plus $750 per joint Dreyfus/Laurel Fund Family Audit Committee
meeting attended, and reimburses each Trustee/Director for travel and
out-of-pocket expenses. For the fiscal year ended December 31, 1993 the
fees for meetings and expenses totaled $79,598.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager
for the Fund pursuant to an Investment Management Agreement with the ^
Trust dated April 4, 1994 ("Management Agreement"), transferred to Dreyfus
as of October 17, 1994. Pursuant to the Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As investment manager, Dreyfus manages the Fund by
making investment decisions based on the Fund's investment objectives,
policies and restrictions. The Management Agreement is subject to review
and approval at least annually by the Board of Directors.
The Management Agreement will continue from year to year provided
that a majority of the Directors who are not interested persons of
Dreyfus/Laurel and either a majority of all Directors or a majority of the
shareholders of the Fund approve their continuance. Dreyfus/Laurel may
terminate the Agreement, without prior notice to Dreyfus, upon the vote of
a majority of the Board of Directors or upon the vote of a majority of the
outstanding voting securities of the Fund on 60 days written notice to
Dreyfus. Dreyfus may terminate the Management Agreement upon written
notice to Dreyfus/Laurel. The Management Agreement will terminate
immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board; Joseph S. DiMartino, President and a
director; W. Keith Smith, Chief Operating Officer and a director; Paul H.
Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean,
B-22
<PAGE>
Vice President and General Counsel; Barbara E. Casey. Vice
President--Retirement Services; Robert F. Dubuss, Vice President; Henry D.
Gottmann, Vice President--Retail; Elie M. Genadry, Vice
President--Wholesale; Mark N. Jacobs, Vice President--Fund Legal and
Compliance; Jeffery N. Nachman, Vice President--Mutual Fund Accounting;
Diane M. Coffey, Vice President--Corporate Communications; Jay R.
DeMartine, Vice President--Marketing; Kirk V. Stumpp, Vice President--New
Product Development; Lawrence S. Kash, Vice Chairman--Distribution; Philip
L. Toia, Vice Chairman--Operations and Administration; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene and David B. Truman, directors.
The Fund is managed by Guy Scott and Mark Donovan. Mr. Scott is
a ^ an officer of Mellon Bank. ^ Mr. Donovan is ^ also an officer of
Mellon Bank. ^ Dreyfus maintains research departments with professional
portfolio managers and securities analysts who provide research services
for the Fund as well as for other funds advised by Dreyfus.
For the last ^ three fiscal periods, the Fund has had the
following expenses^:
For the Fiscal Year Ended December 31,
1993 1992 1991
$3,280,789 $3,297,792 $3,706,858
Prior to April 4, 1994, The Boston Company Advisors, Inc. served
as the Fund's investment manager. With respect to the 1993 fiscal year
fee, $31,482 ^ were reimbursed by The Boston Company Advisors, Inc. (the
investment manager prior to April 4, 1994).
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
B-23
<PAGE>
Dreyfus TeleTransfer Privilege--Investor ^ Shares. TeleTransfer
purchase orders may be made between the hours of 8:00 a.m. and 4:00 p.m.,
New York time, on any business day that The Shareholder Services Group,
Inc., the Fund's transfer and dividend disbursing agent (the "Transfer
Agent"), and the New York Stock Exchange ("NYSE") are open. Such
purchases will be credited to the shareholder's Fund account on the next
bank business day. To qualify to use the Dreyfus TeleTransfer Privilege,
the initial payment for purchase of shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated
on the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Fund Shares--Dreyfus TeleTransfer Privilege--Investor ^
Shares."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan."
Distribution and Service Plans - Investor Shares. The Securities
and Exchange Commission ("SEC") has adopted Rule 12b-1 under the 1940 Act
("Rule") regulating the circumstances under which investment companies
such as the Company directly or indirectly, bear the expenses of
distributing their shares. The Rule defines distribution expenses to
include expenditures for "any activity which is primarily intended to
result in the sale of fund shares." The Rule, among other things,
provides that an investment company may bear such expenses only pursuant
to a plan adopted in accordance with the Rule.
Prior Plans. Prior to April 4, 1994, the Investor ^ shares of
the Fund were known as the "Retail Class" of shares; the "Institutional
Class" of shares was a separate class. The Retail Class was reclassified
as the Investor Shares by the Board of Trustees at a meeting held on
November 22, 1993, subject to certain approvals that were obtained from ^
the Fund's shareholders at a meeting held on March 29, 1994. At the
November 22, 1993 Board Meeting, the Trustees also approved a new
distribution plan for the Investor Shares (formerly Retail Class) and
Institutional Class of the Fund. Shareholders of the Retail Class of
Shares and Institutional Class of Shares approved the new distribution
B-24
<PAGE>
plans at a shareholders' meeting held on March 14 and March 29, 1994.
These new distribution plans ("Current Plans") were effective on April 4,
1994.
Prior to April 4, 1994, the Fund's Retail Shares and
Institutional Shares were subject to distribution plans (the "Prior
Plans") that were adopted by the Company under Section 12(b) of the Act
and ^ Rule 12b-1 thereunder. Under the Prior Plans, the Fund was
authorized to spend up to .25% of its average daily net assets
attributable to the Retail Class on activities primarily intended to
result in the sale of such Class ^ and the Fund was authorized to spend up
to .15% of its average daily net assets attributable to the Institutional
Class on activities primarily intended to result in the sale of such
Class.
Under the distribution agreements with the prior distributor,
Funds Distributor, Inc. ("Funds Distributor") ^ the Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities ^ on
behalf of the Fund on a monthly basis, provided that any payment by ^ the
Fund to Funds Distributor, together with any other payments made by ^ the
Fund pursuant to the Prior Plan, shall not exceed .0208% of its average
daily net assets attributable to the Retail Class for the prior month
(.25% on an annualized basis) and .0125% of its average daily net assets
attributable to the Institutional Class for the prior month (.15% on an
annualized basis).
Current Plans. Under the Current Plan, Investor shares of the
Fund may spend annually up to 0.25% of the average of the net asset values
attributable to the Investor ^ shares, and Institutional shares of the
Fund may spend annually up to 0.15% of the average of its net asset values
attributable to the Institutional Class, for costs and expenses incurred
in connection with the distribution of, and shareholder servicing with
respect to, shares of those respective Classes.
The Current Plans provide that a report of the amounts expended
under the Current Plans, and the purposes for which such expenditures were
incurred, must be made to the Trustees for their review at least
quarterly. In addition, the Current Plans provide that they may not be
amended to increase materially the costs which ^ the Fund may bear for
distribution pursuant to the Current Plans without approval of ^ the
Fund's shareholders, and that other material amendments of the Current
Plans must be approved by the vote of a majority of the Trustees and of
the Trustees who are not "interested persons" of the Company (as defined
in the 1940 Act) and who do not have any direct or indirect financial
B-25
<PAGE>
interest in the operation of the Current Plan, cast in person at a meeting
called for the purpose of considering such amendments. The Current Plans
are subject to annual approval by the entire Board of Trustees and by the
Trustees who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Current Plans, by vote
cast in person at a meeting called for the purpose of voting on the
Current Plan. The Current Plans are terminable, as to the Fund's Class of
shares, at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in
the operation of the Current Plan or by vote of the holders of a majority
of the outstanding shares of such class of the Fund.^
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service 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. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the following
transmittal code which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment
may have the wire transmitted by contacting a TRT Cables operator at
B-26
<PAGE>
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as a described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege--Investor ^ shares. Investors
should be aware that if they have selected the Dreyfus TeleTransfer
Privilege, any request for a wire redemption will be effected as a
TeleTransfer transaction through the ACH system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege--Investor ^ shares."
Redemption Commitment. The Fund has committed itself to pay in
cash all redemption requests by any shareholder of record of the Fund,
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 ^ SEC.
In the case of requests for redemption in excess of such amount, the Board
of ^ Trustees reserves the right to make payments in whole or in part in
securities or other assets 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 this event, the securities would be valued
B-27
<PAGE>
in the same manner as the Fund's portfolio is valued. 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
NYSE is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC 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 ^ SEC by
order may permit to protect the Fund's shareholders.
B-28
<PAGE>
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
^ Fund Exchanges. Shares of any Class of the Fund may be
exchanged for shares of the respective Class of certain other funds
advised or administered by Dreyfus. Shares of the same Class of such
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 other
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 contingent deferred sales
charge ("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 share being exchanged were
initially purchased.
B-29
<PAGE>
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.^
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.
To establish a personal retirement plan by exchange, shares of
the fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Dreyfus Family of Funds. To
exchange shares held in a personal retirement plan account, the shares
exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange
Privilege permits an investor to purchase, in exchange for shares of the
Fund, shares of the same Class of another fund in the Dreyfus Family of
Funds. 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. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this Privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but
not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
^ Funds Exchanges and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the
fund being acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
B-30
<PAGE>
Shareholder Services Forms and prospectuses of the other funds
may be obtained from the Distributor. The Fund reserves the right to
reject any exchange request in whole or in part. The Fund Exchange ^
service or Dreyfus Auto-Exchange Privilege may be modified or terminated
at any time upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted.^ There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors
to invest on the payment date their dividends or dividends and capital
gain distributions, if any, from the Fund in shares of the same Class of
another fund in ^ the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of the same Class of other funds purchased pursuant
to this Privilege will be purchased on the basis of relative net asset
value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of
other funds that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other
funds sold with a sales load, and the applicable sales
load will be deducted.
C. Dividends and distributions paid by a fund which charges
a sales load may be invested in shares of other funds
sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged
by the fund from which dividends or distributions are
being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
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<PAGE>
contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon redemption
of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
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 an SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans
or IRAs may charge a fee, payment of which could require the liquidation
of shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by
direct remittance to the entity acting as custodian. Purchases for these
plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum on subsequent purchases. The
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs,
SEP-IRAs and 403(b)(7) Plans with only one participant, is normally $750,
with no minimum on subsequent purchases. Individuals who open an IRA may
also open a non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details 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
Fund Shares."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or are not valued by a
pricing service approved by the Board of ^ Trustees, are valued at fair
value as determined in good faith by the Board of ^ Trustees. The Board
of ^ Trustees will review the method of valuation on a current basis. In
making their good faith valuation of restricted securities, the ^ Trustees
generally will take the following factors into consideration: restricted
B-32
<PAGE>
securities which are 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 Board of ^ Trustees if the ^ Trustees 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 usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Trustees. ^
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify as a regulated investment company ("RIC"), the Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions), (2) must derive at least 90% of its annual gross
income from specified sources ("Income Requirement"), (3) must derive less
than 30% of its annual gross income from gain on the sale or disposition
of any of the following that are held for less than three months --
(i) securities, (ii) non-foreign-currency options and futures and
(iii) foreign currencies (or foreign currency options, futures and forward
contracts) that are not directly related to the Fund's principal business
of investing in securities (or options and futures with respect thereto)
("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements. Accordingly, the Fund may be
restricted in the selling of securities held for less than three months.
Any dividend or other distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, the
Code provides that if a shareholder holds shares of the Fund for six
months or less and has received a capital gain distribution with respect
to those shares, any loss incurred on the sale of those shares will be
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<PAGE>
treated as a long-term capital loss to the extent of the capital gain
distribution received.
Dividends and other distributions declared by the Fund in Octo-
ber, November or December of any year and payable to shareholders of
record on a date in that month any of those months are deemed to have been
paid by the Fund and received by the shareholders on December 31 of that
year if the distributions are paid by the Fund during the following
January. Accordingly, those distributions will be taxed to shareholders
for the year in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in
cash or reinvested in additional Fund shares, may be eligible for the
dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by the Fund from
U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax.
Dividends and interest received by the Fund may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom
that may be excluded by future regulations), and income from transactions
in options, futures and forward contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of
investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
extent the Fund does not so qualify, it may be forced to defer the closing
out of certain options, futures and forward contracts beyond the time when
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<PAGE>
it otherwise would be advantageous to do so, in order for the Fund to
qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and 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 any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, 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 futures and forward contracts and options transactions
will be treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon exercise or lapse of
such contracts and options as well as from closing transactions. In
addition, any such contracts or options remaining unexercised at the end
of the Fund's taxable year will be treated as sold for their then fair
market value (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by the Fund involving certain contracts
or options may constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, override or modify Sections 1256
and 988. As such, all or a portion of any short-term or long-term capital
gain from certain "straddle" transactions may be recharacterized to
ordinary income. If the Fund were treated as entering into "straddles" by
reason of its engaging in certain forward contracts or options
transactions, such "straddles" would be characterized as "mixed straddles"
if the forward contracts or options transactions comprising a part of such
"straddles" were governed by Section 1256. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, then to the extent the "straddle" and conversion transactions rules
apply to positions established by the Fund, losses realized by the Fund
will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the "straddle" rules, short-term
capital loss on "straddle" positions may be recharacterized as long-term
capital loss, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
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<PAGE>
Investment by the Fund in securities issued or acquired at a
discount (for example, zero coupon securities) or providing for deferred
interest or for payment of interest in the form of additional obligations
(for example, "pay-in-kind" or "PIK" securities) could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, the Fund could be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and to distribute such income in order to
maintain its qualification for treatment as a RIC. In such case, the Fund
may have to dispose of securities it might otherwise have continued to
hold in order to generate cash to satisfy these distribution requirements.
If the Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which its offices are maintained,
in which its agents or independent contractors are located, or in which it
is otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate) on the gross amount
of the distribution. Foreign shareholders also may be subject to U.S.
federal withholding tax on income resulting from any election by the Fund
to treat foreign taxes paid by it as paid by its shareholders (see
discussion above), but foreign shareholders will not be able to claim a
B-36
<PAGE>
credit or deduction for the foreign taxes treated as having been paid by
them.
Capital gains realized by foreign shareholders on the sale of
Fund shares and distributions to them of net capital gain, as well as
amounts retained by the Fund that are designated as undistributed capital
gains, generally will not be subject to U.S. federal income tax unless the
foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable
year. However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for U.S. federal income
tax purposes on his worldwide income at the graduated rates applicable to
U.S. citizens, rather than the 30% U.S. federal withholding tax rate. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If income
from the Fund is effectively connected with a U.S. trade or business
carried on by a foreign shareholder, then all distributions to that
shareholder and any gains realized by that shareholder on the disposition
of the Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as
the case may be. Foreign shareholders also may be subject to the branch
profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally
are subject to U.S. federal estate tax on their U.S. situs property, such
as shares of the Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. The ^ Trust has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of The ^
Trust are exempt from Pennsylvania personal property taxes.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by
Dreyfus subject to the overall supervision of the Trustees of the Trust.
Portfolio transactions for the Fund are effected by or under the direction
of Dreyfus. The same personnel are also in charge of portfolio
transactions for other accounts of other subsidiaries and affiliates of
Dreyfus.
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<PAGE>
Although investment decisions for the Fund are made independently
from those of the other accounts managed by Dreyfus, investments of the
type the Fund may make may also be made by those other accounts. When the
Fund and one or more other accounts managed by Dreyfus are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by Dreyfus to be equitable to each. In some cases, this procedure
may adversely affect the price paid or received by the Fund or the size of
the position obtained or disposed of by the Fund. In other cases, however,
it is believed that coordination and the ability to participate in volume
transactions will be to the benefit of the Fund.
Transactions on stock exchanges on behalf of the Fund involve the
payment of negotiated brokerage commissions. There is generally no stated
commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, Dreyfus seeks the most favorable execution and price available.
The Investment Management Agreement provides that, in assessing the best
overall terms available for any transaction, Dreyfus shall consider
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis. In addition, the Investment Management Agreement authorizes
Dreyfus, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Trust and/or other accounts over which Dreyfus or an affiliate exercises
investment discretion.
The Trustees will periodically review the brokerage commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
inuring to the Fund. It is possible that certain of the services received
will primarily benefit one or more other accounts for which investment
discretion is exercised, or the Fund other than that for which the
transaction was executed. Conversely, the ^ Company or the Fund may be the
primary beneficiary of the service received as a result of portfolio
transactions effected for such other accounts or funds. The fees of
Dreyfus under the Investment Management Agreement are not reduced by
reason of receipt of such brokerage and research services.
B-38
<PAGE>
The Trustees of the Trust have determined that portfolio
transactions for the Funds may be executed through affiliated broker
dealers if, in the judgment of Dreyfus, the use of an affiliated broker is
likely to result in prices and execution that are fair and reasonable and
are at least as favorable as those of other qualified broker-dealers and
if, in such transactions, the affiliated broker-dealer charges the Fund a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. Affiliated broker-dealers will not participate in
commissions from brokerage given by the Fund to other brokers or dealers.
In addition, pursuant to an exemption order granted by the SEC, the Fund
may engage in transactions involving certain money market instruments with
particular affiliates acting as principal. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those
cases in which better prices and executions may be obtained elsewhere.
The following table sets forth certain information regarding the
Fund's payment of brokerage commissions for the fiscal years 1991, 1992,
and 1993:
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<PAGE>
Total Brokerage
^ Commissions 1991: $1,889,445
1992: 716,054
1993: 1,028,551
__________
Commissions paid to Boston $1,050
Institutional Services, Inc. ("BISI")
*(1)
% of total Commissions paid to BISI .10%
*(1)
% of total Transactions Involving .10%
Commissions paid to BISI*(1)
Commissions paid to ^ Lehman 9,660
Brothers*(2)
% of Total Commissions paid to ^ .90%
Lehman Brothers*(2)
% of Total Transactions Involving 1.10%
Commissions paid to ^ Lehman
Brothers*(2)
Commissions paid to Lehman Brothers $7,380
*(3)
% of Total Commissions paid to Lehman .70%
Brothers*(3)
% of Total Transactions Involving .50%
Commissions paid to Lehman
Brothers*(3)
* Figures for 1993 fiscal year only.
(1) Prior to October 29, 1993
(2) Prior to July 30,1993
(3) After July 30,1993
^ Prior to April 4, 1994, the Fund was advised by The Boston
Company Advisors, Inc. Prior to May 21, 1993, The Boston Company
Advisor's, Inc. was affliated with Lehman Brothers.^
Portfolio Turnover. While the Fund does not intend to trade in
securities for short-term profits, the Fund will not consider portfolio
turnover rate a limiting factor in making investment decisions. While it
is not possible to predict the rate of frequency of portfolio transactions
(i.e., portfolio turnover rate) with any certainty, at the present time it
B-40
<PAGE>
is anticipated that the portfolio turnover ^ rate for the Fund will
generally not exceed 100%. Higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. In addition, to the
extent ^ the Fund realizes short-term gains as a result of more portfolio
transactions, such gains would be taxable to shareholders at ordinary
income tax rates.
The portfolio turnover rates for the 1992 and 1993 fiscal years
for the Fund were 66% and 75%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
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 Investor ^ shares) per share with a
hypothetical $1,000 payment made at the beginning of the period (assuming
the reinvestment of dividends and other distributions), dividing by the
amount of the initial investment, taking the "n"th root of the quotient
(where "n" is the number of years in the period) and subtracting 1 from
the result.
Total return is calculated by subtracting the amount of the
Fund's net asset value (maximum offering price in the case of Investor ^
shares) per share at the beginning of a stated period from the net asset
value (maximum offering price in the case of Investor ^ shares) per share
at the end of the period (after giving effect to the reinvestment of
dividends and other distributions during the period), and dividing the
result by the net asset value (maximum offering price in the case of
Investor ^ shares) 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 Investor ^ shares.
The Fund may compare the performance of its Investor, Class R
shares and Institutional Shares to that of other mutual funds, relevant
indices or rankings prepared by independent services or other financial or
industry publications that monitor mutual fund performance.
Performance ^ rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual Fund
B-41
<PAGE>
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund
Values, U.S. News and World Report, Forbes, Fortune, Barron's, Financial
Planning, Financial Planning on Wall Street, Certified Financial Planner
Today, Investment Advisor, Kiplinger's, Smart Money and similar
publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Investor, Class R and Institutional
Class yields in advertisements or in shareholder reports.
Effective October 17, 1994, the Fund redesignated the Trust
Shares as "Class R shares." The following performance data for Investor
Shares is reflective of each Fund's Retail Class of Shares' performance.
Performance data is not available for the Class R Shares of the Fund
because the Fund did not offer Class R shares (or its predecessors-Trust
Shares and Investment Class of Shares) during the fiscal year ended
December 31, 1993. Also listed below is the performance data for the
Fund's Institutional Class of Shares.
Total Return
The table below shows the average annual total return for each of
the Fund's Investor Shares for the specified periods.
Core
Value
For the one year 7/1/93 to 6/30/94 6.77%
For the five years 7/1/89 to 6/30/94 6.84%
For the ten years 7/1/84 to 6/30/94 13.73%
From commencement of operations to 6/30/94 10.36%
__________________________
* The figure reflects the Funds' performance after accounting for
fee waivers. Returns would have been lower if waivers were not
reflected.
1. The Fund commenced operations on February 6, 1947.
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<PAGE>
The Fund commenced operations on February 6, 1947.
The table below shows the average annual total return for the
Fund Class R shares for the specified periods.
Core Value
For the one year 7/1/93 to 6/30/94 --
For the five years 7/1/89 to 12/31/94 --
For the ten years 7/1/84 to 6/30/94 --
From inception date to 6/30/94 --
__________________________
The Fund did not offer Class R shares for the period ended June
30, 1994.
1. The Fund commenced selling Class R Shares on February 1, 1993.
Aggregate Total Return
A fund's aggregate total return figures described and shown below
represent the cumulative change in the value of an investment in each Fund
for the specified period and are computed by the following formula:
ERV-P
AGGREGATE TOTAL RETURN = P
Where: P = A hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of the 1-, 5- or
10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.
B-43
<PAGE>
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid. Fund shares
have no preemptive or subscription rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to
all its shareholders.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and required that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or a Trustee. The Agreement and
Declaration of Trust provides for indemnification from Trust property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the trust itself would be unable to meet its
obligations, a possibility which Dreyfus believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder of the Fund will be
entitled to reimbursements from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as
to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Fund's custodian. The Shareholder Services Group, Inc., a subsidiary of
First Data Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671, is the Fund's transfer and dividend disbursing agent. The
Shareholder Services Group, Inc. and Mellon Bank as custodian, have no
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby - 9th
Floor, Washington, D.C. 20036, has passed upon the legality of the shares
offered by the Prospectus and this Statement of Additional Information.
^ Coopers & Lybrand L.L.P. was appointed by the Trustees to serve
as the Fund's independent auditors for the year ending December 31, ^
1993.^
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<PAGE>
FINANCIAL STATEMENTS
^ The financial statements for the fiscal year ended December 31,
1993, including notes to the financial statements and supplementary
information and the Report of Independent Auditors, are included in the
annual Report to shareholders. A copy of the Annual Report, as well as
the Fund's semi-annual report for the six months ended June 30, 1994,
(unaudited), accompanies this Statement of Additional Information. The
financial statements of the Annual Report and the Semi-Annual are
incorporated herein by reference.
^
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<PAGE>
-------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
INVESTOR ^ AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
^ December 19, 1994
-------------------------------------------------------------------------
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of the Dreyfus Special Growth Fund (formerly the Laurel
Special Growth Fund) (the "Fund"), dated ^ December 19, 1994, as it may
be revised from time to time. The Fund is a separate portfolio of The
Dreyfus/Laurel Funds Trust, a ^ management investment company (the " ^
Trust"), known as a mutual fund. To obtain a copy of the Fund's
Prospectus, please write to the Fund at ^ 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-^ 645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
DC-172732.2
<PAGE>
TABLE OF CONTENTS
Investment Objective And Management Policies . . . . . . . . . . . . 3
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . 17
Controlling Shareholder . . . . . . . . . . . . . . . . . . . . . . . 17
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . 18
Federal Law Affecting Mellon Bank . . . . . . . . . . . . . . . . . . 18
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . 18
Management Arrangements . . . . . . . . . . . . . . . . . . . . . . . 22
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . 23
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . 25
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . 27
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . 31
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . 31
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . 35
Performance Information . . . . . . . . . . . . . . . . . . . . . . . 38
Information About the Fund . . . . . . . . . . . . . . . . . . . . . 40
Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors . . . . . . . . . . . . . . . . . . . . . . 41
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 42
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Description of Securities Ratings . . . . . . . . . . . . . . . . . . 43
Description of Municipal Securities . . . . . . . . . . . . . . . . . 47
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Portfolio Securities
Foreign Securities. The Fund may invest in securities of foreign
issuers, including investments in obligations of foreign branches of
domestic banks and domestic banks of foreign banks. Investment in foreign
securities presents certain risks, including those resulting from
fluctuations in currency exchange rates, reevaluation of currencies,
future political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning
issuers and the fact that foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be
less liquid and their prices more volatile than those of securities of
comparable domestic issuers. In addition, with respect to certain foreign
countries, there is the possibility of expropriation, confiscatory
taxation and limitations on the use or removal of funds or other assets of
the Fund, including withholding of dividends.
U.S. Government Securities. The Fund may invest in U.S.
Government Securities that are direct obligations of the U. S. Treasury,
or that are issued by agencies and instrumentalities of the U.S.
Government and supported by the full faith and credit of the U.S.
Government. These include Treasury notes, bills and bonds and securities
issued by the Government National Mortgage Association ("GNMA"), the
Federal Housing Administration, the Department of Housing and Urban
Development, the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration and the Small
Business Administration.
The Fund may also invest in U.S. Government Securities that are
not supported by the full faith and credit of the U.S. Government. These
include securities issued by the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Home Loan Banks, Tennessee Valley Authority, Student Loan Marketing
Association and District of Columbia Armory Board. Because the U.S.
Government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in obligations issued by
such an instrumentality only when Dreyfus determines that the credit risk
with respect to the instrumentality does not make its securities
unsuitable for investment by the Fund.
GNMA certificates represent ownership interests in a pool of
mortgages issued by a mortgage banker or other mortgagee. Distributions
on GNMA certificates include principal and interest components. GNMA, a
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corporate instrumentality of the U.S. Department of Housing and Urban
Development, guarantees timely payment of principal and interest on GNMA
certificates; this guarantee is deemed a general obligation of the United
States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans
Administration. The mortgages have maximum maturities of 40 years.
Government statistics indicate, however, that the average life of the
underlying mortgages is shorter, due to scheduled amortization and
unscheduled prepayments (attributable to voluntary prepayments or
foreclosures). Since these statistics indicate that the average life of
the mortgages backing most GNMA certificates (which are single-family
mortgages with 25- to 30-year maturities) is approximately 12 years,
yields on pools of single-family mortgages are often quoted on a 12-year
prepayment assumption. (The actual maturity of specific GNMA certificates
will vary based on the prepayment experience of the underlying mortgage
pool.) Based on a 12-year prepayment assumption, GNMA certificates have
had historical yields at least 3/4 of 1% greater than Treasury bonds and
U.S. Government agency bonds and 1/4 of 1% greater than the highest grade
corporate bonds. Actual yield comparisons will vary with the prepayment
experience of specific GNMA certificates.
GNMA has introduced a pass-through security backed by
adjustable-rate mortgages. These securities will bear interest at a rate
which will be adjusted annually. The prepayment experience of the
mortgages underlying these securities may vary from that for fixed-rate
mortgages.
FHLMC is a corporate instrumentality of the U.S. Government and
was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing.^ FHLMC issues
Participation Certificates^, which represent interests in mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
FNMA is a Government sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal
and interest by FNMA.
Bank Obligations. The Fund is permitted to invest in
high-quality, short-term money market instruments. The Fund may invest
temporarily, and without limitation in bank certificates of deposit, time
deposits, and bankers' acceptances when, in Dreyfus' opinion, a
"defensive" investment posture is warranted.
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Certificates of deposit ("CDs") are short-term negotiable
obligations of commercial banks; time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for specified periods of time
at stated interest rates; and bankers' acceptances are time drafts drawn
on commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may
be purchased by the Trust are insured by the FDIC and are subject to
Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches of
foreign banks are, among other things, generally required to maintain
specified levels of reserves, and are subject to other supervision and
regulations designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs
and TDs, may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific obligation
and by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
^ Futures Activities. The Special Growth Fund may invest in
futures contracts and options on futures contracts that are traded on a
United States exchange or board of trade.
^ These investments may be made by the Special Growth Fund solely
for the purpose of hedging against changes in the value of its portfolio
securities, or of securities in which the Fund intends to invest due to
anticipated changes in interest rates and market conditions, and not for
purposes of speculation. The Fund will not purchase or sell futures
contracts or purchase options on futures if, immediately thereafter, more
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than 33 1/3% of its net assets would be hedged. In addition, the Fund will
not enter into futures and options contracts for which aggregate initial
margin deposits and premiums exceed 5% of the fair market value of its
assets, after taking into account unrealized profits and unrealized losses
on futures contracts into which it has entered. See "Taxes" below.
Futures Contracts. The purpose of the acquisition or sale of a
futures contract by the Special Growth Fund is to protect the Fund from
fluctuations in values in rates on securities without actually buying or
selling the securities. Of course, since the value of portfolio securities
will far exceed the value of the futures contracts sold by the Fund, an
increase in the value of the futures contracts could only mitigate--but
not totally offset--the decline in the value of the portfolio.
No consideration is paid or received by the Special Growth Fund
upon the purchase or sale of a futures contract. Initially, the Fund will
be required to deposit with the broker an amount of cash or cash
equivalents equal to approximately 1% to 10% of the contract amount (this
amount is subject to change by the board of trade on which the contract is
traded and members of such board of trade may charge a higher amount).
This amount is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract which is returned
to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker, will be made daily as the
price of securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." In addition, when the Fund purchases
a futures contract, it must deposit into a segregated account with its
custodian an amount of cash or cash equivalents equal to the total market
value of such futures contract, less the amount of initial margin for the
contract. At any time prior to the expiration of a futures contract, the
Fund may elect to close the position by taking an opposite position, which
will operate to terminate the Fund's existing position in the contract.
There are several risks in connection with the use of futures
contracts as a hedging device. Successful use of futures contracts by a
Fund is subject to the ability of Dreyfus to predict correctly movements
in the direction of interest rates. These predictions involve skills and
techniques that may be different from those involved in the management of
the Fund. In addition, there can be no assurance that there will be a
correlation between movements in the price of the underlying ^ securities
and movements in the price of the ^ securities which are the subject of
the hedge. A decision of whether, when and how to hedge involves the
exercise of skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior or unexpected
trends in interest rates.
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^ Positions in futures contracts may be closed out only ^ on the
exchange on which they were entered into (or through a linked exchange)
and no secondary market exists for those contracts. In addition, although
the Special Growth Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, there is no assurance
that a liquid market will exist for the contracts at any particular time.
Most futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures trades to
substantial losses. In such event, and in the event of adverse price
movements, the Fund would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. As described above, however, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
If the Special Growth Fund has hedged against the possibility of
an increase in interest rates adversely affecting the value of securities
held in its portfolio and rates decrease instead, the Fund will lose part
or all of the benefit of the increased value of securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund had insufficient cash, it may
have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. These sales of securities
may, but will not necessarily, be at increased prices which reflect the
decline in interest rates.
Options on Financial Futures Contracts. Financial futures
contracts provide for the future sale by one party and the purchase by the
other party of a certain amount of a specific financial instrument at a
specified price, date, time and place.
The Special Growth Fund may purchase and write put and call
options on futures contracts that are traded on a United States exchange
or board of trade as a hedge against changes in interest rates or in the
value of portfolio securities, and may enter into closing transactions
with respect to such options to terminate existing positions. There is no
guarantee that such closing transactions can be effected.
An option on a futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a
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specified exercise price at any time prior to the expiration date of the
option. Options on futures contracts are currently available on the
Chicago Board of Trade with respect to Treasury bonds, Treasury notes,
Treasury bills and the Standard & Poor's 500 Composite Stock Price Index.
The potential loss related to the purchase of an option on a futures
contract is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale,
there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Fund.
In addition to the risks that apply to all options transactions,
there are several risks relating to options on futures contracts. These
risks include the lack of assurance of a perfect correlation between price
movements in the options on futures, on the one hand, and price movements
in the portfolio securities that are the subject of the hedge, on the
other hand. The ability to establish and close out positions on such
options will be subject to the existence of a liquid market, and there can
be no assurance that such a market will be maintained or that closing
transactions will be effected. In addition, there are risks specific to
writing (as compared to purchasing) such options. While a Fund's risk of
loss with respect to purchased ^ put and call options on futures contracts
is limited to the premium paid for the option (plus transactions costs),
when the Fund writes such an option it is obligated to a broker for the
payment of initial and variation margin. In addition, the purchase of put
or call options will be based upon predictions as to anticipated interest
rate or price trends by Dreyfus which could prove to be incorrect. When a
Fund writes a call option or a put option, it will be required to deposit
initial margin and variation margin pursuant to brokers' requirements
similar to those applicable to interest rate futures contracts. In
addition, net option premiums received for writing options will be
included as initial margin deposits ^.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Currency Transactions. The Fund may engage in currency exchange
transactions as a means of managing certain risks associated with
purchasing and selling securities denominated in foreign securities.
Generally, the currency exchange transactions of the Fund will be
conducted on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the currency exchange market. This rate
under normal market conditions differs from the prevailing exchange rate
in an amount generally less than 0.1% due to the cost of converting from
one currency to another. The Fund also may deal in forward exchanges
between currencies of the different countries in which it invests as a
hedge against possible variations in the exchange rates between these
currencies. This is accomplished through contractual agreements to
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purchase or sell a specified currency at a specified future date and price
set at the time of the contract.
Dealings in forward currency exchanges by the Fund are limited to
hedging involving either specific transactions or aggregate portfolio
positions. Transaction hedging is the purchase or sale of foreign
currency with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of foreign currency with respect
to portfolio security positions denominated or quoted in such currency.
The Fund will not speculate in forward currency exchanges. The Fund may
position hedge with respect to a particular currency to an extent greater
than the aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in or currently
convertible into that particular currency. If the Fund enters into a
position hedging transaction, its custodian or sub-custodian bank will
place cash or readily marketable securities in a segregated account of the
Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of such forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to such
contracts. The Fund will not attempt to hedge all of its foreign portfolio
positions and will enter into such transactions only to the extent, if
any, deemed appropriate by Dreyfus. The Fund will not enter into a
position hedging commitment if, as a result thereof, the Fund would have
more than 15% of the value of its total assets committed to such
contracts. The Fund will not enter into a forward contract with a term of
more than one year.
It may not be possible for the Fund to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to the Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
At or before the maturity of a forward contract, the Fund may
either sell a portfolio security and make delivery of the currency, or it
may retain the security and offset its contractual obligation to deliver
the currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If the Fund retains the portfolio security and engages in
an offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If
the Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the currency. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
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offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The use of forward currency contracts by the Fund will be limited
to the transactions described above. The Fund is not required to enter
into such transactions with regard to its portfolio securities, regardless
of currency denomination, and will not do so unless deemed appropriate by
Dreyfus. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point
in time. In addition, although forward currency contracts tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they also tend to limit any potential gain which might result
should the value of the currency increase.
Because the Fund invests in foreign securities, the Fund will
hold from time to time various foreign currencies pending its investment
in foreign securities or conversion into U.S. dollars. Although the Fund
values its assets daily in terms of U. S. dollars, it does not convert its
holdings of foreign currencies into U.S. dollars on a daily basis. When
converting foreign currencies to U.S. dollars, the Fund may incur costs of
currency conversion. A foreign exchange dealer does not charge a fee for
conversion, but it does realize a profit based on the difference, which is
known as the spread, between the prices at which the dealer is buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
Lending of Portfolio Securities. The Fund may lend securities
from its portfolio to brokers, dealers and other financial organizations.
Such loans, if and when made, may not exceed 33 1/3% of the Fund's total
assets, taken at value. The Fund may not lend portfolio securities to its
affiliates without specific authorization from the SEC. Loans of portfolio
securities by the Fund will be collateralized by cash, letters of credit
or securities issued or guaranteed by the U.S. Government or its agencies
which will be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities. From time to time,
the Fund may return a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third
party, which is unaffiliated with the Fund and which is acting as a
"finder."
By lending portfolio securities, a Fund can increase its income
by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when
Government securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
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following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees
must terminate the loan and regain the right to vote the securities. The
risks in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
Options on Securities. The Fund has the ability to write covered
put and call options on their portfolio securities as part of its
investment strategy.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a
greater return than would be realized on the security alone. In return
for a premium, the writer of a covered call option forfeits the right to
any appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase transaction
can be effected). Nevertheless, the call writer retains the risk of a
decline in the price of the underlying security. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. The writer of a covered put option accepts the risk of a
decline in the price of the underlying security. The size of the premiums
that the Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase
their option-writing activities.
The Fund will write only covered options. Accordingly, whenever
the Fund writes a call option it will continue to own or have the present
right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, whenever
the Fund writes a put option it will either (a) deposit with the Fund's
custodian in a segregated account, cash, U.S. Government Securities or
other high grade debt obligations having a value equal to or greater than
the exercise price of the underlying securities or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates
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as those written by the Fund), or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise
prices greater than those that it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of
the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case
of call options, these exercise prices are referred to as "in-the-money",
"at-the-money" and "out-of-the-money", respectively.
The Fund may write (a) in-the-money call options when Dreyfus
expects that the price of the underlying security will remain flat or
decline moderately during the option period, (b) at-the-money call options
when Dreyfus expects that the price of the underlying security will remain
flat or advance moderately during the option period and (c)
out-of-the-money call options when Dreyfus expects that the premiums
received from writing the call option, plus the appreciation in market
price of the underlying security up to the exercise price, will be greater
than the appreciation in the price of the underlying security alone. In
any of the preceding situations, if the market price of the underlying
security declines and the security is sold at this lower price, the amount
of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the obligation of the Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring it to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. The Fund can no longer effect a closing purchase transaction
with respect to an option once it has been assigned an exercise notice.
To secure its obligation to deliver the underlying security when it writes
a call option, or to pay for the underlying security when it writes a put
option, the Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and the securities
exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
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securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Fund expects to write only call
or put options issued by the Clearing Corporation. The Fund expects to
write options only on national securities exchanges.
The Fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the Fund has written an option, it
will realize a profit if the cost of the closing purchase transaction is
less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Fund generally will write only those options for
which Dreyfus believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities
exchange will exist for any particular option or at any particular time,
and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, have at times rendered certain of
the facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be
possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the Fund and other clients of Dreyfus and
certain of their affiliates may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. At
the date of this Statement of Additional Information, the position and
exercise limits for common stocks were 3,000, 5,500 or 8,000 options per
stock (i.e., options representing 300,000, 550,000 or 800,000 shares),
depending on various factors relating to the underlying security. Dollar
amount limits apply to U. S. Government Securities. These limits may
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restrict the number of options the Fund will be able to purchase on a
particular security.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable
preferred stock or debt securities, the time required to convert or
exchange and obtain physical delivery of the underlying common stocks with
respect to which the Fund has written options may exceed the time within
which the Fund must make delivery in accordance with an exercise notice.
In these instances, the Fund may purchase or temporarily borrow the
underlying securities for purposes of physical delivery. By so doing, the
Fund will not bear any market risk, since the Fund will have the absolute
right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Although Dreyfus will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of put and call options,
there can be no assurance that the Fund will succeed in its option-writing
program.
Stock Index Options. The Fund has the authority to purchase and
write put and call options on stock indexes listed on national securities
exchanges to hedge its portfolio.
A stock index fluctuates with changes in the market values of the
stocks included in the index. Some stock index options are based on a
broad market index such as the NYSE Composite Index, or on a narrower
market index such as the Standard & Poor's 100. Indexes are also based on
an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index.
Options on stock indexes are similar to options on stock except
that (a) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier". Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is
based being greater than, in the case of a call, or less than, in the case
of a put, the exercise price of the option. The amount of cash received
will be equal to such difference between the closing price of the index
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and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may
offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option expire
unexercised. The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent to which price
movements in the portion of a securities portfolio being hedged correlate
with price movements of the stock index selected. Because the value of an
index option depends upon movements in the level of the index rather than
the price of a particular stock, whether the Fund will realize a gain or
loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or,
in the case of certain indexes, in an industry or market segment, rather
than movements in the price of a particular stock. Thus, successful use
by the Fund of options on stock indexes will be subject to Dreyfus'
ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
stocks, and there can be no assurance that the Fund will be successful in
its use of stock index options.
The Fund will engage in stock index options transactions only
when determined by Dreyfus to be consistent with the Fund's efforts to
control risk. There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies will be successful.
When the Fund writes an option on a stock index, the Fund will establish a
segregated account with the Fund's custodian in an amount equal to the
market value of the option and will maintain the account while the option
is open.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund
may not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to
be invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities, and state or
municipal governments and their political subdivisions are not
considered members of any industry. ln addition, this limitation
does not apply to investments in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks).
15
<PAGE>
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) the Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowings, and (b) the Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets
securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that
issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such
loans. For purposes of this limitation debt instruments and
repurchase agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of security or other instruments (but this shall not
prevent the Fund from investing in securities or other
instruments backed by real estate, including mortgage loans, or
securities of companies that engage in real estate business or
invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of
such securities in accordance with the Fund's investment program
may be deemed an underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts
and other similar instruments.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts to
the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute selling short.
16
<PAGE>
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases (the Fund
may, however, purchase and sell the securities of companies
engaging in the exploration, development, production, refining,
transportation, and marketing of oil, gas, or minerals.)
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Trustees of the Fund, its advisers, or managers,
owning beneficially more than one half of one percent of the ^
securities of such issuer, together own beneficially more than 5%
of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof, the value of the Fund's investment
in securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as
the issuer of a security.
6. The Fund will invest no more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days and other securities
which are not readily marketable. For purposes of this
limitation, illiquid securities shall not include Section 4(2)
paper and securities which may be resold under Rule 144A under
the Securities Act of 1933, provided that the Board of Trustees,
or its delegate, determines that such securities are liquid based
upon the trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets and except to the extent
otherwise permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are
outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets
would be invested in warrants, or (b) more than 2% of the value
of the Fund's assets would be invested in warrants that are not
listed on the New York or American Stock Exchange (for purposes
17
<PAGE>
of this undertaking, warrants acquired by the Fund in units or
attached to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and
any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets except that: (a) this limitation shall not
apply to standby commitments, and (b) this limitation shall not
apply to the Fund's transactions in futures contracts and related
options.
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in such percentage resulting from
a change in the values of assets will not constitute a violation of such
restriction, except as otherwise required by the 1940 Act.
In order to permit the sale of the Fund's shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above.^ Should the Trust determine that
any such commitment is no longer in the best interests of the Trust and
its shareholders, it will revoke the commitment by terminating sales of
its shares in the state involved.^ Further, the Fund has given a
representation that investments will not be made in real estate limited
partnerships.^
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDER
^ At November 30, 1994, there were no controlling shareholders,
as that term is defined under the 1940 Act^, of the Dreyfus/Laurel Funds
Trust.
PRINCIPAL SHAREHOLDERS
^ The following shareholder owned 5% or more of the outstanding
voting shares of the Fund at December 8, 1994: Boston Safe Deposit & Trust
Co., A/C 0952114007, One Cabot Road, Wellington III, Medford, MA 021555,
7% record.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in that
business. The activities of Mellon Bank in informing its customers of,
and performing, investment and redemption services in connection with the
Fund, and in providing services to the Fund as custodian and ^ fund
accountant, as well as Dreyfus' investment advisory activities, may raise
18
<PAGE>
issues under these provisions. Mellon Bank has been advised by counsel
that its activities contemplated under this arrangement are consistent
with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities, the Board of Trustees would seek an alternative provider(s) of
such services.
TRUSTEES AND OFFICERS
The ^ Trustees and executive officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. Each Trustee
who is an "interested person" of the Trust as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") is indicated by an
asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Funds Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and as Director of The Dreyfus/Laurel Funds, Inc.
(collectively "The Dreyfus/Laurel Family of Funds").
^ o + RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and
Vice President ^ Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa;^ Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Trust; Director ^ and Chairman,
Massachusetts Business Development ^ Corp.; Director, Boston
Mutual Insurance Company; Director and Vice Chairman of the
Board, Home Owners Federal Savings ^ and Loan (prior to May
1990). Address: Massachusetts Business Development Corp., One
Liberty Square, Boston, Massachusetts 02109.
^ o + JAMES M. FITZGIBBONS. Trustee of the Trust; President and
Director, Amoskeag Company; Chairman, Howes Leather Company,
Inc.; ^ Director, Fiduciary Trust Company^; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
19
<PAGE>
^ o * J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith,
Shaw & McClay (law firm). Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon
Carbon Corporation; Director, National Picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993;
Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Trustee of the Trust; Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. ^ and Florida Hospitality
Group; Managing Partner, Himmel/MKDG, Franklin Federal Partners,
Reston Town Center Associates and Grill 23 & Bar. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Trustee of the Trust; ^ President and ^
CEO, LDG Management Company ^ Inc.; CEO, LDG Reinsurance
Underwriters, SRRF Management Inc. and Medical Reinsurance
Underwriters ^ Inc. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
^ o + ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and
Professor of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
20
<PAGE>
o + ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson
Ventures, Inc.^, prior to February, 1993^; Real Estate
Development Project Manager and Vice President, The Gunwyn
Company. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
# MARIE ^ E. ^ CONNOLLY. President and Treasurer ^ of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds
Trust and The Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. ^(since 1992); Treasurer,
Funds Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services,^ Inc. (since April 1994); Senior
Vice President ^ and Director of Financial Administration, The
Boston Company Advisors, Inc. ^(December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, Premier Mutual Fund
Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994);Vice President and Associate General Counsel,
Premier Mutual Fund Services, Inc. (Since August 1994); Vice
President and Associate General Counsel, Funds Distributor, Inc.
(since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166
RICHARD W. HEALEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
21
<PAGE>
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
March 1994); Senior Vice President, Funds Distributor, Inc.
(since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994); Associate,
Ropes & Gray (August 1990 to February 1992); Associate, Sidley &
Austin (June 1989 to August 1990). Address: One Exchange Place,
Boston, Massachusetts 02109.
______________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment
companies advised by The Dreyfus Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of December 1, 1994.
No officer or employee of The Shareholder Services Group, Inc.
("TSSG") or Premier (or of any parent or subsidiary thereof) receives any
compensation from the Trust for serving as an officer or Trustee of the
Trust. In addition, no officer or employee of Dreyfus (or of any parent or
subsidiary thereof) serves as an officer or Trustee of the Trust. The
Dreyfus Family of Funds pays each Trustee/Director who is not an officer
or employee of Premier or any of its affiliates, $27,000 per annum (and an
additional $75,000 for the Chairman of the Board of Directors/Trustees of
the Dreyfus/Laurel Fund Family). In addition, the Dreyfus/Laurel Fund
Family pays each Trustee/Director $ 1,000 per joint Dreyfus/Laurel Fund
Family meeting attended, plus $750 per joint Dreyfus/Laurel Fund Family
Audit Committee meeting attended, and reimburses each Trustee/Director for
travel and out-of-pocket expenses. For the fiscal year ended December 31,
1993 the fees for meetings and expenses totaled $79,598.
22
<PAGE>
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager
for the Fund pursuant to an Investment Management Agreement with the ^
Trust dated April 4, 1994 ("Management Agreement"), transferred to Dreyfus
as of October 17, 1994. Pursuant to the Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As investment manager, Dreyfus manages the Fund by
making investment decisions based on the Fund's investment objectives,
policies and restrictions. The Management Agreement is subject to review
and approval at least annually by the Board of Trustees.
The ^ Management Agreement will continue from year to year
provided that a majority of the Directors who are not interested persons
of Dreyfus/Laurel and either a majority of all Directors or a majority of
the shareholders of the Fund approve their continuance. Dreyfus/Laurel
may terminate the Agreement, without prior notice to Dreyfus, upon the
vote of a majority of the Board of Directors or upon the vote of a
majority of the outstanding voting securities of the Fund on 60 days
written notice to Dreyfus. Dreyfus may terminate the Management Agreement
upon written notice to Dreyfus/Laurel. The Management Agreement will
terminate immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board; Joseph S. DiMartino, President and a
director; W. Keith Smith, Chief Operating Officer and a director; Paul H.
Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean,
Vice President and General Counsel; Barbara E. Casey. Vice
President--Retirement Services; Robert F. Dubuss, Vice President; Henry D.
Gottmann, Vice President--Retail; Elie M. Genadry, Vice
President--Wholesale; Mark N. Jacobs, Vice President--Fund Legal and
Compliance; Jeffery N. Nachman, Vice President--Mutual Fund Accounting;
Diane M. Coffey, Vice President--Corporate Communications; Jay R.
DeMartine, Vice President--Marketing; Kirk V. Stumpp, Vice President--New
Product Development; Lawrence S. Kash, Vice Chairman--Distribution; Philip
L. Toia, Vice Chairman--Operations and Administration; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene and David B. Truman, directors.
For the last ^ three fiscal ^ years, the Fund has had the
following expenses^:
23
<PAGE>
For the Fiscal Year Ended December 31,
1993 1992 1991
---- ---- ----
$941,416 $491,146 388,040
Prior to April 4, 1994, The Boston Company Advisors, Inc. served
as the Fund's investment manager. With respect to the 1993 fiscal year
fee, $37,583 and $21,136 was voluntarily waived and reimbursed
respectively by The Boston Company Advisors, Inc.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
Dreyfus TeleTransfer Privilege--Investor ^ Shares. Dreyfus
TeleTransfer purchase orders may be made between the hours of 8:00 a.m.
and 4:00 p.m., New York time, on any business day that The Shareholder
Services Group, Inc., the Fund's transfer and dividend disbursing agent
(the "Transfer Agent"), and the New York Stock Exchange ("NYSE") are open.
Such purchases will be credited to the shareholder's Fund account on the
next bank business day. To qualify to use the Dreyfus TeleTransfer
Privilege, the initial payment for purchase of shares must be drawn on,
and redemption proceeds paid to, the same bank and account as are
designated on the Account Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Fund Shares--Dreyfus
TeleTransfer Privilege--Investor ^ Shares."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan."
24
<PAGE>
Distribution ^ Plans - Investor Shares. The Securities and
Exchange Commission ("SEC") has adopted Rule 12b-1 under the 1940 Act
("Rule") regulating the circumstances under which investment companies
such as the ^ Trust directly or indirectly, bear the expenses of
distributing their shares. The Rule defines distribution expenses to
include expenditures for "any activity which is primarily intended to
result in the sale of fund shares." The Rule, among other things,
provides that an investment company may bear such expenses only pursuant
to a plan adopted in accordance with the Rule.
Prior Plans. Prior to April 4, 1994, the Investor ^ shares of
the Fund were known as the "Retail Class" of shares. The Retail Class was
reclassified as the Investor ^ shares by the Board of Trustees at a
meeting held on November 22, 1993, subject to certain approvals that were
obtained from ^ the Fund's shareholders at a meeting held on March 29,
1994. At the November 22, 1993 Board Meeting, the Trustees also approved
a new distribution plan for the Investor ^ shares (formerly Retail Class).
Shareholders of the Retail Class of Shares approved the new distribution
plans at a shareholders' meeting held on March 14 and March 29, 1994.
These new distribution plans ("Current Plans") were effective on April 4,
1994.
Prior to April 4, 1994, the Fund's Retail Shares were subject to
a distribution plans (the "Prior Plans") that ^ was adopted by the ^ Trust
under Section 12(b) of the Act and ^ Rule 12b-1 thereunder. Under the
Prior Plans, the Fund was authorized to spend up to .25% of its average
daily net assets attributable to the Retail Class on activities primarily
intended to result in the sale of such Class.
Under the distribution ^ agreement with the prior distributor,
Funds Distributor, Inc. ("Funds Distributor") ^ the Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities ^ on
behalf of the Fund on a monthly basis, provided that any payment by a Fund
^ the Funds Distributor, together with any other payments made by such
Fund pursuant to the Prior Plan, ^ did not exceed .0208% of its average
daily net assets attributable to the Retail Class for the prior month
(.25% on an annualized basis).
Current ^ Plan. Under the Current Plan, Investor ^ shares of
the Fund may spend annually up to 0.25% of the average of its net asset
values attributable to the Investor ^ shares for costs and expenses
incurred in connection with the distribution of, and shareholder servicing
with respect to, ^ Investor shares.
The Current ^ Plan provides that a report of the amounts expended
under the Current ^ Plan, and the purposes for which such expenditures
were incurred, must be made to the Trustees for their review at least
25
<PAGE>
quarterly. In addition, the Current ^ Plan provides that ^ it may not be
amended to increase materially the costs which a Fund may bear for
distribution pursuant to the Current ^ Plan without approval of a Fund's
shareholders, and that other material amendments of the Current ^ Plan
must be approved by the vote of a majority of the Trustees and of the
Trustees who are not "interested persons" of the ^ Trust (as defined in
the 1940 Act) and who do not have any direct or indirect financial
interest in the operation of the Current Plan, cast in person at a meeting
called for the purpose of considering such amendments. The Current ^ Plan
is subject to annual approval by the entire Board of Trustees and by the
Trustees who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Current ^ Plan, by
vote cast in person at a meeting called for the purpose of voting on the
Current Plan. The Current ^ Plan is terminable, as to the Fund's ^
shares, at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in
the operation of the Current Plan or by vote of the holders of a majority
of the outstanding shares of such class of the Fund.^
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, a ^
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. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the following
transmittal code which may be used for domestic or overseas transmissions:
26
<PAGE>
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment
may have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as a described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege--Investor Class. 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 ACH system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege--Investor shares."
Redemption Commitment. The Fund has committed itself to pay in
cash all redemption requests by any shareholder of record of the Fund,
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 ^ SEC.
In the case of requests for redemption in excess of such amount, the Board
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of Trustees reserves the right to make payments in whole or in part in
securities or other assets 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 this event, the securities would be valued
in the same manner as the Fund's portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the
NYSE is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC 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 ^ SEC by
order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
^ Fund Exchanges. Shares of any Class of the Fund may be
exchanged for shares of the respective Class of certain other funds
advised or administered by Dreyfus. Shares of the same Class of such
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 other
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
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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 are subject to a contingent deferred
sales charge ("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, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.^
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.
To establish a personal retirement plan by exchange, shares of
the fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Dreyfus Family of Funds. To
exchange shares held in a personal retirement plan account, the shares
exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange
Privilege permits an investor to purchase, in exchange for shares of the
Fund, shares of the same Class of another fund in the Dreyfus Family of
Funds. 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 "Exchange Privilege." Enrollment in or modification or cancellation
of this Privilege is effective three business days following notification
by the investor. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Dreyfus Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
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all other retirement accounts, exchanges may be made only among those
accounts.
^ Funds exchanges and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the
fund being acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
Shareholder Services Forms and prospectuses of the other funds
may be obtained from the Distributor. The Fund reserves the right to
reject any exchange request in whole or in part. The ^ Fund exchange
service or Dreyfus Auto-Exchange Privilege may be modified or terminated
at any time upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors
to invest on the payment date their dividends or dividends and capital
gain distributions, if any, from the Fund in shares of the same Class of
another fund in ^ the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of the same Class of other funds purchased pursuant
to this Privilege will be purchased on the basis of relative net asset
value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of
other funds that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other
funds sold with a sales load, and the applicable sales
load will be deducted.
C. Dividends and distributions paid by a fund which charges
a sales load may be invested in shares of other funds
sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged
by the fund from which dividends or distributions are
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<PAGE>
being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon redemptions
of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
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 an SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans
or IRAs may charge a fee, payment of which could require the liquidation
of shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by
direct remittance to the entity acting as custodian. Purchases for these
plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum on subsequent purchases. The
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs,
SEP-IRAs and 403(b)(7) Plans with only one participant, is normally $750,
with no minimum on subsequent purchases. Individuals who open an IRA may
also open a non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details 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
Fund Shares."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or are not valued by a
pricing service approved by the Board of Trustees, are valued at fair
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value as determined in good faith by the Board of Trustees. The Board of
Trustees will review the method of valuation on a current basis. In
making their good faith valuation of restricted securities, the Trustees
generally will take the following factors into consideration: restricted
securities which are 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 Board of Trustees if the Trustees 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 usually will be valued initially at cost. Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board of Trustees.
^
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify as a regulated investment company ("RIC"), the Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions), (2) must derive at least 90% of its annual gross
income from specified sources ("Income Requirement"), (3) must derive less
than 30% of its annual gross income from gain on the sale or disposition
of any of the following that are held for less than three months --
(i) securities, (ii) non-foreign-currency options and futures and
(iii) foreign currencies (or foreign currency options, futures and forward
contracts) that are not directly related to the Fund's principal business
of investing in securities (or options and futures with respect thereto)
("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements. Accordingly, the Fund may be
restricted in the selling of securities held for less than three months.
Any dividend or other distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, the
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Code provides that if a shareholder holds shares of the Fund for six
months or less and has received a capital gain distribution with respect
to those shares, any loss incurred on the sale of those shares will be
treated as a long-term capital loss to the extent of the capital gain
distribution received.
Dividends and other distributions declared by the Fund in Octo-
ber, November or December of any year and payable to shareholders of
record on a date in that month any of those months are deemed to have been
paid by the Fund and received by the shareholders on December 31 of that
year if the distributions are paid by the Fund during the following
January. Accordingly, those distributions will be taxed to shareholders
for the year in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in
cash or reinvested in additional Fund shares, may be eligible for the
dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by the Fund from
U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax.
Dividends and interest received by the Fund may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom
that may be excluded by future regulations), and income from transactions
in options, futures and forward contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of
investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
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<PAGE>
extent the Fund does not so qualify, it may be forced to defer the closing
out of certain options, futures and forward contracts beyond the time when
it otherwise would be advantageous to do so, in order for the Fund to
qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and 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 any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, 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 futures and forward contracts and options transactions
will be treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon exercise or lapse of
such contracts and options as well as from closing transactions. In
addition, any such contracts or options remaining unexercised at the end
of the Fund's taxable year will be treated as sold for their then fair
market value (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by the Fund involving certain contracts
or options may constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, override or modify Sections 1256
and 988. As such, all or a portion of any short-term or long-term capital
gain from certain "straddle" transactions may be recharacterized to
ordinary income. If the Fund were treated as entering into "straddles" by
reason of its engaging in certain forward contracts or options
transactions, such "straddles" would be characterized as "mixed straddles"
if the forward contracts or options transactions comprising a part of such
"straddles" were governed by Section 1256. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, then to the extent the "straddle" and conversion transactions rules
apply to positions established by the Fund, losses realized by the Fund
will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the "straddle" rules, short-term
capital loss on "straddle" positions may be recharacterized as long-term
capital loss, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
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Investment by the Fund in securities issued or acquired at a
discount (for example, zero coupon securities) or providing for deferred
interest or for payment of interest in the form of additional obligations
(for example, "pay-in-kind" or "PIK" securities) could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, the Fund could be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and to distribute such income in order to
maintain its qualification for treatment as a RIC. In such case, the Fund
may have to dispose of securities it might otherwise have continued to
hold in order to generate cash to satisfy these distribution requirements.
If the Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which its offices are maintained,
in which its agents or independent contractors are located, or in which it
is otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate) on the gross amount
of the distribution. Foreign shareholders also may be subject to U.S.
federal withholding tax on income resulting from any election by the Fund
to treat foreign taxes paid by it as paid by its shareholders (see
discussion above), but foreign shareholders will not be able to claim a
35
<PAGE>
credit or deduction for the foreign taxes treated as having been paid by
them.
Capital gains realized by foreign shareholders on the sale of
Fund shares and distributions to them of net capital gain, as well as
amounts retained by the Fund that are designated as undistributed capital
gains, generally will not be subject to U.S. federal income tax unless the
foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable
year. However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for U.S. federal income
tax purposes on his worldwide income at the graduated rates applicable to
U.S. citizens, rather than the 30% U.S. federal withholding tax rate. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If income
from the Fund is effectively connected with a U.S. trade or business
carried on by a foreign shareholder, then all distributions to that
shareholder and any gains realized by that shareholder on the disposition
of the Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as
the case may be. Foreign shareholders also may be subject to the branch
profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally
are subject to U.S. federal estate tax on their U.S. situs property, such
as shares of the Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. The ^ Trust has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of ^ the
Trust are exempt from Pennsylvania personal property taxes.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by
Dreyfus subject to the overall supervision of the Trustees of the Trust.
Portfolio transactions for the Fund are effected by or under the direction
of Dreyfus. The same personnel are also in charge of portfolio
transactions for other accounts of other subsidiaries and affiliates of
Dreyfus.
Although investment decisions for the Fund are made independently
from those of the other accounts managed by Dreyfus, investments of the
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<PAGE>
type the Fund may make may also be made by those other accounts. When the
Fund and one or more other accounts managed by Dreyfus are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by Dreyfus to be equitable to each. In some cases, this procedure
may adversely affect the price paid or received by the Fund or the size of
the position obtained or disposed of by the Fund. In other cases, however,
it is believed that coordination and the ability to participate in volume
transactions will be to the benefit of the Fund.
Transactions on stock exchanges on behalf of the Fund involve the
payment of negotiated brokerage commissions. There is generally no stated
commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, Dreyfus seeks the most favorable execution and price available.
The Investment Management Agreement provides that, in assessing the best
overall terms available for any transaction, Dreyfus shall consider
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis. In addition, the Investment Management Agreement authorizes
Dreyfus, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Trust and/or other accounts over which Dreyfus or an affiliate exercises
investment discretion.
The Trustees will periodically review the brokerage commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
inuring to the Fund. It is possible that certain of the services received
will primarily benefit one or more other accounts for which investment
discretion is exercised, or the Fund other than that for which the
transaction was executed. Conversely, the Trust or the Fund may be the
primary beneficiary of the service received as a result of portfolio
transactions effected for such other accounts or funds. The fees of
Dreyfus under the Investment Management Agreement are not reduced by
reason of receipt of such brokerage and research services.
The Trustees of the Trust have determined that portfolio
transactions for the Funds may be executed through affiliated broker
dealers if, in the judgment of Dreyfus, the use of an affiliated broker is
likely to result in prices and execution that are fair and reasonable and
are at least as favorable as those of other qualified broker-dealers and
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<PAGE>
if, in such transactions, the affiliated broker-dealer charges the Fund a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. Affiliated broker-dealers will not participate in
commissions from brokerage given by the Fund to other brokers or dealers.
In addition, pursuant to an exemption order granted by the SEC, the Fund
may engage in transactions involving certain money market instruments with
particular affiliates acting as principal. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those
cases in which better prices and executions may be obtained elsewhere.
The following table sets forth certain information regarding the
Fund's payment of brokerage commissions for the fiscal years 1991, 1992,
and 1993:
Total Brokerage
Commissions 1991: $179,693
1992: 134,942
1993: 262,685
Commissions paid to Boston Institutional $4,775
Services, Inc. ("BISI") *(1)
% of total Commissions paid to BISI *(1) 2%
% of total Transactions Involving 4%
Commissions paid to BISI*(1)
Commissions paid to Lehman Brothers *(2) $11,025
% of Total Commissions paid to Lehman 4%
Brothers*(2)
% of Total Transactions Involving 2%
Commissions paid to Lehman Brothers*(2)
* Figures for 1993 fiscal year only.
(1) Prior to October 29, 1993
(2) After July 30,1993
^ Prior to April 4, 1994, the Fund was advised by The Boston
Company Advisors, Inc. Prior to May 21, 1993, The Boston Company Advisors,
Inc. was affiliated with Lehman Brothers.^
Portfolio Turnover. While the Fund does not intend to trade in
securities for short-term profits, the Fund will not consider portfolio
turnover rate a limiting factor in making investment decisions. While it
is not possible to predict the rate of frequency of portfolio transactions
(i.e., portfolio turnover rate) with any certainty, at the present time it
is anticipated that the portfolio turnover rates for the Fund is likely to
exceed 100%. Higher portfolio turnover rates can result in corresponding
increases in brokerage commissions. In addition, to the extent a Fund
realizes short-term gains as a result of more portfolio transactions, such
gains would be taxable to shareholders at ordinary income tax rates.
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The portfolio turnover rates for the 1992 and 1993 fiscal years
for the Fund were 112% and 94%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
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 Investor Class) per share with a
hypothetical $1,000 payment made at the beginning of the period (assuming
the reinvestment of dividends and other distributions), dividing by the
amount of the initial investment, taking the "n"th root of the quotient
(where "n" is the number of years in the period) and subtracting 1 from
the result.
Total return is calculated by subtracting the amount of the
Fund's net asset value (maximum offering price in the case of Investor
Class) per share at the beginning of a stated period from the net asset
value (maximum offering price in the case of Investor Class) per share at
the end of the period (after giving effect to the reinvestment of
dividends and other distributions during the period), and dividing the
result by the net asset value (maximum offering price in the case of
Investor Class) 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 Investor ^ shares.
The Fund may compare the performance of its Investor and Class R
shares to that of other mutual funds, relevant indices or rankings
prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
Performance ^ rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual Fund
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund
Values, U.S. News and World Report, Forbes, Fortune, Barron's, Financial
Planning, Financial Planning on Wall Street, Certified Financial Planner
Today, Investment Advisor, Kiplinger's, Smart Money and similar
publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its Investor and Class R yields in
advertisements or in shareholder reports.
Effective April 4, 1994, the Retail and Institutional Class of
shares of the Fund were reclassified as a single class of Shares known as
"Investor Shares" and the Investment Class of shares of the Fund was
renamed as "Trust Shares." Effective October 17, 1994, the Fund
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<PAGE>
redesignated the Trust Shares as "Class R shares." The following
performance data for Investor Shares is reflective of the Fund's Retail
Class of Shares' performance. In addition, the following performance data
for Class R shares of the Fund reflects the Fund's former Investment Class
of Shares and Trust shares.
Total Return
The table below shows the average annual total return for the Fund's
Investor Shares for the specified periods.
Special Growth
For the one year 7/1/93 (7.49%)
to 6/30/94
For the five years 10.60%
7/1/89 to 6/30/94
For the ten years 7/1/84 12.77%
to 6/30/94
From commencement of 15.17%
operations to 6/30/94
____________________________
* The figures reflect the Fund's performance after
accounting for fee waivers. Returns would have been lower
if waivers were not reflected.
1 The Fund commenced operations on May 3, 1982.
The table below shows the average annual total return for the
Fund's Class R shares for the specified periods.
Special Growth
For the one year 7/1/93 to (7.08%)
6/30/94
For the five years 7/1/89 --
to 12/31/94
For the ten years 7/1/84 --
to 6/30/94
40
<PAGE>
From inception date to 1.85%
6/30/94
41
<PAGE>
____________________________
* The figures reflect the Fund's performance after accounting for
fee waivers. Returns would have been lower if waivers were not
reflected.
* The Fund commenced selling Class R shares on February 1, 1993.
The table below shows the aggregate total return for the Fund's Class R
Shares for the specified periods. (See "Aggregate Total Return" below.)
Special Growth
From commencement of (7.08%)
operations to 6/30/94
____________________________
* The figures reflect the Fund's performance after accounting for
fee waivers. Returns would have been lower if waivers were not
reflected.
(1) The Fund commenced operations on February 1, 1993.
Aggregate Total Return
The Fund's aggregate total return figures described and shown
below represent the cumulative change in the value of an investment in
each Fund for the specified period and are computed by the following
formula:
ERV-P
AGGREGATE TOTAL RETURN = P
Where: P = A hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a
hypothetical $10,000 investment made at
the beginning of the
1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment
of all dividends and distributions.
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."
42
<PAGE>
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid. Fund shares
have no preemptive or subscription rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to
all its shareholders.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and required that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or a Trustee. The Agreement and
Declaration of Trust provides for indemnification from the Trust property
for all losses and expenses of any shareholder held personally liable for
the obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the ^ Trust itself would be unable to meet its
obligations, a possibility which Dreyfus believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder of the Fund will be
entitled to reimbursements from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as
to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA
15258, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
The Shareholder Services Group, Inc. and Mellon Bank as custodian, have no
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby
- 9th Floor, Washington, D.C. 20036, has passed upon the legality of the
shares offered by the Prospectus and this Statement of Additional
Information.
^ Coopers & Lybrand L.L.P. was appointed by the Trustees
to serve as the Fund's independent auditors for the year ending
December 31, ^ 1993.^
43
<PAGE>
FINANCIAL STATEMENTS
^ The financial statements for the fiscal year ended
December 31, 1993, including notes to the financial statements and
supplementary information and the Report of Independent Auditors, are
included in the Annual Report to shareholders. A copy of the Annual
Report, as well as the Fund's Semi-Annual Report for the six months' ended
June 30, 1994, (unaudited), accompany this Statement of Additional
Information. The financial statements for the Annual Report and the
Semi-Annual Report are incorporated herein by reference.
44
<PAGE>
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Municipal and Debt Instruments Ratings
Moody's Investors Service. Inc. (Moody's):
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest payments are protected by a
large or exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
Securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment attributes
and are considered "upper medium grade obligations."
Those Bonds in the Aa and A group which Moody's believes possess
the strongest investment attributes are designated by the symbols Aa 1 and
A 1.
Standard & Poor's Ratings Group ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in small
degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
Plus (+) or Minus (-): The AA rating may be modified by the
addition of a plus or minus sign to show relative standing within the AA
rating category.
45
<PAGE>
Short Term Municipal Loans
Moody's:
MIG-1/VMIG-1 -- Securities rated MIG-l/VMIG-l are of the best
quality, enjoying strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the
market for refinancing, or both.
MIG-2/VMIG-2 -- Loans bearing the MIG-2/VMIG-2 designation are of
high quality, with margins of protection ample although not so large as in
the MIG-l/VMIG-l group.
S&P:
SP-1 -- Short-term municipal securities bearing the SP-l
designation have very strong or strong capacity to pay principal and
interest. Those issues rated SP-l which are determined to possess
overwhelming safety characteristics will be given a plus (+) designation.
SP-2 -- Issues rated SP-2 have satisfactory capacity to pay
principal and interest.
Other Municipal Securities and Commercial Paper Ratings
Moody's:
Commercial paper rated Prime by Moody's is based upon its
evaluation of many factors, including: (1) management of the issuer; (2)
the issuer's industry or industries and the speculative-type risks which
may be inherent in certain areas; (3) the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-l,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-l repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
(5) well established access to a range of financial markets and assured
sources of alternative liquidity.
Prime-2 indicates a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
46
<PAGE>
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is
maintained.
S&P:
Commercial paper rated by S&P has the following characteristics:
liquidity ratios are adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-l, A-2, or A-3.
A-1 -- This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
A-2 -- Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is not as
high as for issues designated A- 1.
Fitch's Investors Service. Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current
appraisal of the degree of assurance of timely payment of such debt. An
appraisal results in the rating of an issuer's paper as F-l, F-2, F-3, or
F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
F-2 -- Commercial paper issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than those issues
rated F-l.
Duff and Phelps, Inc.:
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
47
<PAGE>
Emphasis is placed on liquidity which is defined as not only cash
from operations, but also access to alternative sources of funds including
trade credit, bank lines, and the capital markets. An important
consideration is the level of an obligor's reliance on short-term funds on
an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings
is the refinement of the traditional '1' category. The majority of
short-term debt issuers carry the highest rating, yet quality differences
exist within that tier. As a consequence, Duff & Phelps has incorporated
gradations of '1+' (one plus) and '1-' (one minus) to assist investors in
recognizing those differences.
Duff 1+--Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
Duff 1--Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1--High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Good Grade
Duff 2--Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
Satisfactory Grade
Duff 3--Satisfactory liquidity and other protection factors
qualify issue as to investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
Non-Investment Grade
Duff 4--Speculative investment characteristics. Liquidity is not
sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
Default
Duff 5--Issuer failed to meet scheduled principal and/or interest
payments.
IBCA, Inc.:
48
<PAGE>
In addition to conducting a careful review of an institution's
reports and published figures, IBCA's analysts regularly visit the
companies for discussions with senior management. These meetings are
fundamental to the preparation of individual reports and ratings. To keep
abreast of any changes that may affect assessments, analysts maintain
contact throughout the year with the management of the companies they
cover.
IBCA's analysts speak the languages of the countries they cover,
which is essential to maximize the value of their meetings with management
and to properly analyze a company's written materials. They also have a
thorough knowledge of the laws and accounting practices that govern the
operations and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning our
ratings. Before dispatch to subscribers, a draft of the report is
submitted to each company to permit correction of any factual errors and
to enable clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently
for institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time,
the company is informed of the ratings as a matter of courtesy, but not
for discussion.
A1+--Obligations supported by the highest capacity for timely
repayment.
A1--Obligations supported by a very strong capacity for timely
repayment.
A2--Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
B1--Obligations supported by an adequate capacity for timely
repayment. Such capacity is more susceptible to adverse changes in
business, economic, or financial conditions than for obligations in higher
categories.
B2--Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial
conditions.
C1--Obligations for which there is an inadequate capacity to
ensure timely repayment.
D1--Obligations which have a high risk of default or which are
currently in default.
49
<PAGE>
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less. They
include the following:
1. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales, use
and business taxes, and are payable from these specific future taxes.
2. Revenue Anticipation Notes are issued in expectation of
receipt of other types of revenues, such as Federal revenues available
under the Federal Revenue Sharing Programs.
3. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the Notes.
4. Construction Loan Notes are sold to provide construction
financing. After successful completion and acceptance, many projects
receive permanent financing through the Federal Housing Administration
under the Federal National Mortgage Association ("Fannie Mae") or the
Government National Mortgage Association ("Ginnie Mae").
5. Tax-Exempt Commercial Paper is a short-term obligation
with a stated maturity of 365 days or less. It is issued by agencies of
state and local governments to finance seasonal working capital needs or
as short-term financing in anticipation of longer term financing.
^ Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have three
principal classifications:
1. General Obligation Bonds are issued by such entities as
states, counties, cities, towns, and regional districts. The proceeds of
these obligations are used to fund a wide range of public projects,
including construction or improvement of schools, highways and roads, and
water and sewer systems. The basic security behind General Obligation
Bonds is the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. The taxes that can be levied
for the payment of debt service may be limited or unlimited as to the rate
or amount of special assessments.
2. Revenue Bonds generally are secured by the net revenues
derived from a particular facility, group of facilities, or, in some
cases, the proceeds of a special excise or other specific revenue source.
Revenue Bonds are issued to finance a wide variety of capital projects
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and
hospitals. Many of these Bonds provide additional security in the form of
a debt service reserve fund to be used to make principal and interest
50
<PAGE>
payments. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further security in the form of
a state's ability (without obligation) to make up deficiencies in the debt
service reserve fund.
3. Industrial Development Bonds are considered municipal
bonds if the interest paid thereon is exempt from Federal income tax and
are issued by or on behalf of public authorities to raise money to finance
various privately operated facilities for business and manufacturing,
housing, health, sports, and pollution control. These Bonds are also used
to finance public facilities such as airports, mass transit systems,
ports, and parking. The payment of the principal and interest on such
Bonds is dependent solely on the ability of the facility's user to meet
its financial obligations and the pledge, if any, of real and personal
property as security for such payment.
4. Other Municipal Obligations incurred for a variety of
financing purposes, including: Municipal Leases, which may take the form
of a lease or an installment purchase or conditional sale contract, are
issued by state and local governments and authorities to acquire a wide
variety of equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general
obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased
asset to pass eventually to the government issuer) have evolved as a means
for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt.
The debt-issuance limitations of many state constitutions and statutes are
deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the
governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
December ^ 19, 1994
THE DREYFUS/LAUREL FUNDS TRUST
^ 200 Park Avenue
^ New York, NY 10166
For information call l-800-548-2868
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in and should be read in conjunction
with each of the following prospectuses of The Dreyfus/Laurel Funds Trust
(formerly the Laurel Funds Trust) (the "Trust") dated December ^ 19, 1994
(referred to herein singularly as the "Prospectus" and jointly as the (
"Prospectuses"): the prospectus describing the Class R and the Investor
Class shares of the Dreyfus Core Value (formerly the Laurel Capital
Appreciation Fund) ("Core Value"), the prospectus describing the
Institutional Shares of the Core Value Fund and the prospectus describing
the Class R shares and Investor Shares of the Dreyfus Special Growth Fund
(formerly the Laurel Special Growth Fund) ("Special Growth"). Each
Prospectus may be obtained by writing or calling the Trust at the address
or telephone number set forth above.
This Statement of Additional Information, though not in itself a
Prospectus, is incorporated by reference into the Prospectuses in its
entirety. As used in this SAI, the term "Fund" refers to each of the Core
Value and Special Growth Funds. The Investor Shares, Class R shares and
Institutional Shares discussed in the SAI are also referred to as
"Classes" of shares of the Funds. Each Fund's Annual Report for the
fiscal year ended December 31, 1993 ^ and each Fund's Semi-Annual Report
for the six months ended June 30, 1994 (unaudited), accompany this
Statement of Additional Information, and each Fund's financial statements
and related notes contained therein are incorporated by reference into
this SAI.
DC-172257.2/Comparite of 171500 (old) vs. 168412 (new)
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT MANAGEMENT AND OTHER SERVICES . . . . . . . . . . . . . . 6
INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . . . ^ 8
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . ^ 30
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . ^ 32
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . ^ 32
PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . ^ 33
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ^ 39
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . ^ 45
^ CONTROLLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 47
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 47
CUSTODIAN AND FUND ACCOUNTANT . . . . . . . . . . . . . . . . . . . ^ 47
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . ^ 47
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . ^ 48
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . ^ 48
APPENDIX -- INFORMATION ABOUT SECURITIES RATINGS . . . . . . . . . ^ 49
- 2 -
<PAGE>
GENERAL INFORMATION
The Trust's name was changed from the Laurel Funds Trust to the
Dreyfus/Laurel Funds Trust effective October 17, 1994. The Laurel Capital
Appreciation Fund was redesignated Dreyfus Core Value Fund and Laurel
Special Growth Fund was redesignated Dreyfus Special Growth Fund effective
October 17, 1994.
MANAGEMENT OF THE TRUST
The organizations that provide services to the Trust, namely The
Dreyfus Corporation ("Dreyfus") as investment ^ manager (the "Manager");
Mellon Bank, N.A. ("Mellon Bank") as custodian and fund accountant;
Premier Mutual Fund Services, Inc. ("Premier") as the distributor and
sub-investment ^ administrator ("Sub-Administrator"); and The Shareholder
Services Group, Inc. ("TSSG"), a subsidiary of First Data Corporation, as
transfer agent and the functions they perform for the Trust are discussed
in the Prospectus and in this Statement of Additional Information.
Trustees and Officers of the Trust
The Trustees and executive officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. Each Trustee
who is an "interested person" of the Trust as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") is indicated by an
asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Funds Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and as Director of The Dreyfus/Laurel Funds, Inc.
(collectively "The Dreyfus/Laurel ^ Family of Funds").
o + RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa; Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Trust; Director and Chairman,
Massachusetts Business Development Corp.; Director, Boston Mutual
Insurance Company; Director and Vice Chairman of the Board, Home
Owners Federal Savings and Loan (prior to May 1990). Address:
Massachusetts Business Development Corp., One Liberty Square,
Boston, Massachusetts 02109.
o + JAMES M. FITZGIBBONS. Trustee of the Trust; President and
Director, Amoskeag Company; Chairman, Howes Leather Company,
Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
- 3 -
<PAGE>
o * J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith,
Shaw & McClay (law firm). Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon
Carbon Corporation; Director, National Picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993;
Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Trustee of the Trust; Director, The Boston
Company, Inc. ^ and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. and Florida Hospitality
Group; Managing Partner, Himmel/MKDG, Franklin Federal Partners,
Reston Town Center Associates and Grill 23 & Bar. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO,
LDG Management Company Inc.; CEO, LDG Reinsurance Underwriters,
SRRF Management Inc. and Medical Reinsurance Underwriters Inc.
Address: 401 Edgewater Place, Wakefield, Massachusetts 01880.
o + ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and
Professor of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development
Project Manager and Vice President, The Gunwyn Company. Address:
25 Braddock Park, Boston, Massachusetts 02116-5816.
# MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
- 4 -
<PAGE>
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds
Trust and The Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. (since 1992); Treasurer, Funds
Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior
Vice President and Director of Financial Administration, The
Boston Company Advisors, Inc. (December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, Premier Mutual Fund
Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994);Vice President and Associate General Counsel,
Premier Mutual Fund Services, Inc. (Since August 1994); Vice
President and Associate General Counsel, Funds Distributor, Inc.
(since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166
RICHARD W. HEALEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
March 1994); Senior Vice President, Funds Distributor, Inc.
(since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior
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Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994); Associate,
Ropes & Gray (August 1990 to February 1992); Associate, Sidley &
Austin (June 1989 to August 1990). Address: One Exchange Place,
Boston, Massachusetts 02109.
______________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment
companies advised by The Dreyfus ^ Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of ^ December 1, 1994.
No officer or employee of TSSG or Premier (or of any parent or
subsidiary thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent or subsidiary thereof) serves as an officer
or Trustee of the Trust. The ^ Dreyfus Family of Funds pays each
Trustee/Director who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Fund
Family)^. In addition, the Dreyfus/Laurel Fund Family pays each
Trustee/Director $ 1,000 per joint Dreyfus/Laurel Fund Family meeting
attended, plus $750 per joint Dreyfus/Laurel Fund Family Audit Committee
meeting attended, and reimburses each Trustee/Director for travel and
out-of-pocket expenses. For the fiscal year ended December 31, 1993 ^ the
fees for meetings and expenses totaled $79,598.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Dreyfus Corporation ("Dreyfus") serves as the investment
manager (the " ^ Manager") for the Funds pursuant to a written agreement
with ^ the Trust dated April 4, 1994 ("Management Agreement"), transferred
from Mellon ^ Bank ^ to Dreyfus effective October 17, 1994. Pursuant to
the Investment Management Agreement, Dreyfus provides, or arranges for one
or more third parties to provide investment advisory, administrative,
custody, fund accounting and transfer agency service to each Fund. As
investment manager, Dreyfus manages each Fund by making investment
decisions based on such Fund's investment ^ objective, policies and
restrictions. For these services, each Fund pays a fee to Dreyfus at the
rates stated in the Prospectus.
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The Management Agreement will continue from year to year provided
that a majority of the Trustees who are not interested persons of the
Trust and either a majority of all Trustees or a majority of the
shareholders of the Fund approve the continuance. The Trust may terminate
the Agreement, without prior notice to the Manager, upon the vote of a
majority of the Board of Trustees or upon the vote of a majority of the
outstanding voting securities of the Fund on 60 days' written notice to
the Manager. The Manager may terminate the Management Agreement upon
written notice to the Trust. The Management Agreement will terminate
immediately and automatically upon its assignment.
The Investment Management Agreement provides for a "unitary fee."
Under the unitary fee structure, Dreyfus pays all expenses of each Fund
except: (i) brokerage commissions, (ii) taxes, interest, fees and expenses
of the non-interested Trustees (including counsel expenses), and
extraordinary expenses (which are expected to be minimal), and (iii) the
Rule 12b-1 fees described in this Statement of Additional Information.
Under the unitary fee, Dreyfus provides investment advisory services and
provides or arranges for the provision by one or more parties, of
sub-investment advisory, administrative, custody, fund accounting and
transfer agency services to the Funds. For the provision of such services
directly, or through one or more third parties, Dreyfus receives as full
compensation for all services and facilities provided by it, a fee
computed daily and paid monthly at the annual rate set forth in each
Fund's prospectus, applied to the average daily net assets of a Fund's
investment portfolio, less the accrued fees and expenses (including
counsel fees) of the non-interested Trustees of the Trust.
The following table shows the fees paid by each Fund ^(and any
fee waiver during the 1991, 1992 and 1993 fiscal years).
1993 1992 1991
Fee Fee Fee
Core Value Fund 3,280,789(1) 3,297,792 3,706,858
Special Growth Fund 941,416(2) 491,146 388,040
_________________________
(1) $31,482 was reimbursed by The Boston Company Advisors, Inc.
(2) $37,583 and $21,136 was voluntarily waived and reimbursed
respectively by The Boston Company Advisors, Inc. (the investment
manager prior to April 4, 1994).
^
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
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securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in the
business. The activities of Mellon Bank in informing its customers of,
and performing, investment and redemption services in connection with a
Fund, and in providing services to a Fund as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may raise
issues under these provisions. Mellon Bank has been advised by counsel
that its activities contemplated under this arrangement are consistent
with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or a Fund. If Mellon Bank or Dreyfus
were prohibited from serving a Fund in any of its present capacities the
Board ^ of Trustees would seek an alternative provider(s) of such
services.
INVESTMENT POLICIES
The Prospectuses discuss the investment objectives of each Fund
and the policies it employs to achieve those objectives. The following
discussion supplements the description of the Funds' investment policies
in the Prospectuses.
Foreign Securities
The Core Value and Special Growth Funds may invest in securities
of foreign issuers, including investments in obligations of foreign
branches of domestic banks and domestic branches of foreign banks.
Investment in foreign securities presents certain risks, including those
resulting from fluctuations in currency exchange rates, reevaluation of
currencies, future political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental
laws or restrictions, reduced availability of public information
concerning issuers and the fact that foreign issuers are not generally
subject to uniform accounting, auditing and financial reporting standards
or to other regulatory practices and requirements comparable to those
applicable to domestic issuers. Moreover, securities of many foreign
issuers may be less liquid and their prices more volatile than those of
securities of comparable domestic issuers. In addition, with respect to
certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or
other assets of the Fund including withholding of dividends.
Currency Transactions
The Core Value and Special Growth Funds may engage in currency
exchange transactions as a means of managing certain risks associated with
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purchasing and selling securities denominated in foreign securities.
Generally, the currency exchange transactions of the Funds will be
conducted on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the currency exchange market. This rate
under normal market conditions differs from the prevailing exchange rate
in an amount generally less than 0.1% due to the cost of converting from
one currency to another. The Funds also may deal in forward exchanges
between currencies of the different countries in which it invests as a
hedge against possible variations in the exchange rates between these
currencies. This is accomplished through contractual agreements to
purchase or sell a specified currency at a specified future date and price
set at the time of the contract.
Dealings in forward currency exchanges by each of the Funds are
limited to hedging involving either specific transactions or aggregate
portfolio positions. Transaction hedging is the purchase or sale of
foreign currency with respect to specific receivables or payables of a
Fund generally arising in connection with the purchase or sale of its
portfolio securities. Position hedging is the sale of foreign currency
with respect to portfolio security positions denominated or quoted in such
currency. The Funds will not speculate in forward currency exchanges. A
Fund may position hedge with respect to a particular currency to an extent
greater than the aggregate market value (at the time of making such sale)
of the securities held in its portfolio denominated or quoted in or
currently convertible into that particular currency. If a Fund enters into
a position hedging transaction, its custodian or sub-custodian bank will
place cash or readily marketable securities in a segregated account of the
Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of such forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to such
contracts. A Fund will not attempt to hedge all of its foreign portfolio
positions and will enter into such transactions only to the extent, if
any, deemed appropriate by Dreyfus. The Funds will not enter into a
position hedging commitment if, as a result thereof, the Fund would have
more than 15% of the value of its total assets committed to such
contracts. The Funds will not enter into a forward contract with a term of
more than one year.
It may not be possible for the Funds to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to a Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
At or before the maturity of a forward contract, a Fund may
either sell a portfolio security and make delivery of the currency, or it
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may retain the security and offset its contractual obligation to deliver
the currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If a Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If
a Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the currency. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The use of forward currency contracts by each Fund will be
limited to the transactions described above. The Fund is not required to
enter into such transactions with regard to its portfolio securities,
regardless of currency denomination, and will not do so unless deemed
appropriate by Dreyfus. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some future
point in time. In addition, although forward currency contracts tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they also tend to limit any potential gain which might result
should the value of the currency increase.
Because the Funds invest in foreign securities, a Fund will hold
from time to time various foreign currencies pending its investment in
foreign securities or conversion into U.S. dollars. Although a Fund values
its assets daily in terms of U.S. dollars, it does not convert its
holdings of foreign currencies into U.S. dollars on a daily basis. When
converting foreign currencies to U.S. dollars, the Fund may incur costs of
currency conversion. A foreign exchange dealer does not charge a fee for
conversion, but it does realize a profit based on the difference, which is
known as the spread, between the prices at which the dealer is buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
U.S. Government Securities
The Core Value and Special Growth Funds may invest in U.S.
Government Securities that are direct obligations of the U.S. Treasury, or
that are issued by agencies and instrumentalities of the U.S. Government
and supported by the full faith and credit of the U.S. Government. These
include Treasury notes, bills and bonds and securities issued by the
Government National Mortgage Association ("GNMA"), the Federal Housing
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Administration, the Department of Housing and Urban Development, the
Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration.
The Funds may also invest in U.S. Government Securities that are
not supported by the full faith and credit of the U.S. Government. These
include securities issued by the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Home Loan Banks, Tennessee Valley Authority, Student Loan Marketing
Association and District of Columbia Armory Board. Because the U.S.
Government is not obligated by law to provide support to an
instrumentality it sponsors, these Funds will invest in obligations issued
by such an instrumentality only when Dreyfus determines that the credit
risk with respect to the instrumentality does not make its securities
unsuitable for investment by such Funds.
GNMA certificates represent ownership interests in a pool of
mortgages issued by a mortgage banker or other mortgagee. Distributions on
GNMA certificates include principal and interest components. GNMA, a
corporate instrumentality of the U.S. Department of Housing and Urban
Development, guarantees timely payment of principal and interest on GNMA
certificates; this guarantee is deemed a general obligation of the United
States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans
Administration. The mortgages have maximum maturities of 40 years.
Government statistics indicate, however, that the average life of the
underlying mortgages is shorter, due to scheduled amortization and
unscheduled prepayments (attributable to voluntary prepayments or
foreclosures). Since these statistics indicate that the average life of
the mortgages backing most GNMA certificates (which are single-family
mortgages with 25- to 30-year maturities) is approximately 12 years,
yields on pools of single-family mortgages are often quoted on a 12-year
prepayment assumption. (The actual maturity of specific GNMA certificates
will vary based on the prepayment experience of the underlying mortgage
pool.) Based on a 12-year prepayment assumption, GNMA certificates have
had historical yields at least 3/4 of 1% greater than Treasury bonds and
U.S. Government agency bonds and 1/4 of 1% greater than the highest grade
corporate bonds. Actual yield comparisons will vary with the prepayment
experience of specific GNMA certificates.
GNMA issues pass-through securities backed by adjustable-rate
mortgages. The securities will bear interest at a rate which will be
adjusted annually. The prepayment experience of the mortgages underlying
these securities may vary from that for fixed-rate mortgages.
FHLMC is a corporate instrumentality of the U.S. Government and
was created by Congress in 1970 for the purpose of increasing the
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availability of mortgage credit for residential housing.^ FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
FNMA is a Government sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the Secretary
of Housing and Urban Development. FNMA purchases residential mortgages
from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal
and interest by FNMA.
Bank Obligations
As stated in the Prospectuses, each Fund is permitted to invest
in high-quality, short-term money market instruments. The Funds may invest
temporarily, and without limitation in such instruments when, in Dreyfus's
opinion, a "defensive" investment posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable
obligations of commercial banks; time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for specified periods of time
at stated interest rates; and bankers' acceptances are time drafts drawn
on commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may be
purchased by the Trust are insured by the FDIC and are subject to Federal
examination and to a substantial body of Federal law and regulation. As a
result of governmental regulations, domestic branches of foreign banks
are, among other things, generally required to maintain specified levels
of reserves, and are subject to other supervision and regulations designed
to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs
and TDs, may be general obligations of the parent bank in addition to the
issuing branch or may be limited by the terms of a specific obligation and
by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
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Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
Low-Rated Securities
The Core Value Fund may invest in low-rated and comparable
unrated securities. The effect a recession might have on such securities
is not known. Any such recession, however, could severely disrupt the
market for such securities and adversely affect the value of such
securities. Any such economic downturn also could adversely affect the
ability of the issuers of such securities to repay principal and pay
interest thereon.
The ratings of the various nationally recognized statistical
rating organizations ("NRSROs") such as Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's ^ Ratings Group ("S&P") generally
represent the opinions of those organizations as to the quality of the
securities that they rate. Such ratings, however, are relative and
subjective, are not absolute standards of quality and do not evaluate the
market risk of the securities. Although Dreyfus uses these ratings as a
criterion for the selection of securities for the Fund, Dreyfus also
relies on its independent analysis to evaluate potential investments for
the Fund. The Fund's achievement of their investment objective may be more
dependent on Dreyfus's credit analysis of low-rated and unrated securities
than would be the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. In addition, it is possible that an
NRSRO might not timely change its ratings of a particular issue to reflect
subsequent events. None of these events will require the sale of the
securities by the Fund, although Dreyfus will consider these events in
determining whether the Fund should continue to hold the securities. To
the extent that the ratings given by an NRSRO for securities may change as
a result of changes in the rating systems or due to a corporate
reorganization of the NRSRO, the Fund will attempt to use comparable
ratings as standards for its investments in accordance with the investment
objectives and policies of the Fund.
The Core Value Fund intends to invest in these securities when
their issuers will be close to, or already have entered, reorganization
proceedings. As a result, it is expected that at or shortly after the time
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of acquisition by Core Value Fund, these securities will have ceased to
meet their interest payment obligations, and accordingly would trade in
much the same manner as an equity security. Consequently, the Fund intends
to make such investments on the basis of potential appreciation in the
price of these securities, rather than any expectation of realizing
income.
Lending of Portfolio Securities
As stated in the Prospectuses, each Fund may lend securities from
its portfolio to brokers, dealers and other financial organizations. Such
loans, if and when made, may not exceed 33 1/3% of such Fund's total
assets, taken at value. The Funds may not lend portfolio securities to
their affiliates without specific authorization from the SEC. Loans of
portfolio securities by the Funds will be collateralized by cash, letters
of credit or securities issued or guaranteed by the U.S. Government or its
agencies which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. From time
to time, the Funds may return a part of the interest earned from the
investment of collateral received for securities loaned to the borrower
and/or a third party, which is unaffiliated with the Funds and which is
acting as a "finder."
By lending portfolio securities, a Fund can increase its income
by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when
Government securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees
must terminate the loan and regain the right to vote the securities. The
risks in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
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Options on Securities
The Core Value and Special Growth Funds have the ability to write
covered put and call options on their portfolio securities as part of
their investment strategies.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a
greater return than would be realized on the security alone. In return for
a premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase transaction
can be effected). Nevertheless, the call writer retains the risk of a
decline in the price of the underlying security. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. The writer of a covered put option accepts the risk of a decline
in the price of the underlying security. The size of the premiums that a
Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase
their option-writing activities.
The Funds with option-writing authority will write only covered
options. Accordingly, whenever a Fund writes a call option it will
continue to own or have the present right to acquire the underlying
security for as long as it remains obligated as the writer of the option.
To support its obligation to purchase the underlying security if a put
option is exercised, whenever a Fund writes a put option it will either
(a) deposit with the Fund's custodian in a segregated account, cash, U.S.
Government Securities or other high grade debt obligations having a value
equal to or greater than the exercise price of the underlying securities
or (b) continue to own an equivalent number of puts of the same "series"
(that is, puts on the same underlying security having the same exercise
prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying security) with exercise prices greater than those that it has
written (or, if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, it will deposit the difference
with the Fund's custodian in a segregated account).
Options written by the Funds will normally have expiration dates
between one and nine months from the date written. The exercise price of
the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case of
call options, these exercise prices are referred to as "in-the-money,"
"at-the-money" and "out-of-the-money," respectively.
A Fund may write (a) in-the-money call options when Dreyfus
expects that the price of the underlying security will remain flat or
decline moderately during the option period, (b) at-the-money call options
when Dreyfus expects that the price of the underlying security will remain
flat or advance moderately during the option period and (c)
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out-of-the-money call options when Dreyfus expects that the premiums
received from writing the call option, plus the appreciation in market
price of the underlying security up to the exercise price, will be greater
than the appreciation in the price of the underlying security alone. In
any of the preceding situations, if the market price of the underlying
security declines and the security is sold at this lower price, the amount
of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the obligation of a Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring it to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. A Fund can no longer effect a closing purchase transaction
with respect to an option once it has been assigned an exercise notice. To
secure its obligation to deliver the underlying security when it writes a
call option, or to pay for the underlying security when it writes a put
option, a Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and the securities
exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Funds expect to write only call
or put options issued by the Clearing Corporation. The Core Value and
Special Growth Funds expect to write options only on national securities
exchanges.
The Funds may realize a profit or loss upon entering into a
closing transaction. In cases in which a Fund has written an option, it
will realize a profit if the cost of the closing purchase transaction is
less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Funds generally will write only those options for
which Dreyfus believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities
exchange will exist for any particular option or at any particular time,
and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, have at times rendered certain of
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the facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered
call option writer, a Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the Funds and other clients of Dreyfus and
certain of their affiliates may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. At
the date of this Statement of Additional Information, the position and
exercise limits for common stocks were 3,000, 5,500 or 8,000 options per
stock (i.e., options representing 300,000, 550,000 or 800,000 shares),
depending on various factors relating to the underlying security. Dollar
amount limits apply to U.S. Government Securities. These limits may
restrict the number of options a Fund will be able to purchase on a
particular security.
In the case of options written by a Fund that are deemed covered
by virtue of the Fund's holding convertible or exchangeable preferred
stock or debt securities, the time required to convert or exchange and
obtain physical delivery of the underlying common stocks with respect to
which the Fund has written options may exceed the time within which the
Fund must make delivery in accordance with an exercise notice. In these
instances, a Fund may purchase or temporarily borrow the underlying
securities for purposes of physical delivery. By so doing, the Fund will
not bear any market risk, since the Fund will have the absolute right to
receive from the issuer of the underlying security an equal number of
shares to replace the borrowed stock, but the Fund may incur additional
transaction costs or interest expenses in connection with any such
purchase or borrowing.
Although Dreyfus will attempt to take appropriate measures to
minimize the risks relating to a Fund's writing of put and call options,
there can be no assurance that a Fund will succeed in its option-writing
program.
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<PAGE>
Stock Index Options
The Core Value and Special Growth Funds have the authority to
purchase and write put and call options on stock indexes listed on
national securities exchanges to hedge their portfolios.
A stock index fluctuates with changes in the market values of the
stocks included in the index. Some stock index options are based on a
broad market index such as the ^ New York Stock Exchange Composite Index,
or on a narrower market index such as the Standard & Poor's 100. Indexes
are also based on an industry or market segment such as the AMEX Oil and
Gas Index or the Computer and Business Equipment Index.
Options on stock indexes are similar to options on stock except
that (a) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is
based being greater than, in the case of a call, or less than, in the case
of a put, the exercise price of the option. The amount of cash received
will be equal to such difference between the closing price of the index
and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may
offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option expire
unexercised. The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent to which price
movements in the portion of a securities portfolio being hedged correlate
with price movements of the stock index selected. Because the value of an
index option depends upon movements in the level of the index rather than
the price of a particular stock, whether a Fund will realize a gain or
loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or,
in the case of certain indexes, in an industry or market segment, rather
than movements in the price of a particular stock. Thus, successful use by
a Fund of options on stock indexes will be subject to Dreyfus's ability to
predict correctly movements in the direction of the stock market generally
or of a particular industry. This requires different skills and techniques
than predicting changes in the price of individual stocks, and there can
be no assurance that a Fund will be successful in its use of stock index
options.
A Fund will engage in stock index options transactions only when
determined by Dreyfus to be consistent with the Fund's efforts to control
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<PAGE>
risk. There can be no assurance that such judgment will be accurate or
that the use of these portfolio strategies will be successful. When a Fund
writes an option on a stock index, the Fund will establish a segregated
account with the Fund's custodian in an amount equal to the market value
of the option and will maintain the account while the option is open.
Futures Activities
The Special Growth Fund may invest in futures contracts and
options on futures contracts that are traded on a United States exchange
or board of trade.
These investments may be made by the Special Growth Fund solely
for the purpose of hedging against changes in the value of its portfolio
securities, or of securities in which the Fund intends to invest due to
anticipated changes in interest rates and market conditions, and not for
purposes of speculation. The Fund will not purchase or sell futures
contracts or purchase options on futures if, immediately thereafter, more
than 33 1/3% of its net assets would be hedged. In addition, the Fund will
not enter into futures and options contracts for which aggregate initial
margin deposits and premiums exceed 5% of the fair market value of its
assets, after taking into account unrealized profits and unrealized losses
on futures contracts into which it has entered. See "Taxes" below.
Futures Contracts. The purpose of the acquisition or sale of a
futures contract by the Special Growth Fund is to protect the Fund from
fluctuations in values in rates on securities without actually buying or
selling the securities. Of course, since the value of portfolio securities
will far exceed the value of the futures contracts sold by the Fund, an
increase in the value of the futures contracts could only mitigate--but
not totally offset--the decline in the value of the portfolio.
No consideration is paid or received by the Special Growth Fund
upon the purchase or sale of a futures contract. Initially, the Fund will
be required to deposit with the broker an amount of cash or cash
equivalents equal to approximately 1% to 10% of the contract amount (this
amount is subject to change by the board of trade on which the contract is
traded and members of such board of trade may charge a higher amount).
This amount is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract which is returned
to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker, will be made daily as the
price of securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." In addition, when the Fund purchases
a futures contract, it must deposit into a segregated account with its
custodian an amount of cash or cash equivalents equal to the total market
value of such futures contract, less the amount of initial margin for the
contract. At any time prior to the expiration of a futures contract, the
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<PAGE>
Fund may elect to close the position by taking an opposite position, which
will operate to terminate the Fund's existing position in the contract.
There are several risks in connection with the use of futures
contracts as a hedging device. Successful use of futures contracts by a
Fund is subject to the ability of Dreyfus to predict correctly movements
in the direction of interest rates. These predictions involve skills and
techniques that may be different from those involved in the management of
the Fund. In addition, there can be no assurance that there will be a
correlation between movements in the price of the underlying securities
and movements in the price of the securities which are the subject of the
hedge. A decision of whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge may be unsuccessful
to some degree because of market behavior or unexpected trends in interest
rates.
Positions in futures contracts may be closed out only on the
exchange on which they were entered into (or through a linked exchange)
and no secondary market exists for those contracts. In addition, although
the Special Growth Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, there is no assurance
that a liquid market will exist for the contracts at any particular time.
Most futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures trades to
substantial losses. In such event, and in the event of adverse price
movements, the Fund would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. As described above, however, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
If the Special Growth Fund has hedged against the possibility of
an increase in interest rates adversely affecting the value of securities
held in its portfolio and rates decrease instead, the Fund will lose part
or all of the benefit of the increased value of securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund had insufficient cash, it may
have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. These sales of securities
may, but will not necessarily, be at increased prices which reflect the
decline in interest rates.
Options on Financial Futures Contracts. Financial futures ^
contracts provide for the future sale by one party and the purchase by the
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<PAGE>
other party of a certain amount of a specific financial instrument at a
specified price, date, time and place.
The Special Growth Fund may purchase and write put and call
options on futures contracts that are traded on a United States exchange
or board of trade as a hedge against changes in interest rates or in the
value of portfolio securities, and may enter into closing transactions
with respect to such options to terminate existing positions. There is no
guarantee that such closing transactions can be effected.
An option on a futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the
option. Options on futures contracts are currently available on the
Chicago Board of Trade with respect to Treasury bonds, Treasury notes,
Treasury bills and the Standard & Poor's 500 Composite Stock Price Index.
The potential loss related to the purchase of an option on a futures
contract is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale,
there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Fund.
In addition to the risks that apply to all options transactions,
there are several risks relating to options on futures contracts. These
risks include the lack of assurance of a perfect correlation between price
movements in the options on futures, on the one hand, and price movements
in the portfolio securities that are the subject of the hedge, on the
other hand. The ability to establish and close out positions on such
options will be subject to the existence of a liquid market, and there can
be no assurance that such a market will be maintained or that closing
transactions will be effected. In addition, there are risks specific to
writing (as compared to purchasing) such options. While a Fund's risk of
loss with respect to purchased put and call options on futures contracts
is limited to the premium paid for the option (plus transactions costs),
when the Fund writes such an option it is obligated to a broker for the
payment of initial and variation margin. In addition, the purchase of put
or call options will be based upon predictions as to anticipated interest
rate or price trends by Dreyfus which could prove to be incorrect. When a
Fund writes a call option or a put option, it will be required to deposit
initial margin and variation margin pursuant to brokers' requirements
similar to those applicable to interest rate futures contracts. In
addition, net option premiums received for writing options will be
included as initial margin deposits.
Portfolio Turnover
While the Core Value and Special Growth Funds do not intend to
trade in securities for short-term profits, these Funds will not consider
portfolio turnover rate a limiting factor in making investment decisions.
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<PAGE>
While it is not possible to predict the rate of frequency of portfolio
transactions (i.e., portfolio turnover rate) with any certainty, at the
present time it is anticipated that the portfolio turnover rates for the
Core Value Fund will generally not exceed 100%, while that of the Special
Growth Fund is likely to exceed 100%. Higher portfolio turnover rates can
result in corresponding increases in brokerage commissions. In addition,
to the extent a Fund realizes short-term gains as a result of more
portfolio transactions, such gains would be taxable to shareholders at
ordinary income tax rates.
A Fund may experience high portfolio turnover due to frequent
redemptions and exchanges. In addition to the results described above, a
high portfolio turnover rate will increase the risk that the Fund may fail
to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. Failure to so qualify would
cause the Fund's net investment income and capital gain net income to
become subject to Federal income tax at corporate rates. For a discussion
of the requirements for qualification and regulated investment companies
under Subchapter M and the effect of high portfolio turnover on such
qualification, see "Taxes."
The portfolio turnover rates for the 1992 and 1993 fiscal years
for the Core Value Fund were 66% and 75%, respectively and for the Special
Growth Fund, 112%, and 94% respectively. The significant differences in
the portfolio turnover rates for the Funds were due to a change in
portfolio managers that occurred during the 1993 fiscal year or a change
in the investment strategy for the Fund.
Investment Restrictions
The following are fundamental investment restrictions of each
Fund. Each Fund of the Trust may not:
1. Purchase any securities which would cause 25% or more of the
value of a Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities and state or
municipal governments and their political subdivisions are not
considered members of any industry. In addition, this limitation
does not apply to investments of domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) a Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowing, and (b) a Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
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<PAGE>
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such
loans. For purposes of this restriction debt instruments and
repurchase agreements shall not be treated as loans.
4. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition
of such securities in accordance with the Fund's investment
program may be deemed an underwriting.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent a Fund from investing in securities or other instruments
backed by real estate, including mortgage loans, or securities of
companies that engage in the real estate business or invest or
deal in real estate or interests therein).
6. Purchase or sell commodities except that each Fund may enter into
futures contracts and related options, forward currency contracts
and other similar instruments.
7. Purchase with respect to 75% of a Fund's total assets securities
of any issuer (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if, as a
result, (a) more than 5% of a Fund's total assets would be
invested in the securities of that issuer, or (b) a Fund would
hold more than 10% of the outstanding voting securities of that
issuer.
8. A Fund of the Trust may, notwithstanding any other fundamental
investment policy or restriction, invest all of its investable
assets in securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies, and restrictions as the Fund.
The following are non-fundamental investment restrictions of each
Fund of the Trust:
1. The Trust will not purchase or retain the securities of any
issuer if the officers, directors or Trustees of the Trust, its
advisers, or managers owning beneficially more than one half of
one percent of the securities of each issuer together own
beneficially more than five percent of such securities.
2. No Fund will purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof the value of such Fund's investment
in securities would exceed 5% of such Fund's total assets. For
purposes of this limitation, sponsors, general partners,
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<PAGE>
guarantors and originators of underlying assets may be treated as
the issuer of a security.
3. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets except that: (a) this restriction shall not
apply to standby commitments, and (b) this restriction shall not
apply to a Fund's transactions in futures contracts and related
options.
4. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the
Fund's assets would be invested in warrants that are not listed
on the New York Stock Exchange ("NYSE") or American Stock
Exchange (for purposes of this ^ limitation, warrants acquired
by a Fund in units or attached to securities will be deemed to
have no value).
5. No Fund shall invest more than 15% of the value of their net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days, and other securities
which are not readily marketable. For purposes of this
restriction, illiquid securities shall not include commercial
paper issued pursuant to Section 4(2) of the Securities Act of
1933 and securities which may be resold under Rule 144A under the
Securities Act of 1933, provided that the Board of Trustees, or
its delegate, determines that such securities are liquid, based
upon the trading markets for the specific security.
6. No Fund may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise
permitted by the 1940 Act.
7. No Fund will purchase oil, gas or mineral leases (a Fund may,
however, purchase and sell the securities of companies engaged in
the exploration, development, production, refining, transporting
and marketing of oil, gas or minerals).
8. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.
9. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
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<PAGE>
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
10. No Fund shall purchase any security while borrowing representing
more than 5% of the Fund's total assets are outstanding.
If a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in such percentage resulting from
a change in the values of assets will not constitute a violation of such
restriction, except as otherwise required by the 1940 Act.
Each of the foregoing restrictions applies to each Fund unless
otherwise indicated. Under the 1940 Act, a fundamental policy may not be
changed without the vote of a majority of the outstanding voting
securities of each Fund, as defined in the 1940 Act. "Majority" means the
lesser of (1) 67% or more of the shares present at a Trust meeting, if the
holders of more than 50% of the outstanding shares of ^ such Fund are
present or represented by proxy, or (2) more than 50% of the outstanding
shares of the ^ Fund. Non-fundamental investments restrictions may be
changed by vote of a majority of the Trust's Board of Trustees at any
time.
In order to permit the sale of the Funds' shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above. Accordingly, pursuant to such
commitments, the Funds have undertaken not to invest in oil, gas or other
mineral leases. Should the Trust determine that any such commitment is no
longer in the best interests of the Trust and its shareholders, it will
revoke the commitment by terminating sales of its shares in the state
involved. In addition, the Funds have undertaken not to invest in warrants
(other than warrants acquired by the Fund as part of a unit or attached to
securities at the time of purchase) if, as a result, the investments
(valued at the lower of cost or market) would exceed 5% of the value of
the Fund's net assets or if, as a result, more than 2% of the Fund's net
assets would be invested in warrants not listed on AMEX or NYSE. Further,
the Funds have given a representation that investments will not be made in
real estate limited partnerships. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust and its
shareholders, it will revoke the commitment by terminating sales of its
shares in the state involved.
Portfolio Transactions
Decisions to buy and sell securities for the Funds are made by
Dreyfus subject to the overall supervision of the Trustees of the Trust.
Portfolio transactions for the Funds are effected by or under the
direction of Dreyfus. The same personnel are also in charge of portfolio
transactions for other accounts of other subsidiaries and affiliates of
Dreyfus.
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<PAGE>
Although investment decisions for the Funds are made
independently from those of the other accounts managed by Dreyfus,
investments of the type a Fund may make may also be made by those other
accounts. When a Fund and one or more other accounts managed by Dreyfus
are prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by Dreyfus to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by a Fund or the
size of the position obtained or disposed of by a Fund. In other cases,
however, it is believed that coordination and the ability to participate
in volume transactions will be to the benefit of the Funds.
Transactions on stock exchanges on behalf of the Funds involve
the payment of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, Dreyfus seeks the most favorable execution and price available.
The Investment Management ^ Agreement provides that, in assessing the best
overall terms available for any transaction, Dreyfus shall consider
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis. In addition, the Investment ^ Management Agreement authorizes
Dreyfus, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Trust and/or other accounts over which Dreyfus or an affiliate exercises
investment discretion.
The Trustees will periodically review the brokerage commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
inuring to each Fund. It is possible that certain of the services received
will primarily benefit one or more other accounts for which investment
discretion is exercised, or a Fund other than that for which the
transaction was executed. Conversely, the Trust or any given Fund may be
the primary beneficiary of the service received as a result of portfolio
transactions effected for such other accounts or Funds. The fees of
Dreyfus under the Investment Management Agreement are not reduced by
reason of receipt of such brokerage and research services.
The Trustees of the Trust have determined that portfolio
transactions for the Funds may be executed through affiliated broker
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<PAGE>
dealers if, in the judgment of Dreyfus, the use of an affiliated broker is
likely to result in prices and execution that are fair and reasonable and
are at least as favorable as those of other qualified broker-dealers and
if, in such transactions, the affiliated broker-dealer charges the Funds a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. Affiliated broker-dealers will not participate in
commissions from brokerage given by a Fund to other brokers or dealers. In
addition, pursuant to an exemption order granted by the SEC, the Funds may
engage in transactions involving certain money market instruments with
particular affiliates acting as principal. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those
cases in which better prices and executions may be obtained elsewhere.
The following table sets forth certain information regarding the
Core Value and Special Growth Funds' payment of brokerage commissions for
the 1991, 1992 and 1993 fiscal years:
Core Value Fund Special Growth Fund
Total Brokerage
Commissions 1991: $1,889,445 $179,693
1992: 716,054 134,942
1993: 1,028,551 262,685
Commissions paid to Boston $1,050 $4,775
Institutional Services, Inc.
("BISI") *(1)
% of total Commissions paid .10% 2%
to BISI *(1)
% of total Transactions .10% 4%
Involving Commissions paid
to BISI*(1)
Commissions paid to ^ Lehman 9,660 --
Brothers*(2)
% of Total Commissions paid .90% --
to ^ Lehman Brothers*(2)
% of Total Transactions 1.10% --
Involving Commissions paid
to ^ Lehman Brothers*(2)
Commissions paid to Lehman $7,380 $11,025
Brothers *(3)
% of Total Commissions paid .70% 4%
to Lehman Brothers*(3)
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<PAGE>
Core Value Fund Special Growth Fund
% of Total Transactions .50% 2%
Involving Commissions paid
to Lehman Brothers*(3)
________________________
* Figures for 1993 fiscal year only.
(1) Prior to October 29, 1993
(2) Prior to July 30, 1993
(3) After July 30, 1993
Prior to April 4, 1994, the Funds were advised by The Boston
Company Advisors, Inc. Prior to May 21, 1993, The Boston Company
Advisors, Inc. was affiliated with Lehman Brothers.
PURCHASE OF SHARES
Distribution and Service Plans
The Securities and Exchange Commission ("SEC") has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Trust directly or indirectly, bear the
expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Prior Plans. Prior to April 4, 1994, the Class A shares of the
Fund were known as the "Retail Class" of shares; the "Institutional Class"
of shares was a separate class. The Retail Class was reclassified as the
Investor Shares by the Board of Trustees at a meeting held on November 22,
1993, subject to certain approvals that were obtained from each Fund's
shareholders at a meeting held on March 29, 1994. At the November 22,
1993 Board Meeting, the Trustees also approved a new distribution plan for
the Investor Shares (formerly Retail Class) and Institutional Class of the
Fund. Shareholders of the Retail Class of Shares and Institutional Class
of Shares approved the new distribution plans at a shareholders' meeting
held on March 14 and March 29, 1994. These new distribution plans
("Current Plans") were effective on April 4, 1994.
^
Prior to April 4, 1994, the Fund's Retail Shares and
Institutional Shares were subject to distribution plans (the "Prior
Plans") that were adopted by the Trust under Section 12(b) of the Act and
^ Rule 12b-1 thereunder. Under the Prior Plans, ^ each Fund was
authorized to spend up to .25% of its average daily net assets
attributable to the Retail Class on activities primarily intended to
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<PAGE>
result in the sale of such Class ^ and Core Value Fund was authorized to
spend up to .15% of its average daily net assets attributable to the
Institutional Class on activities primarily intended to result in the sale
of such Class.
Under the distribution agreements with the prior distributor,
Funds Distributor, Inc. ("Funds Distributor") each Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities ^ on
behalf of each Fund on a monthly basis, provided that any payment by a
Fund to Funds Distributor, together with any other payments made by such
Fund pursuant to the Prior Plan, shall not exceed .0208% of its average
daily net assets attributable to the Retail Class for the prior month
(.25% on an annualized basis) and .0125% of its average daily net assets
attributable to the Institutional Class for the prior month (.15% on an
annualized basis).
Current Plans. Under the Current Plan, Investor shares of the
Fund may spend annually up to 0.25% of the average of its net asset values
attributable to the Investor Class, and Institutional shares of ^ Core
Value Fund may spend up to 0.15% of the average of its net asset values
attributable to the Institutional Class, for costs and expenses incurred
in connection with the distribution of, and shareholder servicing with
respect to, shares of those respective Classes.
The Current Plans provide that a report of the amounts expended
under the Current Plans, and the purposes for which such expenditures were
incurred, must be made to the Trustees for their review at least
quarterly. In addition, the Current Plans provide that they may not be
amended to increase materially the costs which a Fund may bear for
distribution pursuant to the Current Plans without approval of a Fund's
shareholders, and that other material amendments of the Current Plans must
be approved by the vote of a majority of the Trustees and of the Trustees
who are not "interested persons" of the Trust (as defined in the 1940 Act)
and who do not have any direct or indirect financial interest in the
operation of the Current Plan, cast in person at a meeting called for the
purpose of considering such amendments. The Current Plans are subject to
annual approval by the entire Board of Trustees and by the Trustees who
are neither interested persons nor have any direct or indirect financial
interest in the operation of the Current Plans, by vote cast in person at
a meeting called for the purpose of voting on the Current Plan. The
Current Plans are terminable, as to the Fund's Class of shares, at any
time by vote of a majority of the Trustees who are not interested persons
and have no direct or indirect financial interest in the operation of the
Current Plan or by vote of the holders of a majority of the outstanding
shares of such class of the Fund.
^
REDEMPTION OF SHARES
The right to redeem shares of a Fund may be suspended or the date
of payment postponed (a) for any period during which the ^ NYSE is closed
- 29 -
<PAGE>
(other than for customary weekend or holiday closings); (b) when trading
in the markets the Trust normally uses is restricted or when an emergency
exists as determined by the SEC so that disposal of a Fund's investments
or determination of its net asset value is not reasonably practicable; or
(c) for such other periods as the SEC, by order, may permit for protection
of a Fund's shareholders.
VALUATION OF SHARES
The Prospectuses describe the time at which the net asset value
of each Fund is determined for purposes of sales and redemptions. In
addition, portfolio securities held by the Funds may be actively traded in
securities markets which are open for trading on days when the Funds will
not be determining their net asset values. Accordingly, there may be
occasions when the Funds are not open for business but when the value of a
Fund's portfolio securities will be affected by such trading activity.
The holidays (as observed) on which the ^ NYSE is closed currently are:
New Years Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
Core Value and Special Growth Fund
In valuing the portfolio securities of each Fund, securities
listed on a national securities exchange (other than options) are valued
on the basis of the last sale on the date on which the valuation is made
or, lacking any sales, at the mean between the closing bid and asked
prices. Over-the-counter securities are valued on the basis of the bid
price at the close of business on each day, or, if market quotations for
such securities are not readily available, a fair value, as determined in
good faith by the Trustees, will be used. Options are generally valued at
the last sale price; in the absence of last sale price, the last offer
price is used. When a Fund writes an option, an amount equal to the
premium received by it is included in the Fund's statement of assets and
liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market
value of the option written. When a Fund purchases a stock index option,
the premium paid by the Fund is recorded as an asset and is subsequently
adjusted to the current market value of the option. Investments in U.S.
Government Securities (other than short-term securities) are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Short-term obligations with maturities of 60 days or less are
valued at amortized cost. All other securities and other assets of each
Fund are appraised at their fair value as determined in good faith by the
Trustees. In carrying out the Board of Trustees' valuation policies,
Dreyfus may consult with independent pricing services approved by the
Board of Trustees.
PERFORMANCE DATA
- 30 -
<PAGE>
From time to time, the Funds may quote their yields in
advertisements, shareholder reports or other communications to
shareholders. Price/yield information is generally available by calling
the Trust toll free at 1-800-343-0573.
Each Fund may compare the performance of its Investor and Class R
shares and the Core Value Fund may compare the performance of its
Institutional Shares to that of other mutual funds, relevant indices or
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual Fund
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund
Values, U.S. News and World Report, Forbes, Fortune, Barron's, Financial
Planning, Financial Planning on Wall Street, Certified Financial Planner
Today, Investment Advisor, ^ Kiplinger's, Smart Money and similar
publications may also be used in comparing the Fund's performance.
Furthermore, a Fund may quote its Investor and Class R yields, and
Institutional Class yields with respect to the Core Value Fund, in
advertisements or in shareholder reports.
Effective April 4, 1994, the Retail and Institutional Class of
shares of each Fund (except the ^ Core Value Fund) were reclassified as a
single class of Shares known as "Investor Shares" and the Investment Class
of shares of each Fund was renamed as each Funds' "Trust Shares."
Effective October 17, 1994, each ^ Fund redesignated the Trust Shares as
"Class R shares." The following performance data for Investor Shares is
reflective of each Fund's Retail Class of Shares' performance. In
addition, the following performance data for the Class R shares of the
Special Growth Fund reflects the Fund's former Investment Class of Shares
and Trust shares. Performance data is not available for the Class R Shares
of the Core Value Fund because this Fund did not offer Class R shares (or
its predecessors-Trust Shares and Investment Class of Shares) ^ prior to
June 30, 1994. Also listed below is the performance data for the Core
Value Fund's Institutional Class of Shares.
Total Return
Each of the Core Value and Special Growth Funds' "average annual
total return" figures described and shown below are computed according to
a formula prescribed by the ^ SEC.
The formula can be expressed as follows:
1/n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
- 31 -
<PAGE>
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1000
payment made at beginning of the 1, 5, or 10
years (or other) periods at the end of 1, 5, or
10 years (or other) periods (or fractional
portion thereof)
The table below shows the average annual total return for each of the ^
Funds' Investor Shares for the specified periods.
1 2
Core Special
Value Growth
For the one year ^ 7/1/93 6.77% (7.49%)
to 6/30/94
For the five years 7/1/89 6.84% 10.60%
to 6/30/94
For the ten years 7/1/84 to 13.73% 12.77%
6/30/94
From commencement of 10.36% 15.17%
operations to ^ 6/30/94
__________________________
* The ^ figures reflect the Funds' performance after accounting for
fee waivers. Returns would have been lower if waivers were not
reflected.
1 The Fund commenced operations on February 6, 1947.
2 The Fund commenced operations on May 3, 1982.
The table below shows the ^ average annual total return for ^
each of the Funds' Class R shares for the specified periods.
- 32 -
<PAGE>
^ 1
Special 2
Growth Core Value
For the one year 7/1/93 to (7.08%) --
6/30/94
For the five years 7/1/89 to -- --
6/30/94
For the ten years 7/1/84 to -- --
6/30/94
From inception date to 6/30/94 1.85% --
__________________________
* The figures reflect the Funds' performance after accounting for
fee waivers. Returns would have been lower if waivers were not
reflected.
1 The Fund commenced selling Class R shares on February 1 , 1993.
^ 2 The Fund did not offer Class R shares for the period ended June
30, 1994.
Aggregate Total Return
Each Fund's aggregate total return figures described and shown
below represent the cumulative change in the value of an investment in
each Fund for the specified period and are computed by the following
formula:
ERV-P
AGGREGATE TOTAL RETURN = P
Where: P = A hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of the 1-, 5- or
10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.
The table below shows the aggregate total return for the Special Growth
Fund's Class R Shares for the specified periods. (See "Aggregate Total
Return" below.)
- 33 -
<PAGE>
(1)
SPECIAL GROWTH
From commencement of (7.08%)
operations to 6/30/94
________________________
* The figure reflects the Fund's performance after accounting for
fee waivers. Returns would have been lower if fee waivers were
not reflected.
(1) The Fund commenced selling Class R shares on February 1,
1993.
Set forth, in the chart above, are the aggregate total return for
each Fund's Class R Shares during the ^ period ended ^ June 30, 1994. Set
forth below for the Investor Shares of a Fund are tables showing the
performance on an aggregate total return basis (i.e., with all dividends
and distributions reinvested) of a hypothetical $10,000 investment in the
Special Growth Fund for the period since May 3, 1982 (commencement of
operations), and in the Core Value Fund for the ^ period ended ^ June 30,
1994. In the case of the Core Value Fund, performance is compared to the
Standard & Poor's 500 Stock Index, an index of unmanaged groups of common
stocks, and to the Dow Jones Industrial Average, an unmanaged index of
common stocks of 30 industrial companies listed on the NYSE. The Special
Growth Fund's performance is compared to the Standard & Poor's 500 Stock
Index.
- 34 -
<PAGE>
<TABLE>
<CAPTION>
SPECIAL GROWTH FUND OTHER INDICES
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
^ Change Value ofValue of Total % ChangeS&P % Lipper %
Period Initial Reinvested Value Over 500(2) ChangeGrowth Change
Income $10,000 Dividends Period Period Over Period over
Ended Invest- ^ and PeriodIndex Period
^ ment Capital
Gains
Distribu-
tions(1)
12/31/83 10,000 -- 10,000 -- 10,000 -- 10,000 --
12/31/84 8,792 99 8,891 (11.09)10,629 6.29 9,721 (2.79)
12/31/85 11,607 378 11,985 34.80 14,004 31.75 12,669 30.33
12/31/86 9,535 3,368 12,903 7.66 16,618 18.67 14,678 15.86
12/31/87 6,659 5,752 12,411 (3.81) 17,491 5.25 14,828 1.02
12/31/88 7,906 7,172 15,078 21.49 20,385 16.55 17,168 15.78
12/31/89 7,911 10,007 17,918 18.83 26,832 31.63 22,069 28.55
12/31/90 7,512 9,538 17,050 (4.85) ^ 25,998(3.11)20,970 (4.98)
12/31/91 8,083 13,949 22,032 29.22 33,902 30.40 28,353 35.21
12/31/92 9,114 18,688 27,802 26.19 36,481 7.61 30,486 7.52
12/31/93 9,956 23,408 33,364 20.01 40,173 10.12 34,813 14.19
06/30/94 8,803 20,699 29,502 (11.57) 38,797 (3.38)32,971 (5.29)
^
</TABLE>
_______________________
Explanatory Notes:
* Commencement of Fund operations.
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
(2) Not adjusted for brokerage commissions; dividends invested monthly.
- 35 -
<PAGE>
<TABLE>
<CAPTION>
CORE VALUE FUND OTHER INDICES
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
^ Change Value ofValue of Total % S&P % Lipper %
Period Initial Reinvested Value Change 500(2) Change Growth Change
Income $10,000 Dividends Over Period Over Period Over
Ended Invest- and Period Period Index Period
^ ment Capital
Gains
Distri-
bution(1)
12/31/83 10,000 -- 10,000 -- 10,000 -- 10,000 --
12/31/84 9,280 1,406 10,686 6.86 10,629 6.29 10,263 2.63
12/31/85 11,501 2,925 14,426 35.00 14,004 31.76 13,105 27.69
12/31/86 11,605 6,064 17,669 22.48 16,618 18.66 15,223 16.16
12/31/87 9,337 8,380 17,717 .27 17,491 5.25 15,702 3.15
12/31/88 10,261 10,918 21,179 19.54 20,385 16.55 18,760 19.48
12/31/89 9,846 16,619 26,465 24.96 26,832 31.63 22,999 22.60
12/31/90 8,309 14,600 22,909 (13.44) ^ 25,998(3.11) 21,724 (5.54)
12/31/91 9,814 18,334 28,148 22.87 33,902 30.40 27,612 27.10
12/31/92 9,119 20,164 29,283 4.03 36,481 7.61 30,653 11.01
12/31/93 9,957 24,161 34,118 16.51 40,173 10.12 35,207 14.86
06/30/94 9,839 23,965 33,804 (0.92) 38,797 (3.38) 34,213 (2.77)
^
</TABLE>
_______________________
Explanatory Notes:
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
(2) Not adjusted for brokerage commissions; dividends invested monthly.
TAXES
Each Fund has satisfied, and intends to satisfy, the requirements
for qualifying as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
- 36 -
<PAGE>
each Fund will not be liable for Federal income taxes to the extent its
taxable investment income and net capital gain are distributed to
shareholders provided that at least 90% of its net investment income and
net short-term capital gain for the taxable year are distributed.
To qualify as a regulated investment company, among other
requirements the Fund must earn in each taxable year at least 90% of its
gross income from (i) interest, (ii) dividends, (iii) payments with
respect to securities loans and (iv) gains from the sale or other
disposition of stock or securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% Test"). An additional
requirement is that the Fund must earn in each taxable year less than 30%
of its gross income from the sale or other disposition of any of the
following held for less than three months (i) stock or securities, (ii)
options, futures, or forward contracts (other than options, futures, and
forward contracts on foreign currencies), or (iii) foreign currencies (or
options, futures, or forward contracts on foreign currencies) but only if
such currencies (or options, futures or forward contracts) are not
directly related to the company's principal business of investing in stock
or securities (or options and futures with respect to such stock or
securities) (the "30% Test"). The 30% Test will limit, among other things,
the extent to which the Fund may sell securities held for less than three
months; write options which expire in less than three months; and effect
closing transactions with respect to call or put options that have been
written or purchased within the preceding three months. Finally, as
discussed below, this requirement may also limit investments by certain
Funds in options on stock indexes, options on nonconvertible debt
securities, futures contracts and options on interest rate futures
contracts.
A Fund may have greater difficulty satisfying the 30% ^ Test
because of more frequent redemptions or exchanges of Fund shares. Section
851(h)(3) of the Code provides a special rule for series funds with
respect to the 30% Test. A regulated investment company that is part of a
series fund will not fail the 30% Test as a result of sales made within 5
days of "abnormal redemptions" if: (a) the sum of the percentages for
abnormal redemptions on such day and for abnormal redemptions on prior
days during the taxable year exceeds 30%, and (b) the regulated investment
company of which such fund is a part would meet the 30% Test for the
taxable year if all the funds were treated as a single company. Abnormal
redemptions are deemed to occur on any day when net redemptions on such
day exceed one percent of net asset value. If abnormal redemptions require
a Fund to sell securities with a holding period of less than three months,
the Fund intends to make those sales within 5 days of such redemptions so
as to qualify for the exclusion afforded by section 851(h)(3).
When a Fund is required to sell securities to meet significant
redemptions or exchanges, it may enter into futures contracts for the S&P
- 37 -
<PAGE>
500 as a hedge against price declines in the securities to be sold. Gains
realized by the Fund upon closing out its positions in these contracts are
subject to the 30% Test. Ordinarily, these gains could not be offset by
declines in the value of the hedged securities. However, section 851(g) of
the Code provides that, in the case of a "designated hedge," for purposes
of the 30% Test, increases and decreases in value (during the period of
the hedge) of positions which are part of the hedge are to be netted. A
"designated hedge" exists when (a) the risk of loss is reduced by reason
of a contractual obligation to sell substantially identical property, and
(b) the taxpayer clearly identifies the positions which are part of the
hedge in the manner prescribed in regulations.
Regulations have not yet been issued specifying how the
identification requirement can be satisfied. The legislative history with
respect to section 851(g) states that, prior to the issuance of
regulations, the identification requirement is satisfied with
identification by the close of the day on which the hedge is established
either by: (a) placing the positions that are part of the hedge in a
separate account that is maintained by a broker, futures commission
merchant, custodian or similar person, and that is designated as a hedging
account, provided that such person maintaining such account makes
notations identifying the hedged and hedging positions and the date on
which the hedge is established, or (b) the designation by such a broker,
merchant, custodian or similar person, of such positions as a hedge for
purposes of these provisions, provided that the regulated investment
company is provided with a written confirmation stating the date the hedge
is established and identifying the hedged and hedging positions.
When a Fund enters into futures contracts to hedge against price
declines of securities to be sold, the Fund may identify such securities
and contracts as a hedge so as to qualify under section 851(g). However,
there can be no assurance that the Fund (or its agents) will be able to
comply with the identification requirements that may be contained in
future regulations. Moreover, the netting rule of section 851^(g) is
available only if the securities to be sold and the futures contracts
constitute "substantially identical" property. Although the Fund generally
intends to sell pro-rata all such securities, it is unclear whether the
securities and the futures contracts would constitute "substantially
identical" property.
Taxation of Investments by the Funds
Gains or losses on sales of securities by a Fund will generally
be long-term capital gains or losses if the Fund has held the securities
for more than one year. Gains or losses on sales of securities held for
less than one year will generally be short-term. If a Fund acquires a debt
security at a substantial discount and does not elect current accrual, a
portion of any gain upon sale or redemption of the security, to the extent
it reflects accrued market discount, will be taxed as ordinary income,
rather than capital gain.
- 38 -
<PAGE>
Options and Futures Transactions. The tax consequences of options
transactions entered into by a Fund will vary depending on the nature of
the underlying security, whether the option is written or purchased and
finally, whether the "straddle" rules, discussed separately below, apply
to the transaction. When a Fund writes a call or a put option on an equity
or convertible debt security, it will receive a premium that will, subject
to the straddle rules, be treated as follows for tax purposes. If the
option expires unexercised, or if the Fund enters into a closing purchase
transaction, the Fund will realize a gain (or a loss if the cost of the
closing purchase transaction exceeds the amount of the premium) without
regard to any unrealized gain or loss on the underlying security. Any such
gain or loss generally will be a short-term capital gain or loss, except
that any loss on a "qualified" covered call option that is not treated as
part of a straddle may be treated as a long-term capital loss. To be
"qualified" the option must be exchange traded, must be granted more than
30 days before the day on which the option expires and must not be a
"deep-in-the-money" option. If a call option written by the Fund is
exercised, the Fund will recognize a capital gain or loss from the sale of
the underlying security, and will treat the premium as additional sales
proceeds. Whether the gain or loss will be long-term or short-term will
depend on the holding period of the underlying security. If a put option
written by the Fund is exercised, the amount of the premium will reduce
the tax basis of the security that the Fund then purchases.
The Code imposes a special "marked-to-market" system for taxing
"section 1256 contracts." These contracts generally include, without
limitation, options on nonconvertible debt securities (including U.S.
Government Securities), options on "broad based" stock indexes, certain
forward foreign currency contracts, regulated futures contracts and
options on interest rate futures contracts. The Core Value and Special
Growth Funds may invest in section 1256 contracts. In general, gain or
loss on section 1256 contracts will be taken into account for tax purposes
when actually realized (by a closing transaction, by exercise, by taking
delivery or by other termination). In addition, any section 1256 contracts
held at the end of a taxable year will be treated as sold at their
year-end fair market value (that is, marked-to-the-market), and the
resulting gain or loss will be recognized for tax purposes in such taxable
year. Provided that section 1256 contracts with the exception of certain
forward foreign currency contracts are held as capital assets and are not
part of a "mixed" straddle, both the realized and the unrealized year-end
gain or loss from these investment positions (including premiums on
options that expire unexercised) will be treated as 60% long-term and 40%
short-term capital gain or loss, regardless of the period of time
particular positions are actually held by a Fund. Any gain or loss, both
realized and unrealized, from a forward foreign currency contract will be
characterized as ordinary income at year end.
Straddles. The Code contains other rules applicable to
"straddles," that is, transactions which create positions which offset
positions in section 1256 or other investment contracts. Those rules,
applicable to "straddle" transactions, are intended to eliminate any
- 39 -
<PAGE>
special tax advantages for such transactions. "Straddles" are defined to
include "offsetting positions" in actively-traded personal property. Under
current tax law, it is not clear under what circumstances one investment
made by a Fund, such as an option or futures contract, would be treated as
creating substantial diminution in the risk of loss in another position,
although certain covered call stock options written by the Core Value and
Special Growth Funds may be treated as not creating a straddle.
If two (or more) positions constitute a straddle (but such
straddle does not consist solely of Section 1256 positions), recognition
of a realized loss from one position (including a marked-to-market loss)
must be deferred to the extent of unrecognized gain in an offsetting
position, successor position, or offsetting position to a successor
position which is still held at the Fund's year end. Also, long-term
capital gain may be recharacterized as short-term capital gain, or short--
term capital loss as long-term capital loss. Furthermore, interest and
other carrying charges allocable to personal property that is part of a
straddle which does not consist entirely of Section 1256 positions must be
capitalized. In addition, "modified wash sale" rules apply to prevent the
recognition of loss where an identical or substantially identical position
is or has been acquired within a prescribed period.
If a Fund chooses to identify a particular offsetting position as
being one component of a straddle and all other conditions necessary for
qualification as an "identified straddle" are met, a realized loss on any
component of that straddle will be recognized, no earlier than upon the
liquidation of all of the components of that straddle. Special rules apply
to "mixed" straddles (that is, straddles consisting of a section 1256
contract and an offsetting position that is not a section 1256 contract).
If a Fund makes certain elections, the section 1256 contract components of
such mixed straddles will not be subject to the "60%/40%" marked-to-market
rules. If any such election is made, the amount, the nature (as long- or
short-term) and the timing of the recognition of the Fund's gains or
losses from the affected straddle positions will be determined under rules
that will vary according to the type of election made.
Taxation of the Funds' Shareholders--Special Considerations
The portion of the dividends received from the Core Value and
Special Growth Funds by their corporate shareholders which qualifies for
the 70% dividends received deduction will be reduced to the extent that
the Funds hold dividend-paying stock for less than 46 days (91 days for
certain preferred stocks). A Fund's holding period will not include any
period during which the Fund has reduced its risk of loss from holding the
stock by writing certain call options with respect to substantially
identical stock or securities, such as securities convertible into the
stock. The holding period for stock may also be reduced if a Fund
diminishes its risk of loss by holding one or more positions in
substantially similar or related property. Accordingly, the percentage of
dividends from the Core Value and Special Growth Funds qualifying for the
dividends-received deduction may be less than 100%. Dividends-received
- 40 -
<PAGE>
deductions will be allowed only with respect to shares that a corporate
shareholder has held for at least 46 days within the meaning of the same
holding period rules applicable to the Funds.
Dividends paid by the Fund from net investment income and
distributions of net short-term capital gain will be taxable to
shareholders as ordinary income for Federal income tax purposes, whether
received in cash or reinvested in additional shares. Distributions of
long-term capital gain will be taxable to shareholders as long-term
capital gain, whether paid in cash or reinvested in additional shares, and
regardless of the length of time the investor has held his or her shares
of the Fund.
If a shareholder receives a distribution taxable as long-term
capital gain with respect to shares of a Fund, and redeems or exchanges
the shares before he or she has held them for more than six months, any
loss on the redemption or exchange that is less than or equal to the
amount of the distribution will be treated as a long-term capital loss.
If a shareholder fails to furnish a correct taxpayer
identification number, fails to fully report dividend or interest income,
or fails to certify that he or she has provided a correct taxpayer
identification number or that he or she is not subject to "backup
withholding," then the shareholder may be subject to a ^ 31% Federal
backup withholding tax with respect to (i) taxable dividends and
distributions and (ii) the proceeds of redemptions or exchanges. The
backup withholding tax is not an additional tax and may be credited
against a shareholder's regular Federal income tax liability. An
individual's taxpayer identification number is his or her social security
number.
DESCRIPTION OF THE TRUST
The Trust is a diversified, open-end management investment
company established as a Massachusetts business trust under the laws of
the Commonwealth of Massachusetts by an Agreement and Declaration of Trust
dated March 30, 1979. The Trust commenced business as an investment
company on August 1, 1979. On that date, shares of the Core Value Fund
were issued to the holders of shares of the common stock of The Johnston
Mutual Fund Inc. pursuant to a reorganization of that Fund from a New York
corporation to a Massachusetts business trust. The Core Value Fund
succeeded to the portfolio assets of the New York corporation and
continued the business of that Fund with the same investment objectives
and policies. The Special Growth Fund was created by action of the
Trustees on January 15, 1982, and began offering shares to the public on
May 3, 1982. On April 4, 1994 the Trust changes its name from "The Boston
Company Fund" to "The Laurel Funds Trust" and on October 17, 1994, the
Trust changed its name from "The Laurel Funds Trust" to "The ^
Dreyfus/Laurel Funds Trust."
- 41 -
<PAGE>
The Trustees have authority to create an unlimited number of
shares of beneficial interest of separate series, without par value. Each
series will be treated as a separate entity. To date, seven series have
been authorized. The Trustees have authority to create additional series
at any time in the future without shareholder approval.
The Trust offer shares of beneficial interest of separate ^
funds without par value. ^ Currently, shares of four funds and five
classes have been authorized by the Trustees. Shares of the Core Value
Fund have been classified into three Classes of shares -Investor,
Institutional and Class R shares. Shares of the Special Growth Fund are
classified into two Classes of shares - Investor Class shares and Class R
shares.
Each share (regardless of Class) has one vote. All shares of all
^ funds (and classes thereof) vote together as a single Class, except as
to any matter for which a separate vote of any ^ fund or Class is required
by the 1940 Act, and except as to any matter which affects the interests
of one or more particular ^ funds or Classes, in which case only the
shareholders of the affected ^ funds or Classes are entitled to vote, each
as a separate Class.
The assets received by the Trust for the issue or sale of shares
of each Fund and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are specially allocated to such
Fund, and constitute the underlying assets of such Fund. The underlying
assets of each Fund are required to be segregated on the books of account,
and are to be charged with the expenses in respect of such Fund and with a
share of the general expenses of the Trust. Any general expenses of the
Trust not readily identifiable as belonging to a particular Fund shall be
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable. Each share of each Fund
represents an equal proportionate interest in that Fund with each other
share and is entitled to such dividends and distributions out of the
income belonging to such Funds as are declared by the Trustees. Upon any
liquidation of a Fund, shareholders thereof are entitled to share pro rata
in the net assets belonging to that Fund available for distribution.
The Trust does not hold annual meetings of shareholders. There
will normally be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of no less
than two-thirds of the outstanding shares of the Trust may remove a
Trustee through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. The Trustees are required to
call a meeting of shareholders for the purposes of voting upon the
question of removal of any Trustee when requested in writing to do so by
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<PAGE>
the shareholders of record of not less than 10% of the Trust's outstanding
shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or a Trustee. The Agreement and
Declaration of Trust provides for indemnification from Trust property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its
obligations, a possibility which Dreyfus believes is remote. Upon payment
of any liability incurred by a Fund, the shareholder of that Fund paying
such liability will be entitled to reimbursement from the general assets
of the Fund. The Trustees intend to conduct the operations of each Fund in
such a way so as to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of such Fund.
^ CONTROLLING SHAREHOLDERS
At ^ November 30, 1994, there were no controlling shareholders,
as that term is defined under the 1940 Act, of the Dreyfus/Laurel Funds
Trust.
PRINCIPAL SHAREHOLDERS
The following shareholder owned 5% or more of the outstanding
voting shares of the Fund at December 8, 1994:
Special Growth Fund: Boston Safe Deposit ^ & Trust ^ Co., A/C 0952114007,
One Cabot Road, Wellington III, Medford, MA ^ 021555,
7% record.
CUSTODIAN AND FUND ACCOUNTANT
Mellon Bank, N.A., One Mellon Bank Center Pittsburgh, PA 15258,
serves as custodian and fund accountant with respect to each ^ Fund.
Mellon Bank provides portfolio and shareholder recordkeeping required for
regulatory and financial reporting purposes. Mellon Bank, as Custodian
and Fund Accountant, has no part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the fund.
- 43 -
<PAGE>
TRANSFER AGENT
The Shareholder Services Group, Inc. ("TSSG"), a subsidiary of
First Data Corporation, serves as the Trust's transfer agent. TSSG is
located at One American Express Plaza, Providence, Rhode Island 02903.
FINANCIAL STATEMENTS
^ The financial statements for the fiscal year ended December 31,
1993, including notes to the financial statements and supplementary
information and the Report of Independent Auditors, are included in the
Annual Report to shareholders. A copy of the Annual Report, as well as the
Funds' Semi-Annual Report for the six months ended June 30, 1994
(unaudited), accompany this Statement of Additional Information.
OTHER INFORMATION
Auditor. ^ Coopers & Lybrand L.L.P. was appointed by the Board of
Trustees to serve as independent auditors for the fiscal year ended on
December 31, 1993.
Legal Counsel. Kirkpatrick & Lockhart, 1800 M Street, N.W., South
Lobby - 9th Floor, Washington, D.C. 20036, has passed upon the legality of
the shares offered by the Prospectus and this Statement of Additional
Information.
- 44 -
<PAGE>
APPENDIX
INFORMATION ABOUT SECURITIES RATINGS
Corporate Bond Ratings--Managed Income Fund
Description of Moody's Investors' Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
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<PAGE>
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
Description of S&P corporate bond ratings:
AAA--Bonds rated AAA have the highest rating assigned by S&P to a debt
obligations. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in
higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
represents the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Commercial Paper Ratings^
The rating A-1 + is the highest, and A-l the second highest, commercial
paper rating assigned by S & P. Paper rated A-1 must have either the
direct credit support of an issuer or guarantor that possesses excellent
long-term operating and financial strengths combined with strong liquidity
characteristics (typically, such issuers or guarantors would display
credit quality characteristics which would warrant a senior bond rating of
- 46 -
<PAGE>
"AA-" or higher), or the direct credit support of an issuer or guarantor
that possesses above average, long-term fundamental operating and
financing capabilities combined with ongoing excellent liquidity
characteristics. Paper rated A-1 must have the following characteristics:
liquidity ratios are adequate to meet cash requirements; long-term senior
debt is rated A or better; the issuer has access to at least two
additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigned rating are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term
debt; (6) trend of earnings over a period of ten years; (7) financial
strength of parent company and the relationships which exist with the
issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations.
Description of IBCA Limited/IBCA Inc. commercial paper ratings.
Short-term obligations, including commercial paper, rated A-l+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the
highest capacity for timely repayment. Obligations rated A-1 have a very
strong capacity for timely repayment. Obligations rated A-2 have a strong
capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
Description of Fitch Investors Services, Inc. commercial paper
ratings. Fitch Investors Services, Inc. employs the rating F-l+ to
indicate issues regarded as having the strongest degree of assurance for
timely payment. The rating F-1 reflects an assurance of timely payment
only slightly less in degree than issues rated F-l+, while the rating F-2
indicates a satisfactory degree of assurance for timely payment, although
the margin of safety is not as great as indicated by the F-1+ and F-1
categories.
Description of Duff & Phelps Inc. commercial paper ratings. Duff&
Phelps Inc. employs the designation of Duff 1 with respect to top grade
commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations.
Duff 1- indicates high certainty of timely payment. Duff 2 indicates good
certainty of timely payment: liquidity factors and company fundamentals
are sound.
- 47 -
<PAGE>
Various of the nationally recognized statistical rating
organizations utilize rankings within rating categories indicated by a +
or -. The Funds, in accordance with industry practice, recognize such
rankings within categories as graduations, viewing for example S&P's
rating of A-1+ and A-1 as being in S&P's highest rating category.
Description of Thomson BankWatch, Inc. ("BankWatch") commercial
paper ratings. BankWatch will assign both short-term debt ratings and
issuer ratings to the issuers it rates. BankWatch will assign a short-term
rating ("TBW-1," "TBW-2,""TBW-3," or "TBW-4") to each class of debt (e.g.,
commercial paper or non-convertible debt), having a maturity of one-year
or less, issued by a holding company structure or an entity within the
holding company structure that is rated by BankWatch. Additionally,
BankWatch will assign an issuer rating ("A," "A/B," "B," "B/C" "C," "C/D,"
"D," "D/E," and "E") to each issuer that it rates.
- 48 -
<PAGE>
--------------------------------------------------------------
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PREMIER MANAGED INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
^ December 19, 1994
----------------------------------------------------------------
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectuses of the Premier Limited Term Government Securities Fund
(formerly the Laurel Intermediate Government Securities Fund) and the
Premier Managed Income Fund (formerly the Laurel Managed Income Fund) (the
"Funds"), dated December ^ 19, 1994, as they may be revised from time to
time. The Funds are separate portfolios of ^ The Dreyfus/Laurel Funds
Trust ^ (formerly The Laurel Funds Trust), a management investment
company (the "Company"), known as a mutual fund. To obtain a copy of the
Funds' Prospectuses, please write to the Fund at ^ 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-^ 645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Funds'
investment manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Funds' shares.
DC-172731.3
<PAGE>
TABLE OF CONTENTS
Page
Investment Objective and Management ^ Policies . . . . . . . . . . . B-3
Management of the ^ Fund . . . . . . . . . . . . . . . . . . . . . . B-20
Management ^ Arrangements . . . . . . . . . . . . . . . . . . . . . . B-24
Purchase of Fund ^ Shares . . . . . . . . . . . . . . . . . . . . . . B-26
Distribution ^ Plans . . . . . . . . . . . . . . . . . . . . . . . . B-27
Redemption of Fund ^ Shares . . . . . . . . . . . . . . . . . . . . . B-29
Shareholder ^ Services . . . . . . . . . . . . . . . . . . . . . . . B-30
Determination of Net Asset ^ Value . . . . . . . . . . . . . . . . . B-34
Dividends, Other Distributions and ^ Taxes . . . . . . . . . . . . . B-34
Portfolio ^ Transactions . . . . . . . . . . . . . . . . . . . . . . B-38
Performance ^ Information . . . . . . . . . . . . . . . . . . . . . . B-40
Information About the ^ Fund . . . . . . . . . . . . . . . . . . . . B-46
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent ^ Auditors . . . . . . . . . . . . . . . . B-47
Financial ^ Statements . . . . . . . . . . . . . . . . . . . . . . . B-48
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectuses entitled
"Description of the Fund."
Portfolio Securities
Foreign Securities (Premier Managed Income Fund Only). The Fund
may invest in securities of foreign issuers, including investments in
obligations of foreign branches of domestic banks and domestic branches of
foreign banks. Investment in foreign securities presents certain risks,
including those resulting from fluctuations in currency exchange rates,
reevaluation of currencies, future political and economic developments and
the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public
information concerning issuers and the fact that foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to domestic issuers. Moreover, securities of many foreign
issuers may be less liquid and their prices more volatile than those of
securities of comparable domestic issuers. In addition, with respect to
certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or
other assets of the Fund including withholding of dividends.
Currency Transactions (Premier Managed Income Fund Only). The
Fund may engage in currency exchange transactions as a means of managing
certain risks associated with purchasing and selling securities
denominated in foreign securities. Generally, the currency exchange
transactions of the Fund will be conducted on a spot (i.e., cash) basis at
the spot rate for purchasing or selling currency prevailing in the
currency exchange market. This rate under normal market conditions differs
from the prevailing exchange rate in an amount generally less than 0.1%
due to the cost of converting from one currency to another. The Fund also
may deal in forward exchanges between currencies of the different
countries in which it invests as a hedge against possible variations in
the exchange rates between these currencies. This is accomplished through
contractual agreements to purchase or sell a specified currency at a
specified future date and price set at the time of the contract.
Dealings in forward currency exchanges by the Fund are limited to
hedging involving either specific transactions or aggregate portfolio
positions. Transaction hedging is the purchase or sale of foreign currency
with respect to specific receivables or payables of a Fund generally
arising in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of foreign currency with respect
to portfolio security positions denominated or quoted in such currency.
The Fund will not speculate in forward currency exchanges. The Fund may
B-3
<PAGE>
position hedge with respect to a particular currency to an extent greater
than the aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in or currently
convertible into that particular currency. If the Fund enters into a
position hedging transaction, its custodian or sub-custodian bank will
place cash or readily marketable securities in a segregated account of the
Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of such forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to such
contracts. The Fund will not attempt to hedge all of its foreign
portfolio positions and will enter into such transactions only to the
extent, if any, deemed appropriate by Dreyfus. The Fund will not enter
into a position hedging commitment if, as a result thereof, the Fund would
have more than 15% of the value of its total assets committed to such
contracts. The Fund will not enter into a forward contract with a term of
more than one year.
It may not be possible for the Fund to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to the Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
At or before the maturity of a forward contract, the Fund may
either sell a portfolio security and make delivery of the currency, or it
may retain the security and offset its contractual obligation to deliver
the currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If
the Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the currency. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
B-4
<PAGE>
The use of forward currency contracts by the Fund will be limited
to the transactions described above. The Fund is not required to enter
into such transactions with regard to its portfolio securities, regardless
of currency denomination, and will not do so unless deemed appropriate by
Dreyfus. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point
in time. In addition, although forward currency contracts tend to minimize
the risk of loss due to a decline in the value of the hedged currency,
they also tend to limit any potential gain which might result should the
value of the currency increase.
Because the Fund invests in foreign securities, the Fund will
hold from time to time various foreign currencies pending its investment
in foreign securities or conversion into U.S. dollars. Although the Fund
values its assets daily in terms of U.S. dollars, it does not convert its
holdings of foreign currencies into U.S. dollars on a daily basis. When
converting foreign currencies to U.S. dollars, the Fund may incur costs of
currency conversion. A foreign exchange dealer does not charge a fee for
conversion, but it does realize a profit based on the difference, which is
known as the spread, between the prices at which the dealer is buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
U.S. Government Securities (Each Fund). The Funds may invest in
U.S. Government Securities that are direct obligations of the U.S.
Treasury, or that are issued by agencies and instrumentalities of the U.S.
Government and supported by the full faith and credit of the U.S.
Government. These include Treasury notes, bills and bonds and securities
issued by the Government National Mortgage Association ("GNMA"), the
Federal Housing Administration, the Department of Housing and Urban
Development, the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration and the Small
Business Administration.
The Funds may also invest in the above types of U.S. Government
Securities and in U.S. Government Securities that are not supported by the
full faith and credit of the U.S. Government. These include securities
issued by the Federal National Mortgage Association ("FNMA"), the Federal
Home Loan Mortgage Corporation ("FHLMC"), Federal Home Loan Banks,
Tennessee Valley Authority, Student Loan Marketing Association and
District of Columbia Armory Board. Because the U.S. Government is not
obligated by law to provide support to an instrumentality it sponsors,
these ^ Funds will invest in obligations issued by such an instrumentality
only when Dreyfus ^ determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable for investment by
such Funds.
^
B-5
<PAGE>
GNMA certificates represent ownership interests in a pool of
mortgages issued by a mortgage banker or other mortgagee. Distributions on
GNMA certificates include principal and interest components. GNMA, a
corporate instrumentality of the U.S. Department of Housing and Urban
Development, guarantees timely payment of principal and interest on GNMA
certificates; this guarantee is deemed a general obligation of the United
States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans
Administration. The mortgages have maximum maturities of 40 years.
Government statistics indicate, however, that the average life of the
underlying mortgages is shorter, due to scheduled amortization and
unscheduled prepayments (attributable to voluntary prepayments or
foreclosures). Since these statistics indicate that the average life of
the mortgages backing most GNMA certificates (which are single-family
mortgages with 25- to 30-year maturities) is approximately 12 years,
yields on pools of single-family mortgages are often quoted on a 12-year
prepayment assumption. (The actual maturity of specific GNMA certificates
will vary based on the prepayment experience of the underlying mortgage
pool.) Based on a 12-year prepayment assumption, GNMA certificates have
had historical yields at least 3/4 of 1% greater than Treasury bonds and
U.S. Government agency bonds and 1/4 of 1% greater than the highest grade
corporate bonds. Actual yield comparisons will vary with the prepayment
experience of specific GNMA certificates.
GNMA has introduced a pass-through security backed by
adjustable-rate mortgages. The securities will bear interest at a rate
which will be adjusted annually. The prepayment experience of the
mortgages underlying these securities may vary from that for fixed-rate
mortgages.
^
FHLMC is a corporate instrumentality of the U.S. Government and
was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing.^ FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
FNMA is a Government sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the Secretary
of Housing and Urban Development. FNMA purchases residential mortgages
from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal
and interest by FNMA.
B-6
<PAGE>
Bank Obligations ^(Each Fund). As stated in ^ each Fund's
Prospectus, each Fund is permitted to invest in high-quality, short-term
money market instruments. ^ Each Fund may invest temporarily, and without
limitation, in such instruments when, in Dreyfus' opinion, a "defensive"
investment posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable
obligations of commercial banks; time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for specified periods of time
at stated interest rates; and bankers' acceptances are time drafts drawn
on commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may be
purchased by the Trust are insured by the FDIC and are subject to Federal
examination and to a substantial body of Federal law and regulation. As a
result of governmental regulations, domestic branches of foreign banks
are, among other things, generally required to maintain specified levels
of reserves, and are subject to other supervision and regulations designed
to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs
and TDs, may be general obligations of the parent bank in addition to the
issuing branch or may be limited by the terms of a specific obligation and
by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
Mortgage Backed Securities (Each Fund). The Funds may invest in
various mortgage backed securities, as described in the ^ Prospectuses.
Mortgage backed securities represent an ownership interest in a pool of
residential mortgage loans. These securities are designed to provide
monthly payments of interest and principal to the investor. The
B-7
<PAGE>
mortgagor's monthly payments to his/her lending institution are
"passed-through" to an investor. Most issuers or poolers provide
guarantees of payments, regardless of whether or not the mortgagor
actually makes the payment. The guarantees made by issuers or poolers are
supported by various forms of credit, collateral, guarantees or insurance,
including individual loan, title, pool and hazard insurance purchased by
the issuer. There can be no assurance that the private issuers or poolers
can meet their obligations under the policies. Mortgage backed securities
issued by private issuers or poolers, whether or not such securities are
subject to guarantees, may entail greater risk than securities directly or
indirectly guaranteed by the U.S. Government.
Interests in pools of mortgage backed securities differ from
other forms of debt securities, which normally provide for periodic
payment of interest in fixed amounts with principal payments at maturity
or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential mortgage loans, net of any fees
paid. Additional payments are caused by repayments resulting from the sale
of the underlying residential property, refinancing or foreclosure, net of
fees or costs which may be incurred. Some mortgage backed securities are
described as "modified pass-through." These securities entitle the holders
to receive all interest and principal payments owed on the mortgages in
the pool, net of certain fees, regardless of whether or not the mortgagors
actually make the payments. Collateralized Mortgage Obligations ("CMOs")
are generally issued as a series of different classes. An issue of CMOs
tends to be backed by a larger number of mortgages than GNMA, FNMA or
FHLMC certificates, thus allowing greater statistical prediction of
prepayment characteristics. Interest and principal payments on the
mortgages underlying any series will first be applied to meet the interest
payment requirements of each class in the series other than any class in
respect of which interest accrues but is not paid or any principal only
class. Then, principal payments on the underlying mortgages are generally
applied to pay the principal amount of the class that has the earliest
maturity date. Once that class is retired, the principal payments on the
underlying mortgages are applied to the class with the next earliest
maturity date. This is repeated until all classes are paid. Therefore,
while each class of CMOs remains subject to prepayment as the underlying
mortgages prepay, structuring several classes of CMOs in the stream of
principal payments allows one to more closely estimate the period of time
when any one class is likely to be repaid. The ^ Funds may invest in
mortgage backed securities issued by the FHLMC and the FNMA.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential mortgage loans,
including CMOs, in which the Premier Managed Income Fund can invest. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than Government and Government-related pools because there are no
direct or indirect U.S. Government guarantees of payments in the former
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pools. However, timely payment of interest and principal of these pools is
supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance purchased by the issuer.
The insurance and guarantees are issued by U.S. Government entities,
private insurers and the mortgage poolers. There can be no assurance that
the private insurers or mortgage poolers can meet their obligations under
the policies.
The Premier Managed Income Fund expects that U.S. Government or
private entities may create mortgage loan pools offering pass-through
investments in addition to those described above. The mortgages underlying
these securities may be alternative mortgage instruments, that is,
mortgage instruments whose principal or interest payment may vary or whose
terms to maturity may be shorter than previously customary. As new types
of mortgage backed securities are developed and offered to investors, the
Premier Managed Income Fund will, consistent with its investment objective
and policies, consider making investments in such new types of securities.
Other Asset-Backed Securities (Premier Managed Income ^ Fund
Only). The Fund may also invest in non-mortgage Asset-Backed Securities.
The purchase of non-mortgage Asset-Backed Securities raises considerations
peculiar to the financing of the instruments underlying such securities.
For example, most organizations that issue Asset-Backed Securities
relating to motor vehicle installment purchase obligations perfect their
interests in their respective obligations only by filing a financing
statement and by having the servicer of the obligations, which is usually
the originator, take custody thereof. In such circumstances, if the
servicer were to sell the same obligations to another party, in violation
of its duty not to do so, there is a risk that such party could acquire an
interest in the obligations superior to that of the holders of the
Asset-Backed Securities. Also, although most such obligations grant a
security interest in the motor vehicle being financed, in most states the
security interest in a motor vehicle must be noted on the certificate of
title to perfect such security interest against competing claims of other
parties. Due to the large number of vehicles involved, however, the
certificate of title to each vehicle financed, pursuant to the obligations
underlying the Asset-Backed Securities, usually is not amended to reflect
the assignment of the seller's security interest for the benefit of the
holders of the Asset-Backed Securities. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. In addition,
various state and Federal laws give the motor vehicle owner the right to
assert against the holder of the owner's obligation certain defenses such
owner would have against the seller of the motor vehicle. The assertion of
such defenses could reduce payments on the related Asset-Backed
Securities. Insofar as credit card receivables are concerned, credit card
holders are entitled to the protection of a number of state and Federal
consumer credit laws, many of which give such holders the right to set off
certain amounts against balances owed on the credit card thereby reducing
the amounts paid on such receivables. In addition, unlike most other
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<PAGE>
Asset-Backed Securities, credit card receivables are unsecured obligations
of the card holder.
The development of non-mortgage backed securities is at an early
stage compared to mortgage backed securities. While the market for
Asset-Backed Securities is becoming increasingly liquid, the market for
mortgage backed securities issued by certain private organizations and
non-mortgage backed securities is not as well developed. Dreyfus intends
to limit its purchases of mortgage backed securities issued by certain
private organizations and non-mortgage backed securities to securities
that are readily marketable at the time of purchase.
Low-Rated Securities (Premier Managed Income ^ Fund Only). The
Fund may invest in low-rated and comparable unrated securities. The effect
a recession might have on such securities is not known. Any such
recession, however, could severely disrupt the market for such securities
and adversely affect the value of such securities. Any such economic
downturn also could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon.
The ratings of the various nationally recognized statistical
rating organizations ("NRSROs") such as Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") generally represent
the opinions of those organizations as to the quality of the securities
that they rate. Such ratings, however, are relative and subjective, are
not absolute standards of quality and do not evaluate the market risk of
the securities. Although Dreyfus uses these ratings as a criterion for the
selection of securities for the Fund, Dreyfus also relies on its
independent analysis to evaluate potential investments for the Fund. The
Fund's achievement of ^ its investment objective may be more dependent on
Dreyfus' credit analysis of low-rated and unrated securities than would be
the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum
required for purchase by the ^ Fund. In addition, it is possible that an
NRSRO might not timely change its ratings of a particular issue to reflect
subsequent events. None of these events will require the sale of the
securities by the Fund, although Dreyfus will consider these events in
determining whether the Fund should continue to hold the securities. To
the extent that the ratings given by an NRSRO for securities may change as
a result of changes in the rating systems or due to a corporate
reorganization of the NRSRO, the Fund will attempt to use comparable
ratings as standards for its investments in accordance with the investment
objectives and policies of the Fund.
Management Policies
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The Funds engage, except as noted, in the following practices in
furtherance of their investment objectives.
Lending of Portfolio Securities ^(Both Funds). Each Fund may
lend securities from its portfolio to brokers, dealers and other financial
organizations. Such loans, if and when made, may not exceed 33 1/3% of
such Fund's total assets, taken at value. The Funds may not lend portfolio
securities to ^ its affiliates without specific authorization from the
SEC. Loans of portfolio securities by the Funds will be collateralized by
cash, letters of credit or securities issued or guaranteed by the U.S.
Government or its agencies which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. From time to time, the Funds may return a part of the interest
earned from the investment of collateral received for securities loaned to
the borrower and/or a third party, which is unaffiliated with the Funds
and which is acting as a "finder."
By lending portfolio securities, a Fund can increase its income
by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when
Government securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees
must terminate the loan and regain the right to vote the securities. The
risks in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus ^ to be of good standing and will not be made
unless, in the judgment of Dreyfus^, the consideration to be earned from
such loans would justify the risk.
Options on Securities (Premier Limited Term Government ^
Securities Fund Only). The Fund has the ability to write covered put and
call options on their portfolio securities as part of ^ its investment
strategies.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a
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greater return than would be realized on the security alone. In return for
a premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase transaction
can be effected). Nevertheless, the call writer retains the risk of a
decline in the price of the underlying security. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. The writer of a covered put option accepts the risk of a decline
in the price of the underlying security. The size of the premiums that ^
the Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase
their option-writing activities.
The ^ Fund will write only covered options. Accordingly, whenever
^ the Fund writes a call option it will continue to own or have the
present right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, whenever ^
the Fund writes a put option it will either (a) deposit with the Fund's
custodian in a segregated account, cash, U.S. Government Securities or
other high grade debt obligations having a value equal to or greater than
the exercise price of the underlying securities or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates
as those written by the Fund), or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise
prices greater than those that it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of
the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case of
call options, these exercise prices are referred to as "in-the-money,"
"at-the-money" and "out-of-the-money," respectively.
^ The Fund may write (a) in-the-money call options when Dreyfus ^
expects that the price of the underlying security will remain flat or
decline moderately during the option period, (b) at-the-money call options
when Dreyfus ^ expects that the price of the underlying security will
remain flat or advance moderately during the option period and (c)
out-of-the-money call options when Dreyfus ^ expects that the premiums
received from writing the call option, plus the appreciation in market
price of the underlying security up to the exercise price, will be greater
than the appreciation in the price of the underlying security alone. In
any of the preceding situations, if the market price of the underlying
security declines and the security is sold at this lower price, the amount
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<PAGE>
of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the obligation of ^ the Fund as the writer of an
option continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring it to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. ^ The Fund can no longer effect a closing purchase
transaction with respect to an option once it has been assigned an
exercise notice. To secure its obligation to deliver the underlying
security when it writes a call option, or to pay for the underlying
security when it writes a put option, ^ the Fund will be required to
deposit in escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation (the "Clearing
Corporation") and the securities exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Fund expects to write only call
or put options issued by the Clearing Corporation.
The Fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the Fund has written an option, it
will realize a profit if the cost of the closing purchase transaction is
less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Fund generally will write only those options for
which Dreyfus ^ believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities
exchange will exist for any particular option or at any particular time,
and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, have at times rendered certain of
the facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered
call option writer, ^ the Fund is unable to effect a closing purchase
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<PAGE>
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the Fund and other clients of Dreyfus and
certain of their affiliates may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. At
the date of this Statement of Additional Information, the position and
exercise limits for common stocks were 3,000, 5,500 or 8,000 options per
stock (i.e., options representing 300,000, 550,000 or 800,000 shares),
depending on various factors relating to the underlying security. Dollar
amount limits apply to U.S. Government Securities. These limits may
restrict the number of options ^ the Fund will be able to purchase on a
particular security.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable
preferred stock or debt securities, the time required to convert or
exchange and obtain physical delivery of the underlying common stocks with
respect to which the Fund has written options may exceed the time within
which the Fund must make delivery in accordance with an exercise notice.
In these instances, the Fund may purchase or temporarily borrow the
underlying securities for purposes of physical delivery. By so doing, the
Fund will not bear any market risk, since the Fund will have the absolute
right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Although Dreyfus ^ will attempt to take appropriate measures to
minimize the risks relating to ^ the Fund's writing of put and call
options, there can be no assurance that the Fund will succeed in its
option-writing program.
^
When-Issued Securities and Delayed-Delivery Transactions (Each
Fund). To secure an advantageous price or yield, the Funds may purchase
U.S. Government Securities on a when-issued basis and purchase or sell
U.S. Government Securities for delayed-delivery. The Funds will enter into
such transactions for the purpose of acquiring portfolio securities and
not for the purpose of leverage. Delivery of the securities in such cases
occurs beyond the normal settlement periods, but no payment or delivery is
made by a Fund prior to the reciprocal delivery or payment by the other
party to the transaction. In entering into a when-issued or
delayed-delivery transaction, the Funds will rely on the other party to
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<PAGE>
consummate the transaction and may be disadvantaged if the other party
fails to do so.
U.S. Government Securities are normally subject to changes in
value based upon changes, real or anticipated, in the level of interest
rates and the public's perception of the creditworthiness of the issuers.
In general, U.S. Government Securities tend to appreciate when interest
rates decline and depreciate when interest rates rise. Purchasing these
securities on a when-issued or delayed-delivery basis, therefore, can
involve the risk that the yields available in the market when delivery
takes place may actually be higher than those obtained in the transaction
itself. Similarly, the sale of U.S. Government Securities for
delayed-delivery can involve the risk that the prices available in the
market when the delivery is made may actually be higher than those
obtained in the transaction itself. In the case of the purchase by a Fund
of when-issued or delayed-delivery securities, a segregated account in the
name of the Fund consisting of cash or liquid debt securities equal to the
amount of the when-issued or delayed-delivery commitments will be
established at the Fund's custodian. For the purpose of determining the
adequacy of the securities in the accounts, the deposited securities will
be valued at market or fair value. If the market or fair value of the
securities declines, additional cash or securities will be placed in the
account daily so that the value of the account will equal the amount of
such commitments by the Fund. On the settlement date, the Fund will meet
its obligations from then-available cash flow, the sale of securities held
in the segregated account, the sale of other securities or, although it
would not normally expect to do so, from the sale of the when-issued or
delayed-delivery securities themselves (which may have a greater or lesser
value than the Fund's payment obligations).
Futures Activities (Premier Limited Term Government ^ Securities
Fund Only). The Fund may invest in futures contracts and options on
futures contracts that are traded on a United States exchange or board of
trade.
These investments may be made by the Fund solely for the purpose
of hedging against changes in the value of its portfolio securities, or of
securities in which the Fund intends to invest due to anticipated changes
in interest rates and market conditions, and not for purposes of
speculation. The Fund will not purchase or sell futures contracts or
purchase options on futures if, immediately thereafter, more than 33 1/3%
of its net assets would be hedged. In addition, the Fund will not enter
into futures and options contracts for which aggregate initial margin
deposits and premiums exceed 5% of the fair market value of its assets,
after taking into account unrealized profits and unrealized losses on
futures contracts into which it has entered. See "Dividends, Other
Distributions and Taxes" below.
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<PAGE>
Futures Contracts (Premier Limited Term Government Securities
Fund ^ Only). The purpose of the acquisition or sale of a futures
contract by the Fund is to protect the Fund from fluctuations in values in
rates on securities without actually buying or selling the securities. Of
course, since the value of portfolio securities will far exceed the value
of the futures contracts sold by the Fund, an increase in the value of the
futures contracts could only mitigate--but not totally offset--the decline
in the value of the portfolio.
No consideration is paid or received by the Fund upon the
purchase or sale of a futures contract. Initially, the Fund will be
required to deposit with the broker an amount of cash or cash equivalents
equal to approximately 1% to 10% of the contract amount (this amount is
subject to change by the board of trade on which the contract is traded
and members of such board of trade may charge a higher amount). This
amount is known as "initial margin" and is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Fund
upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as "variation
margin," to and from the broker, will be made daily as the price of
securities underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process
known as "marking-to-market." In addition, when the Fund purchases a
futures contract, it must deposit into a segregated account with its
custodian an amount of cash or cash equivalents equal to the total market
value of such futures contract, less the amount of initial margin for the
contract. At any time prior to the expiration of a futures contract, the
Fund may elect to close the position by taking an opposite position, which
will operate to terminate the Fund's existing position in the contract.
There are several risks in connection with the use of futures
contracts as a hedging device. Successful use of futures contracts by ^
the Fund is subject to the ability of the Dreyfus ^ to predict correctly
movements in the direction of interest rates. These predictions involve
skills and techniques that may be different from those involved in the
management of the Fund. In addition, there can be no assurance that there
will be a correlation between movements in the price of the underlying
securities and movements in the price of the securities which are the
subject of the hedge. A decision of whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of market behavior or
unexpected trends in interest rates.
Positions in futures contracts may be closed out only on the
exchange on which they were entered into (or through a linked exchange)
and no secondary market exists for those contracts. In addition, although
^ the Fund intends to purchase or sell futures contracts only if there is
an active market for such contracts, there is no assurance that a liquid
market will exist for the contracts at any particular time. Most futures
exchanges and boards of trade limit the amount of fluctuation permitted in
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<PAGE>
futures contract prices during a single trading day. Once the daily limit
has been reached in a particular contract, no trades may be made that day
at a price beyond that limit. It is possible that futures contract prices
could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting some futures trades to substantial losses. In
such event, and in the event of adverse price movements, the Fund would be
required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio
being hedged, if any, may partially or completely offset losses on the
futures contract. As described above, however, no assurance can be given
that the price of the securities being hedged will correlate with the
price movements in a futures contract and thus provide an offset to losses
on the futures contract.
If the Fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in its
portfolio and rates decrease instead, the Fund will lose part or all of
the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund had insufficient cash, it may
have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. These sales of securities
may, but will not necessarily, be at increased prices which reflect the
decline in interest rates.
Options on Financial Futures Contracts (Premier Limited Term
Government ^ Securities Fund Only). Financial futures ^ contracts
provide for the future sale by one party and the purchase by the other
party of a certain amount of a specific financial instrument at a
specified price, date, time and place.
The Fund may purchase and write put and call options on futures
contracts that are traded on a United States exchange or board of trade as
a hedge against changes in interest rates or in the value of portfolio
securities, and may enter into closing transactions with respect to such
options to terminate existing positions. There is no guarantee that such
closing transactions can be effected.
An option on a futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the
option. Options on futures contracts are currently available on the
Chicago Board of Trade with respect to Treasury bonds, Treasury notes,
Treasury bills and the Standard & Poor's 500 Composite Stock Price Index.
The potential loss related to the purchase of an option on a futures
contract is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale,
there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Fund.
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<PAGE>
In addition to the risks that apply to all options transactions,
there are several risks relating to options on futures contracts. These
risks include the lack of assurance of a perfect correlation between price
movements in the options on futures, on the one hand, and price movements
in the portfolio securities that are the subject of the hedge, on the
other hand. The ability to establish and close out positions on such
options will be subject to the existence of a liquid market, and there can
be no assurance that such a market will be maintained or that closing
transactions will be effected. In addition, there are risks specific to
writing (as compared to purchasing) such options. While ^ the Fund's risk
of loss with respect to purchased put and call options on futures
contracts is limited to the premium paid for the option (plus transactions
costs), when the Fund writes such an option it is obligated to a broker
for the payment of initial and variation margin. In addition, the purchase
of put or call options will be based upon predictions as to anticipated
interest rate or price trends by Dreyfus which could prove to be
incorrect. When ^ the Fund writes a call option or a put option, it will
be required to deposit initial margin and variation margin pursuant to
brokers' requirements similar to those applicable to interest rate futures
contracts. In addition, net option premiums received for writing options
will be included as initial margin deposits.
Investment Restrictions
The following are fundamental investment restrictions of each
Fund. Each Fund of the Trust may not:
1. Purchase any securities which would cause 25% or more of the
value of a Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities and state or
municipal governments and their political subdivisions are not
considered members of any industry. In addition, this limitation
does not apply to investments of domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) a Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowing, and (b) a Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such
loans. For purposes of this restriction debt instruments and
repurchase agreements shall not be treated as loans.
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<PAGE>
4. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition
of such securities in accordance with the Fund's investment
program may be deemed an underwriting.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent a Fund from investing in securities or other instruments
backed by real estate, including mortgage loans, or securities of
companies that engage in the real estate business or invest or
deal in real estate or interests therein).
6. Purchase or sell commodities except that each Fund may enter into
futures contracts and related options, forward currency contracts
and other similar instruments.
7. Purchase with respect to 75% of a Fund's total assets securities
of any issuer (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if, as a
result, (a) more than 5% of a Fund's total assets would be
invested in the securities of that issuer, or (b) a Fund would
hold more than 10% of the outstanding voting securities of that
issuer.
8. A Fund of the Trust may, notwithstanding any other fundamental
investment policy or restriction, invest all of its investable
assets in securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies, and restrictions as the Fund.
The following are non-fundamental investment restrictions of each
Fund of the Trust:
1. The Trust will not purchase or retain the securities of any
issuer if the officers, directors or Trustees of the Trust, its
advisers, or managers owning beneficially more than one half of
one percent of the securities of each issuer together own
beneficially more than five percent of such securities.
2. No Fund will purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof the value of such Fund's investment
in securities would exceed 5% of such Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as
the issuer of a security.
3. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
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<PAGE>
of its total assets except that: (a) this restriction shall not
apply to standby commitments, and (b) this restriction shall not
apply to a Fund's transactions in futures contracts and related
options.
4. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the
Fund's assets would be invested in warrants that are not listed
on the New York or American Stock Exchange (for purposes of this
undertaking, warrants acquired by a Fund in units or attached to
securities will be deemed to have no value).
5. The Funds will not invest more than 15% of the value of their net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days, and other securities
which are not readily marketable. For purposes of this
restriction, illiquid securities shall not include commercial
paper issued pursuant to Section 4(2) of the Securities Act of
1933 and securities which may be resold under Rule 144A under the
Securities Act of 1933, provided that the Board of Trustees, or
its delegate, determines that such securities are liquid, based
upon the trading markets for the specific security.
6. No Fund may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise
permitted by the 1940 Act.
7. No Fund will purchase oil, gas or mineral leases (a Fund may,
however, purchase and sell the securities of companies engaged in
the exploration, development, production, refining, transporting
and marketing of oil, gas or minerals).
8. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.
9. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
10. No Fund shall purchase any security while borrowing representing
more than 5% of the Fund's total assets are outstanding.
If a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in such percentage resulting from
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<PAGE>
a change in the values of assets will not constitute a violation of such
restriction, except as otherwise required by the 1940 Act.
Each of the foregoing restrictions applies to each Fund unless
otherwise indicated. Under the 1940 Act, a fundamental policy may not be
changed without the vote of a majority of the outstanding voting
securities of each Fund, as defined in the 1940 Act. "Majority" means the
lesser of (1) 67% or more of the shares present at a Trust meeting, if the
holders of more than 50% of the outstanding shares of ^ such Fund are
present or represented by proxy, or (2) more than 50% of the outstanding
shares of the ^ Fund. Non-fundamental investments restrictions may be
changed by vote of a majority of the Trust's Board of Trustees at any
time.
In order to permit the sale of the Funds' shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above.^ Should the Trust determine that
any such commitment is no longer in the best interests of the Trust and
its shareholders, it will revoke the commitment by terminating sales of
its shares in the state involved. In addition, the Funds have undertaken
not to invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets or if, as a result, more
than 2% of the Fund's net assets would be invested in warrants not listed
on AMEX or NYSE. Further, the Funds have given a representation that
investments will not be made in real estate limited partnerships. Should
the Trust determine that any such commitment is no longer in the best
interests of the Trust and its shareholders, it will revoke the commitment
by terminating sales of its shares in the state involved.
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDERS
^ At November 30, 1994, there were no controlling shareholders,
as that term is defined under the 1940 Act^, of the Dreyfus/Laurel Funds
Trust.
PRINCIPAL SHAREHOLDERS
The following shareholder owned more than 5% of the outstanding voting
shares of the Fund at December 8, 1994:
Managed Income Fund: InvestNet, Two Mellon Bank Center, 152-0177,
Pittsburgh, PA 15259-0001, 6% record.^
FEDERAL LAW AFFECTING MELLON BANK
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<PAGE>
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in that
business. The activities of Mellon Bank in informing its customers of,
and performing, investment and redemption services in connection with the
Fund, and in providing services to the Fund as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may raise
issues under these provisions. Mellon Bank has been advised by counsel
that ^ the activities contemplated under ^ there arrangements are
consistent with ^ statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or a Fund. If Mellon Bank or Dreyfus
were prohibited from serving a Fund in any of its present capacities, the
Board of Trustees would seek an alternative provider(s) of such services.
TRUSTEES AND OFFICERS
The Company has a Board composed of twelve Trustees which
supervises the Company's investment activities and reviews contractual
arrangements with companies that provide the Funds with services. The
following lists the Trustees and officers and their positions with the
Company and their present and principal occupations during the past five
years. ^ Each Trustee who is an "interested person" of the Company (as
defined in the Investment Company Act of 1940, as amended (the "1940
Act")) is indicated by an asterisk. Each of the Trustees also serves as a
Trustee of The Dreyfus/Laurel Investment Series and The Dreyfus/Laurel
Tax-Free Municipal Funds and as Director of The Dreyfus/Laurel Funds,
Inc., (collectively "The Dreyfus Family of Funds").
^ o + RUTH MARIE ADAMS. Director of the Company; Professor of English
and Vice President ^ Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa;^ Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Company; Director ^ and Chairman,
Massachusetts Business Development ^ Corp.; Director, Boston
Mutual Insurance Company; Director and Vice Chairman of the
Board, Home Owners Federal Savings ^ and Loan (prior to May
1990). Address: Massachusetts Business Development Corp., One
Liberty Square, Boston, Massachusetts 02109.
B-22
<PAGE>
^ o + JAMES M. FITZGIBBONS. Directoir of the Company; President and
Director, Amoskeag Company; Chairman, Howes Leather Company,
Inc.; ^ Director, Fiduciary Trust Company^; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
^ o * J. TOMLINSON FORT. Director of the Company; Partner, Reed,
Smith, Shaw & McClay (law firm). Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Director of the Company; Director, Chairman
of the Board and Director, Rexene Corporation; Director, Calgon
Carbon Corporation; Director, National Picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993;
Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of the Company; Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. ^ and Florida Hospitality
Group; Managing Partner, Himmel/MKDG, Franklin Federal Partners,
Reston Town Center Associates and Grill 23 & Bar. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Director of the Company; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Director of the Company; ^ President and ^
CEO, LDG Management Company ^ Inc.; CEO, LDG Reinsurance
Underwriters, SRRF Management Inc. and Medical Reinsurance
Underwriters ^ Inc. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
^ o + ROBERT D. MCBRIDE. Director of the Company; Director, Chairman
and CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Director of the Company; Of Counsel, Reed,
Smith, Shaw & McClay (law firm). Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
B-23
<PAGE>
o + JOHN J. SCIULLO. Director of the Company; Dean Emeritus and
Professor of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Director of the Company; Principal, Watson
Ventures, Inc.^, prior to February, 1993^; Real Estate
Development Project Manager and Vice President, The Gunwyn
Company. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
# MARIE ^ E. ^ CONNOLLY. President and Treasurer ^ of the
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Investment Series,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Vice President of The
Dreyfus/Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. ^(since 1992); Treasurer,
Funds Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services,^ Inc. (since April 1994); Senior
Vice President ^ and Director of Financial Administration, The
Boston Company Advisors, Inc. ^(December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of The Dreyfus/Laurel Funds
Trust, The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(since September 1994); Senior Vice President, Premier Mutual
Fund Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of The Dreyfus/Laurel Funds
Trust, The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(since September 1994); Vice President and Associate General
Counsel, Premier Mutual Fund Services, Inc. (Since August 1994);
Vice President and Associate General Counsel, Funds Distributor,
Inc. (since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
B-24
<PAGE>
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166.
RICHARD W. HEALEY. Vice President of The Dreyfus/Laurel Funds
Trust, The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Tax-Free Municipal Funds Trust and The Dreyfus/Laurel Funds Trust
(since March 1994); Senior Vice President, Funds Distributor,
Inc. (since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of The
Dreyfus/Laurel Funds Trust; The Dreyfus/Laurel Investment Series,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Senior Vice President,
General Counsel and Secretary, Funds Distributor, Inc. (since
April 1994); Senior Vice President, General Counsel and
Secretary, Premier Mutual Fund Services, Inc. (since August
1994); Counsel, The Boston Company Advisors, Inc. (February 1992
to March 1994); Associate, Ropes & Gray (August 1990 to February
1992); Associate, Sidley & Austin (June 1989 to August 1990).
Address: One Exchange Place, Boston, Massachusetts 02109.
___________________________________________________
* "Interested person" of The Dreyfus/Laurel Funds Trust, as defined
in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of December 1, 1994.
No officer or employee of TSSG or Premier (or of any parent or
subsidiary thereof) receives any compensation from the Company for serving
as an officer or Trustee of the Company. In addition, no officer or
employee of Dreyfus (or of any parent or subsidiary thereof) serves as an
officer or Trustee of the Company. The Dreyfus Family of Funds pays each
Trustee/Director who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Fund
Family). In addition, the Dreyfus/Laurel Fund Family pays each
Trustee/Director $ 1,000 per joint Dreyfus/Laurel Fund Family meeting
B-25
<PAGE>
attended, plus $750 per joint Dreyfus/Laurel Fund Family Audit Committee
meeting attended, and reimburses each Trustee/Director for travel and
out-of-pocket expenses. For the fiscal year ended December 31, 1993 the
fees for meetings and expenses totaled $79,598.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager
for the ^ Funds pursuant to an Investment Management Agreement with the ^
Trust dated April 4, 1994 ("Management Agreement"), transferred to Dreyfus
as of October 17, 1994. Pursuant to the Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide investment
advisory, administrative, custody, fund accounting and transfer agency ^
services to ^ each Fund. As investment manager, Dreyfus manages the ^
Funds by making investment decisions based on the ^ Funds' investment
objectives, policies and restrictions. The Management Agreement is subject
to review and approval at least annually by the Board of ^ Trustees.
The current Management Agreement with Dreyfus provides for a
"unitary fee." Under the unitary fee structure, Dreyfus pays all expenses
of ^ each Fund except: (i) brokerage commissions, (ii) taxes, interest,
fees and expenses of the non-interested Trustees (including counsel
expenses), and extraordinary expenses (which are expected to be minimal),
and (iii) the Rule 12b-1 fees described in this Statement of Additional
Information. Under the unitary fee, Dreyfus provides, or arranges for one
or more third parties to provide, investment advisory, administrative,
custody, fund accounting and transfer agency services to ^ each Fund. For
the provision of such services directly, or through one or more third
parties, Dreyfus receives as full compensation for all services and
facilities provided by it, a fee computed daily and paid monthly at the
annual rate set forth in ^ each Fund's Prospectus, applied to the average
daily net assets of the Fund's investment portfolio, less the accrued fees
and expenses (including counsel fees) of the non-interested Trustees of
the Trust. Previously, the payments to the investment manager covered
merely the provision of investment advisory services (and payment for
sub-advisory services) and certain specified administrative services.
Under this previous arrangement, the Fund also paid for additional
non-investment advisory expenses, such as custody and transfer agency
services, that were not paid by the investment advisor.
The Management Agreement will continue from year to year provided
that a majority of the Directors who are not interested persons of
Dreyfus/Laurel and either a majority of all Directors or a majority of the
shareholders of the Fund approve their continuance. Dreyfus/Laurel may
terminate the Agreement, without prior notice to Dreyfus, upon the vote of
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<PAGE>
a majority of the Board of Directors or upon the vote of a majority of the
outstanding voting securities of the Fund on 60 days written notice to
Dreyfus. Dreyfus may terminate the Management Agreement upon written
notice to the Trust. The Management Agreement will terminate immediately
and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board; Joseph S. DiMartino, President and a
director; W. Keith Smith, Chief Operating Officer and a director; Paul H.
Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean,
Vice President and General Counsel; Barbara E. Casey. Vice
President--Retirement Services; Robert F. Dubuss, Vice President; Henry D.
Gottmann, Vice President--Retail; Elie M. Genadry, Vice
President--Wholesale; Mark N. Jacobs, Vice President--Fund Legal and
Compliance; Jeffery N. Nachman, Vice President--Mutual Fund Accounting;
Diane M. Coffey, Vice President--Corporate Communications; Jay R.
DeMartine, Vice President--Marketing; Kirk V. Stumpp, Vice President--New
Product Development; Lawrence S. Kash, Vice Chairman--Distribution; Philip
L. Toia, Vice Chairman--Operations and Administration; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene and David B. Truman, directors.
As compensation for Dreyfus's services, the Fund pays a fee,
based on its total average daily net assets, that is computed daily and
paid monthly. The rates at which such fees are paid are described in each
Prospectus. Dreyfus may waive all or a portion of its fees payable by any
Fund from time to time.
The following table shows the fees paid by ^ each Fund to Dreyfus
(or its predecessors as the prior investment advisors), including ^ any
fee waiver during the ^ 1991, 1992 ^ and 1993 ^ fiscal years^.
^ 1993 1992 1991
Fee Fee Fee
Premier Limited Term 150,007(1) 128,299 97,349
Government Securities Fund
Premier Managed Income 586,196(2) 556,257 464,800
Fund
______________________________
(1) $17,091 and $11,704 were voluntarily waived and reimbursed
respectively by The Boston Company Advisors, Inc. (the investment
manager prior to April 4, 1994).
(2) $20,837 was reimbursed by Boston Company Advisors, Inc.
B-27
<PAGE>
Dreyfus has agreed that if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to the Management Agreement,
but excluding interest, brokerage expenses, taxes and extraordinary items)
exceed the expense limitation of any state, it will reduce its management
fees by the amount of such excess expense. Such a fee reduction, if any,
will be reconciled on a monthly basis. To the extent these state
regulations permit the exclusion of distribution expenses (see
"Distribution Plan" below), the ^ Trust will exclude such expenses in
determining whether any reduction obligation exists. The most restrictive
state expense limitation applicable to the Fund requires a reduction of
fees in any year that such expenses exceed 2.5% of the first $30 million
of average net assets, 2.0% of the next $70 million of average net assets
and 1.5% of the remaining average net assets. A number of factors,
including the size of the Fund, will determine which of these restrictions
will be applicable to a Fund at any given time. No reimbursement pursuant
to state expense limitations was required for any of the Funds for the
fiscal year ended October 31, 1994.
^
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Funds'
distributor pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for funds in the Dreyfus Family of Funds and for certain
other investment companies.
Sales Loads--Class A. The scale of sales loads applies to
purchases of Class A 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 Internal Revenue Code of 1986, as amended ("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.
B-28
<PAGE>
^ For Premier Managed Income Fund, set forth below is an example
of the method of computing the offering price of the Class A shares. The
example assumes a purchase of Class A shares aggregating less than ^
$50,000 subject to the schedule of sales charges set forth in the
Prospectus at a price based upon the net asset value of the Class A
shares.
Net Asset Value per Share ^ $12.50
Per Share Sales Charge - ^ 3%
of offering price ^(3% of
net asset value per share) ^ $0.59
Per Share Offering Price to
the Public ^ $13.09
For Premier Limited Term Government Securities Fund, set forth
below is an example of the method of computing the offering price of the
Class A shares. The example assumes a purchase of Class A shares
aggregating less than $100,000 subject to the schedule of sales charges
set forth in the Prospectus at a price based upon the net asset value of
the Class A shares.
Net Asset Value per Share $12.50
Per Share Sales Charge - 3.0%
of offering price (3.1% of
net asset value per share) $0.39
Per Share Offering Price to
the Public $12.89
TeleTransfer Privilege--All Classes, except Class R.
TeleTransfer purchase orders may be made between the hours of 8:00 a.m.
and 4:00 p.m., New York time, on any business day that The Shareholder
Services Group, Inc., the Fund's transfer and dividend disbursing agent
(the "Transfer Agent"), and the New York Stock Exchange ("NYSE") are open.
Such purchases will be credited to the shareholder's Fund account on the
next bank business day. To qualify to use the 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 Fund Shares--TeleTransfer Privilege--All Classes, except
Class R."
B-29
<PAGE>
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION ^ PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution ^ Plan."
Distribution ^ Plan
The Securities and Exchange Commission ("SEC") has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Trust directly or indirectly, bear the
expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Prior Plans. Prior to April 4, 1994, the Investor Shares (Class
A) of each Fund were known as either the "Retail Class" of shares or the
"Institutional Class" of shares. These two classes of shares of the Funds
were reclassified as a single class of shares (the Investor Shares) by the
Board of Trustees at a meeting held on November 22, 1993, subject to
certain approvals that were obtained from each Fund's shareholders at a
meeting held on March 29, 1994. At the November 22, 1993 Board Meeting,
the Trustees also approved a new distribution plan for the Investor Shares
(formerly a Fund's Retail and/or Institutional Class of shares) of each
Fund. Shareholders of each Fund's Retail Class of Shares and
Institutional Class of Shares approved the new distribution plans at a
shareholders' meeting held on March 14 and March 29, 1994. These new
distribution plans ("Current A Plans") were effective on April 4, 1994.
The Trust redesignated the ^ Funds' Investor Class shares Class A shares
effective October 17, 1994.^
Prior to April 4, 1994, each Fund's Retail Shares and
Institutional Shares were subject to distribution plans (the "Prior
Plans") that were adopted by the Trust under Section 12(b) of the Act and
of Rule. Under the Prior Plans, the Fund was authorized to spend up to
.25% of its average daily net assets attributable to the Retail Class on
activities primarily intended to result in the sale of such Shares, and
the Fund was authorized to spend up to .15% of its average daily net
assets attributable to the Institutional Class on activities primarily
intended to result in the sale of such Shares.
B-30
<PAGE>
Under the distribution agreements with the prior distributor,
Funds Distributor, Inc. ("Funds Distributor") each Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities (which
are the same as those authorized by the Plans) on behalf of each Fund on a
monthly basis, provided that any payment by a Fund to Funds Distributor,
together with any other payments made by such Fund pursuant to the Prior
Plan, ^ did not exceed .0208% of its average daily net assets
attributable to the Retail Class for the prior month (.25% on an
annualized basis) and .0125% of its average daily net assets attributable
to the Institutional Class for the prior month (.15% on an annualized
basis).
Current Plans. Distribution Plan--Class A ^ Shares. Under the
Current Class A Plan, Class A or Investor shares of a Fund may spend
annually up to 0.25% of the average of its net asset values for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, Fund shares.
The Current Class A Plan provides that a report of the amounts
expended under the Current Class A Plan, and the purposes for which such
expenditures were incurred, must be made to the Trust's Trustees for their
review at least quarterly. In addition, the Current Class A Plan provides
that it may not be amended to increase materially the costs which a Fund
may bear for distribution pursuant to the Current Class A Plan without
approval of a Fund's shareholders, and that other material amendments of
the Current Class A Plan must be approved by the vote of a majority of the
Trustees and of the Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who do not have any direct or indirect
financial interest in the operation of the Current Class A Plan, cast in
person at a meeting called for the purpose of considering such amendments.
The Current Class A Plan is subject to annual approval by the entire Board
of Trustees and by the Trustees who are neither interested persons nor
have any direct or indirect financial interest in the operation of the
Current Class A Plan, by vote cast in person at a meeting called for the
purpose of voting on the Current Class A Plan. The Current Class A Plan
is terminable, as to a Fund's class of shares, at any time by vote of a
majority of the Trustees who are not interested persons and have no direct
or indirect financial interest in the operation of the Current Class A
Plan or by vote of the holders of a majority of the outstanding shares of
such class of the Fund.
Distribution and Service Plans -- Class B and C Shares. In
addition to the above described Current Class A Plan for Class A ^ shares,
the ^ Board of Trustees has adopted a Service Plan (the "Service Plan")
under the Rule for Class B and Class C shares, pursuant to which the Fund
pays the Distributor and Dreyfus Service Corporation for the provision of
certain services to the holders of Class B and Class C shares. The
Trust's Board of Trustees has also adopted a Distribution Plan pursuant to
the Rule with respect to Class B and Class C shares (the "Distribution
B-31
<PAGE>
Plan"). The Funds' Board of Trustees believes that there is a reasonable
likelihood that the Distribution and Service Plans (the "Plans") will
benefit the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and
the purposes for which such expenditures were incurred, must be made to
the Trustees for their review. In addition, each Plan provides that it
may not be amended to increase materially the cost which holders of
Class B or C shares may bear pursuant to the Plan without the approval of
the holders of such Classes and that other material amendments of the Plan
must be approved by the Board of Trustees and by the Trustees who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements entered into in
connection with the Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Plan is subject to annual
approval by such vote of the Trustees cast in person at a meeting called
for the purpose of voting on the Plan. Each Plan was ^ initially approved
by the Trustees at a meeting held on September 23, 1994. Each Plan may be
terminated at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in
the operation of the Plan or in any agreements entered into in connection
with the Plan or by vote of the holders of a majority of Class B and C
shares.
^
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "How to
Redeem Fund Shares."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
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TeleTransfer Privilege--All Classes, except Class R. Investors
should be aware that if they have selected the TeleTransfer Privilege,
any request for a wire redemption will be effected as a TeleTransfer
transaction through the Automated Clearing House ("ACH") system unless
more prompt transmittal specifically is requested. Redemption proceeds
will be on deposit in the investor's account at an ACH member bank
ordinarily two business days after receipt of the redemption request. See
"Purchase of Fund Shares--TeleTransfer Privilege--All Classes, except
Class R."
Redemption Commitment. The Fund has committed itself to pay in
cash all redemption requests by any shareholder of record of the Fund,
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 SEC. In
the case of requests for redemption in excess of such amount, the Board of
^ Trustees reserves the right to make payments in whole or in part in
securities or other assets 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 this event, the securities would be valued
in the same manner as the Fund's portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the
NYSE is closed (other than customary weekend and holiday closings), (b)
when trading in the markets a Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC so that disposal of a
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 a Fund's
shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
^ Fund Exchanges. Shares of any Class of ^ each Fund may be
exchanged for shares of the respective Class of certain other funds
advised or administered by Dreyfus. Shares of the same Class of such
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.
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<PAGE>
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 other
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 contingent deferred sales
charge ("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, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
^
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.
To establish a personal retirement plan by exchange, shares of
the fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Premier Family of Funds or
the Dreyfus Family of Funds. To exchange shares held in a personal
retirement plan account, the shares exchanged must have a current value of
at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of a Fund, shares of the same
Class of another fund in the Premier Family of Funds or the Dreyfus Family
of Funds. This privilege is available only for existing accounts. With
respect to Class R shares held by a Retirement Plan, exchanges may be made
B-34
<PAGE>
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. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but
not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
^ Fund exchanges and Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds
may be obtained ^ by calling 1-800-645-6561. Each Fund reserves the right
to reject any exchange request in whole or in part. The ^ Fund exchange
sevice or Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted.^ There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, a Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal
Plan.
Dividend Sweep. Dividend Sweep allows investors to invest on the
payment date their dividends or dividends and capital gain distributions,
if any, from a Fund in shares of the same Class of another fund in the
Premier Family of Funds or ^ the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
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<PAGE>
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of
other funds that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other
funds sold with a sales load, and the applicable sales
load will be deducted.
C. Dividends and distributions paid by a fund which charges
a sales load may be invested in shares of other funds
sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged
by the fund from which dividends or distributions are
being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a CDSC and
the applicable CDSC, if any, will be imposed upon
redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. Each Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, each Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
also are available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including an 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,
SEP-IRAs and 403(b)(7) Plans with only one participant, is normally $750,
with no minimum on subsequent purchases. Individuals who open an IRA may
also open a non-working spousal IRA with a minimum investment of $250.
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<PAGE>
The investor should read the Prototype Retirement Plan and the
appropriate form of 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 Funds' Prospectus entitled "How to Buy
Fund Shares."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or are not valued by a
pricing service approved by the Board of Trustees, are valued at fair
value as determined in good faith by the Board of Trustees. The Board of
Trustees will review the method of valuation on a current basis. In
making their good faith valuation of restricted securities, the Trustees
generally will take the following factors into consideration: restricted
securities which are 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 Board of Trustees if the Trustees 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 usually will be valued initially at cost. Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board of Trustees.
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify as a regulated investment company ("RIC"), each Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions), (2) must derive at least 90% of its annual gross
income from specified sources ("Income Requirement"), (3) must derive less
than 30% of its annual gross income from gain on the sale or disposition
B-37
<PAGE>
of any of the following that are held for less than three months --
(i) securities, (ii) non-foreign-currency options and futures and
(iii) foreign currencies (or foreign currency options, futures and forward
contracts) that are not directly related to a Fund's principal business of
investing in securities (or options and futures with respect thereto)
("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements. Accordingly, a Fund may be
restricted in the selling of securities held for less than three months.
Any dividend or other distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Funds' Prospectus. In addition, the
Code provides that if a shareholder holds shares of the Fund for six
months or less and has received a capital gain distribution with respect
to those shares, any loss incurred on the sale of those shares will be
treated as a long-term capital loss to the extent of the capital gain
distribution received.
Dividends and other distributions declared by a Fund in October,
November or December of any year and payable to shareholders of record on
a date in that month any of those months are deemed to have been paid by a
Fund and received by the shareholders on December 31 of that year if the
distributions are paid by a Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
A portion of the dividends paid by a Fund, whether received in
cash or reinvested in additional Fund shares, may be eligible for the
dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by a Fund from
U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax.
Dividends and interest received by a Fund may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom
that may be excluded by future regulations), and income from transactions
in options, futures and forward contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
B-38
<PAGE>
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to a Fund's principal business of investing
in securities (or options and futures with respect to securities) also
will be subject to the Short-Short Limitation if they are held for less
than three months.
If a Fund satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether a Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. Each Fund will consider whether it
should seek to qualify for this treatment for its hedging transactions.
To the extent a Fund does not so qualify, it may be forced to defer the
closing out of certain options, futures and forward contracts beyond the
time when it otherwise would be advantageous to do so, in order for such
Fund to qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and 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 any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, 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 a
Fund from certain futures and forward contracts and options transactions
will be treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon exercise or lapse of
such contracts and options as well as from closing transactions. In
addition, any such contracts or options remaining unexercised at the end
of a Fund's taxable year will be treated as sold for their then fair
market value (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by a Fund involving certain contracts
or options may constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, override or modify Sections 1256
and 988. As such, all or a portion of any short-term or long-term capital
gain from certain "straddle" transactions may be recharacterized to
B-39
<PAGE>
ordinary income. If the Fund were treated as entering into "straddles" by
reason of its engaging in certain forward contracts or options
transactions, such "straddles" would be characterized as "mixed straddles"
if the forward contracts or options transactions comprising a part of such
"straddles" were governed by Section 1256. Each Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to a Fund may differ. If no election is
made, then to the extent the "straddle" and conversion transactions rules
apply to positions established by a Fund, losses realized by a Fund will
be deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
Investment by a Fund in securities issued or acquired at a
discount (for example, zero coupon securities) or providing for deferred
interest or for payment of interest in the form of additional obligations
(for example, "pay-in-kind" or "PIK" securities) could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, a Fund could be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and to distribute such income in order to
maintain its qualification for treatment as a RIC. In such case, the Fund
may have to dispose of securities it might otherwise have continued to
hold in order to generate cash to satisfy these distribution requirements.
If a Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
State and Local Taxes. Depending upon the extent of a Fund's
activities in states and localities in which its offices are maintained,
in which its agents or independent contractors are located, or in which it
is otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from a Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
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<PAGE>
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in a Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from a Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate) on the gross amount
of the distribution. Foreign shareholders also may be subject to U.S.
federal withholding tax on income resulting from any election by a Fund to
treat foreign taxes paid by it as paid by its shareholders (see discussion
above), but foreign shareholders will not be able to claim a credit or
deduction for the foreign taxes treated as having been paid by them.
Capital gains realized by foreign shareholders on the sale of
Fund shares and distributions to them of net capital gain, as well as
amounts retained by a Fund that are designated as undistributed capital
gains, generally will not be subject to U.S. federal income tax unless the
foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable
year. However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for U.S. federal income
tax purposes on his worldwide income at the graduated rates applicable to
U.S. citizens, rather than the 30% U.S. federal withholding tax rate. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If income
from a Fund is effectively connected with a U.S. trade or business carried
on by a foreign shareholder, then all distributions to that shareholder
and any gains realized by that shareholder on the disposition of the Fund
shares will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. citizens and domestic corporations, as the case may be.
Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally
are subject to U.S. federal estate tax on their U.S. situs property, such
as shares of a Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. The ^ Trust has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of the ^
Trust are exempt from Pennsylvania personal property taxes.
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<PAGE>
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Funds are made by
Mellon Bank ^ subject to the overall supervision of the Trustees of the
Trust. Portfolio transactions for the Funds are effected by or under the
direction of Dreyfus^. The same personnel are also in charge of portfolio
transactions for other accounts of other subsidiaries and affiliates of
Dreyfus.
Although investment decisions for the Funds are made
independently from those of the other accounts managed by Dreyfus ^,
investments of the type a Fund may make may also be made by those other
accounts. When a Fund and one or more other accounts managed by Dreyfus ^
are prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by Dreyfus ^ to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by a Fund or the
size of the position obtained or disposed of by a Fund. In other cases,
however, it is believed that coordination and the ability to participate
in volume transactions will be to the benefit of the Funds.
Transactions on stock exchanges on behalf of the Funds involve
the payment of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, Dreyfus ^ seeks the most favorable execution and price available.
The Investment Management and ^ Agreement provides that, in assessing the
best overall terms available for any transaction, Dreyfus ^ shall consider
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis. In addition, the Investment Manager and ^ Agreement authorizes
Dreyfus, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Trust and/or other accounts over which Dreyfus ^ or an affiliate exercises
investment discretion.
The Trustees will periodically review the brokerage commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
B-42
<PAGE>
inuring to each Fund. It is possible that certain of the services received
will primarily benefit one or more other accounts for which investment
discretion is exercised, or a Fund other than that for which the
transaction was executed. Conversely, the Trust or any given Fund may be
the primary beneficiary of the service received as a result of portfolio
transactions effected for such other accounts or Funds. The fees of
Dreyfus ^ under the Investment Management ^ Agreement are not reduced by
reason of receipt of such brokerage and research services.
The Trustees of the Trust have determined that portfolio
transactions for the Funds may be executed through affiliated broker
dealers if, in the judgment of Dreyfus ^, the use of an affiliated broker
is likely to result in prices and execution that are fair and reasonable
and are at least as favorable as those of other qualified broker-dealers
and if, in such transactions, the affiliated broker-dealer charges the
Funds a rate consistent with that charged to comparable unaffiliated
customers in similar transactions. Affiliated broker-dealers will not
participate in commissions from brokerage given by a Fund to other brokers
or dealers. In addition, pursuant to an exemption order granted by the
SEC, the Funds may engage in transactions involving certain money market
instruments with particular affiliates acting as principal.
Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere.
For the 1991, 1992 and 1993 fiscal years the Funds did not pay
any brokerage commissions.
Portfolio Turnover (Each Fund). While the Funds do not intend to
trade in securities for short-term profits, the Funds will not consider
portfolio turnover rate a limiting factor in making investment decisions.
While it is not possible to predict the rate of frequency of portfolio
transactions (i.e., portfolio turnover rate) with any certainty, at the
present time it is anticipated that the portfolio turnover rates of the ^
Funds are likely to exceed 100%. Higher portfolio turnover rates can
result in corresponding increases in brokerage commissions. In addition,
to the extent a Fund realizes short-term gains as a result of more
portfolio transactions, such gains would be taxable to shareholders at
ordinary income tax rates.
The portfolio turnover rates for the 1992 and 1993 fiscal years
for the Premier Managed Income Fund were, 216%, and 333% respectively; and
for the Premier Limited Term Government Securities Fund, 30% and 74%,
respectively. The significant differences in the portfolio turnover rates
for the Funds were due to a change in portfolio managers that occurred
during the 1993 fiscal year or a change in the investment strategy for the
Fund. In addition, the portfolio turnover was attributable to the
mortgage-roll strategy employed by the Fund.
PERFORMANCE INFORMATION
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<PAGE>
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled
"Performance Information."
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) per share with a
hypothetical $1,000 payment made at the beginning of the period (assuming
the reinvestment of dividends and other 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 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 C the
maximum applicable CDSC has been paid upon redemption at the end of the
period.
Total return is calculated by subtracting the amount of a Fund's
net asset value (maximum offering price in the case of Class A) per share
at the beginning of a stated period from the net asset value (maximum
offering price in the case of Class A) per share at the end of the period
(after giving effect to the reinvestment of dividends and other
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) 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 shares or without giving effect to any applicable
CDSC at the end of the period for Class B or C shares. In such cases, the
calculation would not reflect the deduction of the sales load with respect
to Class A shares or any applicable CDSC with respect to Class B or C
shares, which, if reflected would reduce the performance quoted.
^ Each Fund may compare the performance of its shares to that of
other mutual funds, relevant indices or rankings prepared by independent
services or other financial or industry publications that monitor mutual
fund performance. Class B and Class C shares were not offered prior to
December 19, 1994.
Performance rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual Fund
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund
Values, U.S. News and World Report, Forbes, Fortune, Barron's, Financial
Planning, Financial Planning on Wall Street, Certified Financial Planner
Today, Investment Advisor, Kiplinger's, Smart Money and similar
publications may also be used in comparing the Fund's performance.
Furthermore, a Fund may quote its yields in advertisements or in
shareholder reports.
B-44
<PAGE>
Effective April 4, 1994, the Retail and Institutional Class of
shares of each Fund were reclassified as a single class of Shares known as
"Investor Shares" and the Investment Class of shares of each Fund was
renamed as each Fund's "Trust Shares." Effective October 17, 1994, each
fund redesignated the Investor Shares as "Class A shares" and the Trust
Shares as "Class R shares." The following performance data for Class A
shares is reflective of each Fund's Retail Class of Shares' performance.
In addition, the following performance data for the Class R shares of the
Managed Income Fund reflects such Fund's former Investment Shares and
Trust Shares.
30-Day Yield
The Managed Income and Limited Term Government Funds' 30-day
yield figures described below will be calculated according to a formula
prescribed by the SEC. The formula can be expressed as follows:
a-b 6
YIELD = 2[( ------ +1) -1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursement)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the net asset value per share on the last day of
the period
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount
or premium, the formula generally calls for amortization of the discount
or premium; the amortization schedule will be adjusted monthly to reflect
changes in the market values of the debt obligations.
Yield information is useful in reviewing the Funds' performance,
but because yields fluctuate, such information cannot necessarily be used
to compare an investment in a Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that yield is a function of the kind and quality of the
instruments in the Funds' portfolios, portfolio maturity, operating
expenses and market conditions. The Funds' yields and total returns will
also be affected if Dreyfus waives its investment management fees.
B-45
<PAGE>
The Managed Income Fund's and the Limited Term Government Fund's
30-day yield for the period ended June 30, 1994 were as follows:
30-Day Yield for Period Ended
June 30, 1994
Yield
Managed Income Fund
Class A shares 7.17%
Class R shares 6.91%
Limited Term Government
Fund
Class A shares 5.63%
Class R shares N/A
Total Return
Each of the Managed Income and Limited Term Government Funds'
"average annual total return" figures described and shown below are
computed according to a formula prescribed by the SEC.
The formula can be expressed as follows:
1/n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1000
payment made at beginning of the 1, 5, or 10
years (or other) periods at the end of 1, 5, or
10 years (or other) periods (or fractional
portion thereof)
The table below shows the average annual total return for each of the
Funds' Class A shares for the specified periods.
1 2
Managed Limited Term
Income Government
B-46
<PAGE>
For the one year (4.86%) (5.54%)
7/1/93 to 6/30/94
For the five years 6.77% 6.03%
7/1/89 to 6/30/94
For the ten years 9.72% N/A
7/1/84 to 6/30/94
From inception date to 9.48% 6.39%
6/30/94
__________________________
1 Managed Income Fund commenced operations on March 4,
1991.
2 Limited Term Government Fund commenced operations on
March 3, 1986.
The table below shows the average annual total return for each of the
Funds Class R shares for the specified periods.
1 2
Managed Limited Term
Income Government
For the one year 7/1/93 (.07%) --
to 6/30/94
For the five years 7/1/89 -- --
to 12/31/94
For the ten years 7/1/84 -- --
to 6/30/94
From inception date to 4.51 --
6/30/94
__________________________
1 The Fund commenced selling Class R shares on February 1,
1993.
2 The Fund did not offer Class R shares for the period
ended June 30, 1994.
B-47
<PAGE>
Aggregate Total Return
The aggregate total return for Managed Income Fund's Class R
shares for the period from February 1, 1993 (commencement of Class R) to
June 30, 1994 was 6.43%. Set forth below for the Class A shares of a Fund
are tables showing the performance on an aggregate total return basis
(i.e., with all dividends and distributions reinvested) of a hypothetical
$10,000 investment in the Managed Income Fund since November 2, 1984 (the
date the Fund most recently changed its investment objective and policies)
and for the Limited Term Government Fund since March 3, 1986 (commencement
of operations). The Managed Income Fund's performance is compared to the
Lehman Government/Corporate Index, an unmanaged index of government
securities and investment grade corporate bonds with maturities of one
year or more. The Limited Term Government Fund's performance is compared
to the Lehman Intermediate Government Bond Index.
Each Fund's aggregate total return figures described and shown below
represent the cumulative change in the value of an investment in each Fund
for the specified period and are computed by the following formula:
ERV-P
AGGREGATE TOTAL RETURN = P
Where: P = A hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of the 1-, 5- or
10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.
B-48
<PAGE>
<TABLE>
<CAPTION>
MANAGED INCOME FUND OTHER INDICES
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C>
Period Value Value of Total % Lehman %
Ended of Rein- Change Brothers Change
Initial vested over Aggregate over
$10,000 Dividends Period Bond Period
Invest- and
ment Capital
Gains
Distri-
butions(1)
12/31/83* 10,000 -- 10,000 -- 10,000 --
12/31/84 10,000 1,200 11,200 12.00 11,515 15.15
12/31/85 11,132 2,513 13,645 21.84 14,060 22.10
12/31/86 11,236 3,786 15,022 10.09 16,206 15.26
12/31/87 10,651 5,266 15,917 5.96 16,653 2.76
12/31/88 10,783 6,734 17,517 10.05 17,966 7.88
12/31/89 10,491 8,000 18,491 5.56 20,576 14.53
12/31/90 9,953 9,351 19,304 4.40 22,420 8.96
12/31/91 10,764 11,827 22,591 17.03 26,008 16.00
12/31/92 10,802 13,770 24,572 8.77 27,933 7.40
12/31/93 10,736 17,408 28,144 14.54 30,656 9.75
06/30/94 9,821 16745 26566 29,470 (3.87)
</TABLE>
_________________________
Explanatory Notes:
* Effective November 2, 1984, the investment objective and policies
of this Fund (prior to that date, named the "Government Income Fund") were
changed to the current investment objectives and policies described under
"Description of the Fund" in the Prospectus.
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
B-49
<PAGE>
B-50
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM GOVERNMENT FUND* OTHER INDICES
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Total % Lehman %
Initial Reinvested Value Change Inter- Change
$10,000 Dividends over mediat over
Invest- and Period e Period
ment Capital Gov't
Gains Bond
Distri- Index
butions(1)
03/03/86** 10,000 -- 10,000 -- 10,000 --
12/31/86 10,104 735 10,839 8.39 10,977 9.77
12/31/87 9,400 1,549 10,949 1.01 11,373 3.61
12/31/88 9,328 2,306 11,634 6.26 12,100 6.39
12/31/89 9,576 3,324 12,900 10.88 13,635 12.69
12/31/90 9,592 4,248 13,840 7.29 14,938 9.56
12/31/91 10,248 5,462 15,710 13.51 17,045 14.10
12/31/92 10,208 6,361 16,569 5.47 18,226 6.93
12/31/93 10,512 7,564 18,076 9.10 19,715 8.17
06/30/94 9,776 7,490 17,266 (4.48) 19,241 (2.40)
____________________________
Explanatory Notes:
* Effective May 1, 1990, the investment policies of this Fund (prior
to that date, named the "GNMA Fund") were changed to the current policies
described under "Description of the Fund" in the Prospectus.
** Commencement of Fund operations.
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
</TABLE>
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "General
Information."
B-51
<PAGE>
Each Fund 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.
Each Fund will send annual and semi-annual financial statements
to all its shareholders.
Under Massachusetts law, shareholders could, under certain circum
stances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or a Trustee. The Agreement and
Declaration of Trust provides for indemnification from Trust property for
all losses and expenses of any shareholder held personally liable for
the obligations of the Trust. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to
meet its obligations, a possibility which Mellon Bank believes is remote.
Upon payment of any liability incurred by a Fund, the shareholder of
that Fund paying such liability will be entitled to reimbursement from
the general assets of the Fund. The Trustees intend to conduct the
operations of each Fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of
such Fund.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the Funds'
custodian and fund accountant. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9692, Providence, Rhode
Island 02940-9830, is each Fund's transfer and dividend disbursing
agent. The Shareholder Services Group, Inc. and Mellon Bank, as
custodian, have no part in determining the investment policies of a Fund
or which securities are to be purchased or sold by the Fund. Prior to
the effectiveness of the Investment Management Agreement for
its services as custodian and fund accountant, Mellon Bank was
paid an annual fee of $30,000 per portfolio, and, for all portfolios, an
annual administrative account maintenance fee of $10,000, an annual on-line
fee of $3,600, an asset-based fee of .02% of the first $500 million of
the ^ Trust's net assets and .01% of net assets over $500 million, plus
a specified transaction fee for each transaction. For its services as
transfer and dividend disbursing agent, Mellon Bank was paid an annual
fee of $13.00 per shareholder account, with a minimum monthly fee of
$3,000 per portfolio. Mellon Bank was reimbursed for certain out-of-
pocket expenses including wire fees, and postage, stationery and
telephone expenses.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby - 9th Floor,
Washington, D.C. 20036, has passed upon the legality of the shares
offered by the ^ Prospectuses and this Statement of Additional
Information.
B-52
<PAGE>
^ Coopers & Lybrand L.L.P. was appointed by the Trustees to
serve as the Funds' independent auditors for the year ending December
31, ^ 1993.^
FINANCIAL STATEMENTS
^ The financial statements for the fiscal year ended December 31, 1993,
including notes to the financial statements and supplementary informa-
tion are in the Report of the Independent Auditors, included in the
Annual Report to Shareholders. A copy of the Annual Report, as well as
the Funds' Semi-Annual Report for six months' ended June 30, 1994 (un-
audited), accompany this Statement of Additional Information. The
financial statements of the Annual Report and the Semi-Annual Report are
incorporated herein by reference.
B-53
<PAGE>
APPENDIX
INFORMATION ABOUT SECURITIES RATINGS
Corporate Bond Ratings -- Managed Income Fund
Description of Moody's Investors' Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visua-
lized are most unlikely to impair the fundamentally strong position of
such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility
to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of mainte-
nance of other terms of the contract over any long period of time may
be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
B-54
<PAGE>
C--Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
Description of S&P corporate bond ratings:
AAA--Bonds rated AAA have the highest rating assigned by S&P to a debt
obligations. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circum-
stances are more likely to lead to a weakened capacity to pay interest
and repay principal for bonds in this category than for bonds in higher
rated categories.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
represents the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protec-
tive characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
Commercial Paper Ratings ^
The rating A-1 + is the highest, and A-l the second highest, commercial
paper rating assigned by S & P. Paper rated A-1 must have either the direct
credit support of an issuer or guarantor that possesses excellent long-term
operating and financial strengths combined with strong liquidity
characteristics (typically, such issuers or guarantors would display credit
quality characteristics which would warrant a senior bond rating of "AA-"
or higher), or the direct credit support of an issuer or guarantor that
possesses above average, long-term fundamental operating and financing
capabilities combined with ongoing excellent liquidity characteristics.
Paper rated A-1 must have the following characteristics: liquidity ratios
are adequate to meet cash requirements; long-term senior debt is rated A or
better; the issuer has access to at least two additional channels of
borrowing; basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances; typically, the issuer's industry is well
established and the issuer has a strong position
B-55
<PAGE>
within the industry; and the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigned rating are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term
debt; (6) trend of earnings over a period of ten years; (7) financial
strength of parent company and the relationships which exist with the
issuer; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations.
Description of IBCA Limited/IBCA Inc. commercial paper ratings. Short-term
obligations, including commercial paper, rated A-l+ by IBCA Limited or its
affiliate IBCA Inc. are obligations supported by the highest capacity for
timely repayment. Obligations rated A-1 have a very strong capacity for
timely repayment. Obligations rated A-2 have a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
Description of Fitch Investors Services, Inc. commercial paper ratings.
Fitch Investors Services, Inc. employs the rating F-l+ to indicate issues
regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less
in degree than issues rated F-l+, while the rating F-2 indicates a
satisfactory degree of assurance for timely payment, although the margin
of safety is not as great as indicated by the F-1+ and F-1 categories.
Description of Duff & Phelps Inc. commercial paper ratings. Duff& Phelps
Inc. employs the designation of Duff 1 with respect to top grade commer-
cial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment: liquidity factors and
company fundamentals are sound.
Various of the nationally recognized statistical rating organizations
utilize rankings within rating categories indicated by a + or -. The
Funds, in accordance with industry practice, recognize such rankings
within categories as graduations, viewing for example S&P's rating of
A-1+ and A-1 as being in S&P's highest rating category.
Description of Thomson BankWatch, Inc. ("BankWatch") commercial paper
ratings. BankWatch will assign both short-term debt ratings and issuer
ratings to the issuers it rates. BankWatch will assign a short-term
rating ("TBW-1," "TBW-2,""TBW-3," or "TBW-4") to each class of debt
(e.g., commercial paper or non-convertible debt), having a maturity of
one-year or less, issued by a holding company structure or an entity
within the holding company structure that is rated by BankWatch.
Additionally, BankWatch will assign an issuer
B-56
<PAGE>
rating ("A," "A/B," "B," "B/C," "C," "C/D," "D," "D/E," and "E") to each
issuer that it rates.
B-57
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
December ^ 19, 1994
THE DREYFUS/LAUREL FUNDS TRUST
^ 200 Park Avenue
^ New York, NY 10166
For information call l-800-548-2868
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in and should be read in conjunction
with each of the following prospectuses of The Dreyfus/Laurel Funds Trust
(formerly the Laurel Funds Trust) (the "Trust") dated December ^ 19, 1994
(referred to herein singularly as the "Prospectus" and jointly as the (
"Prospectuses"): the prospectus describing the Class A and Class R shares
of the Premier Limited Term Government Securities Fund (formerly the
Laurel Intermediate Term Government Securities Fund) ("Limited Term
Government Fund") and the Premier Managed Income Fund (formerly the Laurel
Managed Income Fund) ("Managed Income Fund"). Each Prospectus may be
obtained by writing or calling the Trust at the address or telephone
number set forth above.
This Statement of Additional Information, though not in itself a
Prospectus, is incorporated by reference into the Prospectuses in its
entirety. As used in this SAI, the term "Fund" refers to each of the
Limited Term Government and Managed Income Funds. The Class A Shares and
Class R shares discussed in the SAI are also referred to as "Classes" of
shares of the Funds. Each Fund's Annual Report for the fiscal year ended
December 31, 1993 ^ and each Fund's Semi-Annual Report for the six months
ended June 30, 1994 (unaudited), accompany this Statement of Additional
Information, and each Fund's financial statements and related notes
contained therein are incorporated by reference into this SAI.
DC-172255.2
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT MANAGEMENT AND OTHER SERVICES . . . . . . . . . . . . . . 6
INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . . . ^ 8
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . ^ 32
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . ^ 35
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . ^ 36
PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . ^ 36
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ^ 43
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . ^ 49
^ CONTROLLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 51
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 51
CUSTODIAN AND FUND ACCOUNTANT . . . . . . . . . . . . . . . . . . . ^ 51
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . ^ 51
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . ^ 51
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 52
APPENDIX -- INFORMATION ABOUT SECURITIES RATINGS . . . . . . . . . ^ 53
- 2 -
<PAGE>
GENERAL INFORMATION
The Trust's name was changed from the Laurel Funds Trust to the
Dreyfus/Laurel Funds Trust effective October 17, 1994. The Laurel
Intermediate Term Government Securities Fund was redesignated Premier
Limited Term Government Fund and the Laurel Managed Income Fund was
redesignated Premier Managed Income Fund effective October 17, 1994.
MANAGEMENT OF THE TRUST
The organizations that provide services to the Trust, namely The
Dreyfus Corporation ("Dreyfus") as investment ^ manager (the "Manager");
Mellon Bank, N.A. ("Mellon Bank") as custodian and fund accountant;
Premier Mutual Fund Services, Inc. ("Premier") as the distributor
("Distributor") and sub-administrator ("Sub-Administrator^"); and The
Shareholder Services Group, Inc. ("TSSG") a subsidiary of First Data
Corporation ("FDC") as transfer agent and the functions they perform for
the Trust are discussed in the Prospectus and in this Statement of
Additional Information.^
Trustees and Officers of the Trust
The Trustees and executive officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. Each Trustee
who is an "interested person" of the Trust as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") is indicated by an
asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Funds Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and as Director of The Dreyfus/Laurel Funds, Inc.
(collectively "The ^ Dreyfus Family of Funds").
o + RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United
Chapters of Phi Beta Kappa; Trustee, Woods Hole Oceanographic
Institution. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Trustees and
Assistant Treasurer of the Trust; Director and Chairman,
Massachusetts Business Development Corp.; Director, Boston Mutual
Insurance Company; Director and Vice Chairman of the Board, Home
Owners Federal Savings and Loan (prior to May 1990). Address:
Massachusetts Business Development Corp., One Liberty Square,
Boston, Massachusetts 02109.
- 3 -
<PAGE>
o + JAMES M. FITZGIBBONS. Trustee of the Trust; President and
Director, Amoskeag Company; Chairman, Howes Leather Company,
Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o * J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith,
Shaw & McClay (law firm). Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon
Carbon Corporation; Director, National Picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993;
Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Trustee of the Trust; Director, The Boston
Company, Inc. ^ and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. and Florida Hospitality
Group; Managing Partner, Himmel/MKDG, Franklin Federal Partners,
Reston Town Center Associates and Grill 23 & Bar. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant.
Address: 1817 Foxcroft Lane, Allison Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO,
LDG Management Company Inc.; CEO, LDG Reinsurance Underwriters,
SRRF Management Inc. and Medical Reinsurance Underwriters Inc.
Address: 401 Edgewater Place, Wakefield, Massachusetts 01880.
o + ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and
Professor of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
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<PAGE>
o + ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development
Project Manager and Vice President, The Gunwyn Company. Address:
25 Braddock Park, Boston, Massachusetts 02116-5816.
# MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds
Trust and The Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. (since 1992); Treasurer, Funds
Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior
Vice President and Director of Financial Administration, The
Boston Company Advisors, Inc. (December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, Premier Mutual Fund
Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994);Vice President and Associate General Counsel,
Premier Mutual Fund Services, Inc. (Since August 1994); Vice
President and Associate General Counsel, Funds Distributor, Inc.
(since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166
RICHARD W. HEALEY. Vice President of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
March 1994); Senior Vice President, Funds Distributor, Inc.
(since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
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<PAGE>
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Trust,
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994); Associate,
Ropes & Gray (August 1990 to February 1992); Associate, Sidley &
Austin (June 1989 to August 1990). Address: One Exchange Place,
Boston, Massachusetts 02109.
___________________________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus ^ Corporation.
The officers and Trustees of the Trust as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of ^ December 1, 1994.
No officer or employee of TSSG or Premier (or of any parent or
subsidiary thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent or subsidiary thereof) serves as an officer
or Trustee of the Trust. The ^ Dreyfus Family of Funds pays each
Trustee/Director who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Fund
Family)^. In addition, the Dreyfus/Laurel Fund Family pays each
Trustee/Director $ 1,000 per joint Dreyfus/Laurel Fund Family meeting
attended, plus $750 per joint Dreyfus/Laurel Fund Family Audit Committee
meeting attended, and reimburses each Trustee/Director for travel and
out-of-pocket expenses. For the fiscal year ended December 31, 1993 ^ the
fees for meetings and expenses totaled $79,598.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Dreyfus Corporation ("Dreyfus") serves as the investment
manager (the " ^ Manager") for the Funds pursuant to a written agreement
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<PAGE>
with ^ the Trust dated April 4, 1994 ("Management Agreement"), transferred
from Mellon Bank ^ to Dreyfus, effective October 17, 1994. Pursuant to
the Investment Management Agreement, Dreyfus provides, or arranges for one
or more third parties to provide investment advisory, administrative,
custody, fund accounting and transfer agency service to each Fund. As
investment manager, Dreyfus manages each Fund by making investment
decisions based on such Fund's investment ^ objective, policies and
restrictions. For these services, each Fund pays a fee to Dreyfus at the
rates stated in the Prospectus.
The Management Agreement will continue from year to year provided
that a majority of the Trustees who are not interested persons of the
Trust and either a majority of all Trustees or a majority of the
shareholders of the Fund approve the continuance. The Trust may terminate
the Agreement, without prior notice to the Manager, upon the vote of a
majority of the Board of Trustees or upon the vote of a majority of the
outstanding voting securities of the Fund on 60 days' written notice to
the Manager. The Manager may terminate the Management Agreement upon
written notice to the Trust. The Management Agreement will terminate
immediately and automatically upon its assignment.
The Investment Management Agreement provides for a "unitary fee."
Under the unitary fee structure, Dreyfus pays all expenses of each Fund
except: (i) brokerage commissions, (ii) taxes, interest, fees and expenses
of the non-interested Trustees (including counsel expenses), and
extraordinary expenses (which are expected to be minimal), and (iii) the
Rule 12b-1 fees described in this Statement of Additional Information.
Under the unitary fee, Dreyfus provides investment advisory services and
provides or arranges for the provision by one or more parties, of
sub-investment advisory, administrative, custody, fund accounting and
transfer agency services to the Funds. For the provision of such services
directly, or through one or more third parties, Dreyfus receives as full
compensation for all services and facilities provided by it, a fee
computed daily and paid monthly at the annual rate set forth in each
Fund's prospectus, applied to the average daily net assets of a Fund's
investment portfolio, less the accrued fees and expenses (including
counsel fees) of the non-interested Trustees of the Trust.
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<PAGE>
The following table shows the fees paid by each Fund ^(and any
fee waiver during the 1991, 1992 and 1993 fiscal years).
1993 1992 1991
Fee Fee Fee
Limited Term 150,007(1) 128,299 97,349
Government Fund
Managed Income Fund 586,196(2) 556,257 464,800
______________________________
(1) $17,091 and $11,704 was voluntarily waived and reimbursed
respectively by The Boston Company Advisors, Inc. (the investment
manager prior to April 4, 1994).
(2) $20,837 was reimbursed by The Boston Company Advisors, Inc.
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in the
business. The activities of Mellon Bank in informing its customers of,
and performing, investment and redemption services in connection with a
Fund, and in providing services to a Fund as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may raise
issues under these provisions. Mellon Bank has been advised by counsel
that its activities contemplated under this arrangement are consistent
with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or a Fund. If Mellon Bank or Dreyfus
were prohibited from serving a Fund in any of its present capacities, the
Board of ^ Trustees would seek an alternative provider(s) of such
services.
INVESTMENT POLICIES
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<PAGE>
The Prospectuses discuss the investment objectives of each Fund
and the policies it employs to achieve those objectives. The following
discussion supplements the description of the Funds' investment policies
in the Prospectuses.
Foreign Securities
The Managed Income Fund may invest in securities of foreign
issuers, including investments in obligations of foreign branches of
domestic banks and domestic branches of foreign banks. Investment in
foreign securities presents certain risks, including those resulting from
fluctuations in currency exchange rates, reevaluation of currencies,
future political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning
issuers and the fact that foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of securities of
comparable domestic issuers. In addition, with respect to certain foreign
countries, there is the possibility of expropriation, confiscatory
taxation and limitations on the use or removal of funds or other assets of
the Fund including withholding of dividends.
Currency Transactions
The Managed Income Fund may engage in currency exchange
transactions as a means of managing certain risks associated with
purchasing and selling securities denominated in foreign securities.
Generally, the currency exchange transactions of the Fund will be
conducted on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the currency exchange market. This rate
under normal market conditions differs from the prevailing exchange rate
in an amount generally less than 0.1% due to the cost of converting from
one currency to another. The Fund also may deal in forward exchanges
between currencies of the different countries in which it invests as a
hedge against possible variations in the exchange rates between these
currencies. This is accomplished through contractual agreements to
purchase or sell a specified currency at a specified future date and price
set at the time of the contract.
Dealings in forward currency exchanges by the Fund are limited to
hedging involving either specific transactions or aggregate portfolio
positions. Transaction hedging is the purchase or sale of foreign currency
with respect to specific receivables or payables of a Fund generally
arising in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of foreign currency with respect
to portfolio security positions denominated or quoted in such currency.
The Fund will not speculate in forward currency exchanges. The Fund may
position hedge with respect to a particular currency to an extent greater
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<PAGE>
than the aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in or currently
convertible into that particular currency. If the Fund enters into a
position hedging transaction, its custodian or sub-custodian bank will
place cash or readily marketable securities in a segregated account of the
Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of such forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to such
contracts. The Fund will not attempt to hedge all of its foreign
portfolio positions and will enter into such transactions only to the
extent, if any, deemed appropriate by Dreyfus. The Fund will not enter
into a position hedging commitment if, as a result thereof, the Fund would
have more than 15% of the value of its total assets committed to such
contracts. The Fund will not enter into a forward contract with a term of
more than one year.
It may not be possible for the Fund to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to the Fund of engaging in currency transactions
varies with such factors as the currency involved, the length of the
contract period and the market conditions then prevailing. Since
transactions in currency exchanges are usually conducted on a principal
basis, no fees or commissions are involved.
At or before the maturity of a forward contract, the Fund may
either sell a portfolio security and make delivery of the currency, or it
may retain the security and offset its contractual obligation to deliver
the currency by purchasing a second contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of
the currency. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If
the Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the currency. Should forward prices
decline during the period between the Fund's entering into a forward
contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The use of forward currency contracts by the Fund will be limited
to the transactions described above. The Fund is not required to enter
into such transactions with regard to its portfolio securities, regardless
of currency denomination, and will not do so unless deemed appropriate by
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<PAGE>
Dreyfus. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point
in time. In addition, although forward currency contracts tend to minimize
the risk of loss due to a decline in the value of the hedged currency,
they also tend to limit any potential gain which might result should the
value of the currency increase.
Because the Fund invests in foreign securities, the Fund will
hold from time to time various foreign currencies pending its investment
in foreign securities or conversion into U.S. dollars. Although the Fund
values its assets daily in terms of U.S. dollars, it does not convert its
holdings of foreign currencies into U.S. dollars on a daily basis. When
converting foreign currencies to U.S. dollars, the Fund may incur costs of
currency conversion. A foreign exchange dealer does not charge a fee for
conversion, but it does realize a profit based on the difference, which is
known as the spread, between the prices at which the dealer is buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
U.S. Government Securities
The Managed Income and Limited Term Government Funds may invest
in U.S. Government Securities that are direct obligations of the U.S.
Treasury, or that are issued by agencies and instrumentalities of the U.S.
Government and supported by the full faith and credit of the U.S.
Government. These include Treasury notes, bills and bonds and securities
issued by the Government National Mortgage Association ("GNMA"), the
Federal Housing Administration, the Department of Housing and Urban
Development, the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration and the Small
Business Administration.
The Funds may also invest in U.S. Government Securities that are
not supported by the full faith and credit of the U.S. Government. These
include securities issued by the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Home Loan Banks, Tennessee Valley Authority, Student Loan Marketing
Association and District of Columbia Armory Board. Because the U.S.
Government is not obligated by law to provide support to an
instrumentality it sponsors, these Funds will invest in obligations issued
by such an instrumentality only when Dreyfus determines that the credit
risk with respect to the instrumentality does not make its securities
unsuitable for investment by such Funds.
GNMA certificates represent ownership interests in a pool of
mortgages issued by a mortgage banker or other mortgagee. Distributions on
GNMA certificates include principal and interest components. GNMA, a
corporate instrumentality of the U.S. Department of Housing and Urban
Development, guarantees timely payment of principal and interest on GNMA
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<PAGE>
certificates; this guarantee is deemed a general obligation of the United
States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans
Administration. The mortgages have maximum maturities of 40 years.
Government statistics indicate, however, that the average life of the
underlying mortgages is shorter, due to scheduled amortization and
unscheduled prepayments (attributable to voluntary prepayments or
foreclosures). Since these statistics indicate that the average life of
the mortgages backing most GNMA certificates (which are single-family
mortgages with 25- to 30-year maturities) is approximately 12 years,
yields on pools of single-family mortgages are often quoted on a 12-year
prepayment assumption. (The actual maturity of specific GNMA certificates
will vary based on the prepayment experience of the underlying mortgage
pool.) Based on a 12-year prepayment assumption, GNMA certificates have
had historical yields at least 3/4 of 1% greater than Treasury bonds and
U.S. Government agency bonds and 1/4 of 1% greater than the highest grade
corporate bonds. Actual yield comparisons will vary with the prepayment
experience of specific GNMA certificates.
GNMA issues pass-through securities backed by adjustable-rate
mortgages. The securities will bear interest at a rate which will be
adjusted annually. The prepayment experience of the mortgages underlying
these securities may vary from that for fixed-rate mortgages.
FHLMC is a corporate instrumentality of the U.S. Government and
was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing.^ FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
FNMA is a Government sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the Secretary
of Housing and Urban Development. FNMA purchases residential mortgages
from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal
and interest by FNMA.
Bank Obligations
As stated in the Prospectuses, the Managed Income Fund ^ and the
Limited Term Government Fund are permitted to invest in high-quality,
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<PAGE>
short-term money market instruments. The Fund may invest temporarily, and
without limitation in such instruments when, in ^ Dreyfus' opinion, a
"defensive" investment posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable
obligations of commercial banks; time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for specified periods of time
at stated interest rates; and bankers' acceptances are time drafts drawn
on commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may be
purchased by the Trust are insured by the FDIC and are subject to Federal
examination and to a substantial body of Federal law and regulation. As a
result of governmental regulations, domestic branches of foreign banks
are, among other things, generally required to maintain specified levels
of reserves, and are subject to other supervision and regulations designed
to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs
and TDs, may be general obligations of the parent bank in addition to the
issuing branch or may be limited by the terms of a specific obligation and
by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
Asset-Backed Securities
Mortgage Backed Securities. The Limited Term Government and the
Managed Income Funds may invest in various mortgage backed securities, as
described in the Prospectus. Mortgage backed securities represent an
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<PAGE>
ownership interest in a pool of residential mortgage loans. These
securities are designed to provide monthly payments of interest and
principal to the investor. The mortgagor's monthly payments to his/her
lending institution are "passed-through" to an investor. Most issuers or
poolers provide guarantees of payments, regardless of whether or not the
mortgagor actually makes the payment. The guarantees made by issuers or
poolers are supported by various forms of credit, collateral, guarantees
or insurance, including individual loan, title, pool and hazard insurance
purchased by the issuer. There can be no assurance that the private
issuers or poolers can meet their obligations under the policies. Mortgage
backed securities issued by private issuers or poolers, whether or not
such securities are subject to guarantees, may entail greater risk than
securities directly or indirectly guaranteed by the U.S. Government.
Interests in pools of mortgage backed securities differ from
other forms of debt securities, which normally provide for periodic
payment of interest in fixed amounts with principal payments at maturity
or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential mortgage loans, net of any fees
paid. Additional payments are caused by repayments resulting from the sale
of the underlying residential property, refinancing or foreclosure, net of
fees or costs which may be incurred. Some mortgage backed securities are
described as "modified pass-through." These securities entitle the holders
to receive all interest and principal payments owed on the mortgages in
the pool, net of certain fees, regardless of whether or not the mortgagors
actually make the payments. Collateralized Mortgage Obligations ("CMOs")
are generally issued as a series of different classes. An issue of CMOs
tends to be backed by a larger number of mortgages than GNMA, FNMA or
FHLMC certificates, thus allowing greater statistical prediction of
prepayment characteristics. Interest and principal payments on the
mortgages underlying any series will first be applied to meet the interest
payment requirements of each class in the series other than any class in
respect of which interest accrues but is not paid or any principal only
class. Then, principal payments on the underlying mortgages are generally
applied to pay the principal amount of the class that has the earliest
maturity date. Once that class is retired, the principal payments on the
underlying mortgages are applied to the class with the next earliest
maturity date. This is repeated until all classes are paid. Therefore,
while each class of CMOs remains subject to prepayment as the underlying
mortgages prepay, structuring several classes of CMOs in the stream of
principal payments allows one to more closely estimate the period of time
when any one class is likely to be repaid. The Managed Income and Limited
Term Government Funds may invest in mortgage backed securities issued by
the FHLMC and the FNMA.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential mortgage loans,
including CMOs, in which the Managed Income Fund can invest. Pools created
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<PAGE>
by such non-governmental issuers generally offer a higher rate of interest
than Government and Government-related pools because there are not direct
or indirect U.S. Government guarantees of payments in the former pools.
However, timely payment of interest and principal of these pools is
supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance purchased by the issuer.
The insurance and guarantees are issued by U.S. Government entities,
private insurers and the mortgage poolers. There can be no assurance that
the private insurers or mortgage poolers can meet their obligations under
the policies.
The Managed Income Fund expects that U.S. Government or private
entities may create mortgage loan pools offering pass-through investments
in addition to those described above. The mortgages underlying these
securities may be alternative mortgage instruments, that is, mortgage
instruments whose principal or interest payment may vary or whose terms to
maturity may be shorter than previously customary. As new types of
mortgage backed securities are developed and offered to investors, the
Managed Income Fund will, consistent with its investment objective and
policies, consider making investments in such new types of securities.
Other Asset-Backed Securities (Managed Income Fund Only). The
Managed Income Fund may also invest in non-mortgage Asset-Backed
Securities. The purchase of non-mortgage Asset-Backed Securities raises
considerations peculiar to the financing of the instruments underlying
such securities. For example, most organizations that issue Asset-Backed
Securities relating to motor vehicle installment purchase obligations
perfect their interests in their respective obligations only by filing a
financing statement and by having the servicer of the obligations, which
is usually the originator, take custody thereof. In such circumstances, if
the servicer were to sell the same obligations to another party, in
violation of its duty not to do so, there is a risk that such party could
acquire an interest in the obligations superior to that of the holders of
the Asset-Backed Securities. Also, although most such obligations grant a
security interest in the motor vehicle being financed, in most states the
security interest in a motor vehicle must be noted on the certificate of
title to perfect such security interest against competing claims of other
parties. Due to the large number of vehicles involved, however, the
certificate of title to each vehicle financed, pursuant to the obligations
underlying the Asset-Backed Securities, usually is not amended to reflect
the assignment of the seller's security interest for the benefit of the
holders of the Asset-Backed Securities. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. In addition,
various state and Federal laws give the motor vehicle owner the right to
assert against the holder of the owner's obligation certain defenses such
owner would have against the seller of the motor vehicle. The assertion of
such defenses could reduce payments on the related Asset-Backed
Securities. Insofar as credit card receivables are concerned, credit card
holders are entitled to the protection of a number of state and Federal
consumer credit laws, many of which give such holders the right to set off
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<PAGE>
certain amounts against balances owed on the credit card thereby reducing
the amounts paid on such receivables. In addition, unlike most other
Asset-Backed Securities, credit card receivables are unsecured obligations
of the card holder.
The development of non-mortgage backed securities is at an early
stage compared to mortgage backed securities. While the market for
Asset-Backed Securities is becoming increasingly liquid, the market for
mortgage backed securities issued by certain private organizations and
non-mortgage backed securities is not as well developed. Dreyfus intends
to limit its purchases of mortgage backed securities issued by certain
private organizations and non-mortgage backed securities to securities
that are readily marketable at the time of purchase.
Low-Rated Securities
The Managed Income Fund may invest in low-rated and comparable
unrated securities. The effect a recession might have on such securities
is not known. Any such recession, however, could severely disrupt the
market for such securities and adversely affect the value of such
securities. Any such economic downturn also could adversely affect the
ability of the issuers of such securities to repay principal and pay
interest thereon.
The ratings of the various nationally recognized statistical
rating organizations ("NRSROs") such as Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's ^ Ratings Group ("S&P") generally
represent the opinions of those organizations as to the quality of the
securities that they rate. Such ratings, however, are relative and
subjective, are not absolute standards of quality and do not evaluate the
market risk of the securities. Although Dreyfus uses these ratings as a
criterion for the selection of securities for the Fund, Dreyfus also
relies on its independent analysis to evaluate potential investments for
the Fund. The Fund's achievement of their investment objective may be more
dependent on Dreyfus's credit analysis of low-rated and unrated securities
than would be the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. In addition, it is possible that an
NRSRO might not timely change its ratings of a particular issue to reflect
subsequent events. None of these events will require the sale of the
securities by the Fund, although Dreyfus will consider these events in
determining whether the Fund should continue to hold the securities. To
the extent that the ratings given by an NRSRO for securities may change as
a result of changes in the rating systems or due to a corporate
reorganization of the NRSRO, the Fund will attempt to use comparable
ratings as standards for its investments in accordance with the investment
objectives and policies of the Fund.
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Lending of Portfolio Securities
As stated in the Prospectuses, The Managed Income Fund and the
Limited Term Government may lend securities from its portfolio to brokers,
dealers and other financial organizations. Such loans, if and when made,
may not exceed 33 1/3% of such Fund's total assets, taken at value. The
Fund may not lend portfolio securities to ^ its affiliates without
specific authorization from the SEC. Loans of portfolio securities by the
Fund will be collateralized by cash, letters of credit or securities
issued or guaranteed by the U.S. Government or its agencies which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. From time to time, the Fund may
return a part of the interest earned from the investment of collateral
received for securities loaned to the borrower and/or a third party, which
is unaffiliated with the Fund and which is acting as a "finder."
By lending portfolio securities, the Fund can increase its income
by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when
Government securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees
must terminate the loan and regain the right to vote the securities. The
risks in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
Options on Securities
The Limited Term Government Fund has the ability to write covered
put and call options on their portfolio securities as part of its
investment strategy.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a
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greater return than would be realized on the security alone. In return for
a premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike
price for the life of the option (or until a closing purchase transaction
can be effected). Nevertheless, the call writer retains the risk of a
decline in the price of the underlying security. Similarly, the principal
reason for writing covered put options is to realize income in the form of
premiums. The writer of a covered put option accepts the risk of a decline
in the price of the underlying security. The size of the premiums that a
Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase
their option-writing activities.
The Fund will write only covered options. Accordingly, whenever
the Fund writes a call option it will continue to own or have the present
right to acquire the underlying security for as long as it remains
obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, whenever
the Fund writes a put option it will either (a) deposit with the Fund's
custodian in a segregated account, cash, U.S. Government Securities or
other high grade debt obligations having a value equal to or greater than
the exercise price of the underlying securities or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates
as those written by the Fund), or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise
prices greater than those that it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of
the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case of
call options, these exercise prices are referred to as "in-the-money,"
"at-the-money" and "out-of-the-money," respectively.
The Fund may write (a) in-the-money call options when Dreyfus
expects that the price of the underlying security will remain flat or
decline moderately during the option period, (b) at-the-money call options
when Dreyfus expects that the price of the underlying security will remain
flat or advance moderately during the option period and (c)
out-of-the-money call options when Dreyfus expects that the premiums
received from writing the call option, plus the appreciation in market
price of the underlying security up to the exercise price, will be greater
than the appreciation in the price of the underlying security alone. In
any of the preceding situations, if the market price of the underlying
security declines and the security is sold at this lower price, the amount
of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
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reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
So long as the obligation of the Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring it to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. The Fund can no longer effect a closing purchase transaction
with respect to an option once it has been assigned an exercise notice. To
secure its obligation to deliver the underlying security when it writes a
call option, or to pay for the underlying security when it writes a put
option, the Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and the securities
exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange or in the over-the-counter market. In light of this
fact and current trading conditions, the Fund expects to write only call
or put options issued by the Clearing Corporation. The Managed Income Fund
expects to write options only on national securities exchanges.
The Fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the Fund has written an option, it
will realize a profit if the cost of the closing purchase transaction is
less than the premium received upon writing the original option and will
incur a loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option.
Although the Fund generally will write only those options for
which Dreyfus believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities
exchange will exist for any particular option or at any particular time,
and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity or
order flow, or other unforeseen events, have at times rendered certain of
the facilities of national securities exchanges inadequate and resulted in
the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered
call option writer, the Fund is unable to effect a closing purchase
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<PAGE>
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires.
Securities exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the Fund and other clients of Dreyfus and
certain of their affiliates may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. At
the date of this Statement of Additional Information, the position and
exercise limits for common stocks were 3,000, 5,500 or 8,000 options per
stock (i.e., options representing 300,000, 550,000 or 800,000 shares),
depending on various factors relating to the underlying security. Dollar
amount limits apply to U.S. Government Securities. These limits may
restrict the number of options the Fund will be able to purchase on a
particular security.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable
preferred stock or debt securities, the time required to convert or
exchange and obtain physical delivery of the underlying common stocks with
respect to which the Fund has written options may exceed the time within
which the Fund must make delivery in accordance with an exercise notice.
In these instances, the Fund may purchase or temporarily borrow the
underlying securities for purposes of physical delivery. By so doing, the
Fund will not bear any market risk, since the Fund will have the absolute
right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Although Dreyfus will attempt to take appropriate measures to
minimize the risks relating to a Fund's writing of put and call options,
there can be no assurance that the Fund will succeed in its option-writing
program.
When-Issued Securities and Delayed-Delivery Transactions
To secure an advantageous price or yield, the Managed Income and
Limited Term Government Funds may purchase U.S. Government Securities on a
when-issued basis and purchase or sell U.S. Government Securities for
delayed-delivery. The Funds will enter into such transactions for the
purpose of acquiring portfolio securities and not for the purpose of
leverage. Delivery of the securities in such cases occurs beyond the
normal settlement periods, but no payment or delivery is made by a Fund
prior to the reciprocal delivery or payment by the other party to the
transaction. In entering into a when-issued or delayed-delivery
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<PAGE>
transaction, the Funds will rely on the other party to consummate the
transaction and may be disadvantaged if the other party fails to do so.
U.S. Government Securities are normally subject to changes in
value based upon changes, real or anticipated, in the level of interest
rates and the public's perception of the creditworthiness of the issuers.
In general, U.S. Government Securities tend to appreciate when interest
rates decline and depreciate when interest rates rise. Purchasing these
securities on a when-issued or delayed-delivery basis, therefore, can
involve the risk that the yields available in the market when delivery
takes place may actually be higher than those obtained in the transaction
itself. Similarly, the sale of U.S. Government Securities for
delayed-delivery can involve the risk that the prices available in the
market when the delivery is made may actually be higher than those
obtained in the transaction itself. In the case of the purchase by a Fund
of when-issued or delayed-delivery securities, a segregated account in the
name of the Fund consisting of cash or liquid debt securities equal to the
amount of the when-issued or delayed-delivery commitments will be
established at the Fund's custodian. For the purpose of determining the
adequacy of the securities in the accounts, the deposited securities will
be valued at market or fair value. If the market or fair value of the
securities declines, additional cash or securities will be placed in the
account daily so that the value of the account will equal the amount of
such commitments by the Fund. On the settlement date, the Fund will meet
its obligations from then-available cash flow, the sale of securities held
in the segregated account, the sale of other securities or, although it
would not normally expect to do so, from the sale of the when-issued or
delayed-delivery securities themselves (which may have a greater or lesser
value than the Fund's payment obligations).
Futures Activities
The Limited Term Government Fund may invest in futures contracts
and options on futures contracts that are traded on a United States
exchange or board of trade.
These investments may be made by the Limited Term Government Fund
solely for the purpose of hedging against changes in the value of its
portfolio securities, or of securities in which the Fund intends to invest
due to anticipated changes in interest rates and market conditions, and
not for purposes of speculation. The Fund will not purchase or sell
futures contracts or purchase options on futures if, immediately
thereafter, more than 33 1/3% of its net assets would be hedged. In
addition, the Fund will not enter into futures and options contracts for
which aggregate initial margin deposits and premiums exceed 5% of the fair
market value of its assets, after taking into account unrealized profits
and unrealized losses on futures contracts into which it has entered. See
"Taxes" below.
Futures Contracts. The purpose of the acquisition or sale of a
futures contract by the Limited Term Government Fund is to protect the
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<PAGE>
Fund from fluctuations in values in rates on securities without actually
buying or selling the securities. Of course, since the value of portfolio
securities will far exceed the value of the futures contracts sold by the
Fund, an increase in the value of the futures contracts could only
mitigate--but not totally offset--the decline in the value of the
portfolio.
No consideration is paid or received by the Limited Term
Government Fund upon the purchase or sale of a futures contract.
Initially, the Fund will be required to deposit with the broker an amount
of cash or cash equivalents equal to approximately 1% to 10% of the
contract amount (this amount is subject to change by the board of trade on
which the contract is traded and members of such board of trade may charge
a higher amount). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied. Subsequent payments,
known as "variation margin," to and from the broker, will be made daily as
the price of securities underlying the futures contract fluctuates, making
the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." In addition, when the
Fund purchases a futures contract, it must deposit into a segregated
account with its custodian an amount of cash or cash equivalents equal to
the total market value of such futures contract, less the amount of
initial margin for the contract. At any time prior to the expiration of a
futures contract, the Fund may elect to close the position by taking an
opposite position, which will operate to terminate the Fund's existing
position in the contract.
There are several risks in connection with the use of futures
contracts as a hedging device. Successful use of futures contracts by a
Fund is subject to the ability of Dreyfus to predict correctly movements
in the direction of interest rates. These predictions involve skills and
techniques that may be different from those involved in the management of
the Fund. In addition, there can be no assurance that there will be a
correlation between movements in the price of the underlying securities
and movements in the price of the securities which are the subject of the
hedge. A decision of whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge may be unsuccessful
to some degree because of market behavior or unexpected trends in interest
rates.
Positions in futures contracts may be closed out only on the
exchange on which they were entered into (or through a linked exchange)
and no secondary market exists for those contracts. In addition, although
the Limited Term Government Fund intends to purchase or sell futures
contracts only if there is an active market for such contracts, there is
no assurance that a liquid market will exist for the contracts at any
particular time. Most futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular
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<PAGE>
contract, no trades may be made that day at a price beyond that limit. It
is possible that futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some
futures trades to substantial losses. In such event, and in the event of
adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may partially
or completely offset losses on the futures contract. As described above,
however, no assurance can be given that the price of the securities being
hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
If the Limited Term Government Fund has hedged against the
possibility of an increase in interest rates adversely affecting the value
of securities held in its portfolio and rates decrease instead, the Fund
will lose part or all of the benefit of the increased value of securities
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund had insufficient
cash, it may have to sell securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. These
sales of securities may, but will not necessarily, be at increased prices
which reflect the decline in interest rates.
Options on Financial Futures Contracts. Financial futures ^
contracts provide for the future sale by one party and the purchase by the
other party of a certain amount of a specific financial instrument at a
specified price, date, time and place.
The Limited Term Government Fund may purchase and write put and
call options on futures contracts that are traded on a United States
exchange or board of trade as a hedge against changes in interest rates or
in the value of portfolio securities, and may enter into closing
transactions with respect to such options to terminate existing positions.
There is no guarantee that such closing transactions can be effected.
An option on a futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the
option. Options on futures contracts are currently available on the
Chicago Board of Trade with respect to Treasury bonds, Treasury notes,
Treasury bills and the Standard & Poor's 500 Composite Stock Price Index.
The potential loss related to the purchase of an option on a futures
contract is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale,
there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Fund.
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<PAGE>
In addition to the risks that apply to all options transactions,
there are several risks relating to options on futures contracts. These
risks include the lack of assurance of a perfect correlation between price
movements in the options on futures, on the one hand, and price movements
in the portfolio securities that are the subject of the hedge, on the
other hand. The ability to establish and close out positions on such
options will be subject to the existence of a liquid market, and there can
be no assurance that such a market will be maintained or that closing
transactions will be effected. In addition, there are risks specific to
writing (as compared to purchasing) such options. While a Fund's risk of
loss with respect to purchased put and call options on futures contracts
is limited to the premium paid for the option (plus transactions costs),
when the Fund writes such an option it is obligated to a broker for the
payment of initial and variation margin. In addition, the purchase of put
or call options will be based upon predictions as to anticipated interest
rate or price trends by Dreyfus which could prove to be incorrect. When a
Fund writes a call option or a put option, it will be required to deposit
initial margin and variation margin pursuant to brokers' requirements
similar to those applicable to interest rate futures contracts. In
addition, net option premiums received for writing options will be
included as initial margin deposits.
Portfolio Turnover
While the Managed Income and Limited Term Government Funds do not
intend to trade in securities for short-term profits, these Funds will not
consider portfolio turnover rate a limiting factor in making investment
decisions. While it is not possible to predict the rate of frequency of
portfolio transactions (i.e., portfolio turnover rate) with any certainty,
at the present time it is anticipated that the portfolio turnover rates
for the Managed Income and Limited Term Government Funds is likely to
exceed 100%. Higher portfolio turnover rates can result in corresponding
increases in brokerage commissions. In addition, to the extent a Fund
realizes short-term gains as a result of more portfolio transactions, such
gains would be taxable to shareholders at ordinary income tax rates.
A Fund may experience high portfolio turnover due to frequent
redemptions and exchanges. In addition to the results described above, a
high portfolio turnover rate will increase the risk that the Fund may fail
to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. Failure to so qualify would
cause the Fund's net investment income and capital gain net income to
become subject to Federal income tax at corporate rates. For a discussion
of the requirements for qualification and regulated investment companies
under Subchapter M and the effect of high portfolio turnover on such
qualification, see "Taxes."
The portfolio turnover rates for the 1992 and 1993 fiscal years
for the Managed Income Fund were 216% and 333%, respectively and for the
Limited Term Government Fund, 30% and 74%, respectively. The significant
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<PAGE>
differences in the portfolio turnover rates for the ^ Limited Term
Government Fund were due to a change in portfolio managers that occurred
during the 1993 fiscal year or a change in the investment strategy for the
^ Fund. The significant differences in the portfolio turnover rates for
the Managed Income Fund were the result of a mortgage-roll strategy
employed by the Fund.
Investment Restrictions
The following are fundamental investment restrictions of each
Fund. Each Fund of the Trust may not:
1. Purchase any securities which would cause 25% or more of the
value of a Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities and state or
municipal governments and their political subdivisions are not
considered members of any industry. In addition, this limitation
does not apply to investments of domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) a Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowing, and (b) a Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such
loans. For purposes of this restriction debt instruments and
repurchase agreements shall not be treated as loans.
4. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition
of such securities in accordance with the Fund's investment
program may be deemed an underwriting.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent a Fund from investing in securities or other instruments
backed by real estate, including mortgage loans, or securities of
companies that engage in the real estate business or invest or
deal in real estate or interests therein).
6. Purchase or sell commodities except that each Fund may enter into
futures contracts and related options, forward currency contracts
and other similar instruments.
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<PAGE>
7. Purchase with respect to 75% of a Fund's total assets securities
of any issuer (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if, as a
result, (a) more than 5% of a Fund's total assets would be
invested in the securities of that issuer, or (b) a Fund would
hold more than 10% of the outstanding voting securities of that
issuer.
8. A Fund of the Trust may, notwithstanding any other fundamental
investment policy or restriction, invest all of its investable
assets in securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies, and restrictions as the Fund.
The following are non-fundamental investment restrictions of each
Fund of the Trust:
1. The Trust will not purchase or retain the securities of any
issuer if the officers^ or Trustees of the Trust, its advisers,
or managers owning beneficially more than one half of one percent
of the securities of each issuer together own beneficially more
than five percent of such securities.
2. No Fund will purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof the value of such Fund's investment
in securities would exceed 5% of such Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as
the issuer of a security.
3. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets except that: (a) this restriction shall not
apply to standby commitments, and (b) this restriction shall not
apply to a Fund's transactions in futures contracts and related
options.
4. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the
Fund's assets would be invested in warrants that are not listed
on the New York or American Stock Exchange (for purposes of this
^ limitation, warrants acquired by a Fund in units or attached to
securities will be deemed to have no value).
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<PAGE>
5. No Fund shall invest more than 15% of the value of their net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days, and other securities
which are not readily marketable. For purposes of this
restriction, illiquid securities shall not include commercial
paper issued pursuant to Section 4(2) of the Securities Act of
1933 and securities which may be resold under Rule 144A under the
Securities Act of 1933, provided that the Board of Trustees, or
its delegate, determines that such securities are liquid, based
upon the trading markets for the specific security.
6. No Fund may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise
permitted by the 1940 Act.
7. No Fund will purchase oil, gas or mineral leases (a Fund may,
however, purchase and sell the securities of companies engaged in
the exploration, development, production, refining, transporting
and marketing of oil, gas or minerals).
8. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.
9. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
10. No Fund shall purchase any security while borrowing representing
more than 5% of the Fund's total assets are outstanding.
If a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in such percentage resulting from
a change in the values of assets will not constitute a violation of such
restriction, except as otherwise required by the 1940 Act.
Each of the foregoing restrictions applies to each Fund unless
otherwise indicated. Under the 1940 Act, a fundamental policy may not be
changed without the vote of a majority of the outstanding voting
securities of each Fund, as defined in the 1940 Act. "Majority" means the
lesser of (1) 67% or more of the shares present at a Trust meeting, if the
holders of more than 50% of the outstanding shares of ^ such Fund are
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<PAGE>
present or represented by proxy, or (2) more than 50% of the outstanding
shares of the ^ Fund. Non-fundamental investments restrictions may be
changed by vote of a majority of the Trust's Board of Trustees at any
time.
In order to permit the sale of the Funds' shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above. Accordingly, pursuant to such
commitments, the Funds have undertaken not to invest in oil, gas or other
mineral leases. Should the Trust determine that any such commitment is no
longer in the best interests of the Trust and its shareholders, it will
revoke the commitment by terminating sales of its shares in the state
involved. In addition, the Funds have undertaken not to invest in warrants
(other than warrants acquired by the Fund as part of a unit or attached to
securities at the time of purchase) if, as a result, the investments
(valued at the lower of cost or market) would exceed 5% of the value of
the Fund's net assets or if, as a result, more than 2% of the Fund's net
assets would be invested in warrants not listed on ^ American Stock
Exchange or New York Stock Exchange ("NYSE"). Further, the Funds have
given a representation that investments will not be made in real estate
limited partnerships. Should the Trust determine that any such commitment
is no longer in the best interests of the Trust and its shareholders, it
will revoke the commitment by terminating sales of its shares in the state
involved.
Portfolio Transactions
Decisions to buy and sell securities for the Funds are made by
Dreyfus subject to the overall supervision of the Trustees of the Trust.
Portfolio transactions for the Funds are effected by or under the
direction of Dreyfus. The same personnel are also in charge of portfolio
transactions for other accounts of other subsidiaries and affiliates of
Dreyfus.
Although investment decisions for the Funds are made
independently from those of the other accounts managed by Dreyfus,
investments of the type a Fund may make may also be made by those other
accounts. When a Fund and one or more other accounts managed by Dreyfus
are prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by Dreyfus to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by a Fund or the
size of the position obtained or disposed of by a Fund. In other cases,
however, it is believed that coordination and the ability to participate
in volume transactions will be to the benefit of the Funds.
Transactions on stock exchanges on behalf of the Funds involve
the payment of negotiated brokerage commissions. There is generally no
- 28 -
<PAGE>
stated commission in the case of securities traded in the over-the-counter
markets, but the price of those securities includes an undisclosed
commission or mark-up. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, Dreyfus seeks the most favorable execution and price available.
The Investment Management ^ Agreement provides that, in assessing the best
overall terms available for any transaction, Dreyfus shall consider
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis. In addition, the Investment Manager ^ Agreement authorizes Dreyfus,
in selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, to consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Trust and/or other
accounts over which Dreyfus or an affiliate exercises investment
discretion.
The Trustees will periodically review the brokerage commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were fair and reasonable in relation to the benefits
inuring to each Fund. It is possible that certain of the services received
will primarily benefit one or more other accounts for which investment
discretion is exercised, or a Fund other than that for which the
transaction was executed. Conversely, the Trust or any given Fund may be
the primary beneficiary of the service received as a result of portfolio
transactions effected for such other accounts or Funds. The fees of
Dreyfus under the Investment Management Agreement are not reduced by
reason of receipt of such brokerage and research services.
The Trustees of the Trust have determined that portfolio
transactions for the Funds may be executed through affiliated broker
dealers if, in the judgment of Dreyfus, the use of an affiliated broker is
likely to result in prices and execution that are fair and reasonable and
are at least as favorable as those of other qualified broker-dealers and
if, in such transactions, the affiliated broker-dealer charges the Funds a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. Affiliated broker-dealers will not participate in
commissions from brokerage given by a Fund to other brokers or dealers. In
addition, pursuant to an exemption order granted by the SEC, the Funds may
engage in transactions involving certain money market instruments with
particular affiliates acting as principal. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those
cases in which better prices and executions may be obtained elsewhere.
- 29 -
<PAGE>
For the 1991, 1992 and 1993 fiscal years the Managed Income and
Limited Term Government Funds did not pay any brokerage commissions.
PURCHASE OF SHARES
Distribution and Service Plans
The Securities and Exchange Commission ("SEC") has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Trust directly or indirectly, bear the
expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Prior Plans. Prior to April 4, 1994, the Investor Shares of each
Fund were known as either the "Retail Class" of shares or the
"Institutional Class" of shares. These two classes of shares of the Funds
were reclassified as a single class of shares (the Investor Shares) by the
Board of Trustees at a meeting held on November 22, 1993, subject to
certain approvals that were obtained from each Fund's shareholders at a
meeting held on March 29, 1994. At the November 22, 1993 Board Meeting,
the Trustees also approved a new distribution plan for the Investor Shares
(formerly a Fund's Retail and/or Institutional Class of shares) of each
Fund. Shareholders of each Fund's Retail Class of Shares and
Institutional Class of Shares approved the new distribution plans at a
shareholders' meeting held on March 14 and March 29, 1994. These new
distribution plans ("Current Class A Plans") were effective on April 4,
1994. The Trust redesignated the Funds' Investor Class shares Class A
shares effective October 17, 1994.
Prior to April 4, 1994, each Fund's Retail Shares and
Institutional Shares were subject to distribution plans (the "Prior
Plans") that were adopted by the Trust under Section 12(b) of the Act and
of the Rule. Under the Prior Plans, the Fund was authorized to spend up
to .25% of its average daily net assets attributable to the Retail Class
on activities primarily intended to result in the sale of such Shares, and
the Fund was authorized to spend up to .15% of its average daily net
assets attributable to the Institutional Class on activities primarily
intended to result in the sale of such Shares.
Under the distribution agreements with the prior distributor,
Funds Distributor, Inc. ("Funds Distributor"), each Fund was authorized to
pay, or reimburse Funds Distributor, for distribution activities (which
are the same as those authorized by the Plans) on behalf of each Fund on a
monthly basis, provided that any payment by a Fund to Funds Distributor,
together with any other payments made by such Fund pursuant to the Prior
Plan, shall not exceed .0208% of its average daily net assets attributable
to the Retail Class for the prior month (.25% on an annualized basis) and
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<PAGE>
.0125% of its average daily net assets attributable to the Institutional
Class for the prior month (.15% on an annualized basis).
Current Plans. Distribution Plan--Class A shares. Under the
Current Class A Plan, Class A shares of a Fund may spend annually up to
0.25% of the average of its net asset values for costs and expenses
incurred in connection with the distribution of, and shareholder servicing
with respect to, Fund shares.
The Current Class A Plan provides that a report of the amounts
expended under the Current Class A Plan, and the purposes for which such
expenditures were incurred, must be made to the Trust's Trustees for their
review at least quarterly. In addition, the Current Class A Plan provides
that it may not be amended to increase materially the costs which a Fund
may bear for distribution pursuant to the Current Class A Plan without
approval of a Fund's shareholders, and that other material amendments of
the Current Class A Plan must be approved by the vote of a majority of the
Trustees and of the Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who do not have any direct or indirect
financial interest in the operation of the Current Class A Plan, cast in
person at a meeting called for the purpose of considering such amendments.
The Current Class A Plan is subject to annual approval by the entire Board
of Trustees and by the Trustees who are neither interested persons nor
have any direct or indirect financial interest in the operation of the
Current Class A Plan, by vote cast in person at a meeting called for the
purpose of voting on the Current Class A Plan. The Current Class A Plan
is terminable, as to a Fund's class of shares, at any time by vote of a
majority of the Trustees who are not interested persons and have no direct
or indirect financial interest in the operation of the Current Class A
Plan or by vote of the holders of a majority of the outstanding shares of
such class of the Fund.
Distribution and Service Plans -- Class B and C shares. The Fund
also offers Class B and Class C shares, described in the Prospectus,
pursuant to a separate Prospectus and a separate network associated with
Dreyfus. In addition to the above described Current Class A Plan for
Class A shares, the Trust's Board of Trustees has adopted a Service Plan
(the "Service Plan") under the Rule for Class B and Class C shares,
pursuant to which the Fund pays the Distributor and Dreyfus Service
Corporation for the provision of certain services to the holders of Class
B and Class C shares. The Trust's Board of Trustees has also adopted a
Distribution Plan pursuant to the Rule with respect to Class B and Class C
shares (the "Distribution Plan"). The ^ Board of Trustees believes that
there is a reasonable likelihood that the Distribution and Service Plans
(the "Plans") will benefit the Fund and the holders of Class B and Class C
shares.
A quarterly report of the amounts expended under each Plan, and
the purposes for which such expenditures were incurred, must be made to
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<PAGE>
the Trustees for their review. In addition, each Plan provides that it
may not be amended to increase materially the cost which holders of
Class B or C shares may bear pursuant to the Plan without the approval of
the holders of such Classes and that other material amendments of the Plan
must be approved by the Board of Trustees and by the Trustees who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements entered into in
connection with the Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Plan is subject to annual
approval by such vote of the Trustees cast in person at a meeting called
for the purpose of voting on the Plan. Each Plan was so approved by the
Trustees at a meeting held on September 23, 1994. Each Plan may be
terminated at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in
the operation of the Plan or in any agreements entered into in connection
with the Plan or by vote of the holders of a majority of Class B and C
shares.
^
Sales Loads--Class A. The scale of sales loads applies to
purchases of Class A 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 Internal Revenue Code of 1986, as amended ("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 Class A shares. The example assumes a purchase of
Class A shares aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Prospectus at a price based upon the net
asset value of the Class A shares.
Net Asset Value per Share $12.50
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $0.59
Per Share Offering Price to
- 32 -
<PAGE>
the Public $13.09
REDEMPTION OF SHARES
The right to redeem shares of a Fund may be suspended or the date
of payment postponed (a) for any period during which the ^ NYSE is closed
(other than for customary weekend or holiday closings); (b) when trading
in the markets the Trust normally uses is restricted or when an emergency
exists as determined by the SEC so that disposal of a Fund's investments
or determination of its net asset value is not reasonably practicable; or
(c) for such other periods as the SEC, by order, may permit for protection
of a Fund's shareholders.
Redemption Commitment. Each Fund has committed itself to pay in
cash all redemption requests by any shareholder of record of the Fund,
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 SEC. In
the case of requests for redemption in excess of such amount, the Trustees
and executive officers of the Trust reserve the right to make payments in
whole or in part in securities or other assets 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 this event, the securities
would be valued in the same manner as the ^ Fund's portfolio is valued.
If the recipient sold such securities, brokerage charges would be
incurred.
VALUATION OF SHARES
The Prospectuses describe the time at which the net asset value
of each Fund is determined for purposes of sales and redemptions. In
addition, portfolio securities held by the Funds may be actively traded in
securities markets which are open for trading on days when the Funds will
not be determining their net asset values. Accordingly, there may be
occasions when the Funds are not open for business but when the value of a
Fund's portfolio securities will be affected by such trading activity.
The holidays (as observed) on which the ^ NYSE is closed currently are:
New Years Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
In valuing the portfolio securities of each Fund, securities
listed on a national securities exchange (other than options) are valued
on the basis of the last sale on the date on which the valuation is made
or, lacking any sales, at the mean between the closing bid and asked
- 33 -
<PAGE>
prices. Over-the-counter securities are valued on the basis of the bid
price at the close of business on each day, or, if market quotations for
such securities are not readily available, a fair value, as determined in
good faith by the Trustees, will be used. Options are generally valued at
the last sale price; in the absence of last sale price, the last offer
price is used. When a Fund writes an option, an amount equal to the
premium received by it is included in the Fund's statement of assets and
liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market
value of the option written. When a Fund purchases a stock index option,
the premium paid by the Fund is recorded as an asset and is subsequently
adjusted to the current market value of the option. Investments in U.S.
Government Securities (other than short-term securities) are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Short-term obligations with maturities of 60 days or less are
valued at amortized cost. All other securities and other assets of each
Fund are appraised at their fair value as determined in good faith by the
Trustees. In carrying out the Board of Trustees' valuation policies,
Dreyfus may consult with independent pricing services approved by the
Board of Trustees.
PERFORMANCE DATA
From time to time, the Funds may quote their yields in
advertisements, shareholder reports or other communications to
shareholders. Price/yield information is generally available by calling
the Trust toll free at 1-800-343-0573.
Each Fund may compare the performance of its Class A and Class R
shares to that of other mutual funds, relevant indices or rankings
prepared by independent services or other financial or industry
publications that monitor mutual fund performance. Class B and Class C
shares were not offered prior to December ^ 19, 1994.
Performance rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual Fund
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund
Values, U.S. News and World Report, Forbes, Fortune, Barron's, Financial
Planning, Financial Planning on Wall Street, Certified Financial Planner
Today, Investment Advisor, ^ Kiplinger's, Smart Money and similar
publications may also be used in comparing the Fund's performance.
Furthermore, a Fund may quote its Class A and Class R yields in
advertisements or in shareholder reports.
- 34 -
<PAGE>
Effective April 4, 1994, the Retail and Institutional Class of
shares of each Fund were reclassified as a single class of Shares known as
"Investor Shares" and the Investment Class of shares of each Fund was
renamed as each Funds' "Trust Shares." Effective October 17, 1994, each ^
Fund redesignated the Investor Shares as "Class A shares" and the Trust
Shares as "Class R shares." The following performance data for Class A
shares is reflective of each Fund's Retail Class of Shares' performance.
In addition, the following performance data for the Class R shares of the
Managed Income Fund reflects such Fund's former Investment Shares and
Trust Shares.
30-Day Yield
The Managed Income and Limited Term Government Funds' 30-day
yield figures described below will be calculated according to a formula
prescribed by the ^ SEC. The formula can be expressed as follows:
a-b 6
YIELD = 2[( ------ +1) -1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursement)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the net asset value per share on the last day of
the period
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount
or premium, the formula generally calls for amortization of the discount
or premium; the amortization schedule will be adjusted monthly to reflect
changes in the market values of the debt obligations.
Yield information is useful in reviewing the Funds' performance,
but because yields fluctuate, such information cannot necessarily be used
to compare an investment in a Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that yield is a function of the kind and quality of the
instruments in the Funds' portfolios, portfolio maturity, operating
- 35 -
<PAGE>
expenses and market conditions. The Funds' yields and total returns will
also be affected if Dreyfus waives its investment management fees.
The Managed Income Fund's and the Limited Term Government Fund's
30-day yield for the period ended ^ June 30, 1993 were as follows:
30-Day Yield for Period Ended
^ June 30, 1994
Yield
Managed Income Fund
Class A ^ shares 7.17%
Class R ^ shares 6.91%
Limited Term Government
Fund
Class A ^ shares 5.63%
Class R shares N/A
^
Total Return
Each of the Managed Income and Limited Term Government Funds'
"average annual total return" figures described and shown below are
computed according to a formula prescribed by the ^ SEC.
The formula can be expressed as follows:
1/n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1000
payment made at beginning of the 1, 5, or 10
years (or other) periods at the end of 1, 5, or
10 years (or other) periods (or fractional
portion thereof)
The table below shows the average annual total return for each of the ^
Funds' Class A shares for the specified periods.
- 36 -
<PAGE>
1 2
Managed Limited Term
Income Government
For the one year ^ 7/1/93 to 6/30/94 (4.86%) (5.54%)
For the five years 7/1/89 to 6/30/94 6.77% 6.03%
For the ten years 7/1/84 to 6/30/94 9.72% N/A
From inception date to 6/30/94 9.48% 6.39%
__________________________
^
1 ^ Managed Income Fund commenced operations on March 4,
1991.
2 ^ Limited Term Government Fund commenced operations on
March 3, 1986.
The table below shows the ^ average annual total return for ^ each of the
Funds' Class R shares for the specified periods.
^ 1 2
Managed Limited Term
Income Government
For the one year 7/1/93 to 6/30/94 (.07%) --
For the five years 7/1/89 to 6/30/94 -- --
For the ten years 7/1/84 to 6/30/94 -- --
From inception date to 6/30/94 4.51 --
__________________________
1 The Fund commenced selling Class R shares on February 1 ,
1993.
^ 2 The Fund did not offer Class R shares for the period
ended June 30, 1994.
- 37 -
<PAGE>
Aggregate Total Return
Each Fund's aggregate total return figures described and shown
below represent the cumulative change in the value of an investment in
each Fund for the specified period and are computed by the following
formula:
ERV-P
-----
AGGREGATE TOTAL RETURN = P
Where: P = A hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of the 1-, 5- or
10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.
^ The aggregate total return for ^ Managed Income Fund's Class R
shares ^ for the period from February 1, 1993 (commencement of Class R) to
June 30, 1994 was 6.43%. Set forth below for the Class A shares of a Fund
are tables showing the performance on an aggregate total return basis
(i.e., with all dividends and distributions reinvested) of a hypothetical
$10,000 investment in the Managed Income Fund since November 2, 1984 (the
date the ^ Fund most recently changed its investment ^ objective and
policies) and for the Limited Term Government Fund since March 3, 1986
(commencement of operations). The Managed Income Fund's performance is
compared to the Lehman Government/Corporate Index, an unmanaged index of
government securities and investment grade corporate bonds with maturities
of one year or more. The Limited Term Government Fund's performance is
compared to the Lehman Intermediate Government Bond Index.
<TABLE>
<CAPTION>
MANAGED INCOME FUND OTHER INDICES
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C>
^ Change Value of Value of Total % Lehman %
Period Initial Reinvested Value Change Inter- Change
Bond $10,000 Dividends Over mediate Over
Ended Invest- and Period Gov't Period
ment Capital Index
Gains
12/31/83 *10,000 -- 10,000 -- 10,000 --
- 38 -
<PAGE>
12/31/84 10,000 1,200 11,200 12.00 11,515 15.15
12/31/85 11,132 2,513 13,645 21.84 14,060 22.10
12/31/86 11,236 3,786 15,022 10.09 16,206 15.26
12/31/87 10,651 5,266 15,917 5.96 16,653 2.76
12/31/88 10,783 6,734 17,517 10.05 17,966 7.88
12/31/89 10,491 8,000 18,491 5.56 20,576 14.53
12/31/90 9,953 9,351 19,304 4.40 22,420 8.96
12/31/91 10,764 11,827 22,591 17.03 26,008 16.00
12/31/92 10,802 13,770 24,572 8.77 27,933 7.40
12/31/93 10,736 17,408 28,144 14.54 30,656 9.75
06/30/94 9,821 16,745 26,566 29,470 (3.87)
^
</TABLE>
_________________________
Explanatory Notes:
* Effective November 2, 1984, the investment ^ objective and policies
of this Fund (prior to that date, named the "Government Income Fund") were
changed to the current investment ^ objective and policies described under
" ^ Investment Objective and Policies" in the Prospectus.
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
<TABLE>
<CAPTION>
LIMITED TERM GOVERNMENT FUND* OTHER INDICES
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C>
^ Change Value of Value of Total % Lehman %
Period Initial Re- Value Change Inter- Change
Bond $10,000 invested Over mediate Over
Ended Invest- Dividend Period Gov't Period
ment s and Index
Capital
Gains
03/03/86 **10,000 -- 10,000 -- 10,000 --
12/31/86 10,104 735 10,839 8.39 10,977 9.77
- 39 -
<PAGE>
12/31/87 9,400 1,549 10,949 1.01 11,373 3.61
12/31/88 9,328 2,306 11,634 6.26 12,100 6.39
12/31/89 9,576 3,324 12,900 10.88 13,635 12.69
12/31/90 9,592 4,248 13,840 7.29 14,938 9.56
12/31/91 10,248 5,462 15,710 13.51 17,045 14.10
12/31/92 10,208 6,361 16,569 5.47 18,226 6.93
12/31/93 10,512 7,564 18,076 9.10 19,715 8.17
06/30/94 9,776 7,490 17,266 (4.48) 19,241 (2.40)
^
</TABLE>
____________________________
Explanatory Notes:
* Effective May 1, 1990, the investment policies of this Fund (prior
to that date, named the "GNMA Fund") were changed to the current policies
described under " ^ Investment Objective and Policies" in the Prospectus.
** Commencement of Fund operations.
(1) No adjustment has been made for a shareholder's tax liability on
dividends or capital gains distributions.
TAXES
Each Fund has satisfied, and intends to satisfy, the requirements
for qualifying as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
each Fund will not be liable for Federal income taxes to the extent its
taxable investment income and net capital gain are distributed to
shareholders provided that at least 90% of its net investment income and
net short-term capital gain for the taxable year are distributed.
To qualify as a regulated investment company, among other
requirements the Fund must earn in each taxable year at least 90% of its
gross income from (i) interest, (ii) dividends, (iii) payments with
respect to securities loans and (iv) gains from the sale or other
disposition of stock or securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% Test"). An additional
requirement is that the Fund must earn in each taxable year less than 30%
of its gross income from the sale or other disposition of any of the
following held for less than three months (i) stock or securities, (ii)
options, futures, or forward contracts (other than options, futures, and
- 40 -
<PAGE>
forward contracts on foreign currencies), or (iii) foreign currencies (or
options, futures, or forward contracts on foreign currencies) but only if
such currencies (or options, futures or forward contracts) are not
directly related to the company's principal business of investing in stock
or securities (or options and futures with respect to such stock or
securities) (the "30% Test"). The 30% Test will limit, among other things,
the extent to which the Fund may sell securities held for less than three
months; write options which expire in less than three months; and effect
closing transactions with respect to call or put options that have been
written or purchased within the preceding three months. Finally, as
discussed below, this requirement may also limit investments by certain
Funds in options on stock indexes, options on nonconvertible debt
securities, futures contracts and options on interest rate futures
contracts.
A Fund may have greater difficulty satisfying the 30% ^ Test
because of more frequent redemptions or exchanges of Fund shares. Section
851(h)(3) of the Code provides a special rule for series funds with
respect to the 30% Test. A regulated investment company that is part of a
series fund will not fail the 30% Test as a result of sales made within 5
days of "abnormal redemptions" if: (a) the sum of the percentages for
abnormal redemptions on such day and for abnormal redemptions on prior
days during the taxable year exceeds 30%, and (b) the regulated investment
company of which such fund is a part would meet the 30% Test for the
taxable year if all the funds were treated as a single company. Abnormal
redemptions are deemed to occur on any day when net redemptions on such
day exceed one percent of net asset value. If abnormal redemptions require
a Fund to sell securities with a holding period of less than three months,
the Fund intends to make those sales within 5 days of such redemptions so
as to qualify for the exclusion afforded by section 851(h)(3).
When a Fund is required to sell securities to meet significant
redemptions or exchanges, it may enter into futures contracts for the S&P
500 as a hedge against price declines in the securities to be sold. Gains
realized by the Fund upon closing out its positions in these contracts are
subject to the 30% Test. Ordinarily, these gains could not be offset by
declines in the value of the hedged securities. However, section 851(g) of
the Code provides that, in the case of a "designated hedge," for purposes
of the 30% Test, increases and decreases in value (during the period of
the hedge) of positions which are part of the hedge are to be netted. A
"designated hedge" exists when (a) the risk of loss is reduced by reason
of a contractual obligation to sell substantially identical property, and
(b) the taxpayer clearly identifies the positions which are part of the
hedge in the manner prescribed in regulations.
Regulations have not yet been issued specifying how the
identification requirement can be satisfied. The legislative history with
respect to section 851(g) states that, prior to the issuance of
regulations, the identification requirement is satisfied with
- 41 -
<PAGE>
identification by the close of the day on which the hedge is established
either by: (a) placing the positions that are part of the hedge in a
separate account that is maintained by a broker, futures commission
merchant, custodian or similar person, and that is designated as a hedging
account, provided that such person maintaining such account makes
notations identifying the hedged and hedging positions and the date on
which the hedge is established, or (b) the designation by such a broker,
merchant, custodian or similar person, of such positions as a hedge for
purposes of these provisions, provided that the regulated investment
company is provided with a written confirmation stating the date the hedge
is established and identifying the hedged and hedging positions.
When a Fund enters into futures contracts to hedge against price
declines of securities to be sold, the Fund may identify such securities
and contracts as a hedge so as to qualify under section 851(g). However,
there can be no assurance that the Fund (or its agents) will be able to
comply with the identification requirements that may be contained in
future regulations. Moreover, the netting rule of section 851^(g) is
available only if the securities to be sold and the futures contracts
constitute "substantially identical" property. Although the Fund generally
intends to sell pro-rata all such securities, it is unclear whether the
securities and the futures contracts would constitute "substantially
identical" property.
Taxation of Investments by the Funds
Gains or losses on sales of securities by a Fund will generally
be long-term capital gains or losses if the Fund has held the securities
for more than one year. Gains or losses on sales of securities held for
less than one year will generally be short-term. If a Fund acquires a debt
security at a substantial discount and does not elect current accrual, a
portion of any gain upon sale or redemption of the security, to the extent
it reflects accrued market discount, will be taxed as ordinary income,
rather than capital gain.
Options and Futures Transactions. The tax consequences of options
transactions entered into by a Fund will vary depending on the nature of
the underlying security, whether the option is written or purchased and
finally, whether the "straddle" rules, discussed separately below, apply
to the transaction. When a Fund writes a call or a put option on an equity
or convertible debt security, it will receive a premium that will, subject
to the straddle rules, be treated as follows for tax purposes. If the
option expires unexercised, or if the Fund enters into a closing purchase
transaction, the Fund will realize a gain (or a loss if the cost of the
closing purchase transaction exceeds the amount of the premium) without
regard to any unrealized gain or loss on the underlying security. Any such
gain or loss generally will be a short-term capital gain or loss, except
that any loss on a "qualified" covered call option that is not treated as
part of a straddle may be treated as a long-term capital loss. To be
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"qualified" the option must be exchange traded, must be granted more than
30 days before the day on which the option expires and must not be a
"deep-in-the-money" option. If a call option written by the Fund is
exercised, the Fund will recognize a capital gain or loss from the sale of
the underlying security, and will treat the premium as additional sales
proceeds. Whether the gain or loss will be long-term or short-term will
depend on the holding period of the underlying security. If a put option
written by the Fund is exercised, the amount of the premium will reduce
the tax basis of the security that the Fund then purchases.
The Code imposes a special "marked-to-market" system for taxing
"section 1256 contracts." These contracts generally include, without
limitation, options on nonconvertible debt securities (including U.S.
Government Securities), options on "broad based" stock indexes, certain
forward foreign currency contracts, regulated futures contracts and
options on interest rate futures contracts. The ^ Managed Income or
Limited Term Government Funds may invest in section 1256 contracts. In
general, gain or loss on section 1256 contracts will be taken into account
for tax purposes when actually realized (by a closing transaction, by
exercise, by taking delivery or by other termination). In addition, any
section 1256 contracts held at the end of a taxable year will be treated
as sold at their year-end fair market value (that is,
marked-to-the-market), and the resulting gain or loss will be recognized
for tax purposes in such taxable year. Provided that section 1256
contracts with the exception of certain forward foreign currency contracts
are held as capital assets and are not part of a "mixed" straddle, both
the realized and the unrealized year-end gain or loss from these
investment positions (including premiums on options that expire
unexercised) will be treated as 60% long-term and 40% short-term capital
gain or loss, regardless of the period of time particular positions are
actually held by a Fund. Any gain or loss, both realized and unrealized,
from a forward foreign currency contract will be characterized as ordinary
income at year end.
Straddles. The Code contains other rules applicable to
"straddles," that is, transactions which create positions which offset
positions in section 1256 or other investment contracts. Those rules,
applicable to "straddle" transactions, are intended to eliminate any
special tax advantages for such transactions. "Straddles" are defined to
include "offsetting positions" in actively-traded personal property. Under
current tax law, it is not clear under what circumstances one investment
made by a Fund, such as an option or futures contract, would be treated as
creating substantial diminution in the risk of loss in another position,
although certain covered call stock options written by the Managed Income
or Limited Term Government Funds may be treated as not creating a
straddle.
If two (or more) positions constitute a straddle (but such
straddle does not consist solely of Section 1256 positions), recognition
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of a realized loss from one position (including a marked-to-market loss)
must be deferred to the extent of unrecognized gain in an offsetting
position, successor position, or offsetting position to a successor
position which is still held at the Fund's year end. Also, long-term
capital gain may be recharacterized as short-term capital gain, or short--
term capital loss as long-term capital loss. Furthermore, interest and
other carrying charges allocable to personal property that is part of a
straddle which does not consist entirely of Section 1256 positions must be
capitalized. In addition, "modified wash sale" rules apply to prevent the
recognition of loss where an identical or substantially identical position
is or has been acquired within a prescribed period.
If a Fund chooses to identify a particular offsetting position as
being one component of a straddle and all other conditions necessary for
qualification as an "identified straddle" are met, a realized loss on any
component of that straddle will be recognized, no earlier than upon the
liquidation of all of the components of that straddle. Special rules apply
to "mixed" straddles (that is, straddles consisting of a section 1256
contract and an offsetting position that is not a section 1256 contract).
If a Fund makes certain elections, the section 1256 contract components of
such mixed straddles will not be subject to the "60%/40%" marked-to-market
rules. If any such election is made, the amount, the nature (as long- or
short-term) and the timing of the recognition of the Fund's gains or
losses from the affected straddle positions will be determined under rules
that will vary according to the type of election made.
Taxation of the Funds' Shareholders--Special Considerations
The portion of the dividends received from the Managed Income and
Limited Term Government Funds by their corporate shareholders which
qualifies for the 70% dividends received deduction will be reduced to the
extent that the Funds hold dividend-paying stock for less than 46 days (91
days for certain preferred stocks). A Fund's holding period will not
include any period during which the Fund has reduced its risk of loss from
holding the stock by writing certain call options with respect to
substantially identical stock or securities, such as securities
convertible into the stock. The holding period for stock may also be
reduced if a Fund diminishes its risk of loss by holding one or more
positions in substantially similar or related property. Accordingly, the
percentage of dividends from the Managed Income and Limited Term
Government Funds qualifying for the dividends-received deduction may be
less than 100%. Dividends-received deductions will be allowed only with
respect to shares that a corporate shareholder has held for at least 46
days within the meaning of the same holding period rules applicable to the
Funds.
Dividends paid by the Fund from net investment income and
distributions of net short-term capital gain will be taxable to
shareholders as ordinary income for Federal income tax purposes, whether
received in cash or reinvested in additional shares. Distributions of
long-term capital gain will be taxable to shareholders as long-term
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capital gain, whether paid in cash or reinvested in additional shares, and
regardless of the length of time the investor has held his or her shares
of the Fund.
If a shareholder receives a distribution taxable as long-term
capital gain with respect to shares of a Fund, and redeems or exchanges
the shares before he or she has held them for more than six months, any
loss on the redemption or exchange that is less than or equal to the
amount of the distribution will be treated as a long-term capital loss.
If a shareholder fails to furnish a correct taxpayer
identification number, fails to fully report dividend or interest income,
or fails to certify that he or she has provided a correct taxpayer
identification number or that he or she is not subject to "backup
withholding," then the shareholder may be subject to a ^ 31% Federal
backup withholding tax with respect to (i) taxable dividends and
distributions and (ii) the proceeds of redemptions or exchanges. The
backup withholding tax is not an additional tax and may be credited
against a shareholder's regular Federal income tax liability. An
individual's taxpayer identification number is his or her social security
number.
DESCRIPTION OF THE TRUST
The Trust is a diversified, open-end management investment
company established as a Massachusetts business trust under the laws of
the Commonwealth of Massachusetts by an Agreement and Declaration of Trust
dated March 30, 1979. The Trust commenced business as an investment
company on August 1, 1979. On that date, shares of the Core Value Fund
were issued to the holders of shares of the common stock of The Johnston
Mutual Fund Inc. pursuant to a reorganization of that Fund from a New York
corporation to a Massachusetts business trust. The Core Value succeeded to
the portfolio assets of the New York corporation and continued the
business of that Fund with the same investment objectives and policies.
The Special Growth Fund was created by action of the Trustees on January
15, 1982, and began offering shares to the public on May 3, 1982. On April
4, 1994 the Trust ^ changed its name from "The Boston Company Fund" to
"The Laurel Funds Trust" and on October ^ 17, 1994, the Trust changed its
name from "The Laurel Funds Trust" to "The ^ Dreyfus/Laurel Funds Trust."
The Trustees have authority to create an unlimited number of
shares of beneficial interest of separate series, without par value. Each
series will be treated as a separate entity. To date, seven series have
been authorized. The Trustees have authority to create additional series
at any time in the future without shareholder approval.
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<PAGE>
The Trust ^ offers shares of beneficial interest of separate ^
funds without par value. To date, shares of ^ four funds and five classes
have been authorized by the Trustees. Shares of the Managed Income and
Limited Term Government Funds have been classified into ^ four Classes of
shares - Class ^ A, Class R, Class B and Class C shares, of which only
Class A and Class R may be purchased through this Prospectus.
Each share (regardless of Class) has one vote. All shares of all
^ funds (and classes thereof) vote together as a single Class, except as
to any matter for which a separate vote of any ^ fund or Class is required
by the 1940 Act, and except as to any matter which affects the interests
of one or more particular ^ funds or Classes, in which case only the
shareholders of the affected ^ funds or Classes are entitled to vote, each
as a separate Class.
The assets received by the Trust for the issue or sale of shares
of each Fund and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are specially allocated to such
Fund, and constitute the underlying assets of such Fund. The underlying
assets of each Fund are required to be segregated on the books of account,
and are to be charged with the expenses in respect of such Fund and with a
share of the general expenses of the Trust. Any general expenses of the
Trust not readily identifiable as belonging to a particular Fund shall be
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable. Each share of each Fund
represents an equal proportionate interest in that Fund with each other
share and is entitled to such dividends and distributions out of the
income belonging to such Funds as are declared by the Trustees. Upon any
liquidation of a Fund, shareholders thereof are entitled to share pro rata
in the net assets belonging to that Fund available for distribution.
The Trust does not hold annual meetings of shareholders. There
will normally be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of no less
than two-thirds of the outstanding shares of the Trust may remove a
Trustee through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. The Trustees are required to
call a meeting of shareholders for the purposes of voting upon the
question of removal of any Trustee when requested in writing to do so by
the shareholders of record of not less than 10% of the Trust's outstanding
shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
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<PAGE>
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or a Trustee. The Agreement and
Declaration of Trust provides for indemnification from Trust property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its
obligations, a possibility which Dreyfus believes is remote. Upon payment
of any liability incurred by a Fund, the shareholder of that Fund paying
such liability will be entitled to reimbursement from the general assets
of the Fund. The Trustees intend to conduct the operations of each Fund in
such a way so as to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of such Fund.
^ CONTROLLING SHAREHOLDERS
^ At November 30, 1994, there were no controlling shareholders,
as that term is defined under the 1940 Act, of the Dreyfus/Laurel Funds
Trust.
PRINCIPAL SHAREHOLDERS
The following shareholder owned more than 5% of the outstanding voting
shares of the Funds at December 8, 1994:
Managed Income Fund: InvestNet, Two Mellon Bank Center, 15259-0177,
Pittsburgh, PA 15259-0001, 6% record.
CUSTODIAN AND FUND ACCOUNTANT
Mellon Bank, N.A., One Mellon Bank Center Pittsburgh, PA 15258,
serves as custodian and fund accountant with respect to each ^ Fund.
Mellon Bank provides portfolio and shareholder recordkeeping required for
regulatory and financial reporting purposes. Mellon Bank, as Custodian
and Fund Accountant, has no part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the fund.
TRANSFER AGENT
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<PAGE>
The Shareholder Services Group, Inc. ("TSSG"), a subsidiary of
First Data Corporation, serves as the Trust's transfer agent. TSSG is
located at One American Express Plaza, Providence, Rhode Island 02903.
FINANCIAL STATEMENTS
^ The financial statements for the fiscal year ended December 31,
1993, including notes to the financial statements and supplementary
information and the Report of Independent Auditors, are included in the
Annual Report to shareholders. A copy of the Annual Report, as well as the
Funds' Semi-Annual Reports for the six months ended June 30, 1994
(unaudited), accompany this Statement of Additional Information.
OTHER INFORMATION
Auditor. ^ Coopers & Lybrand L.L.P. was appointed by the Board of
Trustees to serve as independent auditors for the fiscal year ended
December 31, 1993.
Legal Counsel. Kirkpatrick & Lockhart, 1800 M Street, N.W., South
Lobby - 9th Floor, Washington, D.C. 20036, has passed upon the legality of
the shares offered by the Prospectus and this Statement of Additional
Information.
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APPENDIX
INFORMATION ABOUT SECURITIES RATINGS
Corporate Bond Ratings--Managed Income Fund
Description of Moody's Investors' Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
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<PAGE>
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
Description of S&P corporate bond ratings:
AAA--Bonds rated AAA have the highest rating assigned by S&P to a debt
obligations. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in
higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
represents the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Commercial Paper Ratings-Cash Management Fund
The rating A-1 + is the highest, and A-l the second highest, commercial
paper rating assigned by S & P. Paper rated A-1 must have either the
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direct credit support of an issuer or guarantor that possesses excellent
long-term operating and financial strengths combined with strong liquidity
characteristics (typically, such issuers or guarantors would display
credit quality characteristics which would warrant a senior bond rating of
"AA-" or higher), or the direct credit support of an issuer or guarantor
that possesses above average, long-term fundamental operating and
financing capabilities combined with ongoing excellent liquidity
characteristics. Paper rated A-1 must have the following characteristics:
liquidity ratios are adequate to meet cash requirements; long-term senior
debt is rated A or better; the issuer has access to at least two
additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigned rating are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term
debt; (6) trend of earnings over a period of ten years; (7) financial
strength of parent company and the relationships which exist with the
issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations.
Description of IBCA Limited/IBCA Inc. commercial paper ratings.
Short-term obligations, including commercial paper, rated A-l+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the
highest capacity for timely repayment. Obligations rated A-1 have a very
strong capacity for timely repayment. Obligations rated A-2 have a strong
capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
Description of Fitch Investors Services, Inc. commercial paper
ratings. Fitch Investors Services, Inc. employs the rating F-l+ to
indicate issues regarded as having the strongest degree of assurance for
timely payment. The rating F-1 reflects an assurance of timely payment
only slightly less in degree than issues rated F-l+, while the rating F-2
indicates a satisfactory degree of assurance for timely payment, although
the margin of safety is not as great as indicated by the F-1+ and F-1
categories.
Description of Duff & Phelps Inc. commercial paper ratings. Duff&
Phelps Inc. employs the designation of Duff 1 with respect to top grade
commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations.
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Duff 1- indicates high certainty of timely payment. Duff 2 indicates good
certainty of timely payment: liquidity factors and company fundamentals
are sound.
Various of the nationally recognized statistical rating
organizations utilize rankings within rating categories indicated by a +
or -. The Funds, in accordance with industry practice, recognize such
rankings within categories as graduations, viewing for example S&P's
rating of A-1+ and A-1 as being in S&P's highest rating category.
Description of Thomson BankWatch, Inc. ("BankWatch") commercial
paper ratings. BankWatch will assign both short-term debt ratings and
issuer ratings to the issuers it rates. BankWatch will assign a short-term
rating ("TBW-1," "TBW-2,""TBW-3," or "TBW-4") to each class of debt (e.g.,
commercial paper or non-convertible debt), having a maturity of one-year
or less, issued by a holding company structure or an entity within the
holding company structure that is rated by BankWatch.^
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PREMIER LIMITED TERM INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PREMIER ^ BALANCED FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
^ December 19, 1994
---------------------------------------------------------------------
This Statement of Additional Information ("SAI"), which
is not a prospectus, supplements and should be read in conjunction with
the current ^ Prospectuses of the Premier Limited Term Income Fund
^(formerly the Laurel Intermediate Income Fund) and the Premier Balanced
Fund (formerly the Laurel Balanced Fund) (the "Funds"), dated December 19,
1994, as they may be revised from time to time. The ^ Funds are separate
^ portfolios of the Dreyfus/Laurel Funds, Inc. ^(formerly The Laurel
Funds, Inc.), an open-end, diversified ^ management investment company
(the "Company"), known as a mutual fund. To obtain a copy of a ^ Funds'
Prospectuses, please write to the Fund at ^ 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-^ 645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Funds'
investment manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Funds' shares.
DC-172739.2
1
<PAGE>
TABLE OF CONTENTS
Page
Investment Objective and Management ^ Policies . . . . . . . . . . . B-3
Management of the ^ Fund . . . . . . . . . . . . . . . . . . . . . . B-12
Management ^ Arrangements . . . . . . . . . . . . . . . . . . . . . . B-17
Purchase of Fund ^ Shares . . . . . . . . . . . . . . . . . . . . . . B-19
Distribution ^ Plan . . . . . . . . . . . . . . . . . . . . . . . . . B-20
Redemption of Fund ^ Shares . . . . . . . . . . . . . . . . . . . . . B-22
Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . ^ B-23
Determination of Net Asset ^ Value . . . . . . . . . . . . . . . . . B-26
Dividends, Other Distributions and ^ Taxes . . . . . . . . . . . . . B-26
Portfolio ^ Transactions . . . . . . . . . . . . . . . . . . . . . . B-30
Performance ^ Information . . . . . . . . . . . . . . . . . . . . . . B-31
Information About the ^ Funds . . . . . . . . . . . . . . . . . . . . B-34
Custodian, Transfer and Dividend Disbursing Agent, ^ Counsel
and Independent ^ Auditors . . . . . . . . . . . . . . . . . . . . B-35
Financial ^ Statements . . . . . . . . . . . . . . . . . . . . . . . B-35
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled
"Description of the Fund."
Portfolio Securities
Floating Rate Securities (Premier Limited Term Income Fund ^
Only). A floating rate security is one whose terms provide for the
automatic adjustment of interest ^ rates whenever a specified interest
rate changes. The interest on floating rate securities is ordinarily tied
to and is a percentage of the prime rate of a specified bank or some
similar objective standard such as the 90-day U.S. Treasury bill rate and
may change daily. Generally, changes in interest rates on floating rate
securities will reduce changes in the security's market value from the
original purchase price resulting in the potential for capital
appreciation or capital marker depreciation being less than for fixed
income obligations with a fixed interest rate.
ECDs, ETDs, and Yankee ^ CDs (Each Fund). The Funds may purchase
Eurodollar certificates of deposit ("ECDs"), which are U.S.
dollar-denominated certificates of deposit issued by foreign branches of
domestic banks, Eurodollar time deposits ("ETDs"), which are U.S. dollar
denominated deposits in a foreign branch of a domestic bank or foreign
bank, and Yankee-Dollar certificates of deposit ("Yankee CDs") which are
certificates of deposit issued by a domestic branch of a foreign bank
denominated in U.S. dollars and held in the United States. ECDs, ETDs,
and Yankee CDs are subject to somewhat different risks than domestic
obligations of domestic banks. These risks are discussed in ^ each Fund's
Prospectus.
Government Obligations (Each Fund). Each Fund may invest in a
variety of U.S. Treasury obligations, which differ only in their interest
rates, maturities and times of issuance: (a) U.S. Treasury bills have a
maturity of one year or less, (b) U.S. Treasury notes have maturities of
one to ten years, and (c) U.S. Treasury bonds generally have maturities of
greater than ten years.
In addition to U.S. Treasury obligations, each Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the
full faith and credit of the U.S. Treasury (such as Government National
Mortgage Association ("GNMA") participation certificates), (b) the right
of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, (c) discretionary authority of the U.S. Government
agency or instrumentality, or (d) the credit of the instrumentality.
(Examples of agencies and instrumentalities are: Federal Land Banks,
Federal Housing Administration, Farmers Home Administration, Export-Import
Bank of the United States, Central Bank for Cooperatives, Federal
B-3
<PAGE>
Intermediate Credit Banks, Federal Home Loan Banks, General Services
Administration, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Inter-American Development Bank,
Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development and Federal National
Mortgage Association ("FNMA")). No assurance can be given that the U.S.
Government will provide financial support to such U.S. Government agencies
or instrumentalities described in (b), (c) and (d) in the future, other
than as set forth above, since it is not obligated to do so by law.
Repurchase Agreements (Each Fund). The Funds may enter into
repurchase agreements with U.S. Government securities dealers recognized
by the Federal Reserve Board, with member banks of the Federal Reserve
System, or with such other brokers or dealers that meet the credit
guidelines of the Board of Directors. In a repurchase agreement, the Fund
buys a security from a seller that has agreed to repurchase the same
security at a mutually agreed upon date and price. A Fund's resale price
will be in excess of the purchase price, reflecting an agreed upon
interest rate. This interest rate is effective for the period of time the
Fund is invested in the agreement and is not related to the coupon rate on
the underlying security. Repurchase agreements may also be viewed as a
fully collateralized loan of money by the Fund to the seller. The period
of these repurchase agreements will usually be short, from overnight to
one week, and at no time will a Fund invest in repurchase agreements for
more than one year. A Fund will always receive as collateral securities
whose market value including accrued interest is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of
a repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. Dreyfus seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the credit guidelines of
the Company's Board of Directors.
Reverse Repurchase Agreements (Each Fund). A Fund may enter into
reverse repurchase agreements to meet redemption requests where the
liquidation of portfolio securities is deemed by Dreyfus to be
inconvenient or disadvantageous. A reverse repurchase agreement is a
transaction whereby a Fund transfers possession of a portfolio security to
a bank or broker-dealer in return for a percentage of the portfolio
security's market value. The Fund retains record ownership of the security
involved including the right to receive interest and principal payments.
At an agreed upon future date, the Fund repurchases the security by paying
an agreed upon purchase price plus interest. Cash or liquid high-grade
debt obligations of the Fund equal in value to the repurchase price
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including any accrued interest will be maintained in a segregated account
while a reverse repurchase agreement is in effect.
When-Issued Securities (Each Fund). New issues of U.S. Treasury
and Government securities are often offered on a when-issued basis. This
means that delivery and payment for the securities normally will take
place approximately 7 to 15 days after the date the buyer commits to
purchase them. The payment obligation and the interest rate that will be
received on securities purchased on a when-issued basis are each fixed at
the time the buyer enters into the commitment. Each Fund will make
commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
or dispose of the commitment before the settlement date if it is deemed
advisable as a matter of investment strategy. Cash or marketable
high-grade debt securities equal to the amount of the above commitments
will be segregated on each Fund's records. For the purpose of determining
the adequacy of these securities the segregated securities will be valued
at market. If the market value of such securities declines, additional
cash or securities will be segregated on the Fund's records on a daily
basis so that the market value of the account will equal the amount of
such commitments by the Fund.
Securities purchased on a when-issued basis and the securities
held by each Fund are subject to changes in market value based upon the
public's perception of changes in the level of interest rates. Generally,
the value of such securities will fluctuate inversely to changes in
interest rates -- i.e., they will appreciate in value when interest rates
decline and decrease in value when interest rates rise. Therefore, if in
order to achieve higher interest income each Fund remains substantially
fully invested at the same time that it has purchased securities on a
"when-issued" basis, there will be a greater possibility of fluctuation in
the Fund's net asset value.
When payment for when-issued securities is due, each Fund will
meet its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Commercial Paper (Each Fund). The Funds may invest in commercial
paper issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933
("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition
under the federal securities laws and generally is sold to investors who
agree that they are purchasing the paper for an investment and not with a
view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper is normally resold to other
investors through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) paper, thus providing liquidity.
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Pursuant to guidelines established by the Company's Board of Directors,
Dreyfus may determine that Section 4(2) paper is liquid for the purposes
of complying with the Fund's investment restriction relating to
investments in illiquid securities.
Management Policies
The Funds engage, except as noted, in the following practices in
furtherance of their investment objectives.
Loans of Fund Securities (Each Fund). Each Fund has authority to
lend its portfolio securities provided (1) the loan is secured
continuously by collateral consisting of U.S. Government securities or
cash or cash equivalents adjusted daily to make a market value at least
equal to the current market value of these securities loaned; (2) the Fund
may at any time call the loan and regain the securities loaned; (3) the
Fund will receive any interest or dividends paid on the loaned securities;
and (4) the aggregate market value of securities loaned will not at any
time exceed one-third of the total assets of the Fund. In addition, it is
anticipated that a Fund may share with the borrower some of the income
received on the collateral for the loan or that it will be paid a premium
for the loan. In determining whether to lend securities, Dreyfus considers
all relevant factors and circumstances including the creditworthiness of
the borrower.
Futures Contracts and Options (Each Fund). For the purpose of
creating market exposure for uncommitted cash balances, reducing
transaction costs associated with rebalancing a Fund, facilitating trading
or seeking higher investment returns when a futures contract is priced
more attractively than the underlying security or each index of the
above-referenced Funds may enter into futures contracts, options, and
options on futures contracts with respect to securities in which the Funds
may invest and indices comprised of such securities.
Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security or
securities index at a specified future time and at a specified price.
Where the underlying security is an index, no physical transfer of
securities takes place; rather, upon expiration of the contract, the
parties settle by exchanging cash in an amount equal to the difference
between the contract price and the closing value of the index at
expiration, net of variation margin previously paid. Futures contracts
that are standardized as to maturity date and underlying interest are
traded on national futures exchanges.
Futures traders are required to make a good faith margin deposit
in cash or government securities with a broker or custodian to initiate
and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of
the underlying security) if it is not terminated prior to the specified
delivery date. Minimal initial margin requirements are established by the
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futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the
contract is marked to market daily. If the futures contract price changes
to the extent that the margin on deposit does not satisfy margin
requirements, payment of additional "variation" margin will be required.
Conversely, change in the contract value may reduce the required margin,
resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as
long as the contract remains open. Each Fund expects to earn interest
income on its margin deposits.
Options are of two basic types, either call or put options, and
may relate to a single security or a securities index or a futures
contract. A call option on a security permits the holder of the option to
purchase the underlying security at a specified price ("strike price") at
any time during the term of the option. Thus, in exchange for the premium
paid to the writer, the purchaser obtains the right to profit from any
appreciation in the value of the underlying security above the strike
price. A put option permits the holder to sell the underlying security to
the writer at the strike price at any time during the term of the
contract. Thus, in exchange for the premium paid to the writer, the
purchaser is relieved of the risk of a decline in the value of the
underlying security below the strike price. An option on a securities
index gives the holder the right to receive cash from the writer in an
amount equal to the difference between the strike price of the option and
the value of the underlying index multiplied by a factor established by
the exchange upon which the option is traded. An option on a futures
contract gives the holder, in return for the premium paid to the writer,
the right to assume a position in the underlying futures contract at a
specified price at any time during the term of the option.
Although futures and options contracts by their terms call for
actual delivery or acceptance of the underlying securities, in most cases
the contracts are closed out before the settlement date without the making
or taking of delivery. Closing out an open futures position is done by
taking an opposite position ("buying" a contract which has previously been
"sold," or "selling" a contract previously purchased) in an identical
contract to terminate the position. An option purchased may be closed out
by selling the option. An option written is closed out by purchasing an
option identical to that written. Brokerage commissions are incurred when
futures and options contracts are bought and sold.
Restrictions on the Use of Futures Contracts and Options ^(Each
Fund). Neither Fund will ^ enter into futures contracts to the extent that
its outstanding obligations under these contracts would exceed 25% of the
Fund's total assets. To the extent that a Fund enters into futures
contracts and options on futures positions that are not for bona fide
hedging purposes (as defined by the Commodity Futures Trading Commission),
the aggregate initial margin and premiums on these positions (excluding
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the amount by which options are "in-the-money") may not exceed 5% of the
Fund's net assets.
Transactions using options and futures contracts (other than
options that the Fund has purchased) expose the Fund to an obligation to
another party. A Fund will not enter into any such transactions unless it
owns either (1) an offsetting ("covered") position in securities or other
options or futures contracts or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Fund will comply
with Securities and Exchange Commission ("SEC") guidelines regarding cover
for these instruments and, if the guidelines so require, set aside cash,
U.S. Government securities or other liquid, high-grade debt securities in
a segregated account with its custodian in the prescribed amount.
All options purchased or written by a Fund must be listed on a
national securities or futures exchange or traded in the over-the-counter
("OTC") market. A Fund will not purchase or write OTC options if, as a
result of such transaction, the sum of (i) the market value of outstanding
OTC options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund,
and (iii) the market value of all other assets of the Fund that are
illiquid or are not otherwise readily marketable, would exceed 15% of the
net assets of the Fund, taken at market value. However, if an OTC option
is sold by a Fund to a primary U.S. Government securities dealer
recognized by the Federal Reserve Bank of New York and the Fund has the
unconditional contractual right to repurchase such OTC option from the
dealer at a predetermined price, then the Fund will treat as illiquid such
amount of the underlying securities as is equal to the repurchase price
less the amount by which the option is "in-the-money" (the difference
between current market value of the underlying security and the option's
strike price). The repurchase price with primary dealers is typically a
formula price which is generally based on a multiple of the premium
received for the option plus the amount by which the option is
"in-the-money."
Each Fund may write only covered options. A call option is
covered if the Fund owns the underlying security or a call option on the
same security with a lower strike price. A put option is covered if the
Fund segregates cash and/or short-term debt securities in an amount
necessary to pay the strike price of the option or purchases a put option
on the same underlying security with a higher strike price.
Each Fund will not purchase puts, calls, straddles, spreads or
any combination thereof, if as a result of such purchase the value of the
Fund's aggregate investment in such securities would exceed 5% of the
Fund's total assets.
Risk Factors in Futures and Options Transactions (Each Fund).
There can be no assurance that a liquid secondary market will exist for
any particular futures or option contract at any specific time. Thus, it
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may not be possible to close a futures or option position. In the event of
adverse price movements, each Fund would continue to be required to make
daily cash payments to maintain its required margin with respect to open
futures or written options positions. In such a situation, if the Fund has
insufficient cash, it may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, a Fund may be required to make or take delivery of the
securities underlying futures contracts that it holds and options
contracts that it has written.
Each Fund will seek to minimize the risk that it will be unable
to close out a futures contract by entering into only those futures
contracts that are listed on national futures exchanges and for which
there appears to be a liquid secondary market. Likewise, each Fund will
enter into only those option contracts that are listed on a national
securities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies
can be substantial, due both to the low margin deposits required, and the
extremely high degree of leverage involved in futures pricing. As a
result, a relatively small price movement in a futures contract may result
in immediate and substantial loss (as well as gain) to the investor. For
example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of
the futures contract would result in a total loss of margin deposit,
before any deduction for the transaction costs, if the account were then
closed out. A 15% decrease would result in a loss equal to 150% if the
original margin deposit for the contract were closed out. Thus, a purchase
or sale of a futures contract may result in losses in excess of the amount
invested in the contract. Options transactions are subject to similar
risks. However, because ^ the Fund will not engage in futures or options
transactions for speculative purposes, Dreyfus believes that a Fund's risk
of loss is less than the risk of loss associated with speculative
transactions. Moreover, in the foregoing example, the Fund would
presumably have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying security and sold it after the
decline.
Utilization of futures contracts and options transactions by each
Fund does involve the risk of imperfect or no correlation where the
securities underlying futures and options contracts are different from the
portfolio securities being hedged. It is also possible that the Fund could
both lose money on futures and options contracts and also experience a
decline in value of its portfolio securities. There is also the risk of
loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or option
thereon.
Most futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may
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<PAGE>
vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a
particular type of contract, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions.
Futures contract prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Futures and options contracts involve special tax considerations.
See "Dividends, Other Distributions and Taxes" for further information.
Investment Restrictions
The following limitations have been adopted by each Fund. A Fund
may not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of a Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of a Fund, whichever is less. Each
Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of a Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting
their principal activities in the same industry. (For purposes of
this limitation, U.S. Government securities, and state or
municipal governments and their political subdivisions are not
considered members of any industry. ln addition, this limitation
does not apply to investments in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) a Fund may borrow money in an amount not
exceeding one-third of the Fund's total assets at the time of
such borrowings, and (b) a Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Purchase with respect to 75% of a Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) if, as a
result, (a) more than 5% of a Fund's total assets would be
invested in the securities of that issuer, or (b) a Fund would
hold more than 10% of the outstanding voting securities of that
issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such
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<PAGE>
loans. For purposes of this limitation debt instruments and
repurchase agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of ^ securities or other instruments (but this shall
not prevent a Fund from investing in securities or other
instruments backed by real estate, including mortgage loans, or
securities of companies that engage in real estate business or
invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of
such securities in accordance with the Fund's investment program
may be deemed an underwriting.
7. Purchase or sell commodities except that each Fund may enter into
futures contracts and related options, forward currency contacts
and other similar instruments.
Each Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its investable assets in securities of
a single open-end management investment company with substantially the
same investment objectives, policies and limitations as the Fund.
^ Each Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts are not deemed to constitute selling short.
2. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
3. No Fund shall purchase oil, gas or mineral leases.
4. Each Fund will not purchase or retain the securities of any
issuer if the officers, Directors of the Fund, its advisers, or
managers, owning beneficially more than one half of one percent
of the ^ securities of such issuer, together own beneficially
more than 5% of such securities.
5. No Fund will purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
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years, if by reason thereof, the value of such Fund's investment
in securities would exceed 5% of such Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as
the issuer of a security.
6. No Fund will invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with
maturities in excess of seven days and other securities which are
not readily marketable. For purposes of this limitation, illiquid
securities shall not include Section 4(2) Paper and securities
which may be resold under Rule 144A under the Securities Act of
1933, provided that the Board of Directors, or its delegate,
determines that such securities are liquid based upon the trading
markets for the specific security.
7. No Fund may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise
permitted by the 1940 Act.
8. No Fund shall purchase any security while borrowings representing
more than 5% of the Fund's total assets are outstanding.
9. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the
Fund's assets would be invested in warrants that are not listed
on the New York or American Stock Exchange (for purposes of this
undertaking, warrants acquired by a Fund in units or attached to
securities will be deemed to have no value).
10. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets except that: (a) this limitation shall not
apply to standby commitments, and (b) this limitation shall not
apply to a Fund's transactions in futures contracts and related
options.
As an operating policy, ^ the Funds will not invest more than 25%
of the value of the Fund's total assets, at the time of such purchase in
domestic banks, including U.S. branches of foreign banks and foreign
branches of U.S. banks. The Company's Board of Directors may change this
policy without shareholder approval. Notice will be given to shareholders
if this policy is changed by the Board of Directors.
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MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDERS
Mellon Bank Corporation, a Pennsylvania corporation registered as
a bank holding company under the Bank Holding Company Act of 1956, as
amended, owned of record, through its direct and indirect subsidiaries, ^
79% of the issued and outstanding voting shares of the Company, as of ^
November 30, 1994, and is, as a consequence, deemed to be a controlling
shareholder of the Company as that term is defined under the 1940 Act. The
address of Mellon Bank Corporation is: Mellon Bank Corporation, Mutual
Fund Department, 3 Mellon Bank Center, Pittsburgh, PA 15259.
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned 5% or more of the outstanding
voting shares of the Funds at November 30, 1994:
Limited Term Income Fund: Mac & Co. 97A-W00, Mellon Bank, N.A., as Nominee
for Trust Custodian, Mutual Funds, P.O. Box 320, Pittsburgh, PA
15230-0320, 12% record; Investnet Corporation, Two Mellon Bank Center,
Pittsburgh, PA 15259-0001, 11% record; Patterson & Co., PNB Personal
Trust, P.O. Box 7829, Philadelphia, PA 19010-7829, 6% record.
Balanced Fund: Mac & Co. 853-924, Mellon Bank, N.A., as Nominee for Trust
Custodian, Mutual Funds, P.O. Box 320, Pittsburgh, PA 15230-0320, 28%
record; Bank of New York Trustee, The Penn Central Master Trust, One Wall
Street MT/MC - 7th Floor, New York, NY 10286, 24% record; Mac & Co.
97A-W02, Mellon Bank, N.A., as Nominee for Trust Custodian, Mutual Funds,
P.O. Box 320, Pittsburgh, PA 15230-0320, 15% record; Mac & Co 180-174,
Mellon Bank, N.A., as Nominee for Trust Custodian, Mutual Funds, P.O. Box
320, Pittsburgh, PA 15230-0320, 8% record.^
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in that
business. The activities of Mellon Bank in informing its customers of,
and performing, investment and redemption services in connection with the
^ Funds, and in providing services to the ^ Funds as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may raise
issues under these provisions. Mellon Bank has been advised by counsel
that ^ these activities contemplated under ^ these arrangements are
consistent with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
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affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or a Fund. If Mellon Bank or Dreyfus
were prohibited from serving a Fund in any of its present capacities, the
Board of ^ Directors would seek an alternative provider(s) of such
services.
DIRECTORS AND OFFICERS
The Company has a Board composed of twelve Directors which
supervises the Company's investment activities and reviews contractual
arrangements with companies that provide the Funds with services. The
following lists the Directors and officers and their positions with the
Company and their present and principal occupations during the past five
years. ^ Each Director who is an "interested person" of the Company (as
defined in the Investment Company Act of 1940, as amended (the "Act")) is
indicated by an asterisk. Each of the Directors also serves as a Trustee
of The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Investment Series
and The Dreyfus/Laurel Tax-Free Municipal Funds (collectively "The Dreyfus
Family of Funds").
^ o + RUTH MARIE ADAMS. Director of The Dreyfus/Laurel Funds, Inc.;
Professor of English and Vice President ^ Emeritus, Dartmouth
College; Senator, United Chapters of Phi Beta Kappa;^ Trustee,
Woods Hole Oceanographic Institution. Address: 1026 Kendal Lyme
Road, Hanover, New Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Directors and
Assistant Treasurer of The Dreyfus/Laurel Funds, Inc.; ^ Director
and Chairman, Massachusetts Business Development ^ Corp.;
Director, Boston Mutual Insurance Company; Director and Vice
Chairman of the Board, Home Owners Federal Savings ^ and Loan
(prior to May 1990). Address: Massachusetts Business Development
Corp., One Liberty Square, Boston, Massachusetts 02109.
^ o+ JAMES M. FITZGIBBONS. Director of The Dreyfus/Laurel Funds,
Inc.; President and Director, Amoskeag Company; Chairman, Howes
Leather Company, Inc.; Director, Fiduciary Trust Company^;
Chairman, CEO and Director, Fieldcrest-Cannon Inc.; Director,
Lumber Mutual Insurance Company; Director, Barrett Resources,
Inc. Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
^ o * J. TOMLINSON FORT. Director of The Dreyfus/Laurel Funds, Inc.;
Partner, Reed, Smith, Shaw & McClay (law firm). Address: 204
Woodcock Drive, Pittsburgh, Pennsylvania 15215.
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o + ARTHUR L. GOESCHEL. Director of The Dreyfus/Laurel Funds, Inc.;
Director, Chairman of the Board and Director, Rexene Corporation;
Director, Calgon Carbon Corporation; Director, National Picture
Frame Corporation; Chairman of the Board and Director, Tetra
Corporation 1991-1993; Director, Medalist Corporation 1992-1993;
From 1988-1989 Director, Rexene Corporation. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of The Dreyfus/Laurel Funds, Inc.;
Director, The Boston Company, Inc. and Boston Safe Deposit and
Trust Company; President and Chief Executive Officer, Himmel &
Co., Inc.; Vice Chairman, Sutton Place Gourmet, Inc. ^ and
Florida Hospitality Group; Managing Partner, Himmel/MKDG,
Franklin Federal Partners, Reston Town Center Associates and
Grill 23 & Bar. Address: Himmel and Company, Inc., 101 Federal
Street, 22nd Floor, Boston, Massachusetts 02110.
o + ARCH S. JEFFERY. Director of The Dreyfus/Laurel Funds, Inc.;
Financial Consultant. Address: 1817 Foxcroft Lane, Allison
Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Director of The Dreyfus/Laurel Funds, Inc.;
President and CEO ^, LDG Management Company ^ Inc.; CEO, LDG
Reinsurance Underwriters, SRRF Management Inc. and Medical
Reinsurance Underwriters ^ Inc. Address: 401 Edgewater Place,
Wakefield, Massachusetts 01880.
^ o + ROBERT D. MCBRIDE. Director of The Dreyfus/Laurel Funds, Inc.;
Director, Chairman and CEO, McLouth Steel; Director, Salem
Corporation. Director, SMS/Concast, Inc. (1983-1991). Address:
15 Waverly Lane, Grosse Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Director of The Dreyfus/Laurel Funds, Inc.; Of
Counsel, Reed, Smith, Shaw & McClay (law firm). Address: 5521
Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Director of The Dreyfus/Laurel Funds, Inc.;
Dean Emeritus and Professor of Law, Duquesne University Law
School; Director, Urban Redevelopment Authority of Pittsburgh.
Address: 321 Gross Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Director of The Dreyfus/Laurel Funds, Inc.;
Principal, Watson Ventures, Inc.^, prior to February, 1993^; Real
Estate Development Project Manager and Vice President, The Gunwyn
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Company. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
# MARIE ^ E. ^ CONNOLLY. President and Treasurer ^ of The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Investment Series,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Vice President of The
Dreyfus/Laurel Funds, Inc. (March 1994 to September 1994);
President, Funds Distributor, Inc. ^(since 1992); Treasurer,
Funds Distributor, Inc. (July 1993 to April 1994); COO, Funds
Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services,^ Inc. (since April 1994); Senior
Vice President ^ and Director of Financial Administration, The
Boston Company Advisors, Inc. ^(December 1988 to May 1993).
Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(since September 1994); Senior Vice President, Premier Mutual
Fund Services, Inc. (since August 1994); Vice President, Funds
Distributor, Inc. (since August 1994); Fundraising Manager, Swim
Across America (October 1993 to August 1994); General Manager,
Spring Industries (August 1988 to October 1993). Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue New York, New York
10166.
# ERIC B. FISCHMAN. Vice President of The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(since September 1994); Vice President and Associate General
Counsel, Premier Mutual Fund Services, Inc. (Since August 1994);
Vice President and Associate General Counsel, Funds Distributor,
Inc. (since August 1994); Staff Attorney, Federal Reserve Board
(September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk
County District Attorney (June 1990 to August 1990). Address:
Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
New York 10166.
RICHARD W. HEALEY. Vice President of The Dreyfus/Laurel Funds
Inc., The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Tax-Free Municipal Funds Trust and The Dreyfus/Laurel Funds Trust
(since March 1994); Senior Vice President, Funds Distributor,
Inc. (since March 1993); Vice President, The Boston Company Inc.,
(March 1993 to May 1993); Vice President of Marketing, Calvert
B-16
<PAGE>
Group (1989 to March 1993); Fidelity Investments (prior to 1989).
Address: One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of The
Dreyfus/Laurel Funds, Inc.; The Dreyfus/Laurel Investment Series,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Senior Vice President,
General Counsel and Secretary, Funds Distributor, Inc. (since
April 1994); Senior Vice President, General Counsel and
Secretary, Premier Mutual Fund Services, Inc. (since August
1994); Counsel, The Boston Company Advisors, Inc. (February 1992
to March 1994); Associate, Ropes & Gray (August 1990 to February
1992); Associate, Sidley & Austin (June 1989 to August 1990).
Address: One Exchange Place, Boston, Massachusetts 02109.
___________________________________
* "Interested person" of Dreyfus/Laurel Funds, Inc., as defined in
the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus Corporation.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of December 1, 1994.
No officer or employee of TSSG or Premier (or of any parent or
subsidiary thereof) receives any compensation from each Fund for serving
as an officer or Director of the Fund. In addition, no officer or employee
of Dreyfus (or of any parent or subsidiary thereof) serves as an officer
or Director of each Fund. The Dreyfus Family of Funds pays each
Trustee/Director who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus Family of
Funds). In addition, the Dreyfus Family of Funds pays each
Trustee/Director $ 1,000 per joint Dreyfus Family of Funds meeting
attended, plus $750 per joint Dreyfus Family of Funds Audit Committee
meeting attended, and reimburses each Trustee/Director for travel and
out-of-pocket expenses. For the fiscal year ended December 31, 1993 the
fees for meetings and expenses totaled $79,598.
B-17
<PAGE>
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager
for the Fund pursuant to an Investment Management Agreement with the
Company dated April 4, 1994 ("Management Agreement"), transferred to
Dreyfus as of October 17, 1994. Pursuant to the Management Agreement,
Dreyfus provides, or arranges for one or more third parties to provide
investment advisory, administrative, custody, fund accounting and transfer
agency ^ services to ^ each Fund. As investment manager, Dreyfus manages
the Fund by making investment decisions based on ^ each Fund's investment
objectives, policies and restrictions. The Management Agreement is subject
to review and approval at least annually by the Board of Directors.
The current Management Agreement with Dreyfus provides for a
"unitary fee." Under the unitary fee structure, Dreyfus pays all expenses
of the ^ Funds except: (i) brokerage commissions, (ii) taxes, interest,
fees and expenses of the non-interested ^ Directors (including counsel
expenses), and extraordinary expenses (which are expected to be minimal),
and (iii) the Rule 12b-1 fees described in this Statement of Additional
Information. Under the unitary fee, Dreyfus provides, or arranges for one
or more third parties to provide, investment advisory, administrative,
custody, fund accounting and transfer agency services to ^ each Fund. For
the provision of such services directly, or through one or more third
parties, Dreyfus receives as full compensation for all services and
facilities provided by it, a fee computed daily and paid monthly at the
annual rate set forth in ^ each Fund's Prospectus, applied to the average
daily net assets of the Fund's investment portfolio, less the accrued fees
and expenses (including counsel fees) of the non-interested ^ Directors of
the ^ Company. Previously, the payments to the investment manager covered
merely the provision of investment advisory services (and payment for
sub-advisory services) and certain specified administrative services.
Under this previous arrangement, ^ each Fund also paid for additional
non-investment advisory expenses, such as custody and transfer agency
services, that were not paid by the investment ^ adviser.
^ The Management Agreement will continue from year to year
provided that a majority of the Directors who are not interested persons
of Dreyfus/Laurel and either a majority of all Directors or a majority of
the shareholders of the Fund approve their continuance. Dreyfus/Laurel
may terminate the Agreement, without prior notice to Dreyfus, upon the
vote of a majority of the Board of Directors or upon the vote of a
majority of the outstanding voting securities of the Fund on 60 days
written notice to Dreyfus. Dreyfus may terminate the Management Agreement
upon written notice to Dreyfus/Laurel. The Management Agreement will
terminate immediately and automatically upon its assignment.
B-18
<PAGE>
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board; Joseph S. DiMartino, President and a
director; W. Keith Smith, Chief Operating Officer and a director; Paul H.
Snyder, Vice President and Chief Financial Officer; Daniel C. Maclean,
Vice President and General Counsel; Barbara E. Casey. Vice
President--Retirement Services; Robert F. Dubuss, Vice President; Henry D.
Gottmann, Vice President--Retail; Elie M. Genadry, Vice
President--Wholesale; Mark N. Jacobs, Vice President--Fund Legal and
Compliance; Jeffery N. Nachman, Vice President--Mutual Fund Accounting;
Diane M. Coffey, Vice President--Corporate Communications; Jay R.
DeMartine, Vice President--Marketing; Kirk V. Stumpp, Vice President--New
Product Development; Lawrence S. Kash, Vice Chairman--Distribution; Philip
L. Toia, Vice Chairman--Operations and Administration; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene and David B. Truman, directors ^.
For the last three fiscal years, each Fund had the following
expenses^:
For the Fiscal Years Ended October 31,
^ 1993 1992 ^ 1991
Limited Term Income
Advisory fees (gross of waiver) $118,161 $58,933 $7,856 (1)
Expense reimbursement from
Adviser 142,319 161,200 53,730 (1)
Advisory fees waived ^-- 8,972 7,856 (1)
Balanced
Advisory fees (gross of waiver) $22,519 (2) -- --
Expense reimbursement from
Adviser 31,076 (2) -- --
Advisory fees waived -- (2) -- --
(1) For the period July 11, 1991 (commencement of operations) to October
31, 1991.
(2) For the period September 15, 1993 (commencement of operations) to
October 31, 1993.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
B-19
<PAGE>
The Distributor. The Distributor serves as the Funds'
distributor pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for funds in the Dreyfus Family of Funds and for certain
other investment companies.
Sales Loads--Class A. The scale of sales loads applies to
purchases of Class A 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 Internal Revenue Code of 1986, as amended ("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 Class A shares for each fund. The example assumes a
purchase of Class A shares for each aggregating less than $100,000 subject
to the schedule of sales charges set forth in the Prospectus at a price
based upon the net asset value of the Class A shares ^ for each fund.
For Premier Balanced Fund:
Net Asset Value per Share ^ $12.50
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $ ^ 0.59
Per Share Offering Price to
the Public ^ $13.09
For Premier Limited Term Government Securities Fund:
Net Asset Value per Share $12.50
Per Share Sales Charge - 3.0%
of offering price (3.1% of
net asset value per share) $0.39
Per Share Offering Price to
the Public $12.89
B-20
<PAGE>
TeleTransfer Privilege--All Classes, except Class R.
TeleTransfer purchase orders may be made between the hours of 8:00 a.m.
and 4:00 p.m., New York time, on any business day that The Shareholder
Services Group, Inc., the Fund's transfer and dividend disbursing agent
(the "Transfer Agent"), and the New York Stock Exchange ("NYSE") are open.
Such purchases will be credited to the shareholder's Fund account on the
next bank business day. To qualify to use the 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 Fund Shares--TeleTransfer Privilege--All Classes, except
Class R."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Distribution and Service Plans."
Class A, B and C shares are subject to annual fees for
distribution and shareholder services.
Distribution Plan--Class A Shares. The ^ SEC^ has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Company may, directly or indirectly, bear
the expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule. With respect to
the Class A shares of each Fund, the Company has adopted a Distribution
Plan ("Class A Plan"), and may enter into Selling Agreements with Service
Agents pursuant to the Class A Plan.
Under the Class A Plan, Class A shares of a Fund may spend
annually up to 0.25% of the average of its net asset values for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to ^ Fund shares.
The Class A Plan provides that a report of the amounts expended
under the Class A Plan, and the purposes for which such expenditures were
incurred, must be made to the Company's Directors for their review at
least quarterly. In addition, the Class A Plan provides that it may not
be amended to increase materially the costs which a Fund may bear for
B-21
<PAGE>
distribution pursuant to the Class A Plan without approval of a Fund's
shareholders, and that other material amendments of the Class A Plan must
be approved by the vote of a majority of the Directors and of the
Directors who are not "interested persons" of the Company (as defined in
the 1940 Act) and who do not have any direct or indirect financial
interest in the operation of the Class A Plan, cast in person at a
meeting called for the purpose of considering such amendments. The Class A
Plan is subject to annual approval by the entire Board of Directors and by
the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Class A Plan, by vote
cast in person at a meeting called for the purpose of voting on the Plan.
The Class A Plan is terminable, as to a Fund's class of shares, at any
time by vote of a majority of the Directors who are not interested persons
and have no direct or indirect financial interest in the operation of the
Plan or by vote of the holders of a majority of the outstanding shares of
such class of the Fund.
Distribution and Service Plans -- Class B and C Shares. In
addition to the above described Class A Plan for Class A shares, the
Company's Board of Directors has adopted a Service Plan (the "Service
Plan") under the Rule for Class B and Class C shares, pursuant to which
the Fund pays the Distributor and Dreyfus Service Corporation, an
affiliate of Dreyfus, for the provision of certain services to the holders
of Class B and Class C shares. The Company's Board of Directors has also
adopted a Distribution Plan pursuant to the Rule with respect to Class B
and Class C shares (the "Distribution Plan"). The Funds' Board of
Directors believes that there is a reasonable likelihood that the
Distribution and Service Plans (the "Plans") will benefit the Fund and the
holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and
the purposes for which such expenditures were incurred, must be made to
the Directors for their review. In addition, each Plan provides that it
may not be amended to increase materially the cost which holders of
Class B or C shares may bear pursuant to the Plan without the approval of
the holders of such Classes and that other material amendments of the Plan
must be approved by the Board of Directors and by the Directors who are
not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plan
is subject to annual approval by such vote of the Directors cast in person
at a meeting called for the purpose of voting on the Plan. Each Plan was
so approved by the Directors at a meeting held on September 23, 1994.
Each Plan may be terminated at any time by vote of a majority of the
Directors who are not interested persons and have no direct or indirect
financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan or by vote of the holders of a
majority of Class B and C shares.
^
B-22
<PAGE>
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to
Redeem Fund Shares."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
TeleTransfer Privilege--All Classes, except Class R. Investors
should be aware that if they have selected the TeleTransfer Privilege,
any request for a wire redemption will be effected as a TeleTransfer
transaction through the Automated Clearing House system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--TeleTransfer Privilege--All Classes, except Class R."
Redemption Commitment. ^ Each Fund has committed itself to pay
in cash all redemption requests by any shareholder of record of the Fund,
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 SEC. 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 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 this event, the securities would be valued
in the same manner as ^ each Fund's portfolio is valued. 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
NYSE is closed (other than customary weekend and holiday closings), (b)
when trading in the markets a Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC so that disposal of a
Fund's investments or determination of its net asset value is not
B-23
<PAGE>
reasonably practicable, or (c) for such other periods as the ^ SEC by
order may permit to protect a Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
^ Fund Exchanges. Shares of any Class of a Fund may be exchanged
for shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such 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 other
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 contingent deferred sales
charge ("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, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
^ 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.
B-24
<PAGE>
To establish a personal retirement plan by exchange, shares of
the fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Premier Family of Funds or
the Dreyfus Family of Funds. To exchange shares held in a personal
retirement plan account, the shares exchanged must have a current value of
at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of a Fund, shares of the same
Class of another fund in the Premier Family of Funds or the Dreyfus Family
of Funds. 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 "Exchange Privilege." Enrollment in or modification or cancellation
of this privilege is effective three business days following notification
by the investor. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but
not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
^ Fund exchanges and Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds
may be obtained from the Distributor. The Fund reserves the right to
reject any exchange request in whole or in part. The ^ Fund exchange
service or Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, a Fund
B-25
<PAGE>
or the Transfer Agent. Shares for which certificates have been issued may
not be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to invest on the
payment date their dividends or dividends and capital gain distributions,
if any, from a Fund in shares of the same Class of another fund in the
Premier Family of Funds or ^ the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of
other funds that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other
funds sold with a sales load, and the applicable sales
load will be deducted.
C. Dividends and distributions paid by a fund which charges
a sales load may be invested in shares of other funds
sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged
by the fund from which dividends or distributions are
being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a CDSC and
the applicable CDSC, if any, will be imposed upon
redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. Each Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, each Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
also are available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including an 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.
B-26
<PAGE>
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,
SEP-IRAs and 403(b)(7) Plans with only one participant, is normally $750,
with no minimum on subsequent purchases. Individuals who open an IRA may
also open a non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details 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 Funds' Prospectus entitled "How to Buy
Fund Shares."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or are not valued by a
pricing service approved by the Board of Directors, are valued at fair
value as determined in good faith by the Board of Directors. The Board of
Directors will review the method of valuation on a current basis. In
making their good faith valuation of restricted securities, the Directors
generally will take the following factors into consideration: restricted
securities which are 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 Board of Directors if the Directors 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 usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Directors.
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
B-27
<PAGE>
To qualify as a regulated investment company ("RIC"), each Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions), (2) must derive at least 90% of its annual gross
income from specified sources ("Income Requirement"), (3) must derive less
than 30% of its annual gross income from gain on the sale or disposition
of any of the following that are held for less than three months --
(i) securities, (ii) non-foreign-currency options and futures and
(iii) foreign currencies (or foreign currency options, futures and forward
contracts) that are not directly related to a Fund's principal business of
investing in securities (or options and futures with respect thereto)
("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements. Accordingly, a Fund may be
restricted in the selling of securities held for less than three months.
Any dividend or other distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Funds' Prospectus. In addition, the
Code provides that if a shareholder holds shares of the Fund for six
months or less and has received a capital gain distribution with respect
to those shares, any loss incurred on the sale of those shares will be
treated as a long-term capital loss to the extent of the capital gain
distribution received.
Dividends and other distributions declared by a Fund in October,
November or December of any year and payable to shareholders of record on
a date in that month any of those months are deemed to have been paid by a
Fund and received by the shareholders on December 31 of that year if the
distributions are paid by a Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
A portion of the dividends paid by a Fund, whether received in
cash or reinvested in additional Fund shares, may be eligible for the
dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by a Fund from
U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax.
Dividends and interest received by a Fund may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom
that may be excluded by future regulations), and income from transactions
in options, futures and forward contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will
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qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to a Fund's principal business of investing
in securities (or options and futures with respect to securities) also
will be subject to the Short-Short Limitation if they are held for less
than three months.
If a Fund satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether a Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. Each Fund will consider whether it
should seek to qualify for this treatment for its hedging transactions.
To the extent a Fund does not so qualify, it may be forced to defer the
closing out of certain options, futures and forward contracts beyond the
time when it otherwise would be advantageous to do so, in order for such
Fund to qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and 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 any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, 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 a
Fund from certain futures and forward contracts and options transactions
will be treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon exercise or lapse of
such contracts and options as well as from closing transactions. In
addition, any such contracts or options remaining unexercised at the end
of a Fund's taxable year will be treated as sold for their then fair
market value (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by a Fund involving certain contracts
or options may constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, override or modify Sections 1256
and 988. As such, all or a portion of any short-term or long-term capital
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gain from certain "straddle" transactions may be recharacterized to
ordinary income. If the Fund were treated as entering into "straddles" by
reason of its engaging in certain forward contracts or options
transactions, such "straddles" would be characterized as "mixed straddles"
if the forward contracts or options transactions comprising a part of such
"straddles" were governed by Section 1256. Each Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to a Fund may differ. If no election is
made, then to the extent the "straddle" and conversion transactions rules
apply to positions established by a Fund, losses realized by a Fund will
be deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
Investment by a Fund in securities issued or acquired at a
discount (for example, zero coupon securities) or providing for deferred
interest or for payment of interest in the form of additional obligations
(for example, "pay-in-kind" or "PIK" securities) could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, a Fund could be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and to distribute such income in order to
maintain its qualification for treatment as a RIC. In such case, the Fund
may have to dispose of securities it might otherwise have continued to
hold in order to generate cash to satisfy these distribution requirements.
If a Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Fund. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
State and Local Taxes. Depending upon the extent of a Fund's
activities in states and localities in which its offices are maintained,
in which its agents or independent contractors are located, or in which it
is otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from a Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
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those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in a Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate) on the gross amount
of the distribution. Foreign shareholders also may be subject to U.S.
federal withholding tax on income resulting from any election by a Fund to
treat foreign taxes paid by it as paid by its shareholders (see discussion
above), but foreign shareholders will not be able to claim a credit or
deduction for the foreign taxes treated as having been paid by them.
Capital gains realized by foreign shareholders on the sale of
Fund shares and distributions to them of net capital gain, as well as
amounts retained by a Fund that are designated as undistributed capital
gains, generally will not be subject to U.S. federal income tax unless the
foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable
year. However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for U.S. federal income
tax purposes on his worldwide income at the graduated rates applicable to
U.S. citizens, rather than the 30% U.S. federal withholding tax rate. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If income
from a Fund is effectively connected with a U.S. trade or business carried
on by a foreign shareholder, then all distributions to that shareholder
and any gains realized by that shareholder on the disposition of the Fund
shares will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. citizens and domestic corporations, as the case may be.
Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally
are subject to U.S. federal estate tax on their U.S. situs property, such
as shares of a Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. The Company has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of the
Company are exempt from Pennsylvania personal property taxes.
PORTFOLIO TRANSACTIONS
All portfolio transactions of each Fund are placed on behalf of
each Fund by Dreyfus. Debt securities purchased and sold by each Fund are
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generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that
a dealer (the securities firm or bank dealing with a Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. Each Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to each Fund and
at spreads and commission rates, if any, which are reasonable in relation
to the benefits received. Dreyfus also places transactions for other
accounts that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of a Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to
be purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 of the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to a Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or
the purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as
clearance and settlement).
The receipt of research services from broker-dealers may be
useful to Dreyfus in rendering investment management services to a Fund
and/or its other clients; and, conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of other
clients of Dreyfus may be useful to these organizations in carrying out
their obligations to the Fund. The receipt of such research services does
not reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt
to develop comparable information through their own staffs.
The Company's Board of Directors periodically review Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of a Fund and review the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
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<PAGE>
Although Dreyfus manages other accounts in addition to the Funds,
investment decisions for the Funds are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the
purchase or sale of the same investment instrument, the prices and amounts
are allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of a
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to a Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the period July 11, 1991 (commencement of operations) to
October 31, 1991, Premier Limited Term Income Fund did not pay any
brokerage commissions. For the fiscal years ended October 31, 1993 and
1992, Premier Limited Term Income Fund paid ^ $4,885 and $563,
respectively, in brokerage commissions. Increase in brokerage commissions
paid was related to the acquisition in fiscal year 1993 of a few
securities of which brokerage was charged. The Premier Limited Term
Income Fund typically does not pay a stated brokerage fee on transactions.
For the period September 15, 1993 (commencement of operations) to
October 31, 1993, Balanced Fund paid brokerage commissions amounting to
$24,670.
Portfolio Turnover. The portfolio turnover rate for each Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year.
The portfolio turnover rates for the last two years of each Fund
were:
Fiscal Year Ended October 31,
1993 1992
Premier Limited Income 112% ^ 67%
Balanced (1) __ --
(1) ^ Balanced Fund commenced operations 9/15/93.
PERFORMANCE INFORMATION
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<PAGE>
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled
"Performance Information."
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) per share with a
hypothetical $1,000 payment made at the beginning of the period (assuming
the reinvestment of dividends and other 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 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 C the
maximum applicable CDSC has been paid upon redemption at the end of the
period.
Total return is calculated by subtracting the amount of a Fund's
net asset value (maximum offering price in the case of Class A) per share
at the beginning of a stated period from the net asset value (maximum
offering price in the case of Class A) per share at the end of the period
(after giving effect to the reinvestment of dividends and other
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) 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 shares or without giving effect to any applicable
CDSC at the end of the period for Class B or C shares. In such cases, the
calculation would not reflect the deduction of the sales load with respect
to Class A shares or any applicable CDSC with respect to Class B or C
shares, which, if reflected would reduce the performance quoted.
^ Average annual total return (expressed as a percentage) for
Class A shares of each Fund for the periods noted were:
Annualized Total Return for the
Periods Ended April 30, 1994
Fund:
1 Year 5 Years 10 Years Inception
Balanced -- -- -- (4/14/94)
Limited Term -- -- -- (4/7/94)
Income
The dates in parentheses under the column headed "Inception" reflect the
date the commencement of Class A shares of each Fund.
Average annual total return (expressed as a percentage) for Class R shares
of each Fund for the periods noted were:
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<PAGE>
Annualized Total Return for the
Periods Ended April 30, 1994
Fund:
1 Year 5 Years 10 Years Inception
Balanced -- -- -- (9/15/94)
Limited Term 0.36 -- -- 7.35 (7/11/91)
Income
The dates in parentheses under the column headed "Inception" reflect the
date of each Fund's inception.
Certain Funds may also advertise yield from time to time. Yields
are computed by using standardized methods of calculation required by the
SEC. Yields are calculated by dividing the net investment income per
share earn during a 30-day (or one month) period by the maximum offering
price per share on the last day of the period, according to the following
formula:
6
YIELD = 2[a-b/cd+1) -1]
Where: a = dividends and interest earned during
the period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of shares outstanding during
the period that were entitled to receive
dividends; and
d = the maximum offering price per share
on the last day of the period.
The 30-day yield for each Fund quoting yield for the period ended
April 30, 1994 was:
Limited Term Income Fund (Class R) 5.76%
Performance information for the Funds may be compared, in reports
and promotional literature, to indexes including, but not limited to: (i)
the Morgan Stanley European Index; (ii) the Standard & Poor's 500
Composite Stock Price Index ("S&P 500"), the Dow Jones Industrial Average
("DJIA"), or other appropriate unmanaged domestic or foreign indices of
performance of various types of investments so that investors may compare
the Fund's results with those of indices widely regarded by investors as
representative of the securities markets in general; (iii) other groups of
mutual funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or
other criteria; (iv) the Consumer Price Index (a measure of inflation) to
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<PAGE>
assess the real rate of return from an investment in the Fund; and (v)
products managed by a universe of money managers with similar country
allocation and performance objectives. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions or
administrative and management costs and expenses.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares have no preemptive or subscription rights and
are freely transferable.
Each Fund will send annual and semi-annual financial statements
to all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA
15258, is the Funds' custodian and fund accountant. The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation, P.O. Box
9692, Providence, Rhode Island 09240-9830, is each Fund's transfer and
dividend disbursing agent. The Shareholder Services Group, Inc. and
Mellon Bank as custodian, have no part in determining the investment
policies of a Fund or which securities are to be purchased or sold by the
Fund. Prior to the effectiveness of the Investment Management Agreement
for its services as custodian and fund accountant, Mellon Bank was paid an
annual fee of $30,000 per portfolio, and, for all portfolios, an annual
administrative account maintenance fee of $10,000, an annual on-line fee
of $3,600, an asset-based fee of .02% of the first $500 million of the
Company's net assets and .01% of net assets over $500 million, plus a
specified transaction fee for each transaction. For its services as
transfer and dividend disbursing agent, Mellon Bank was paid an annual fee
of $13.00 per shareholder account, with a minimum monthly fee of $3,000
per portfolio. Mellon Bank was reimbursed for certain out-of-pocket
expenses including wire fees, and postage, stationery and telephone
expenses.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby
- 9th Floor, Washington, D.C. 20036, has passed upon the legality of the
shares offered by the ^ Prospectuses and this Statement of Additional
Information.
^ KPMG Peat Marwick LLP was appointed by the Directors to
serve as the Funds' independent auditors for the year ending October 31,
1994, providing audit services including (1) examination of the annual
financial ^ statements, (2) assistance, review and consultation in
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<PAGE>
connection with the SEC and (3) review of the annual federal income tax
return and the Pennsylvania excise tax return filed on behalf of each
Fund.
FINANCIAL STATEMENTS
^
The ^ financial statements for the fiscal year ended October 31,
1993, including notes to the financial statements and supplementary
information and the Report of Independent Auditors, are included in the
Annual Report to shareholders. A copy of the Annual Report, as well as
the Semi-Annual Report for the six months ended June 30, 1994 (unaudited),
accompanies this Statement of Additional Information. The financial
statements for the Annual Report and the Semi-Annual Report are
incorporated herein by reference ^.
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APPENDIX
DESCRIPTION OF SECURITIES RATINGS
^ Debt Instruments Ratings
Moody's Investors Service. Inc. (Moody's):
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest payments are protected by a
large or exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
Securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment attributes
and are considered "upper medium grade obligations."
Those Bonds in the Aa and A group which Moody's believes possess
the strongest investment attributes are designated by the symbols Aa 1 and
A 1.
Standard & Poor's Ratings Group ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in small
degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
Plus (+) or Minus (-): The AA rating may be modified by the
addition of a plus or minus sign to show relative standing within the AA
rating category.
^
Commercial Paper Ratings
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Moody's:
Commercial paper rated Prime by Moody's is based upon its
evaluation of many factors, including: (1) management of the issuer; (2)
the issuer's industry or industries and the speculative-type risks which
may be inherent in certain areas; (3) the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-l,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-l repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
(5) well established access to a range of financial markets and assured
sources of alternative liquidity.
Prime-2 indicates a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is
maintained.
S&P:
Commercial paper rated by S&P has the following characteristics:
liquidity ratios are adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-l, A-2, or A-3.
A-1 -- This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
A-2 -- Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is not as
high as for issues designated A- 1.
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Fitch's Investors Service. Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current
appraisal of the degree of assurance of timely payment of such debt. An
appraisal results in the rating of an issuer's paper as F-l, F-2, F-3, or
F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
F-2 -- Commercial paper issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than those issues
rated F-l.
Duff and Phelps, Inc.:
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash
from operations, but also access to alternative sources of funds including
trade credit, bank lines, and the capital markets. An important
consideration is the level of an obligor's reliance on short-term funds on
an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings
is the refinement of the traditional '1' category. The majority of
short-term debt issuers carry the highest rating, yet quality differences
exist within that tier. As a consequence, Duff & Phelps has incorporated
gradations of '1+' (one plus) and '1-' (one minus) to assist investors in
recognizing those differences.
Duff 1+--Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
Duff 1--Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1--High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Good Grade
Duff 2--Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge
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total financing requirements, access to capital markets is good. Risk
factors are small.
Satisfactory Grade
Duff 3--Satisfactory liquidity and other protection factors
qualify issue as to investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
Non-Investment Grade
Duff 4--Speculative investment characteristics. Liquidity is not
sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
Default
Duff 5--Issuer failed to meet scheduled principal and/or interest
payments.
IBCA, Inc.:
In addition to conducting a careful review of an institution's
reports and published figures, IBCA's analysts regularly visit the
companies for discussions with senior management. These meetings are
fundamental to the preparation of individual reports and ratings. To keep
abreast of any changes that may affect assessments, analysts maintain
contact throughout the year with the management of the companies they
cover.
IBCA's analysts speak the languages of the countries they cover,
which is essential to maximize the value of their meetings with management
and to properly analyze a company's written materials. They also have a
thorough knowledge of the laws and accounting practices that govern the
operations and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning our
ratings. Before dispatch to subscribers, a draft of the report is
submitted to each company to permit correction of any factual errors and
to enable clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently
for institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time,
the company is informed of the ratings as a matter of courtesy, but not
for discussion.
A1+--Obligations supported by the highest capacity for timely
repayment.
A1--Obligations supported by a very strong capacity for timely
repayment.
B-41
<PAGE>
A2--Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
B1--Obligations supported by an adequate capacity for timely
repayment. Such capacity is more susceptible to adverse changes in
business, economic, or financial conditions than for obligations in higher
categories.
B2--Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial
conditions.
C1--Obligations for which there is an inadequate capacity to
ensure timely repayment.
D1--Obligations which have a high risk of default or which are
currently in default.
^
B-42
<PAGE>
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights for each of the periods
indicated therein. The Financial Highlights for the period ended June 30,
1994 are unaudited.
Included in Part B: The following financial
statements for the period ended December 31, 1993 are incorporated by
reference to the Registrant's Annual Report to Shareholders filed on March
8, 1994 (for Premier Limited Term Government Securities Fund) and March 4,
1994 (for Dreyfus Core Value Fund, Premier Managed Income Fund and Dreyfus
Special Growth Fund):
- Reports of Independent Accountants.
- Portfolio of Investments.
- Statement of Assets and Liabilities.
- Statement of Operations.
- Statements of Changes in Net Assets.
- Notes to Financial Statements.
The following are incorporated by reference to the
Registrant's Semi-Annual Report to Shareholders filed on September 8,
1994:
- Portfolio of Investments (unaudited).
- Statement of Assets and Liabilities (unaudited).
- Statement of Operations (unaudited).
- Statements of Changes in Net Assets (unaudited).
- Notes to Financial Statements (unaudited).
(b) Exhibits:
1(a) Second Amended and Restated Agreement and
Declaration of Trust. Incorporated by reference
to Post-Effective Amendment No. 87.
DC-172354.1
<PAGE>
1(b) Amendment No. 1 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust
filed on February 7, 1994. Incorporated by
reference to Post-Effective Amendment No. 90.
1(c) Amendment No. 2 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust
filed on March 31, 1994. Incorporated by
reference to Post-Effective Amendment No. 90.
1(d) Amendment No. 3 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust.
Incorporated by reference to Post-Effective
Amendment No. 93 filed on December 13, 1994.
1(e) Amendment No. 4 to Registrant's Second Amended
and Restated Agreement and Declaration. Filed
herewith.
2 Amended and Restated By-Laws. Incorporated by
reference to Post-Effective Amendment No. 75.
3 Not Applicable.
4 Specimen security. To be filed by Amendment.
5(a) Investment Management Agreement between the
Registrant and Mellon Bank, N.A., dated April 4,
1994. Incorporated by reference to Post-
Effective Amendment No. 90.
5(b) Assignment Agreement among the Registrant, Mellon
Bank, N.A. and The Dreyfus Corporation, dated as
of October 17, 1994, (relating to Investment
Management Agreement dated April 4, 1994).
Incorporated by reference to Post-Effective
Amendment No. 93 filed on December 13, 1994.
6 Distribution Agreement between the Registrant and
Premier Mutual Fund Services, Inc., dated as of
October 17, 1994. Incorporated by reference to
Post-Effective Amendment No. 93 filed on December
13, 1994.
7 Not applicable.
8(a) Custody and Fund Accounting Agreement between the
Registrant and Mellon Bank, N.A., dated April 4,
1994. Incorporated by reference to Post-
Effective Amendment No. 90.
8(b) Amendment to Custody and Fund Accounting
Agreement, dated August 1, 1994. Incorporated by
<PAGE>
reference to Post-Effective Amendment No. 93
filed on December 13, 1994.
9(a) Transfer Agent Agreement between the Registrant
and Boston Safe Deposit and Trust Company
(currently known as The Shareholder Services
Group, Inc.) Incorporated by reference to Post-
Effective Amendment No. 62.
9(b) Supplement to Transfer Agent Agreement for the
Registrant, dated June 1, 1989. Incorporated by
reference to Post-Effective Amendment No. 78.
9(c) Supplement to Transfer Agent Agreement for the
Registrant, dated April 4, 1994. Incorporated by
reference to Post-Effective Amendment No. 93
filed on December 13, 1994.
10 Opinion and consent of counsel. Filed herewith.
11 Consent of Coopers & Lybrand. Filed herewith.
12 Not Applicable.
13 Not Applicable.
14 Not applicable.
15(a) Restated Distribution Plan (relating to Investor
Shares and Class A Shares). Incorporated by
reference to Post-Effective Amendment No. 93
filed on December 13, 1994.
15(b) Form of Distribution and Service Plans (relating
to Class B Shares and Class C Shares). Filed
herewith.
16 Performance Information is incorporated by
reference to Post-Effective Amendment No. 76.
Item 25. Persons Controlled By or Under Common Control with
Registrant
Not Applicable.
Item 26. Number of Holders of Securities
Set forth below are the number of recordholders of securities of
- 3 -
<PAGE>
each series of the Registrant, as of December 8, 1994.
Number of Record Holders
Title of Class
Class A Investor Class R Institutional
Class
Dreyfus Core Value N/A 20,107 14 1,902
Fund
Premier Managed 6,163 N/A 63 N/A
Income Fund
Dreyfus Special N/A 7,899 42 N/A
Growth Fund
Premier Limited 2,902 N/A 1 N/A
Term Government
Securities Fund
Item 27. Indemnification
Under a provision of the Registrant's Second Amended and Restated
Agreement and Declaration of Trust (the "Declaration of Trust"), any past
or present Trustee or officer of the Registrant is indemnified to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him/her in connection with any action, suit or
proceeding to which he/she may be a party or otherwise involved by reason
of his/her being or having been a Trustee or officer of the Registrant.
This provision does not authorize indemnification against any liability to
the Registrant or its shareholders to which such Trustee or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his/her duties. Moreover, this
provision does not authorize indemnification where such Trustee or officer
is finally adjudicated not to have acted in good faith in the reasonable
belief that his/her actions were in or not opposed to the best interests
of the Registrant. Expenses may be paid by the Registrant in advance of
the final disposition of any action, suit or proceeding upon receipt of an
undertaking by such Trustee or officer to repay such expenses to the
Registrant if it is ultimately determined that indemnification of such
expenses is not authorized under the Declaration of Trust.
Item 28(a). Business and Other Connections of Investment Adviser
Investment Adviser -- The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the investment
adviser, manager and distributor for sponsored investment companies
- 4 -
<PAGE>
registered under the Investment Company Act of 1940 and as an investment
adviser to institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various pension
plans, institutions and individuals.
Officers and Directors of Investment Adviser
Name and Position
with Dreyfus Other Businesses
MANDELL L. BERMAN Real estate consultant and private investor
Director
29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and Chief
Director Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 9103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director
- 5 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
535 Madison Avenue
New York, New York 10022;
Director and member of the Executive Committee of
Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director
Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the
Board and Chief Dreyfus Acquisition Corporation*;
Executive Officer
The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management, Inc.*;
- 6 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
Dreyfus Personal Management, Inc. *;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of
the Board of Dreyfus Service Corporation*;
Directors
Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)+;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, and
Director The Dreyfus Trust Company++;
Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
- 7 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837
Vice President and former Treasurer and Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and Director:
Major Trading Corporation*
KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating
Officer The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and
Chief Financial Pennsylvania Economy League
Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
- 8 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
Director and Vice President:
Financial Executives Institute
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief Executive Officer:
Vice Chairman,
Distribution The Boston Advisers, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President,
Marketing The Woodbury Society
16 Woodbury lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services
Executive Vice President:
- 9 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate
Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant
and Director The Dreyfus Security Savings Bank, F.S.B.
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President
Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
- 10 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President,
Wholesale Institutional Services Division of Dreyfus
Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*:
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation *:
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and
General Counsel Dreyfus Previous Metals, Inc.*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation *;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President,
Fund Administration
- 11 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
PHILIP L. TOIA Chairman of the Board and Vice President;
Vice Chairman, Dreyfus Thrift & Commerce****;
Operations and
Administration
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and The Chase
Manhattan Capital Markets Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. Formerly, Assistant Commissioner:
WICKHAM
Vice President,
Human Resources
Department of Parks and Recreation of the City of
New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller
Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
- 12 -
<PAGE>
Name and Position
with Dreyfus Other Businesses
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President,
Fund Legal and The Dreyfus Consumer Credit Corporation*;
Compliance
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Truepenny Corporation*
___________________________
* The address of the business so indicated is 200 Park
Avenue, New York, New York 10166.
** The address of the business so indicated is 80 Cutter
Mill Road, Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway,
New York, New York 10006.
**** The address of the business so indicated is Five Triad
Center, Salt Lake City, Utah 84180.
+ The address of the business so indicated is Atrium
Building, 80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One
Rockefeller Plaza, New York, New York 10020.
- 13 -
<PAGE>
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama
Islands.
Item 29. Principal Underwriter
(a) Premier Mutual Fund Services, Inc. ("Premier") currently
serves as the distributor for The Dreyfus/Laurel Funds Trust. Premier is
registered with the Securities and Exchange Commission as a broker-dealer
and is a member of National Association of Securities Dealers, Inc.
Premier is a wholly-owned subsidiary of Institutional Administration
Services, Inc., the parent company of which is Boston Institutional Group,
Inc.
Premier also currently serves as the exclusive distributor or principal
underwriter for the following investment companies:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
- 14 -
<PAGE>
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wilshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) First Prairie Cash Management
76) First Prairie Diversified Asset Fund
77) First Prairie Money Market Fund
78) First Prairie Municipal Money Market Fund
79) First Prairie Tax Exempt Bond Fund, Inc.
80) First Prairie U.S. Government Income Fund
81) First Prairie U.S. Treasury Securities Cash Management
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Fund, Inc.
85) General Money Market Fund, Inc.
- 15 -
<PAGE>
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Fund, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
90) Pacific American Fund
91) Peoples Index Fund, Inc.
92) Peoples S&P MidCap Index Fund, Inc.
93) Premier Insured Municipal Bond Fund
94) Premier California Municipal Bond Fund
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal Bond Fund
99) Premier State Municipal Bond Fund
100) The Dreyfus/Laurel Funds, Inc.
101) The Dreyfus/Laurel Tax-Free Municipal Funds
102) The Dreyfus/Laurel Investment Series
(b) The names of the principal executive officers of Premier
together with their respective positions with Premier and their positions
and offices with the Registrant, are set forth below.
Name and Address Position and Office(s) Position and
with Premier Office(s) with
Registrant
Marie E. Connolly* Director, President & President & Treasurer
Chief Operating
Officer
John E. Pelletier* Senior Vice President Vice President &
& General Counsel Secretary
Joseph F. Tower, III* Senior Vice President Assistant Treasurer
& Chief Financial
Officer
John J. Pyburn** Vice President Assistant Treasurer
Jean M. O'Leary* Assistant Secretary N/A
Eric B. Fischman** Vice President & Vice President &
Associate General Assistant Secretary
Counsel
Frederic C. Dey** Senior Vice President Vice President &
Assistant Treasurer
Ruth D. Leibert** Assistant Vice Assistant Secretary
President
Paul D. Furcinito** Assistant Vice Assistant Secretary
President
- 16 -
<PAGE>
*Address: Funds Distributor, Inc., Exchange Place, Boston, MA 02109.
**Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
NY 10166.
Item 30. Location of Accounts and Records
(1) The Dreyfus/Laurel Funds Trust
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(2) Mellon Bank, N.A.
c/o The Boston Company Advisers, Inc.
4th Floor
One Exchange Place
Boston, MA 02109
(3) Mellon Bank, N.A.
c/o The Boston Company, Inc.
5th Floor
One Boston Place
Boston, MA 02108
(4) Mellon Bank, N.A.
The Park Square Building
31 St. James Avenue
Boston, MA 02116
(5) The Shareholder Services Group, Inc.
1 American Express Plaza
Providence, RI 02903
(6) Mellon Bank, N.A.
One Mellon Bank Center
39th Floor
Pittsburgh, PA 15258
(7) The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
- 17 -
<PAGE>
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
- 18 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, The Dreyfus/Laurel Funds Trust (formerly The Laurel Funds
Trust), certifies that it meets all of the requirements for effectiveness
of this Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Boston, the Commonwealth of
Massachusetts on the 19th day of December, 1994.
THE DREYFUS/LAUREL FUNDS
TRUST
/s/ Marie E. Connolly
_____________________________
Marie E. Connolly
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
/s/ Marie E. Connolly
___________________________ President, Treasurer 12/19/94
Marie E. Connolly
/s/ Ruth Marie Adams
_________________________ Trustee 12/19/94
Ruth Marie Adams
/s/ James M. Fitzgibbons
________________________ Trustee 12/19/94
James M. Fitzgibbons
/s/ Kenneth A. Himmel
________________________ Trustee 12/19/94
Kenneth A. Himmel
- 19 -
<PAGE>
/s/ Stephen J. Lockwood
________________________ Trustee 12/19/94
Stephen J. Lockwood
/s/ Roslyn M. Watson
________________________ Trustee 12/19/94
Roslyn M. Watson
/s/ J. Tomlinson Fort
________________________ Trustee 12/19/94
J. Tomlinson Fort
/s/ Arthur L. Goeschel
________________________ Trustee 12/19/94
Arthur L. Goeschel
/s/ Arch S. Jeffery
________________________ Trustee 12/19/94
Arch S. Jeffery
/s/ Robert D. McBride
________________________ Trustee 12/19/94
Robert D. McBride
/s/ John L. Propst
________________________ Trustee 12/19/94
John L. Propst
/s/ John J. Sciullo
________________________ Trustee 12/19/94
John J. Sciullo
- 20 -
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> PREMIER MANAGED INCOME FUND INVESTOR
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> PREMIER MANAGED INCOME FUND CLASS R
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<SERIES>
<NUMBER> 0
<NAME>PREMIER LIMITED TERM GOVT SEC FUND INV
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<PERIOD-END> JUN-30-1994
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<NAME>PREMIER LIMITED TERM GOVT SEC FUND TRU
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> DREYFUS SPECIAL GROWTH FUND INVESTOR
<S> <C>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> DREYFUS SPECIAL GROWTH FUND TRUST SHA
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> DREYFUS CORE VALUE FUND INVESTOR SHAR
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<TABLE> <S> <C>
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<NAME> DREYFUS CORE VALUE FUND INSTITUTIONAL
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
December 19, 1994
The Dreyfus/Laurel Funds Trust
200 Park Avenue - 55th Floor
New York, New York 10166
Dear Sir or Madam:
The Dreyfus/Laurel Funds Trust ("Trust") is an unincorporated
voluntary association organized under the laws of the Commonwealth of
Massachusetts on March 30, 1979. We understand that the Trust is about to
file Post-Effective Amendment No. 93 to its Registration Statement on Form
N-1A. You have requested our opinion regarding certain matters in
connection with the issuance of shares of beneficial interest ("Shares")
of the Trust in the following designated Series: Dreyfus Core Value Fund;
Dreyfus Special Growth Fund; Premier Limited Term Government Securities
Fund; and Premier Managed Income Fund (each, a "Series").
We have, as counsel, participated in various business and other
proceedings relating to the Trust. We have examined copies, either
certified or otherwise proved to be genuine, of minutes of meetings of its
board of trustees and other documents relating to its organization and
operation, and we are generally familiar with its affairs. Based upon the
foregoing, it is our opinion that the authorized but unissued shares of
beneficial interest of the Trust may be sold in accordance with the
Trust's Declaration of Trust and By-Laws and subject to compliance with
the Securities Act of 1933, the Investment Company Act of 1940 and
applicable state laws regulating the offer and sale of securities and,
when so sold, will be legally issued, fully paid and non-assessable.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. The Declaration of Trust states that creditors
of, contractors with, and claimants against the Trust or any Series shall
look only to the assets of the Trust or the appropriate Series for
payment. It also requires that notice of such disclaimer be given in each
note, bond, contract, certificate, undertaking or instrument made or
issued by the officers or the trustees of the Trust on behalf of the
Trust. The Declaration of Trust further provides: (1) for indemnification
from the assets of the appropriate Series for all loss and expense of any
shareholder held personally liable for the obligations of the Trust or any
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Series by virtue of ownership of shares of such Series; and (ii) for the
appropriate Series to assume the defense of any claim against the
shareholder for any act or obligation of such Series. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the Trust or Series would be unable
to meet its obligations.
We hereby consent to the filing of this opinion in connection
with Post-Effective Amendment No. 93 which you are about to file with the
Securities and Exchange Commission and to the reference in the Statements
of Additional Information incorporated by reference into the Series'
Prospectuses.
Sincerely yours,
/s/ Kirkpatrick & Lockhart
KIRKPATRICK & LOCKHART
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CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Dreyfus/Laurel Funds Trust:
We hereby consent to the following with respect to Post-
Effective Amendment No. 93 to the Registration Statement on
Form N-1A under the Securities Act of 1933, as amended, of
The Dreyfus/Laurel Funds Trust (formerly The Laurel Funds
Trust and previously The Boston Company Fund):
1. The incorporation by reference of our reports
dated February 14, 1994 accompanying the
financial statement of the Capital Appreciation
Fund, Special Growth Fund, Managed Income Fund,
and Intermediate Term Government Securities Fund
(four series of The Dreyfus/Laurel Funds Trust)
for the year ended December 31, 1993 into the
Statement of Additional Information.
2. The reference to our firm under the heading
"Financial Highlights" in the Prospectuses.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 19, 1994
THE DREYFUS/LAUREL FUNDS TRUST
FORM OF SERVICE PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Trust"), consisting of distinct portfolios of
shares (each a "Fund"), adopt a Service Plan (the "Plan") relating to its
Class B shares and Class C shares, respectively, in accordance with Rule
12b-1 promulgated under the Investment Company Act of 1940, as amended
(the "Act"). Under the Plan, a Fund would pay for the provision of
services to shareholders of Class B and Class C, respectively, of the Fund
(each such Fund as set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time). The Distributor would be permitted to pay
certain financial institutions, securities dealers and other industry
professionals (collectively, "Service Agents") in respect of these
services. The fee under the Plan with respect to a particular Class of a
Fund is intended to be a "service fee" as defined in Article III, Section
26 of the NASD Rules of Fair Practice. Pursuant to the Act and said Rule
12b-1, this written plan describing all material aspects of the proposed
financing is being adopted by the Trust, on behalf of each Fund.
The Trust's Board, in considering whether a Fund should implement
a written plan with respect to its Class B shares and Class C shares,
respectively, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use Fund assets attributable
to its Class B shares and Class C shares, respectively, for such purposes.
In voting to approve the implementation of such a plan with
respect to a Fund's Class B shares and Class C shares, respectively, the
Board members have concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is
a reasonable likelihood that the plan set forth below will benefit the
Fund and the holders of its Class B shares and Class C shares,
respectively.
The Plan: The material aspects of this Plan as it relates to a
particular Class of a Fund are as follows:
1. A Fund shall pay an amount equal to an annual rate of
0.25 of 1% of the value of the Fund's average daily net assets
attributable to its Class B shares and Class C shares, respectively, to
(a) Dreyfus Service Corporation ("Dreyfus"), or any affiliate thereof
designated by it, in respect of shares of a particular Class held of
record by Dreyfus, and (b) the Distributor, in respect of shares of a
particular Class held of record by any other person. Such payments shall
be for the provision of personal services to shareholders of and/or the
DC-172285.2
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maintenance of shareholder accounts in a particular Class of a Fund. The
Distributor shall determine the amounts to be paid to Service Agents and
the basis on which such payments will be made. Payments to a Service
Agent are subject to compliance by the Service Agent with the terms of any
related Plan agreement between the Service Agent and the Distributor.
2. For purposes of determining the fee payable under this
Plan with respect to a particular Class of a Fund to which it relates, the
value of the Fund's net assets attributable to its Class B shares and
Class C shares, respectively, shall be computed in the manner specified in
the Trust's charter documents as then in effect or in the Trust's then
current Prospectus and Statement of Additional Information for the
computation of the value of the Fund's net assets attributable to Class B
shares and Class C shares, respectively.
3. The Trust's Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this Plan with
respect to a particular Class of a Fund to which it relates. The report
shall state the purpose for which the amounts were expended.
4. This Plan shall become effective with respect to a
particular Class of a Fund to which it relates upon the later to occur of
approval by (a) the holders of at least a majority of the Fund's
outstanding voting shares of that Class and (b) a majority of the Board
members, including a majority of the Board members who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on the
approval of this Plan.
5. This Plan shall continue with respect to a particular
Class of a Fund to which it relates for a period of one year from its
effective date, unless earlier terminated in accordance with its terms,
and thereafter shall continue with respect to that Class automatically for
successive annual periods, provided such continuance is approved at least
annually in the manner provided in paragraph 4(b) hereof.
6. This Plan may be amended, with respect to a particular
Class of a Fund to which it relates, at any time by the Trust's Board,
provided that (a) any amendment to increase materially the costs that a
particular Class of a Fund may bear pursuant to this Plan shall be
effective only upon approval by a vote of the holders of a majority of the
Fund's outstanding voting shares of that Class, and (b) any material
amendments of the terms of this Plan as it relates to a particular Class
of a Fund shall become effective only upon approval as provided in
paragraph 4(b) hereof.
7. This Plan may be terminated, with respect to a particular
Class of a Fund to which it relates, without penalty at any time by (a) a
vote of a majority of the Board members who are not "interested persons"
(as defined in the Act) of the Trust and who have no direct or indirect
2
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financial interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, or (b) a vote of the holders of
a majority of the Fund's outstanding voting shares of that Class. This
Plan may remain in effect with respect to a particular Class of a Fund
even if the Plan has been terminated in accordance with this paragraph 7
with respect to any other Class.
8. While this Plan is in effect, the selection and
nomination of Board members who are not "interested persons" (as defined
in the Act) of the Trust and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into
in connection with this Plan shall be committed to the discretion of the
Board members who are not "interested persons".
9. The Trust will preserve copies of this Plan, any related
agreement and any report made pursuant to paragraph 3 hereof, for a period
of not less than six (6) years from the date of this Plan, such agreement
or report, as the case may be, the first two (2) years of such period in
an easily accessible place.
10. For Massachusetts business trusts: Limitation of
Liability of Trustees, Officers and Shareholders. A copy of the Second
Amended and Restated Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that the obligations of the Trust hereunder and
under any related Plan agreement shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the
Trust, personally, but shall bind only the trust property of the Trust, as
provided in the Second Amended and Restated Agreement and Declaration of
Trust of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Plan as of this
_____ day of _____________, 1994.
THE DREYFUS/LAUREL FUNDS TRUST
By: ________________________
Title: ___________________
3
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Exhibit A
4
<PAGE>
THE DREYFUS/LAUREL FUNDS TRUST
FORM OF DISTRIBUTION PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Trust"), consisting of distinct portfolios of
shares (each a "Fund"), adopt a Distribution Plan (the "Plan") relating to
its Class B shares and Class C shares, respectively, in accordance with
Rule 12b-1 promulgated under the Investment Company Act of 1940, as
amended (the "Act"). Under the Plan, a Fund would pay the Trust's
distributor (the "Distributor") for distributing the Class B shares and
Class C shares, respectively, of the Fund (each such Fund as set forth on
Exhibit A hereto, as such Exhibit may be revised from time to time).
Pursuant to the Act and said Rule 12b-1, this written plan describing all
material aspects of the proposed financing is being adopted by the Trust,
on behalf of each Fund.
The Trust's Board, in considering whether a Fund should implement
a written plan with respect to its Class B shares and Class C shares,
respectively, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use Fund assets attributable
to its Class B shares and Class C shares, respectively, for such purposes.
In voting to approve the implementation of such a plan with
respect to a Fund's Class B shares and Class C shares, respectively, the
Board members have concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is
a reasonable likelihood that the plan set forth below will benefit the
Fund and the holders of its Class B shares and Class C shares,
respectively.
The Plan: The material aspects of this Plan as it relates to a
particular Class of a Fund are as follows:
1. Distribution Fee for Class B Shares. A Fund shall pay to
the Distributor a distribution fee at an annual rate of either (i) 0.75 of
1% (in the case of an equity Fund) or (ii) 0.50 of 1% (in the case of a
bond Fund) of the value of the Fund's average daily net assets
attributable to its Class B shares.
Distribution Fee for Class C Shares. A Fund shall pay to
the Distributor a distribution fee at an annual rate of either (i) 0.75 of
1% (in the case of an equity Fund) or (ii) 0.50 of 1% (in the case of a
bond Fund) of the value of the Fund's average daily net assets
attributable to its Class C shares.
DC-172287.2
<PAGE>
2. For purposes of determining the fee payable under this
Plan with respect to a particular Class of a Fund to which it relates, the
value of the Fund's net assets attributable to its Class B shares and
Class C shares, respectively, shall be computed in the manner specified in
the Trust's charter documents as then in effect or in the Trust's then
current Prospectus and Statement of Additional Information for the
computation of the value of the Fund's net assets attributable to Class B
shares and Class C shares, respectively.
3. The Trust's Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this Plan with
respect to a particular Class of a Fund to which it relates. The report
shall state the purpose for which the amounts were expended.
4. This Plan shall become effective with respect to a
particular Class of a Fund to which it relates upon the later to occur of
approval by (a) the holders of at least a majority of the Fund's
outstanding voting shares of that Class and (b) a majority of the Board
members, including a majority of the Board members who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on the
approval of this Plan.
5. This Plan shall continue with respect to a particular
Class of a Fund to which it relates for a period of one year from its
effective date, unless earlier terminated in accordance with its terms,
and thereafter shall continue with respect to that Class automatically for
successive annual periods, provided such continuance is approved at least
annually in the manner provided in paragraph 4(b) hereof.
6. This Plan may be amended, with respect to a particular
Class of a Fund to which it relates, at any time by the Trust's Board,
provided that (a) any amendment to increase materially the costs that a
particular Class of a Fund may bear pursuant to this Plan shall be
effective only upon approval by a vote of the holders of a majority of the
Fund's outstanding voting shares of that Class, and (b) any material
amendments of the terms of this Plan as it relates to a particular Class
of a Fund shall become effective only upon approval as provided in
paragraph 4(b) hereof.
7. This Plan may be terminated, with respect to a particular
Class of a Fund to which it relates, without penalty at any time by (a) a
vote of a majority of the Board members who are not "interested persons"
(as defined in the Act) of the Trust and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, or (b) a vote of the holders of
a majority of the Fund's outstanding voting shares of that Class. This
Plan may remain in effect with respect to a particular Class of a Fund
even if the Plan has been terminated in accordance with this paragraph 7
with respect to any other Class.
2
<PAGE>
8. While this Plan is in effect, the selection and
nomination of Board members who are not "interested persons" (as defined
in the Act) of the Trust and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into
in connection with this Plan shall be committed to the discretion of the
Board members who are not "interested persons".
9. The Trust will preserve copies of this Plan, any related
agreement and any report made pursuant to paragraph 3 hereof, for a period
of not less than six (6) years from the date of this Plan, such agreement
or report, as the case may be, the first two (2) years of such period in
an easily accessible place.
10. For Massachusetts business trusts: Limitation of
Liability of Trustees, Officers and Shareholders. A copy of the Second
Amended and Restated Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that the obligations of the Trust hereunder and
under any related Plan agreement shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the
Trust, personally, but shall bind only the trust property of the Trust, as
provided in the Second Amended and Restated Agreement and Declaration of
Trust of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Plan as of this
_____ day of _____________, 1994.
THE DREYFUS/LAUREL FUNDS TRUST
By: _____________________
Title: ___________________
3
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Exhibit A
4
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