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. 95 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 36
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
Secretary
The Dreyfus/Laurel Funds Trust
200 Park Avenue - 55th floor
New York, New York 10166
(Name and Address of Agent for Service)
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
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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, 1994 was filed with the Commission on February 28, 1995.
Dreyfus Special Growth Fund
Premier Limited Term Government Securities Fund
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.
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
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 - Prospectuses
- Dreyfus Special Growth Fund
- Premier Limited Term Government Securities Fund
- Premier Managed Income Fund
Part B - Statements of Additional Information
- 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
--------
* The currently effective prospectuses and statement of
additional information for the following series of the
Registrant are not affected by this Amendment: Dreyfus
Core Value Fund.
- --------------------------------------------------------------------------
PROSPECTUS MAY 1, 1995
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, OR TO CUSTOMERS WHO HAVE RECEIVED AND HOLD
SHARES OF THE FUND DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR
RELATIONSHIP. INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE
FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER
FINANCIAL INSTITUTIONS ("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 FUND 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."
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 MAY 1, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("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, 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
- --------------------------------------------------------------------------
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
Page 2
EXPENSE SUMMARY
<TABLE>
<CAPTION>
INVESTOR SHARES CLASS R SHARES
_______________ --------------
<S> <C> <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 Fee1.. 0.25% none
Other Expense2........... 0.00% 0.00%
-------- -------
Total Fund Operating Expense ................ 1.40% 1.15%
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 SHARES
_______________ ______________
1 Year $ 14 $ 12
3 Years $ 44 $ 37
5 Years $ 77 $ 63
10 Years $168 $140
- ------------------------
(1) See "Distribution Plan (Investor Shares Only)" for a description of the
Fund's Distribution Plan for the Investor Class.
(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 .02% of the Fund's net
assets (See "Management of the Fund.")
</TABLE>
- -----------------------------------------------------------------------
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. 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"). Certain 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 (Investor Shares Only)."
The Company understands that banks, brokers, dealers or 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 connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Selling Agreement ("Agreement") with Premier Mutual Fund
Services, Inc. (the "Distributor"). The Agreement requires each Agent to discl
ose to its clients any compensation payable to such Agent by the Distributor
and any other compensation payable by the client for various services
provided in connection with their accounts.
Page 3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor 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, 1994 which is incorporated by reference in the SAI.
The financial statements included in the Fund's Annual Report for the year
ended December 31, 1994, have been audited by KPMG Peat Marwick LLP,
independent accountants, whose report appears in the Fund's Annual Report.
DREYFUS SPECIAL GROWTH FUND
<TABLE>
<CAPTION>
For an Investor share outstanding throughout each year.*
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/94## 12/31/93+++12/31/92 12/31/91 12/31/90+++12/31/89 12/31/88 12/31/87 12/31/86 12/31/85
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of year...... $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21 $20.95 $15.87
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Income from investment
operations:
Net investment
income/(loss)#.. (0.09) (0.20) (0.10) (0.05) 0.03 0.14 0.37 0.63 0.13 0.36
Net realized and unrealized
gain/(loss) on
investments... (3.18) 3.51 3.77 3.90 (0.72) 2.49 2.22 (0.91) 1.40 5.07
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total from investment
operations.. (3.27) 3.31 3.67 3.85 (0.69) 2.63 2.59 (0.28) 1.53 5.43
Less distributions:
Distributions from net
investment income.. -_ -_ -_ -_ (0.03) (0.25) (0.34) (0.81) (0.31) (0.35)
Distributions in excess of net
investment income.. -_ -_ (0.19) -_ -_ -_ -_ -_ -_ -_
Distributions from net
realized gains
on investments.. (0.05) (1.79) (1.62) (2.82) -_ (2.37) -_ (4.10) (4.96) -_
Distributions in excess of net
realized gains
on investments.. (0.00)(1) -_ -_ -_ -_ -_ -_ -_ -_ -_
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total distributions... (0.05) (1.79) (1.81) (2.82) (0.03) (2.62) (0.34) (4.91) (5.27) (0.35)
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net asset value,
end of year.. $14.65 $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21 $20.95
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total Return+.... (18.22)% 20.01% 26.19% 29.22% (4.84)% 18.83% 21.49% (3.81)% 7.66% 34.80%
======== ====== ====== ====== ====== ======= ====== ======== ====== ======
Ratios / Supplemental Data:
Net assets, end of year
(in 000's)... $64,839 $83,879 $64,071 $41,522 $43,591 $39,759 $35,227 $30,678 $35,860 $53,562
Ratio of operating
expenses to average
net assets++... 1.42% 1.73% 1.57% 1.70% 1.62% 1.72% 1.58% 1.49% 1.32% 1.35%
Ratio of net investment income/loss
to average
net assets.. (0.51)% (1.09)% (0.71)% (0.34)% 0.19% 0.82% 2.70% 3.25% 1.16% 1.96%
Portfolio turnover
rate++++... 133% 94% 112% 141% 222% 184% 180% 322% 192% 257%
- -------------------
* 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 year ended December 31,
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 December 31, 1994. The
Financial Highlights for the year ended December 31, 1993 and prior
periods are based upon a Retail Share outstanding.
+ Total returns represent aggregate total returns for the periods indicated.
++ Without the voluntary waiver of fees and/or reimbursement of expenses by
the investment adviser, the annualized ratio of expenses to average net
assets for the year ended December 31, 1993 would have been 1.79%.
+++ Per share amounts have been calculated using the monthly average
share method.
++++ In accordance with the SEC'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 the year ended
December 31, 1993 would have been $(0.21)
## Prior to April 4, 1994, The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the Fund's investment manager. Effective October
17, 1994, Dreyfus began serving as the Fund's investment manager.
(1) Amount represents less than $0.01 per share.
</TABLE>
Page 4
FINANCIAL HIGHLIGHTS (CONTINUED)
DREYFUS SPECIALGROWTHFUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
12/31/94## 12/31/93*+++
------------ -------------
<S> <C> <C>
Net asset value, beginning of period $18.06 $17.31
________ -------
Income from investment operations:
Net investment loss # (0.02) (0.10)
Net realized and unrealized gain (loss) on investments (3.21) 2.64
________ -------
Total from investment operations (3.23) 2.54
Less Distributions:
Distributions from net realized gains on investments (0.05) (1.79)
Distributions in excess of net realized gains on investments (0.00)(1) --
________ -------
Net asset value, end of period $14.78 $18.06
________ -------
Total return + (17.91)% 15.78%
======== ========
Ratios / Supplemental data:
Net Assets, end of period (in 000's) $6,784 $14,941
Ratio of operating expenses to average net assets ++ 1.15% 1.19%**
Ratio of net investment loss to average net assets (0.24)% (0.55)%**
Portfolio turnover rate 133% 94%
- ------------------------------------
* On February 1, 1993, the Fund commenced selling Investment Class shares.
Effective April 4, 1994 the Investment Class shares were reclassified
as Trust shares and on October 17, 1994 were reclassified as Class R
shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated.
++ Without voluntary waiver of fees and/or reimbursement of expenses by the
investment adviser the 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 period ended December
31, 1993 would have been $(0.11).
## Prior to April 4, 1994, The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the the Fund's investment manager. Effective
October 17, 1994, Dreyfus began serving as the Fund's investment manager.
(1) Amount represents less than $0.01 per share.
</TABLE>
page 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 or to customers who
have received and hold shares of the Fund distributed to them by virtue of
such an account or relationship. Investor shares are primarily sold to retail
investors by the Distributor and by 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 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 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 Fund is a diversified fund that seeks above-average growth of
capital without regard to income through investments principally in
securities of issuers thought to have significant growth potential.
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
portfolio. 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.
Page 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
Page 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
Page 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 March 31, 1995, Dreyfus managed or administered
approximately $72 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 with Dreyfus
and has been employed by Dreyfus 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.
Page 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,
including Dreyfus, Mellon managed approximately $193 billion in assets as of
December 31, 1994, including approximately $70 billion in mutual fund assets.
As of December 31, 1994, Mellon, through various subsidiaries including
Dreyfus, provided non-investment services, such as custodial or
administration services, for approximately $654 billion in assets, including
approximately $74 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
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 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 Man
agement 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 period from January 1, 1994 to April 3, 1994, the
Fund paid its investment adviser, The Boston Company Advisors, Inc. ("Boston
Advisors"), (an indirect wholly-owned subsidiary of Mellon Bank Corporation),
1.00% (annualized) of its average daily net assets in investment advisory
fees under the Fund's previous investment advisory contract (such contract
covered only the provision of investment advisory and certain specified
administrative services). For the period from April 4, 1994 through the
fiscal year ended December 31, 1994, the Fund paid Mellon Bank or Dreyfus
1.15% (annualized) of its average daily net assets in investment management
fees, less fees and expenses of non-interested Trustees (including counsel
fees).
For the fiscal year ended December 31, 1994, total operating expenses
(excluding Rule 12b-1 fees of each class of the Fund were 1.18% an 1.15%
(annualized) of the average daily net assets of Class A and Class R,
respectively.
In addition, Investor shares may be subject to certain distribution
and service fees. See "Distribution Plan (Investor Shares Only)."
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 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
page 10
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 FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
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 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, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. 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-pro
fit 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.
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 an 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
page 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, 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. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA# as shown below, for purchase of Fund shares in your
name:
DDA# 044261 Dreyfus Special Growth Fund/Investor shares;
DDA# 043710 Dreyfus Special Growth Fund/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 1-800-645-6561 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 Boston Safe Deposit & Trust Co. with instructions to credit
your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS:
"4100" Dreyfus Special Growth Fund/Investor shares;
"4490" Dreyfus Special Growth Fund/Class R shares.
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
Page 12
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 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 Transfer Agent 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 purchase orders made through the Dreyfus TELETRANSFER Privilege,
which are effective one business day 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 _ 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 Transfe
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents
Page 13
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 Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus 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 Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
Fund Exchanges
You may purchase, in exchange for shares of a Class, shares of the
same or a comparable 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 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 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
page 14
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 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
Page 15
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, 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. 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 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.
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 con-
Page 16
sult 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 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 Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. 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 NAV 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 through the
page 17
Dreyfus TELETRANSFER Privilege. Other redemption procedures may be in effect
for clients of certain Agents and institutions. The Fund makes available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a 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 NAV 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
Page 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. 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 for activities or 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 Agents that
have entered into Selling Agreements ("Agreements") with the Distributor.
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 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 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.
Page 19
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.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment income,
if any, annually 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 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
Page 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. Advertisem
ents 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 NAV at the
beginning of the
Page 21
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.
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 management 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.
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, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Trustee from office and
for any other purpose. Company shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Company's outstanding shares. In
addition, the Board
Page 22
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.
Page 23
DREYFUS
Special Growth
Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
322/722p2050195
- -------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
(LION LOGO)
PROSPECTUS MAY 1, 1995
- -------------------------------------------------------------------------
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 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 May 1,
1995, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which
may be of interest to some investors. It has been filed with the
Securities and Exchange Commission ("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, 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.
- -------------------------------------------------------------------------
(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 and its affiliates) ("Banks")
acting on behalf of customers having a qualified trust or investment
account or relationship at such institution, or to customers who have
received and hold shares of the Fund distributed to them by virtue of such
an account or relationship. (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.
You can purchase or redeem Fund shares by telephone using the
TELETRANSFER Privilege.
Page 2
TABLE OF CONTENTS
Expense Summary.................................... 4
Financial Highlights............................... 5
Alternative Purchase Methods....................... 8
Description of the Fund............................ 9
Management of the Fund............................. 15
How to Buy Fund Shares............................. 17
Shareholder Services............................... 22
How to Redeem Fund Shares.......................... 26
Distribution Plans (Class A Plan and Class B and Class C Plans) 30
Dividends, Other Distributions and Taxes........... 31
Performance Information............................ 33
General Information................................ 34
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
<S> <C> <C> <C> <C>
CLASS A CLASS B CLASS C CLASS R
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 Fee.......................... 0.70% 0.70% 0.70% 0.70%
12b-1 Fee1.............................. 0.25% 1.00% 1.00% none
Other Expenses2 ........................ 0.00% 0.00% 0.00% 0.00%
___- ___- ___- ___-
Total Fund Operating Expenses........... 0.95% 1.70% 1.70% 0.70%
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) except where noted,
redemption
at the end of each time period:
1 YEAR $54 $57/173 $27/173 $7
3 YEARS $74 $84/543 $54 $22
5 YEARS $95 $112/923 $92 $39
10 YEARS $156 $201 $201 $87
</TABLE>
- ----------------------
1 See "Distribution Plans (Class A Plan and Class B and Class C Plans)" for a
description of the Fund's Distribution Plan and Service Plan for Class A, B
and C shares.
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 .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. 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 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 "Management of the
Fund," "How to Buy Fund Shares" and "Distribution Plans (Class A Plan and
Class B and Class C Plans)."
The Company understands that banks, brokers, dealers or other
financial institutions (including Mellon Bank and its affiliates)
(collectively "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 an Agent under its Selling Agreement ("Agreement") with Premier
Mutual Fund Services, Inc. (the "Distributor"). The Agreement requires each
Agent to disclose to its clients any compensation payable to such 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 should be read in
conjunction with the financial statements and related notes that appear
in the Fund's Annual Report dated December 31, 1994 which is incorporated
by reference in the SAI. The financial statements included in the Fund's
Annual Report dated December 31, 1994 have been audited by KPMG Peat
Marwick LLP, independent accountants, whose report appears in the Fund's
Annual Report. Financial highlights for Class B, Class C and Class R
shares are not presented because no shares had been issued to the public
as of December 31, 1994.*
PREMIER MANAGED INCOME FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/94** 12/31/93## 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 12/31/85
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of year $11.38 $11.45 $11.41 $10.55 $11.12 $11.43 $11.29 $11.91 $11.80 $10.60
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income # 0.69 0.78 0.87 0.86 0.93 0.98 1.01 1.20 0.86 1.20
Net realized and unrealized gain/(loss)
on investments (1.26) 0.83 0.10 0.86 (0.47) (0.36) 0.09 (0.52) 0.28 0.99
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.57) 1.61 0.97 1.72 0.46 0.62 1.10 0.68 1.14 2.19
Less distributions:
Distributions from net
investment income (0.69) (0.75) (0.87) (0.86) (1.03) (0.93) (0.96) (1.20) (0.96) (0.99)
Distributions in excess of net
investment income -_ -_ (0.06) -_ -_ -_ -_ -_ -_ -_
Distributions from net
realized gains -_ (0.57) -_ -_ -_ -_ -_ (0.10) (0.07) -_
Distributions in excess of net
realized gains
on investments -_ (0.36) -_ -_ -_ -_ -_ -_ -_ -_
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (0.69) (1.68) (0.93) (0.86) (1.03) (0.93) (0.96) (1.30) (1.03) (0.99)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
end of year $10.12 $11.38 $11.45 $11.41 $10.55 $11.12 $11.43 $11.29 $11.91 $11.80
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return + (5.14)% 14.54% 8.77% 17.03% 4.40% 5.56% 10.05% 5.96% 10.09% 21.83%
======= ====== ====== ======= ======= ====== ====== ===== ====== =======
Ratios/Supplemental data:
Net assets, end of year
(in 000's) $79,548 $58,052 $98,207 $84,203 $71,132 $83,912 $65,105 $51,765 $49,272 $16,721
Ratio of expenses to average
net assets +++ 0.98% 1.14% 1.02% 1.13% 1.19% 1.15% 1.14% 0.94% 0.88% 1.48%
Ratio of net income to
average net assets 6.32% 6.55% 7.58% 7.91% 8.65% 8.76% 8.81% 10.30% 10.01% 10.77%
Portfolio turnover rate 270% 333% 216% 119% 183% 142% 139% 306% 71% 173%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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. On October 17, 1994, the Investor shares were
redesignated Class A shares. The amounts shown for the year ended
December 31, 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 (now Class A) Share outstanding from April 4, 1994 to
December 31, 1994. The Financial Highlights for the year ended December
31, 1993 and prior years are based upon a Retail Share outstanding.
** Prior to April 4, 1994, The Boston Company Advisors, Inc.
served as the Fund's investment adviser. From April 4, 1994 through
October 16, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
+ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charge.
+++ Without the voluntary reimbursement of expenses and/or waiver of fees by
the investment adviser and/or transfer agent and/or distributor, the ratio
of expenses to average net assets for the years ended December 31, 1994
and 1993 would have been 0.99% and 1.27%, respectively.
++++ 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 waiver of fees or reimbursement
of expenses by the investment adviser for the year ended December 31,
1994 was $0.69. Net investment income before waiver of fees and/or
reimbursement of expenses by the investment adviser and/or transfer agent
and/or distributor for the year ended December 31, 1993 was $0.77.
## Per share amounts have been calculated using the average share method,
which more appropriately presents the per share data for this year since
the use of the undistributed method did not accord with results of
operations.
Page 6
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PREMIER MANAGED INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR PERIOD
ENDED ENDED
12/31/94** 12/31/93*##
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, beginning of period $11.38 $11.62
____-- ____--
Income from investment operations:
Net investment income # 0.72 0.74
Net Realized and unrealized gain/(loss) on investments (1.26) 0.67
____-- ____--
Total from investment operations (0.54) 1.41
Less Distributions:
Dividends from net investment income (0.72) (0.71)
Distributions from net realized gains on investments -_ (0.61)
Distributions in excess of net realized gains on investments -_ (0.33)
____-- ____--
Total Distributions (0.72) (1.65)
Net Asset Value, end of period $10.12 $11.38
____-- ____--
Total Return + (4.88)% 12.59%
======= =======
Ratios/Supplemental data:
Net Assets, end of period (in 000's) $9,588 $1,338
Ratio of operating expenses to average net assets++ 0.71% 0.83%***
Ratio of net investment income to average net assets 6.59% 6.86%***
Portfolio turnover rate 270% 333%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* On February 1, 1993 the Fund commenced selling Investment Class shares.
Effective April 4,1994 the Investment Class was redesignated as the Trust
Shares. On October 17, 1994, the Trust Shares were redesignated Class R
shares.
** Prior to April 4, 1994, The Boston Company Advisors, Inc.
served as the Fund's investment adviser. From April 4, 1994 through
October 16, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
*** Annualized.
+ Total return represents aggregate total return for the periods indicated.
++ Without the voluntary reimbursement of expenses and/or waiver of fees by
the investment adviser and transfer agent, the annualized ratio of
operating expenses to average net assets would have been 0.72% and 0.87%
for the year ended December 31, 1994 and the period ended December 31,
1993, respectively.
# Net investment income before voluntary waiver of fees and/or
reimbursement of expenses by the investment adviser for the year ended
December 31, 1994 was $0.71. Net investment income before waiver of fees
and/or reimbursement of expenses by the investment adviser, transfer
agent and distributor for the period ended December 31, 1993 was $0.74.
## Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this
period since the use of the undistributed method did not accord with
results of operations.
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 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 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 relationship at such institution, or to customers
who have received and hold shares of the Fund distributed to them by
virtue of such an account or relationship. Class A, Class B and Class C
shares are primarily sold to retail investors by 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 pur-
Page 8
chased 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 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
The 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.
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 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 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.
U.S. Government Securities in which the Fund may invest
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 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.
Investors should be aware that even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing
entities. The Fund's net asset value generally will not be stable and
should fluctuate based upon changes in the value of the Fund's portfolio
securities. Securities in which the Fund will invest may earn a higher
level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and
less fluctuations in market value.
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
collat-
Page 10
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.
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 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 from 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.
Page 11
For this purpose, an issuer's location is determined based on such factors
as its country of organization, the primary trading market for its
securities, and the location of its assets, personnel, sales, and
earnings. A security is located in a particular country if: (1) the
security is issued or guaranteed by the government of the country or any
of its agencies, political subdivisions or instrumentalities or has its
primary trading market in that country; or (2) the issuer is organized
under the laws of the country, derives at least 50% of its revenues or
profits from goods sold, investments made or services performed in the
country, or has at least 50% of its assets located in the country.
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. 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 out-
Page 12
weighed 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 interest
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,
Page 13
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 of 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 (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 are
permissible under the Investment Company Act of 1940, as
Page 14
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 which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 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 two portfolio managers, Almond G.
Goduti, Jr. 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.
Page 15
Almond Goduti, Vice President of The Boston Company Advisors,
Inc., 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.
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 $193 billion in assets as of December 31,
1994, including approximately $70 billion in mutual fund assets. As of
December 31, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services,
for approximately $654 billion in assets, including approximately $74
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 period from
January 1, 1994 to April 3, 1994, the Fund paid its investment adviser,
The Boston Company Advisors, Inc. ("Boston Advisors"), (an indirect
wholly-owned subsidiary of Mellon Bank Corporation), 0.55%
(annualized) of its average daily net assets in investment advisory fees
(net of fees waived and expenses reimbursed), under the Fund's previous
investment advisory contract (such contract covered only the provision of
investment advisory and certain specified administrative services). For
the period from April 4, 1994 through the fiscal year ended December 31,
1994, the Fund paid
Page 16
Mellon Bank or Dreyfus 0.70% (annualized) of its average daily net assets
in investment management fees, less fees and expenses of the
non-interested Trustees (including counsel fees).
For the fiscal year ended December 31, 1994, total operating
expenses (excluding Rule 12b-1 fees) (net of fees waived and expenses
reimbursed) of each class of the Fund were 0.77% and 0.71% (annualized)
of the average daily net assets of Class A and Class R, respectively.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans (Class A
Plan and Class B and Class C Plans)."
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 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 FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a subsidiary of FDI Holdings,
Inc., 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 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. Subsequent purchases may be sent directly to the
Transfer Agent or your 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, or to customers who have received and
hold shares of the Fund distributed to them by virtue of such an account
or relationship. 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 17
When purchasing Fund shares, you must specify which Class is
being purchased. Stock certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Agents may impose certain conditions on their clients which are different
from those described in 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 Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Agent in
this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment 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 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 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 Boston Safe Deposit & Trust
Co., together with the applicable Class' DDA # as shown below, for
purchase of Fund shares in your name:
DDA# 044660 Premier Managed Income Fund/Class A shares;
DDA# 044709 Premier Managed Income Fund/Class B shares;
DDA# 044717 Premier Managed Income Fund/Class C shares;
DDA# 044725 Premier Managed Income Fund/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-
Page 18
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 Boston Safe Deposit and Trust Co. with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and Fund account number PRECEDED BY THE
DIGITS :
"4370" Premier Managed Income Fund/Class A Shares;
"4380" Premier Managed Income Fund/Class B Shares;
"4390" Premier Managed Income Fund/Class C Shares;
"4400" Premier Managed Income Fund/Class R Shares.
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.
Page 19
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 Transfer Agent 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 purchase orders made through the Dreyfus TELETRANSFER Privilege
which are effective one business day 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 most shares of investment portfolios advised by
Dreyfus is published in leading newspapers daily. The NAV of any Premier
Fund may also be obtained by calling 1-800-645-6561.
CLASS A SHARES _ The public offering price of Class A shares
is the NAV per share of that class plus a sales load as shown below:
<TABLE>
<CAPTION>
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
page 20
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 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 NAV 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 Company'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 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 B Shares" above and
"How to Redeem Fund Shares."
page 21
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 $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 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 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
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 Agents, and some Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Agent in this
regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares
of the same or comparable 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 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
Page 22
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 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 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
Page 23
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 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,
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 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, you may qualify for share prices which do not include the
sales load or which reflect a reduced sales load. If you are investing in
a fund 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
Page 24
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, is 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
Page 25
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.
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
Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed directly through the Distributor. 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
Page 26
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 NAV 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 NAV of the Class B shares redeemed
does not exceed (i) the current NAV of Class B shares acquired through
reinvestment of dividends 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 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>
<CAPTION>
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
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
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment.
Page 27
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 SEC or its staff may
permit. If the Company'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 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 through the
TELETRANSFER Privilege or, if you are a client of a Selected Dealer,
through the Selected Dealer. If you have given your Agent authority to
instruct the Transfer Agent to redeem shares and to credit the proceeds
of such redemptions to a designated account at your 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 Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Agents and
institutions. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select a
telephone redemption privilege or Telephone Exchange Privilege, which is
granted automatically unless you refuse it, you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
Page 28
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 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. 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.
Page 29
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 NAV
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 PLAN AND CLASS B AND CLASS 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 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.
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 expenses primarily intended to result in the
sale of Class A shares of the Fund and the Distributor for shareholder
servicing activities. The Plan allows the Distributor 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 the
Distributor. 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 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 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 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 Agents in respect of distribution and other services for
these Classes of shares. The
Page 30
Distributor determines the amounts, if any, to be paid to 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 atNAV. 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-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 infor-
Page 31
mation 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
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.
Page 32
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
NAV (or maximum offering price in the case of Class A shares) 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 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 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 NAV (or maximum public offering price in the case of Class
A shares) 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 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
page 33
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 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.
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, the holders of at least
10% of the shares outstanding and entitled to vote may require the
Company to hold a special meeting of shareholders for purposes of
removing a Trustee from office and for any other purpose. Company
shareholders may remove a Trustee by the affirmative vote of two-thirds
of the Company's outstanding 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/P2050195
page 34
- -------------------------------------------------------------------------
PREMIER LIMITED TERM
GOVERNMENT SECURITIES FUND
(LION LOGO)
PROSPECTUS MAY 1, 1995
- -------------------------------------------------------------------------
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 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 May 1,
1995, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which
may be of interest to some investors. It has been filed with the
Securities and Exchange Commission ("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, 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.
- -------------------------------------------------------------------------
(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 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 and its affiliates) ("Banks")
acting on behalf of customers having a qualified trust or investment
account or relationship at such institution, or to customers who have
received and hold shares of the Fund distributed to them by virtue of such
an account or relationship. (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.
You can purchase or redeem Fund shares by telephone using the
TELETRANSFER Privilege.
TABLE OF CONTENTS
Expense Summary.................................... 3
Financial Highlights............................... 4
Alternative Purchase Methods....................... 6
Description of the Fund............................ 7
Management of the Fund............................. 12
How to Buy Fund Shares............................. 14
Shareholder Services............................... 19
How to Redeem Fund Shares.......................... 22
Distribution Plans(Class A Plan and Class B and Class C Plans) 26
Dividends, Other Distributions and Taxes........... 27
Performance Information............................ 29
General Information................................ 30
page 2
<TABLE>
<CAPTION>
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% 0.75% none
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees(1)...................... 0.60% 0.60% 0.60% 0.60%
12b-1 Fee(2)............................ 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%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) except where noted,
redemption at the end of each time period:
<S> <C> <C> <C> <C>
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 $162 $162 $75
- ------------------------
1 See "Distribution Plans (Class A Plan and Class B and Class C Plans)" for a
description of the Fund's Distribution Plan and Service Plan for Class A, B
and C shares.
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 .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. 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 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 "Management of the
Fund," "How to Buy Fund Shares" and "Distribution Plans (Class A Plan and
Class B and Class C Plans)."
The Company understands that banks, brokers, dealers or other
financial institutions (including Mellon Bank and its affiliates)
(collectively "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 an Agent under its Selling Agreement ("Agreement") with Premier
Mutual Fund Services, Inc. (the "Distributor"). The Agreement requires each
Agent to disclose to its clients any compensation payable to such Agent by
the Distributor and any other compensation payable by the client for various
services provided in connection with their accounts.
Page 3
FINANCIAL HIGHLIGHTS
The tables below are 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, 1994, which is incorporated by reference
into the SAI. The financial statements included in the Fund's Annual
Report for the year ended December 31, 1994 have been audited by KPMG Peat
Marwick LLP, independent auditors whose report appears in the Fund's Annual
Report. Further information about the Fund's performance is included in
the Fund's Annual Report, which may be obtained without charge. Financial
highlights for Class B, Class C and Class R shares are not presented
because no shares had been issued to the public as of December 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/94## 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of year $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 # 0.68 0.75 0.72 0.74 0.81 .90 0.81 0.99 0.88
Net realized and unrealized gain/(loss)
on investments (1.23) 0.40 (0.05) 0.82 0.02 0.33 (0.09) (0.88) 0.13
------ ------ ------ ------- ------ ------ ------ ------ -------
Total from
investment operations (0.55) 1.15 0.67 1.56 0.83 1.23 0.72 0.11 1.01
Less Distributions:
Dividends from net
investment income (0.70) (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 (0.70) (0.77) (0.72) (0.74) (0.81) (0.92) (0.81) (0.99) (0.88)
------ ------ ------ ------- ------ ------ ------ ------ -------
Net Asset Value
end of year $11.89 $13.14 $12.76 $12.81 $11.99 $11.97 $11.66 $11.75 $12.63
------ ------ ------ ------- ------ ------ ------ ------ -------
Total Return + (4.24)% 9.10% 5.47% 13.51% 7.29% 10.89% 6.25% 1.01% 8.39%
====== ======= ======= ======= ======= ====== ======= ====== ======
Ratios/Supplemental data:
Net assets, end
of year (in 000's) $17,685 $8,776 $22,914 $15,797 $15,526 $13,841 $13,759 $13,618 $15,434
Ratio of expenses to average
net assets +++ 1.02% 1.40% 1.67% 1.91% 1.91% 1.85% 1.63% 1.04% 0.65%++
Ratio of net income to average
net assets 5.59% 5.56% 5.70% 6.09% 6.87% 7.61% 6.91% 8.20% 8.21%++
Portfolio turnover rate 165% 74% 30% 50% 300% 321% 65% 122% 85%
- -----------------------------
* The Fund commenced operations on March 3, 1986. 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 were
reclassified as a single class of shares known as the Investor Shares and the
Fund began offering Trust Shares. On October 17, 1994 Investor shares were
redesignated Class A shares and Trust Shares were redesignated Class R
shares. The amounts shown for the year ended December 31, 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 (now Class A)
Share outstanding from April 4, 1994 to December 31, 1994. The Financial
Highlights for the year ended December 31, 1993 and prior years are based
upon a Retail Share outstanding.
** Amount represents less than $0.01 per share.
+ Total return represents aggregate total return for the periods
indicated and does not reflect any applicable sales charge.
++ Annualized.
+++ Without the voluntary reimbursement of expenses and/or waiver of fees by
the investment adviser, the transfer agent and distributor, the ratio of
expenses to average net assets for the years ended December 31, 1994,
1993 and 1987 and for the period ending December 31, 1986 would have been
1.09%, 1.74%, 1.57% and 1.30%, respectively.
# Net investment income before voluntary waiver of fees and/or reimbursement
of expenses by the investment adviser, transfer agent, and distributor, for
the years ended December 31, 1994, 1993 and 1987, and for the period ended
December 31, 1986 would have been $0.67, $0.70, $0.93, and $0.81,
respectively.
## Prior to April 4, 1994, The Boston Company Advisors, Inc. served as
the Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the Fund's investment manager. Effective October 17,
1994, Dreyfus began serving as the Fund's investment manager.
</TABLE>
page 4 and 5
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 relationship at such institution or to customers
who have received and hold shares of the Fund distributed to them by
virtue of such an account or relationship. Class A, Class B and Class C
shares are primarily sold to retail investors by 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
Page 6
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 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 Fund is a diversified fund that seeks to provide
investors with current income consistent with preservation of capital.
The Fund seeks to achieve its objective by investing primarily in 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
("GNMA"), General Services Administration and Maritime Administration.
The Fund will also invest in U.S. Government Securities that do not carry
the full faith and credit guarantee, such as mortgage-backed securities
issued or guaranteed 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 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
Page 7
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. 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 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".
Investors should be aware that even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. The Fund's net asset value generally will not be stable and
should fluctuate based upon changes in the value of the Fund's portfolio
securities.
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
Page 8
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 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
Page 9
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 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 limita-
Page 10
tion 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 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 are
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.
Page 11
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.
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 March 31, 1995, Dreyfus managed or
administered approximately $72 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 since October
17, 1994. Mr. Goduti also serves as 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
Page 12
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 $193 billion in assets as
of December 31, 1994, including approximately $70 billion in mutual fund
assets. As of December 31, 1994, Mellon, through various subsidiaries,
provided non-investment services, such as custodial or administration
services, for approximately $654 billion in assets, including
approximately $74 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 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 period from January 1, 1994 to
April 3, 1994, the Fund paid its investment adviser, The Boston Company
Advisors, Inc. ("Boston Advisors"), (an indirect wholly-owned subsidiary
of Mellon Bank Corporation), 0.39% (annualized) of its average daily net
assets in investment advisory fees (net of fees waived and expenses
reimbursed), under the Fund's previous investment advisory contract (such
contract covered only the provision of investment advisory and certain
specified administrative services). For the period from April 4, 1994
through the fiscal year ended December 31, 1994, the Fund paid Mellon
Bank or Dreyfus 0.60% (annualized) of its average daily net assets in
investment management fees, less fees and expenses of the non-interested
Trustees (including counsel fees).
For the fiscal year ended December 31, 1994, total operating
expenses (excluding Rule 12b-1 fees) (net of fees waived and expenses
reimbursed) of the Fund were 0.83% (annualized) of the average daily net
assets of Class A.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans (Class A
Plan and Class B and Class C Plans)."
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 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.
Page 13
Premier Mutual Fund Services, Inc. is the Fund's Distributor
(the "Distributor"). The Distributor is located at One Exchange Place,
Boston, Massachusetts 02109. The Distributor is a wholly-owned subsidiary
of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a subsidiary of FDI Holdings,
Inc., 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 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, or to customers who have received and
hold shares of the Fund distributed to them by virtue of such an account
or relationship. 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.
When purchasing Fund shares, you must specify which Class is
being purchased. Stock certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Agents may impose certain conditions on their clients which are different
from those described in 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 Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Agent in
this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment 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 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.
Page 14
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 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 Boston Safe Deposit & Trust
Co., together with the applicable Class' DDA # as shown below, for
purchase of Fund shares in your name:
DDA #044393 Premier Limited Term Government
Securities Fund/Class A shares;
DDA #044407 Premier Limited Term Government
Securities Fund/Class B shares;
DDA #044415 Premier Limited Term Government
Securities Fund/Class C shares;
DDA #044423 Premier Limited Term Government
Securities Fund/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 1-800-645-6561
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 Boston Safe Deposit & Trust Co. with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and Fund account number PRECEDED BY THE
DIGITS :
"4200" Premier Limited Term Government Securities
Fund/Class A shares;
"4210" Premier Limited Term Government Securities
Fund/Class B shares;
"4220" Premier Limited Term Government Securities
Fund/Class C shares;
"4230" Premier Limited Term Government Securities
Fund/Class R shares.
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
Page 15
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 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 Transfer Agent in proper form
before the close of business on the NYSE (usually 4 p.m., Eastern Time)
are effective on, and
Page 16
will receive the price determined on, that day (except purchase orders
made through the Dreyfus TELETRANSFER Privilege which are effective one
business day 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.
The NAV of most shares of investment portfolios is published
in leading newspapers daily. The NAV of any Premier Fund may also be
obtained by calling 1-800-645-6561.
CLASS A SHARES _ The public offering price of Class A shares is the
NAV per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>
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 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 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 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 NAV 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 Company'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.
Page 17
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 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 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 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
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.
Page 18
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 Agents and some Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus. You should consult your 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 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 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 Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records.
Page 19
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 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. 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
Page 20
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 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, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund 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 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, is 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
Page 21
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.
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
Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are
Page 22
redeemed directly through the Distributor. 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 NAV 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 NAV of the Class B shares
redeemed does not exceed (i) the current NAV of Class B shares acquired
through reinvestment of dividends or other 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 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:
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
WAS MADE PROCEEDS
---------- -----------------
First.................................... 3.00
Second................................... 3.00
Third.................................... 2.00
Fourth................................... 2.00
Fifth.................................... 1.00
Sixth.................................... .00
In determining whether a CDSC is applicable to a redemption,
the calculation will be
Page 23
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 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
per share for a cost of $1,000. Subsequently, the shareholder acquired
five additional shares through dividend reinvestment. During the second
year after the purchase the investor decided to redeem $500 of 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 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 SEC or its staff may
permit. If the Company'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 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, through the TELETRANSFER
Privilege or, if you are a client of a Selected Dealer, through the
Selected Dealer. If you have given your Agent authority to instruct the
Transfer Agent to redeem shares and to credit the proceeds of such
redemptions to a designated account at your 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 Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Agents and
institutions. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select a
telephone redemption privilege or Telephone Exchange Privilege, which is
granted automatically unless you refuse it, you authorize the Transfer
Page 24
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a 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 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 _ 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
Page 25
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 NAV 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 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 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.
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 Agents that have entered into Selling Agreements
("Agreements") with the Distributor. 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 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 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
Page 26
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 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 Agents in respect of distribution and other services for
these Classes of shares. The Distributor determines the amounts, if any,
to be paid to 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 NAV. 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
Page 27
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
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.
page 28
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
NAV (or maximum offering price in the case of Class A shares) 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 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 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 NAV (or maximum public offering price in the case of Class
A shares) 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 VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE, BARRON'S
and similar publications may also be
Page 29
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 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 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 the Distribution and Service Plan relating to that Class.
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, the holders of at least
10% of the shares outstanding and entitled to vote may require the
Company to hold a special meeting of shareholders for purposes of
removing a Trustee from office and for any other purpose. Company
shareholders may remove a Trustee by the affirmative vote of two-thirds
of the Company's outstanding 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.
page 30
PLG/P2050195
DREYFUS SPECIAL GROWTH FUND
INVESTOR AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
May 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the Dreyfus Special Growth Fund (formerly the Laurel Special Growth
Fund) (the "Fund"), dated May 1, 1995, as it may be revised from time to
time. The Fund is a separate portfolio of The Dreyfus/Laurel Funds Trust
(the "Trust"), a management investment company, 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
Outside the U.S. and outside of Canada -- Call 1-516-794-5452
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.
TABLE OF CONTENTS
Page
Investment Objective And Management Policies. . . . . . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . B-14
Management Arrangements . . . . . . . . . . . . . . . . . . . . . . . B-20
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . B-21
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . B-23
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . B-25
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . B-28
Dividends, Other Distributions and Taxes. . . . . . . . . . . . . . . B-28
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . B-32
Performance Information . . . . . . . . . . . . . . . . . . . . . . . B-35
Information About the Fund. . . . . . . . . . . . . . . . . . . . . . B-36
Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors. . . . . . . . . . . . . . . . . . . . . . B-37
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . B-37
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
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 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.
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
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.
FNMA and FHLMC are Government sponsored corporations owned entirely
by private stockholders. They are 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. 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.
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.
Futures Activities. 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.
Futures Contracts. 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 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
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 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 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.
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
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
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
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
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
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.
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
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).
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.
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 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 Investment Company Act of 1940 (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 March 31, 1995, there were no controlling shareholders, as that
term is defined under the 1940 Act, of the Dreyfus/Laurel Funds Trust.
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 these activities
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 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 1940 Act is
indicated by an asterisk. Each of the Trustees also serves as a Trustee of
The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and as Director of The Dreyfus/Laurel Funds, Inc.
(collectively with the Trust, "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. Age:
79 years old. 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). Age: 76 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o +JOSEPH S. DIMARTINO, Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. For more than five
years prior hereto, he was President and a director of Dreyfus and
Executive Vice President and a director of Dreyfus Services
Corporation, a wholly-owned subsidiary of Dreyfus and until August
1994, the Fund's distributor. In addition, for more than five years
prior to January 1995 and until August 1994, he was Chief Operating
Officer of Dreyfus and from August 1994 to December 31, 1994, he was
a director of Mellon Bank Corporation. Mr. DiMartino is a director
and former Treasurer of the Muscular Dystrophy Association; a trustee
of Bucknell University; Chairman of the Board of Directors of Noel
Group, Inc.; and a director of HealthPlan Corporation; a Director of
Belding Heminway Company, Inc.; and a Director of Curtis Industries,
Inc. Mr. DiMartino is also a Board member of 92 other funds in the
Dreyfus Family of Funds. Age: 51 years old. Address: 200 Park
Avenue, New York, New York 10166.
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. Age: 59 years old. Address: 40 Norfolk
Road, Brookline, Massachusetts 02167.
o *J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith, Shaw &
McClay (law firm). Age: 65 years old. 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. Age: 71 years old. 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. Age: 47 years old. Address: Himmel and
Company, Inc., 101 Federal Street, 22nd Floor, Boston, Massachusetts
02110.
o +ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant. Age: 76
years old. 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. Age: 46
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o +ROBERT D. MCBRIDE. Trustee of the Trust; Director and Chairman (and
until April 1995 CEO), McLouth Steel; Director, Salem Corporation.
Director, SMS/Concast, Inc. (1983-1991). Age: 66 years old.
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). Age: 79 years old. 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. Age: 62 years old. 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. Age: 44 years old.
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 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 and 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.
#JOHN E. PELLETIER. Vice President and Secretary of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds 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.
JOSEPH S. TOWER, III, Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Senior Vice
President, Treasurer and Chief Financial Officer of Premier Mutual
Fund Services, Inc. (since August 1994). From July 1988 to August
1994, he was employed by The Boston Company, Inc. where he held
various management positions in the Corporate Finance and Treasury
areas. Address: One Exchange Place, Boston, Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds 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
#FREDERICK C. DEY. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds 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.
RICHARD W. HEALEY. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since July 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.
LESLIE M. GAYNOR. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds, Inc. and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
JOHN J. PYBURN, Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Vice
President of Premier Mutual Fund Services, Inc. From 1984 to July
1994, he held the position of Assistant Vice President in the Mutual
Fund Accounting Department of Dreyfus. Address: Premier Mutual Fund
Services, Inc., 200 Park Avenue, New York, New York 10166.
RUTH D. LEIBERT, Assistant Secretary of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Assistant
Vice President of Premier Mutual Fund Services, Inc. From March 1992
to July 1994, she was a Compliance Officer for The Managers Funds, a
registered investment company. From March 1990 until September 1991,
she was Development Director of the Rockland Center for the Arts.
Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, New
York, New York 10166.
PAUL D. FURCINITO, Assistant Secretary of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Assistant
Vice president of Premier Mutual Fund Services, Inc. From January
1992 to July 1994, he was a Senior Legal Product Managers, and, from
January 1990 to January 1992, he was a mutual fund accountant for The
Boston Company Advisors, Inc. Address: Premier Mutual Fund
Services, Inc., 200 Park Avenue, New York, New York 10166.
__________________________________________________
* "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 Dreyfus.
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 March 31,
1995.
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/Laurel 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 Family of Funds). In addition,
the Dreyfus/Laurel Family of Funds pays each Trustee/Director $ 1,000 per
joint Dreyfus/Laurel Family of Funds meeting attended, plus $750 per joint
Dreyfus/Laurel 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, 1994 the fees for meetings and
expenses totaled $90,926.
For the fiscal year ended December 31, 1994, the aggregate amount of
fees and expenses received by each Trustee from the Trust and all other
funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From Fund
Benefits Estimated and Fund
Accrued as Annual Complex
Aggregate Part of Benefits Paid to Board
Name of Board Member From Fund# Expenses Retirement Member
- ------------------- ------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $11,210 none none $ 34,500
Francis P. Brennan@ 35,728 none none 109,500
James M. Fitzgibbons 8,056 none none 28,750
Joseph S. DiMartino* n/a n/a n/a n/a
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 4,780 none none 25,000
Kenneth A. Himmel 10,457 none none 32,750
Arch S. Jeffrey 4,984 none none 26,000
Steven J. Lockwood 10,457 none none 32,750
Robert D. McBride 4,984 none none 26,000
John L. Propst 4,984 none none 26,000
John J. Sciullo 4,984 none none 26,000
Roslyn M. Watson 10,661 none none 33,750
</TABLE>
# Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $15,858.08 for the Dreyfus/Laurel Family
of Funds.
* Joseph S. DiMartino was not a Trustee of the Trust as of December 31,
1994.
** Affiliated Trustee - not paid by Funds, paid by Mellon Bank.
@ Frank Brennan is paid $75,000 to be the Chairman of the Board.
Dreyfus is contractually required to reduce its management fee in an
amount equal to the Fund's allocable portion of the fees and expenses of
the non-interested Trustees (including counsel).
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 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 their continuance. The Trust may
terminate the Agreement, without prior notice to Dreyfus, 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
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; W. Keith
Smith, Vice Chairman of the Board of Directors; Robert E. Riley,
President, Chief Operating Officer and a director; Lawrence S. Kash, Vice
Chairman, Distribution; Philip L. Toia, Vice Chairman, Operations and
Administration; Paul H. Snyder, Vice President and Chief Financial
Officer; Daniel C. Maclean III, General Counsel and Vice President; Elie
M. Genadry, Vice President, Wholesale; Henry D. Gottmann, Vice President,
Retail; Jeffrey N. Nachman, Vice President, Fund Administration; Barbara
E. Casey, Vice President, Retirement Services; Diane M. Coffey, Vice
President, Corporate Communications; William F. Glavin, Jr., Vice
President-Product Management; Katherine C. Wickham, Vice President, Human
Resources; Andrew S. Wasser, Vice President-Information Systems; Maurice
Bendrihem, Controller; Mark N. Jacobs, Vice President, Fund Legal and
Compliance; and Mandell L. Berman, Alvin E. Friedman, Frank Cahouet,
Lawrence M. Greene, Julian M. Smerling and David B. Truman, directors.
For the last three fiscal years, the Fund has had the following
investment management expenses:
For the Fiscal Year Ended December 31,
1994 1993 1992
---- ---- ---
$1,029,132 $941,416 $491,146
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. 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."
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 - 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 assets
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
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 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:
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. 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."
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 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
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
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 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
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 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 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
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
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.
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
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
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 Fund 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 1992, 1993,
and 1994:
Total Brokerage
Commissions 1992: $134,942
1993: 262,685
1994: 354,891
Commissions paid to Boston $4,775
Institutional Services, Inc.
("BISI") *(1)
% of total Commissions paid 2%
to BISI *(1)
% of total Transactions 4%
Involving Commissions paid to
BISI*(1)
Commissions paid to Lehman $11,025
Brothers *(2)
% of Total Commissions paid 4%
to Lehman Brothers*(2)
% of Total Transactions 2%
Involving 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.
For the fiscal year ended December 31, 1994, the Fund paid $3,290 in
brokerage commissions to BISI, an affiliated Broker.
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.
The portfolio turnover rates for the 1993 and 1994 fiscal years for
the Fund were 94% and 133%, 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 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 per share at the beginning of a stated period from the net
asset value per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.
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
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 1/1/94 to 12/31/94 (18.22)%
For the five years 1/1/90 to 12/31/94* 8.78
For the ten years 1/1/85 to 12/31/94* 11.87%
____________________________
* The figures reflect the Fund's performance after accounting for fee
waivers. Returns would have been lower if waivers were not reflected.
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 1/1/94 to 12/31/94 (17.91)%
For the five years 1/1/90 to 12/31/94+ -
From inception date to 12/31/94*+ 2.62)%
____________________________
* 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.
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 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.
KPMG Peat Marwick LLP was appointed by the Trustees to serve as the
Fund's independent auditors for the year ending December 31, 1994,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1994,
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, accompanies this Statement
of Additional Information. The financial statements for the Annual Report
are incorporated herein by reference.
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.
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
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.
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.:
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.
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 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.
__________________________________________________________________________
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)
May 1, 1995
__________________________________________________________________________
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 May 1, 1995, 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
"Trust"), 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
Outside the U.S. and outside of Canada -- Call 1-516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Funds' investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Funds' shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . . . . B-2
Management of the Funds. . . . . . . . . . . . . . . . . . . . . . . B-17
Management Arrangements. . . . . . . . . . . . . . . . . . . . . . . B-23
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . B-25
Distribution Plan. . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . B-28
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . B-29
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . B-32
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . B-33
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . B-37
Performance Information. . . . . . . . . . . . . . . . . . . . . . . B-39
Information About the Funds. . . . . . . . . . . . . . . . . . . . . B-43
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . B-43
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-44
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-45
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
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.
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.
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.
FNMA and FHLMC are Government sponsored corporations owned by private
stockholders. Each 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. 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.
Bank Obligations (Premier Managed Income Fund Only). The Fund is
permitted to invest in high-quality, 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.
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
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
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
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 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 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
The Funds engage, except as noted, in the following practices in
furtherance of their investment objectives.
Lending of Portfolio Securities (Each Fund). 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 its 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 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 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 transaction in a secondary
market, it will not be able to sell the underlying security until the
option expires.
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 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.
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
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.
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.
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% 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 (Premier
Managed Income 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 Fund 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 FUNDS
Controlling Shareholders
At March 31, 1995, 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 March 31, 1995:
Managed Income Fund: Boston Safe Deposit & Trust Co., A/C
0951943000, One Cabot Road, Medford, MA 02155, 5.2% record; Boston Safe
Deposit & Trust Co., A/C 0530019009, One Cabot Road, Medford, MA 02155, 8%
record; Boston Safe Deposit & Trust Co., A/C 0687967503, One Cabot Road,
Medford, MA 02155, 6% 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 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 of the Trust
The Trust has a Board composed of thirteen Trustees which supervises
the Trust'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 Trust 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
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 with the Trust, "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. Age:
79 years old. 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). Age: 76 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o*JOSEPH S. DIMARTINO, Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. For more than five
years prior hereto, he was President and a director of Dreyfus and
executive Vice President and a director of Dreyfus Services
Corporation, a wholly-owned subsidiary of Dreyfus and until August
1994, the Fund's distributor. In addition, for more than five years
prior to January 1995 and until August 1994, he was Chief Operating
Officer of Dreyfus and from August 1994 to December 31, 1994, he was
a director of Mellon Bank Corporation. Mr. DiMartino is a Director
and former Treasurer of the Muscular Dystrophy Association; a trustee
of Bucknell University; Chairman of the Board of Directors of Noel
Group, Inc.; and a director of HealthPlan Corporation; a Director of
Belding Heminway Company, Inc.; and a Director of Curtis Industries,
Inc. Mr. DiMartino is also a Board member of 92 other funds in the
Dreyfus Family of Funds. Age: 51 years old. Address: 200 Park
Avenue, New York, New York 10166.
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. Age: 59 years old. Address: 40 Norfolk
Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith, Shaw &
McClay (law firm). Age: 65 years old. 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. Age: 71 years old. 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. Age: 47 years old. Address: Himmel and Company,
Inc., 101 Federal Street, 22nd Floor, Boston, Massachusetts 02110.
o+ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant. Age: 76
years old. 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. Age: 46
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o+ROBERT D. MCBRIDE. Trustee of the Trust; Director and Chairman (and
until April 1995 CEO), McLouth Steel; Director, Salem Corporation.
Director, SMS/Concast, Inc. (1983-1991). Age: 66 years old.
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). Age: 79 years old. 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. Age: 62 years old. 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. Age: 44 years old.
Address: 25 Braddock Park, Boston, Massachusetts 02116-5816.
#MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Investment Series 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.
#JOHN E. PELLETIER. Vice President and Secretary of the Trust, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds 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.
JOSEPH S. TOWER, III, Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Senior Vice
President, Treasurer and Chief Financial Officer of Premier Mutual
Fund Services, Inc. (since August 1994). From July 1988 to August
1994, he was employed by The Boston Company, Inc. where he held
various management positions in the Corporate Finance and Treasury
areas. Address: One Exchange Place, Boston, Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds 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.
#FREDERICK C. DEY. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds 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.
RICHARD W. HEALEY. Vice President of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since July 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.
LESLIE M. GAYNOR. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds, Inc. and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
JOHN J. PYBURN, Assistant Treasurer of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Vice
President of Premier Mutual Fund Services, Inc. From 1984 to July
1994, he held the position of Assistant Vice President in the Mutual
Fund Accounting Department of Dreyfus. Address: Premier Mutual Fund
Services, Inc., 200 Park Avenue, New York, New York 10166.
RUTH D. LEIBERT, Assistant Secretary of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Assistant
Vice President of Premier Mutual Fund Services, Inc. From March 1992
to July 1994, she was a Compliance Officer for The Managers Funds, a
registered investment company. From March 1990 until September 1991,
she was Development Director of the Rockland Center for the Arts.
Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, New
York, New York 10166.
PAUL D. FURCINITO, Assistant Secretary of the Trust, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds and
The Dreyfus/Laurel Funds, Inc. (since September 1994) and Assistant
Vice president of Premier Mutual Fund Services, Inc. From January
1992 to July 1994, he was a Senior Legal Product Managers, and, from
January 1990 to January 1992, he was a mutual fund accountant for The
Boston Company Advisors, Inc. Address: Premier Mutual Fund
Services, Inc., 200 Park Avenue, New York, New York 10166.
___________________________________________________
* "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 Dreyfus.
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 March 31,
1995.
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 Family
of Funds). In addition, the Dreyfus/Laurel Family of Funds pays each
Trustee/Director $ 1,000 per joint Dreyfus/Laurel Family of Funds meeting
attended, plus $750 per joint Dreyfus/Laurel 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,
1994 the fees for meetings and expenses totaled $90,926.
For the fiscal year ended December 31, 1994, the aggregate amount of
fees and expenses received by each Trustee from the Trust and all other
funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Pension of Total
Retirement Compensation
Benefits Estimated From Fund
Accrued as Annual and Fund
Aggregate Part of Benefits Complex
Compensation Fund's Upon Paid to Board
Name of Board Member From Fund# Expenses Retirement Member
- -------------------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $11,210 none none $ 34,500
Francis P. Brennan@ 35,728 none none 109,500
James M. Fitzgibbons 8,056 none none 28,750
Joseph S. DiMartino* n/a n/a n/a n/a
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 4,780 none none 25,000
Kenneth A. Himmel 10,457 none none 32,750
Arch S. Jeffrey 4,984 none none 26,000
Steven J. Lockwood 10,457 none none 32,750
Robert D. McBride 4,984 none none 26,000
John L. Propst 4,984 none none 26,000
John J. Sciullo 4,984 none none 26,000
Roslyn M. Watson 10,661 none none 33,750
_______________________
# Amount does not include reimbursed expenses for attending Board meetings, which
amounted to $15,858.08 for the Dreyfus/Laurel Family of Funds.
* Joseph S. DiMartino was not a Trustee of the Trust as of December 31, 1994.
** Affiliated Trustee - not paid by Funds, paid by Mellon Bank.
@ Frank Brennan is paid $75,000 to be the Chairman of the Board.
</TABLE>
Dreyfus is contractually required to reduce its management fee in an
amount equal to the Fund's allocable portion of the fee and expenses of
the non-interested Trustees (including counsel).
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 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, 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 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 their continuance. The Trust may
terminate the Agreement, without prior notice to Dreyfus, 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
Dreyfus. Dreyfus may terminate the Management Agreement upon written
notice to the Company. 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; W. Keith
Smith, Vice Chairman of the Board of Directors; Robert E. Riley,
President, Chief Operating Officer and a director; Lawrence S. Kash, Vice
Chairman, Distribution; Philip L. Toia, Vice Chairman, Operations and
Administration; Paul H. Snyder, Vice President and Chief Financial
Officer; Daniel C. Maclean III, General Counsel and Vice President; Elie
M. Genadry, Vice President, Wholesale; Henry D. Gottmann, Vice President,
Retail; Jeffrey N. Nachman, Vice President, Fund Administration; Barbara
E. Casey, Vice President, Retirement Services; Diane M. Coffey, Vice
President, Corporate Communications; William F. Glavin, Jr., Vice
President-Product Management; Katherine C. Wickham, Vice President, Human
Resources; Andrew S. Wasser, Vice President-Information Systems; Maurice
Bendrihem, Controller; Mark N. Jacobs, Vice President, Fund Legal and
Compliance; and Mandell L. Berman, Alvin E. Friedman, Frank Cahouet,
Lawrence M. Greene, Julian M. Smerling 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 1992, 1993 and 1994 fiscal years.
1994 1993 1992
Fee Fee Fee
Premier Limited Term 105,130(3) 150,007(1) 128,299
Government Securities Fund
Premier Managed Income Fund 630,564(4) 586,196(2) 556,257
______________________________
(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.
(3) Boston Advisors waived fees and reimbursed expenses of $14,827.
(4) $7,023 and $5,389 were voluntarily waived and reimbursed respectively
by The Boston Company Advisors, Inc.
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 December 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.
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 - 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, 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. 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.
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 PLANS
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, 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 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, 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 shares of a Fund may spend annually up to 0.25% of
the average of its net assets for costs and expenses incurred in
connection with the distribution of, and shareholder servicing with
respect to, Class A 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 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.
TeleTransfer Privilege. 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."
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.
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
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
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. 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:
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.
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
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
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
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
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.
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 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 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 1994 fiscal year, the Fund paid $3,289 in brokerage
commissions to non-affiliated brokers. For the 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 1993 and 1994 fiscal years for
the Premier Managed Income Fund were, 333% and 270%, respectively; and for
the Premier Limited Term Government Securities Fund, 74% and 165%,
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
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.
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
YIELD = 2[( ------ +1)6 -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.
Managed Income Fund's and Limited Term Government Fund's 30-day yield
for the period ended December 31, 1994 were as follows:
30-Day Yield for Period Ended
December 31, 1994
Yield
Managed Income Fund
Class A shares 7.10%
Class B shares* -
Class C shares* -
Class R shares 7.70%
Limited Term Government
Fund
Class A shares 6.79%
Class B shares* -
Class C shares* -
Class R shares** -
________________________________________
* The 30-day yields for each of the Funds' Class B and Class C shares
are not presented because no shares had been issued to the public as
of December 31, 1994.
** Limited Term Government Fund did not issue any Class R shares for the
period ended December 31, 1994.
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:
P(1+T)1/n = 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.
<TABLE>
<CAPTION>
Managed Limited Term
Income Government*
With Without With Without
Sales Sales Sales Sales
Charge Charge Charge Charge
_______________________________________________
<S> <C> <C> <C> <C>
For the one year 1/1/94 to 12/31/94 (9.41)% (5.14)% (7.11)% 4.24%
For the five years 1/1/90 to 12/31/94 8.57% 9.07% 5.41% 6.06%
For the ten years 1/1/85 to 12/31/94 6.64% 7.62% - -
From inception date to 12/31/94 - - 6.05% 6.41%
</TABLE>
__________________________
* 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 1/1/94 to 12/31/94 (4.88)% -
From inception date to 12/31/94 3.64% -
__________________________
1 Managed Income Fund commenced selling Class R shares on February 1,
1993.
2 Limited Term Government Fund did not issue any Class R shares for the
period ended December 31, 1994.
Aggregate Total Return
The aggregate total returns for each of the Funds' Class B and Class
C shares are not presented because no shares had been issued to the public
as of December 31, 1994.
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.
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.
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.
KPMG Peat Marwick LLP was appointed by the Trustees to serve as the
Fund's independent auditors for the year ending December 31, 1994,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1994,
including notes to the financial statements and supplementary information
are in the Report of the Independent Auditors, included in the Annual
Report to Shareholders. A copy of the Annual Report accompanies this
Statement of Additional Information. The financial statements of the
Annual Report are incorporated herein by reference.
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.
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 "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.
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.
The Dreyfus/Laurel Funds Trust
Dreyfus Special Growth Fund
February 17, 1995
1
..............................................................................
<PAGE>
TABLE of CONTENTS
..............................................................................
<TABLE>
<S> <C>
Shareholder Letter........................................ 1
Economic Review........................................... 3
Portfolio Overview........................................ 4
Performance Summary....................................... 5
Portfolio of Investments.................................. 7
Statement of Assets and Liabilities....................... 11
Statement of Operations................................... 12
Statement of Changes in Net Assets........................ 13
Financial Highlights...................................... 14
Notes to Financial Statements............................. 18
Independent Auditors' Report.............................. 26
Tax Information........................................... 27
</TABLE>
2
................................................................................
<PAGE>
ECONOMIC REVIEW
................................................................................
ECONOMIC STRENGTH, MARKET WEAKNESS
Following several years of stop-and-start recovery, the U.S. economy finally
established a steady pace of expansion in 1994. Initially, this helped to
propel the stock market upward, but as the economy continued to expand, the
market stumbled. Broad market averages such as the S&P 500 posted minimal
declines of 2-3% for the year, although many individual stocks lost up to 50%
of their value. The market was also volatile, with investors volleying between
elation and alarm in response to each new government economic report and
interest rate move.
Sector performance varied widely. Basic industrial stocks led performance for
the first three quarters, before beginning to sell off somewhat toward year
end. High technology, especially PC-related stocks, had an exceptional run
during the summer and continued strong as the year drew to a close. After two
dismal years, health care began to come back, benefiting from the de facto
defeat of Washington's reform legislation and several important mergers and
acquisitions of health care-related companies. Transportation, consumer
durables such as autos, utilities, and finance sectors fared worse.
RISING INTEREST RATES DAMPENED EQUITY PERFORMANCE
Beginning in February, the Federal Reserve Board signaled its intention to
thwart potential inflation by raising short-term interest rates a total of six
times over the next eleven months. The first few hikes sent bond, and then
equity markets, reeling. Investors already felt the equity market could be
somewhat overvalued. The rise in interest rates provided sufficient fuel for
many investors to sell, thereby driving down equity prices. While later
increases had a less dramatic effect, a kind of catch-22 scenario began to
emerge. Although corporate profits remained strong, investors started to
discount them, believing these profits to be the last of a good thing because
the economy would soon begin to slow significantly in response to the Fed's
monetary tightening actions.
The Fed's first actions were prompted by concerns that the economy had begun
to grow too quickly, and that inflation would surely follow. Later, inflation
did begin to emerge at the producer level. Although consumer prices had yet to
rise, commodity prices were up, and the Fed felt these increases would
eventually flow through to the retail level unless interest rates rose.
Rapidly developing foreign recoveries were, and continue to be, another
concern for the Fed, since international growth creates demand for U.S. goods
and services that puts inflationary pressure on our economy.
MIXED SIGNALS AHEAD
Our outlook for the stock market remains one of cautious long-term optimism,
tempered by the knowledge that things really could go either way in the period
just ahead. While the equity market is not expensive at present, neither is it
cheap enough to provide compelling values that would entice new investors to
buy in and fuel a rally. On one hand, investors could begin to sell equities,
deciding that rising rates have made bonds a
3
................................................................................
<PAGE>
ECONOMIC REVIEW (continued)
................................................................................
better relative investment. On the other hand, U.S. economic growth may
moderate some, but it is unlikely to slow significantly given the
strengthening of economies abroad. If the bond market stabilizes, then the
equity market could rise on the strength of good economic fundamentals.
PORTFOLIO OVERVIEW
................................................................................
The 1994 market environment proved especially challenging for the Fund, as the
inherent volatility of its primary sectors, energy, consumer services, health
care, technology, telecommunications and basic industries, produced a decline
in portfolio value. While the portfolio manager did attempt to reduce
volatility by investing up to 8% in short-term cash instruments, the total
return for the annual period was (18.22)% for the Investor shares and (17.91)%
for the Class R shares.
The Fund's management believes that the disappointing year was caused by a
major correction in the telecommunications stock holdings and the emerging
markets exposure which declined 20%. In addition, regional airline holdings
imploded within the transportation sector.
Currently, the Fund maintains a sizeable concentration in telecommunications
and energy stocks -- specifically oil service and natural gas. In the
telecommunications sector, several changes are taking place that may benefit
future stock performance. Most importantly perhaps are the cable and wireless
communications technologies now beginning to replace the copper wire
technology around the world. Less developed countries with huge populations
like China, India, and Indonesia are starting to modernize their
telecommunications services in order to attract development capital. To
accomplish this feat, these countries may turn to the leading global
telecommunications companies.
In the energy sector, the opportunities arise not from changing technology but
from changes we anticipate in the investment climate itself. Low oil prices at
the start of 1994 produced energy stock declines that never recovered, even
though oil prices rose. However, while we concede there is more than enough
oil and gas below ground surface, we challenge conventional wisdom that there
is adequately deliverable supply to meet the escalating energy appetites of
the world's growing economies. Instead, we anticipate a rise in energy stock
prices as we believe demand will exceed supply in the years ahead.
4
................................................................................
<PAGE>
PERFORMANCE SUMMARY
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND (UNAUDITED)
CHANGE IN VALUE OF $10,000 INVESTED FROM JANUARY 1, 1985 - DECEMBER 31, 1994 +
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in Dreyfus Special Growth
Fund Investor shares on December 31, 1984 through December 31, 1994 as compared
with the growth of a $10,000 investment in the Standard & Poor's 500 Stock Price
Index and Lipper Growth Fund Index. The plot points used to draw the line graph
were as follows:
<TABLE>
<CAPTION>
Growth of
$10,000
Invested in Growth of $10,000
Investor Investment in the Growth of $10,000
Month shares of the Standard & Poor's 500 Investment in the
Ended Fund Stock Price Index Lipper Growth Fund Index
<S> <C> <C> <C>
12/84 $10,000 $ 10,000 $ 10,000
3/85 11,679 10,918 10,920
6/85 12,180 11,720 11,702
9/85 11,466 11,240 11,689
12/85 13,480 13,174 13,032
3/86 16,098 15,032 15,035
6/86 16,940 15,919 15,838
9/86 14,225 14,808 14,565
12/86 14,513 15,634 15,098
3/87 17,120 18,973 17,980
6/87 17,417 19,924 18,401
9/87 18,487 21,239 19,383
12/87 13,960 16,457 15,252
3/88 15,446 17,391 16,458
6/88 16,433 18,548 17,415
9/88 16,805 18,611 17,364
12/88 16,960 19,183 17,659
3/89 18,113 20,542 19,064
6/89 20,050 22,354 20,735
9/89 21,144 24,743 22,887
12/89 20,154 25,252 22,695
3/90 18,742 24,493 22,047
6/90 19,970 26,032 23,652
9/90 17,006 22,458 19,846
12/90 19,177 24,468 21,565
3/91 23,208 28,015 25,156
6/91 21,893 27,948 24,907
9/91 23,618 29,411 26,777
12/91 24,781 31,906 29,163
3/92 26,411 31,101 28,651
6/92 24,166 31,690 28,236
9/92 25,740 32,691 28,988
12/92 31,271 34,335 31,358
3/93 34,255 35,835 32,570
6/93 35,871 36,005 33,417
9/93 40,053 36,934 35,135
12/93 37,528 37,792 35,808
3/94 34,082 36,364 34,602
6/94 33,184 36,513 33,915
9/94 33,092 38,295 35,579
12/94 30,691 38,286 35,177
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN -- INVESTOR SHARES
<S> <C>
-------------------------------------------------------------------
Year Ended 12/31/94 (18.22)%
-------------------------------------------------------------------
Five Years Ended 12/31/94 8.78%
-------------------------------------------------------------------
Ten Years Ended 12/31/94 11.87%
-------------------------------------------------------------------
<FN>
+ HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN INVESTOR SHARES (FORMERLY
RETAIL SHARES) AT JANUARY 1, 1985 AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS AT NET ASSET VALUE THROUGH DECEMBER 31, 1994.
THE STANDARD & POOR'S 500 STOCK INDEX IS A MARKET CAPITALIZATION INDEX COMPOSED
OF 500 WIDELY HELD COMMON STOCKS LISTED ON THE NEW YORK STOCK EXCHANGE,
AMERICAN STOCK EXCHANGE AND OVER-THE-COUNTER MARKET. BECAUSE THE INDEX IS NOT
A MANAGED PORTFOLIO, THERE ARE NO ADVISORY FEES OR INTERNAL MANAGEMENT
EXPENSES REFLECTED IN THE INDEX'S PERFORMANCE.
THE LIPPER GROWTH FUND INDEX IS A NET ASSET VALUE WEIGHTED INDEX OF THE 30
LARGEST GROWTH MUTUAL FUNDS.
INDEX INFORMATION IS AVAILABLE AT MONTH-END ONLY; THEREFORE, THE CLOSEST
MONTH-END TO INCEPTION DATE OF THE FUND HAS BEEN USED.
THIS PERIOD WAS ONE IN WHICH COMMON STOCK PRICES FLUCTUATED AND THE RESULTS
SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF DIVIDEND INCOME OR CAPITAL GAIN
OR LOSS WHICH MAY BE REALIZED FROM AN INVESTMENT IN THE FUND TODAY. NO
ADJUSTMENT HAS BEEN MADE FOR A SHAREHOLDER'S TAX LIABILITY ON DIVIDENDS OR
CAPITAL GAINS.
FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING FEE WAIVERS AND/OR
EXPENSE REIMBURSEMENTS, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF
THE PROSPECTUS AND ELSEWHERE IN THE REPORT.
NOTE: ALL FIGURES CITED HERE AND ON THE FOLLOWING PAGES REPRESENT PAST
PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
UPON REDEMPTION MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
</TABLE>
5
................................................................................
<PAGE>
PERFORMANCE SUMMARY (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND (UNAUDITED)
CHANGE IN VALUE OF $10,000 INVESTED FROM FEBRUARY 1, 1993 - DECEMBER 31, 1994 +
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in Dreyfus Special Growth
Fund Class R shares of February 1, 1993 through December31, 1994 as compared
with the growth of a $10,000 investment in the Standard & Poor's 500 Stock Price
Index and Lipper Growth Fund Index. The plot points used to draw the line graph
were as follows:
<TABLE>
<CAPTION>
Growth of
$10,000
Invested in Growth of $10,000
Class R Investment in the Growth of $10,000
Month shares of the Standard & Poor's 500 Investment in the
Ended Fund Stock Price Index Lipper Growth Fund Index
<S> <C> <C> <C>
1/93 -- $ 10,000 $ 10,000
2/01/93 $10,000 -- --
3/93 10,531 10,350 10,242
6/93 11,045 10,399 10,508
9/93 12.335 10,667 11,048
12/93 11,578 10,915 11,260
3/94 10,539 10,503 10,881
6/94 10,263 10,546 10,665
9/94 10,242 11,060 11,188
12/94 9,505 11,058 11,062
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN -- CLASS R SHARES
<S> <C>
-------------------------------------------------------------------
Year Ended 12/31/94 (17.91)%
-------------------------------------------------------------------
Inception (2/1/93) through 12/31/94 (2.62)%
-------------------------------------------------------------------
<FN>
+ HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN CLASS R SHARES (FORMERLY
INVESTMENT CLASS) AT INCEPTION (FEBRUARY 1, 1993) AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS AT NET ASSET VALUE THROUGH DECEMBER 31, 1994.
THE STANDARD & POOR'S 500 STOCK INDEX IS A MARKET CAPITALIZATION INDEX COMPOSED
OF 500 WIDELY HELD COMMON STOCKS LISTED ON THE NEW YORK STOCK EXCHANGE,
AMERICAN STOCK EXCHANGE AND OVER-THE-COUNTER MARKET. BECAUSE THE INDEX IS NOT
A MANAGED PORTFOLIO, THERE ARE NO ADVISORY FEES OR INTERNAL MANAGEMENT
EXPENSES REFLECTED IN THE INDEX'S PERFORMANCE.
THE LIPPER GROWTH FUND INDEX IS A NET ASSET VALUE WEIGHTED INDEX OF THE 30
LARGEST GROWTH MUTUAL FUNDS.
INDEX INFORMATION IS AVAILABLE AT MONTH-END ONLY; THEREFORE, THE CLOSEST
MONTH-END TO INCEPTION DATE OF THE FUND HAS BEEN USED.
THIS PERIOD WAS ONE IN WHICH COMMON STOCK PRICES FLUCTUATED AND THE RESULTS
SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF DIVIDEND INCOME OR CAPITAL GAIN
OR LOSS WHICH MAY BE REALIZED FROM AN INVESTMENT IN THE FUND TODAY. NO
ADJUSTMENT HAS BEEN MADE FOR A SHAREHOLDER'S TAX LIABILITY ON DIVIDENDS OR
CAPITAL GAINS.
FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING FEE WAIVERS AND/OR
EXPENSE REIMBURSEMENTS, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF
THE PROSPECTUS AND ELSEWHERE IN THE REPORT.
NOTE: ALL FIGURES CITED HERE AND ON THE FOLLOWING PAGES REPRESENT PAST
PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES
UPON REDEMPTION MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
</TABLE>
6
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
COMMON STOCKS -- 88.0%
ENERGY -- 21.6%
40,000 Apache Corporation $ 1,000,000
110,000 Brown, Tom, Inc.+ 1,265,000
757,000 Global Marine, Inc.+ 2,744,125
60,000 Noble Affiliates, Inc. 1,485,000
270,000 Parker Drilling Company+ 1,282,500
348,000 Rowan Companies, Inc.+ 2,131,500
90,000 Sonat Offshore Drilling, Inc. 1,597,500
240,000 Unit Corporation+ 720,000
247,500 Varco International, Inc.+ 1,546,875
171,500 Weatherford International, Inc.+ 1,672,125
-----------
15,444,625
-----------
CONSUMER SERVICES -- 13.0%
84,500 Bell Cablemedia+ 1,711,125
53,000 C-TEC Corporation, Class B+ 1,043,438
108,000 Comcast Corporation, Class A 1,660,500
45,800 Grupo Iusacell S.A., ADR+ 853,025
26 News Corporation Limited+ 89
25,000 United Engineers 123,360
61,500 Vanguard Cellular Systems, Inc., Class A+ 1,583,625
55,000 Viacom, Inc., Class B+ 2,234,375
30,000 Wharf Holdings 101,195
-----------
9,310,732
-----------
HEALTH CARE -- 12.0%
94,000 ALZA Corporation+ 1,692,000
35,000 Amgen, Inc.+ 2,065,000
32,000 Biogen, Inc.+ 1,336,000
71,000 Centocor, Inc.+ 1,153,750
74,000 Genzyme Corporation+ 2,331,000
9,990 Genzyme Corporation Tissue Repair+ 37,463
-----------
8,615,213
-----------
TECHNOLOGY -- 11.5%
43,000 Analog Devices, Inc.+ 1,510,375
48,000 Apple Computer, Inc. 1,872,000
25,000 Aspen Technology, Inc.+ 490,625
50,000 Leader Universal Holdings 160,564
75,000 Network Equipment Technologies+ 1,800,000
60,000 Nextel Communications, Inc., Class A+ 862,500
10 TSL Holdings, Inc.+ 1
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 7
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
COMMON STOCKS (continued)
<C> <S> <C>
TECHNOLOGY (CONTINUED)
45,000 Vodafone Group, ADR $ 1,513,125
-----------
8,209,190
-----------
TELECOMMUNICATIONS -- 8.7%
13,500 Advanced Information Services 161,322
20,000 Sapura Telecommunications 77,932
87,125 Tele Communications, Inc., Class A+ 1,894,969
30,000 Telecom Argentina STET 146,993
14,000 Telecomasia Corporation+ 39,036
36,100 Telecomasia Corporation, GDR++ 1,010,800
6,000 Telecomunicacoes Brasileiras S.A., ADR 265,500
25,000 Telefonica De Argentina S.A., Class B 128,744
50,000 Telefonos De Mexico, Series L 102,914
24,000 Telekom Malaysia Berhad 162,600
48,000 Telephone & Data Systems, Inc. 2,214,000
10,000 Thai Telephone & Telecommunication+ 60,944
51 The News Corporation 200
-----------
6,265,954
-----------
BASIC INDUSTRIES -- 8.0%
53,000 Boise Cascade Corporation 1,417,750
20,250 Cemex S.A. 100,130
5,000 Grupo Simec S.A., ADR+ 75,625
45,000 Inco Limited 1,288,125
5,000 Indian Rayon & Industries, Inc., GDR++ 85,000
950,000 Mariah International, Inc.+ 47,500
250,000 M.C. Packaging 96,930
35,000 Nac Re Corporation 1,172,500
80,000 Stone Container Corporation+ 1,380,000
25,000 Van Der Horst+ 76,844
-----------
5,740,404
-----------
CAPITAL GOODS -- 6.3%
1,400 Nokia AB 206,882
104,500 Seda Specialty Packaging+ 1,227,875
79,500 Tidewater, Inc. 1,470,750
50,000 Trinity Industry, Inc. 1,575,000
-----------
4,480,507
-----------
UTILITIES -- 3.7%
91,000 Airtouch Communications, Inc.+ 2,650,375
-----------
</TABLE>
8 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
COMMON STOCKS (continued)
<C> <S> <C>
FINANCIAL SERVICES -- 2.5%
10,000 AMMB Holdings Berhad $ 94,772
10,350 Banco De Galicia Buenos Aires S.A., Class B 41,398
6,000 Banco Del Sud S.A., Class B 45,598
23,000 Bangkok Bank Public Company 245,529
15,000 Malayan Banking Berhad 90,464
39,000 Overseas Union Bank 227,444
25,000 Trenwick Group, Inc. 1,059,375
-----------
1,804,580
-----------
CONSUMER NON-DURABLES -- 0.4%
37,500 H.M. Sampoerna 184,258
4,200 Panamerican Beverage, Inc. 132,825
-----------
317,083
-----------
CONSUMER DURABLES -- 0.1%
5,000 Ek Chor China Motorcycle Company 68,125
-----------
OTHER -- 0.3%
15,000 Aokam Perdana 92,814
25,000 Th Loy Industries Berhad+ 87,625
-----------
180,439
-----------
TOTAL COMMON STOCKS (Cost $69,006,886) 63,087,227
-----------
CONVERTIBLE PREFERRED -- 0.3% (Cost $153,901)
10,000 AMMB Holdings Berhad, Convertible 4,934
3,000 Philippine Long Distance Telecommunications 162,375
-----------
167,309
-----------
WARRANTS -- 1.0% (Cost $472,700)
145,000 Ann Taylor Stores Corporation, Warrant,
Expire 07/15/99+ 726,450
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 9
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
FACE VALUE)
VALUE (NOTE 1
<C> <S> <C>
COMMERCIAL PAPER -- 5.8% (Cost $4,166,000)
$2,083,000 General Electric Capital Corporation, Interest Bearing Note
5.800% due 01/03/95 $ 2,083,000
2,083,000 Ford Motor Credit Corporation, Interest Bearing Note
5.750% due 01/03/95 2,083,000
-----------
4,166,000
-----------
TOTAL INVESTMENTS (Cost $73,799,487*) 95.1% 68,146,986
OTHER ASSETS AND LIABILITIES (NET) 4.9 3,476,095
------ -----------
NET ASSETS 100.0% $71,623,081
------ -----------
------ -----------
------------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
+ NON-INCOME PRODUCING SECURITY.
++ SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS.
</TABLE>
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
CONTRACT VALUE
VALUE DATE (NOTE 1)
<S> <C> <C>
- ------------------------------------------------------------------------------------
Forward Foreign Exchange Contracts to Sell
522,774 Mexican Peso 01/03/95 $ (105,080)
(Contract Amount $104,555)
</TABLE>
10 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of ASSETS and LIABILITIES
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at value (Cost $73,799,487) (Note 1)
See accompanying schedule $ 68,146,986
Cash and foreign currency (Cost $160,153) 160,221
Receivable for investment securities sold 5,017,620
Forward foreign exchange contracts to sell
See accompanying schedule 104,555
Dividends and interest receivable 31,705
Receivable for Fund shares sold 16,090
------------
TOTAL ASSETS 73,477,177
LIABILITIES
Payable for investment securities purchased $ 1,399,898
Payable for Fund shares redeemed 248,038
Forward foreign exchange contracts to sell, at value
(Contract cost $104,555) (Note 1)
See accompanying schedule 105,080
Investment management fee payable (Note 2) 81,796
Accrued Trustees' fees and expenses (Note 2) 7,013
Distribution fee payable (Note 3) 1,771
Accrued expenses and other payables 10,500
-----------
TOTAL LIABILITIES 1,854,096
------------
NET ASSETS $ 71,623,081
------------
------------
NET ASSETS consist of:
Accumulated net realized loss on investments, forward
foreign exchange contracts and foreign currency
transactions $ (748,482)
Net unrealized depreciation of investments, forward
foreign exchange contract and foreign currency (5,654,018)
Paid-in capital 78,025,581
------------
TOTAL NET ASSETS $ 71,623,081
------------
------------
NET ASSETS VALUE
INVESTOR CLASS SHARES:
Net asset value, offering and redemption price per share
($64,839,147 DIVIDED BY 4,424,392 shares of
beneficial interest outstanding) $14.65
------
------
CLASS R SHARES:
Net asset value, offering and redemption price per share
($6,783,934 DIVIDED BY 458,870 shares of beneficial
interest outstanding) $14.78
------
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 11
................................................................................
<PAGE>
STATEMENT of OPERATIONS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $24) $ 440,725
Dividends (net of foreign withholding taxes of $8,485) 421,557
-------------
TOTAL INVESTMENT INCOME 862,282
EXPENSES
Investment management fee (Note 2) $ 741,988
Investment advisory fee (Note 2) 287,144
Distribution fee (Note 3) 198,008
Transfer agent fees (Note 2) 21,874
Custodian fees (Note 2) 14,153
Trustees' fees and expenses (Note 2) 11,950
Legal and audit fees 8,422
Other 19,704
----------
TOTAL EXPENSES 1,303,243
-------------
NET INVESTMENT LOSS (440,961)
-------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized gain/(loss) on:
Securities transactions (638,830)
Forward foreign exchange contracts (3,353)
Foreign currency transactions 8,550
-------------
Net realized loss on investments sold during the year (633,633)
-------------
Net change in unrealized depreciation of:
Securities (18,171,853)
Forward foreign exchange contracts (525)
Foreign currencies (992)
-------------
Net unrealized depreciation of investments during the
year (18,173,370)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (18,807,003)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (19,247,964)
-------------
-------------
</TABLE>
12 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/94 12/31/93
<S> <C> <C>
Net investment loss $ (440,961) $ (910,845)
Net realized gain/(loss) on investments sold, forward foreign exchange
contracts and currency transactions during the year (633,633) 11,824,587
Net unrealized appreciation/(depreciation) on investments, forward foreign
exchange contracts and foreign currency during the year (18,173,370) 2,755,492
------------ ------------
Net increase/(decrease) in net assets resulting from operations (19,247,964) 13,669,234
Distributions to shareholders from net realized gains on investments:
Investor Shares (formerly Retail Class) (228,089) (7,266,384)
Institutional Class -- (1,880,791)
Class R Shares (formerly Investment Class) (28,254) (1,252,247)
Distributions to shareholders in excess of net realized gain on
investments:
Investor Shares (formerly Retail Class) (184)
Class R Shares (formerly Investment Class) (23)
Net increase in net assets from Fund share transactions (Note 5):
Investor Shares (formerly Retail Class) (21,633,955) 20,420,511
Institutional Class -- 16,949,922
Class R Shares (formerly Investment Class) (5,807,720) 13,856,229
------------ ------------
Net increase/(decrease) in net assets (46,946,189) 54,496,474
NET ASSETS:
Beginning of year 118,569,270 64,072,796
------------ ------------
End of year $ 71,623,081 $118,569,270
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 13
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
Reference is made to pages 4 and 5 of the Fund's Prospectus dated
May 1, 1995.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/93*+++
<S> <C>
Net asset value, beginning of period $ 17.31
----------
Income from investment operations:
Net investment loss# (0.14)
Net realized and unrealized gain on investments 2.65
----------
Total from investment operations 2.51
Less distributions:
Distributions in excess of net investment income (1.79)
----------
Net asset value, end of period $ 18.03
----------
Total return+ 15.60%
----------
----------
Ratios to average net assets/Supplemental Data:
Net assets, end of year (in 000's) $19,749
Ratio of operating expenses to average net assets++ 1.40%**
Ratio of net investment loss to average net assets (0.76)%**
Portfolio turnover rate 94%
------------------------------------------------------------------------
<FN>
* ON FEBRUARY 1, 1993, THE FUND COMMENCED SELLING INSTITUTIONAL CLASS SHARES.
EFFECTIVE APRIL 4, 1994 THE INSTITUTIONAL AND RETAIL CLASSES WERE
RECLASSIFIED AS A SINGLE CLASS OF SHARES KNOWN AS INVESTOR SHARES.
** ANNUALIZED.
+ TOTAL RETURN REPRESENTS AGGREGATE TOTAL RETURN FOR THE PERIOD INDICATED.
++ WITHOUT THE VOLUNTARY REIMBURSEMENT OF EXPENSES AND/OR WAIVER OF FEES BY THE
INVESTMENT ADVISER, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS FOR THE
PERIOD ENDED DECEMBER 31, 1993 WOULD HAVE BEEN 1.47%.
+++ 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 PERIOD ENDED DECEMBER 31,
1993 WOULD HAVE BEEN ($0.15).
</TABLE>
16 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS
................................................................................
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds Trust (the "Trust") (formerly The Boston Company
Fund), The Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel Funds,
Inc. and The Dreyfus/Laurel Investment Series are all registered open-end
investment companies that are now part of The Dreyfus Family of Funds. The
Trust is an investment company which consists of four funds: Premier Limited
Term Government Securities Fund, Dreyfus Core Value Fund, Premier Managed
Income Fund and Dreyfus Special Growth Fund (the "Fund"). The Trust is a
"Massachusetts business trust" and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a diversified, open-end management investment company. On
April 4, 1994, the Retail and Institutional Classes of shares were
reclassified as a single class of shares known as the Investor Shares and the
Investment Class of shares was reclassified as the Trust Shares. On October
17, 1994, Trust Shares were redesignated as Class R Shares. Investor Shares
are sold primarily to retail investors and bear a distribution fee. Class R
Shares are sold 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 relationship at
such institution, and bear no distribution fee. Each class of shares has
identical rights and privileges except with respect to the distribution fees
and voting rights on matters affecting a single class. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements.
(A) PORTFOLIO VALUATION:
Investments in securities traded on a national securities exchange are valued
at the last reported sales price or, in the absence of a recorded sale, at the
mean of the closing bid and asked prices. Over-the-counter securities are
valued at the mean of the closing bid and asked prices. When market quotations
for securities are not readily available, the securities are valued at fair
value, as determined in good faith by the Board of Trustees. Options are
generally valued at the last sale price or, in the absence of a last sale
price, the last bid price. 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. Debt securities with maturities of 60
days or less from the valuation day are valued on the basis of amortized cost
which approximates market value. Foreign securities are generally valued at
the preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under
the direction of the Board of Trustees or its delegates.
18
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
(B) FORWARD FOREIGN CURRENCY CONTRACTS:
The Fund uses forward foreign currency contracts to hedge risks on foreign
currency denominated transactions and holdings. The Fund generally enters into
forward contracts as a hedge, in connection with the purchase or sale of a
security denominated in foreign currency. Forward contracts may also be used
to shift portfolio currency risk, though the Fund does not employ forwards for
this purpose at the present time.
Forward foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Fund as
an unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Fund's investment securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the Fund
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
(C) FOREIGN CURRENCY:
The books and records of the Fund are maintained in United States (U.S.)
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of
the period, and purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Unrealized gains and losses which result from changes in the foreign currency
exchange rates have been included in the unrealized
appreciation/(depreciation) of investments and net other assets. Net realized
foreign currency gains and losses resulting from changes in exchange rates
include foreign currency gains and losses between trade date and settlement
date on investment securities transactions, foreign currency transactions and
the difference between the amounts of interest and dividends recorded on the
books of the Fund and the amount actually received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in
realized gains and losses on investment securities sold.
(D) REPURCHASE AGREEMENTS:
The Fund may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund, through its custodian, takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding
period. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Fund's holding period. The value of the
19
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
collateral is at least equal at all times to the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is delayed
or prevented from exercising its rights to dispose of the collateral
securities including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund's investment manager, acting under the supervision of the
Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate potential risks.
(E) OPTION CONTRACTS:
The Fund may enter into option transactions. The Fund generally purchases put
options or writes covered call options to hedge against adverse movements in
the value of the portfolio holdings. When the Fund purchases a put option or a
call option, the premium paid is recorded as an investment, the value of which
is marked-to-market daily. When a purchased option expires, the Fund will
realize a loss in the amount of the cost of the option. When the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss
depending on whether the sales proceeds from the closing sale transaction are
greater or less than the cost of the option. When the Fund exercises a put
option, it will realize a gain or loss from the sale of the underlying
security based on the proceeds from such sale which will be decreased by the
premium originally paid. When the Fund exercises a call option, the cost of
the security which the Fund purchases upon exercise will be increased by the
premium originally paid.
When the Fund writes a call option or a put option, an amount equal to the
premium received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a
gain equal to the amount of the premium received. When the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or loss) if the cost
of the closing purchase transaction is less than (exceeds) the premium
received when the option was written without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
eliminated. When a call option is exercised, the Fund realizes a gain or loss
from the sale of the underlying security based on the proceeds from such sale
which are increased by the premium originally received. When a put option is
exercised, the amount of the premium originally received will reduce the cost
of the security which the Fund purchased upon exercise.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that the Fund may forego
the opportunity of profit if the market price of the underlying security
increases and the option is exercised. The risk in writing a put option is
that the Fund may incur a loss if the market price of the underlying security
decreases and the option is exercised. In addition, there is the risk the Fund
may not be able to enter into a closing transaction because of an illiquid
secondary market.
20
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
(F) EXPENSE ALLOCATION:
Expenses of the Fund not directly attributable to the operations of any class
of shares are prorated between the classes based upon the relative average
daily net assets of each class. Distribution expense is directly attributable
to a particular class of shares and is charged only to that class' operations.
(G) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Realized gains or losses on sales of investments are determined on the
basis of identified cost. Investment income and realized gains and losses are
allocated based upon relative net assets of each class of shares.
(H) DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income of the Fund, if any, are determined
on a class level and are declared and paid annually. The Fund distributes any
net realized capital gains on a Fund level annually. Distributions to
shareholders are recorded on the ex-dividend date. Additional distributions of
net investment income and capital gains for the Fund may be made at the
discretion of the Board of Trustees in order to avoid the 4% nondeductible
Federal excise tax. Income distributions and capital gain distributions on a
Fund level are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various
investment securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund as a whole.
(I) FEDERAL TAXES:
It is the Fund's policy to qualify as a regulated investment company, if such
qualification is in the best interest of its shareholders, by complying with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and by distributing all of its taxable income to its
shareholders. Therefore, no Federal income tax provision is required.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES
AND OTHER RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the Trust's investment management agreement
with Mellon Bank, N.A. ("Mellon Bank") was transferred to The Dreyfus
Corporation (the "Manager"), a wholly-owned subsidiary of Mellon Bank. 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 Trust. The Manager also directs the investments of the
Fund in accordance with its investment objective, policies and limitations.
For these services, the Fund is contractually obligated to pay the Manager
21
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
a fee, calculated daily and paid monthly, at the annual rate of 1.15% of the
value of the Fund's average daily net assets. Out of its fee, the Manager pays
all of the expenses of the Fund except brokerage fees, taxes, interest, Rule
12b-1 distribution fees and expenses, fees and expenses of non-interested
Trustees (including counsel fees) and extraordinary expenses. In addition, the
Manager is required to reduce its fee in an amount equal to the Fund's
allocable portion of fees and expenses of the non-interested Trustees
(including counsel).
For the period from April 4, 1994 to October 16, 1994, Mellon Bank served as
the Trust's investment manager pursuant to the investment management agreement
described above. Prior to April 4, 1994, the Trust had an investment advisory
agreement under which the Fund paid The Boston Company Advisors Inc., a
wholly-owned subsidiary of Mellon Bank, a monthly fee at the annual rate of
1.00% of the value of its average daily net assets.
Prior to April 4, 1994, the Trust had individual contracts, which contained
specific fee provisions, with Boston Safe Deposit and Trust Company, a
wholly-owned subsidiary of Mellon Bank, and The Shareholder Services Group,
Inc. to provide custody and transfer agent services, respectively, to the
Fund. Effective April 4, 1994, the payment of fees for custody, accounting and
transfer agent services are covered by the investment management agreement
described above.
Operating expenses directly attributable to a particular class of shares are
charged only to that class' operations. In addition to the distribution fees,
gross class specific operating expenses include transfer agent fees. For the
year ended December 31, 1994, the Investor and Class R shares incurred
transfer agent fees of $21,163 and $711, respectively.
For the period from April 4, 1994 to September 23, 1994, Frank Russell
Investment Management Company (the "Administrator") served as the Fund's
administrator and provided, pursuant to an administration agreement, various
administrative and corporate secretarial services to the Fund. For the period
from April 4, 1994 to September 23, 1994, Mellon Bank, as investment manager,
paid the Administrator's fee out of the management fee described above.
Prior to October 17, 1994, the Trust had a contract with Funds Distributor,
Inc. to serve as distributor of the Trust's shares. Effective as of October
17, 1994, Premier Mutual Fund Services, Inc. ("Premier") serves as the Trust's
distributor. Premier also serves as the Trust's sub-administrator and,
pursuant to a sub- administration agreement with the Manager, provides various
administrative and corporate secretarial services to the Trust.
No officer or employee of Premier (or of any parent, subsidiary or affiliate
thereof) receives any compensation from The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds or The
Dreyfus/Laurel Investment Series (collectively, "The Dreyfus/Laurel Funds")
for serving as an officer or Director or Trustee of The Dreyfus/Laurel Funds.
In addition, no officer or employee of
22
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
the Manager (or of any parent, subsidiary or affiliate thereof) serves as an
officer or Director or Trustee of The Dreyfus/Laurel Funds. The Dreyfus/Laurel
Funds pays each Director or Trustee who is not an officer or employee of
Premier (or of any parent, subsidiary or affiliate thereof) or of the Manager,
$27,000 per annum, $1,000 for each Board meeting attended and $750 for each
Audit Committee meeting attended, and reimburses each Director or Trustee for
travel and out-of-pocket expenses.
3. DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act relating to its Investor Shares. Under the Plan the Fund
may pay annually up to .25% of the value of the average daily net assets
attributable to its Investor Shares to compensate Premier and Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing activities
and to compensate Premier for activities and expenses primarily intended to
result in the sale of Investor Shares. The Class R Shares bear no distribution
fee. Prior to April 4, 1994, under a distribution plan, the Fund was
authorized to spend up to .25% and .15%, respectively, of its average daily
net assets annually on distribution expenses for the Retail Class and the
Institutional Class shares which are now reclassified as Investor Shares.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of a majority of the Trustees
and a majority of the Trustees who are not "interested persons" of the Trust
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities, excluding short-term
investments and U.S. government securities, for the year ended December 31,
1994 were $110,193,021and $131,584,059, respectively.
At December 31, 1994, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess
of tax cost over value were $4,672,140 and $10,324,641, respectively.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of
beneficial interest of four separate investment portfolios, without par value.
The Fund offers two classes of shares.
23
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
-------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
YEAR ENDED DECEMBER 31, 1993 DECEMBER 31, 1993*
DECEMBER 31, 1994** (RETAIL CLASS) (INSTITUTIONAL CLASS)
Shares+ Amount++ Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
INVESTOR SHARES:
Sold 1,941,895 $ 32,031,183 6,976,008 $118,310,926 2,256,935 $ 40,318,781
Issued as reinvestment of
dividends and distributions 14,090 217,665 391,057 7,078,144 89,187 1,618,748
Redeemed (3,294,041) (53,882,803) (5,367,725) (83,730,470) (2,076,570) (39,279,055)
Exchanged for Institutional
shares -- -- (825,618) (14,291,448) -- --
Exchanged for Investment
shares -- -- (401,308) (6,946,641) -- --
Issued in exchange for Retail
shares -- -- -- -- 825,618 14,291,448
---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------
Net increase/ (decrease) (1,338,056) $(21,633,955) 772,414 $ 20,420,511 1,095,170 $ 16,949,922
---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------
------------------------------------------------------------------------------------
PERIOD ENDED
YEAR ENDED DECEMBER 31, 1993*
DECEMBER 31, 1994**# (INVESTMENT CLASS)
Shares Amount Shares Amount
------------------------------------------------------------------------------------
CLASS R SHARES:
Sold 82,480 $ 1,390,092 507,410 $ 8,488,854
Issued as reinvestment of
dividends and distributions 1,624 25,347 -- --
Issued in exchange for Retail
Shares -- -- 401,308 6,946,641
Redeemed (452,409) (7,223,159) (81,543) (1,579,266)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Net increase/ (decrease) (368,305) $ (5,807,720) 827,175 $ 13,856,229
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
------------------------------------------------------------------------------------
<FN>
* THE FUND COMMENCED SELLING INSTITUTIONAL AND INVESTMENT CLASS SHARES ON
FEBRUARY 1, 1993. ANY SHARES OUTSTANDING PRIOR TO FEBRUARY 1, 1993 WERE
DESIGNATED RETAIL CLASS SHARES.
** EFFECTIVE APRIL 4, 1994, THE RETAIL AND INSTITUTIONAL CLASSES OF SHARES WERE
RECLASSIFIED AS A SINGLE CLASS OF SHARES KNOWN AS INVESTOR SHARES AND THE
INVESTMENT CLASS SHARES WERE RECLASSIFIED AS TRUST SHARES.
# EFFECTIVE OCTOBER 12, 1994, THE TRUST SHARES WERE RECLASSIFIED AS CLASS R
SHARES.
+ NUMBER OF SHARES INCLUDES 157,588 OF SUBSCRIPTIONS AND 477,271 OF REDEMPTIONS
FOR THE INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
++ AMOUNTS INCLUDE $2,791,543 OF SUBSCRIPTIONS AND $8,392,173 OF REDEMPTIONS
FOR THE INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
</TABLE>
24
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
6. FOREIGN SECURITIES
The Fund may purchase securities of foreign issuers. Investing in securities
of foreign companies and foreign governments involves special risks and
considerations not typically associated with investing in securities of U.S.
companies and the U.S. government. These risks include revaluation of
currencies and future adverse political and economic developments. Moreover,
securities of many foreign companies and foreign governments and their markets
may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
7. LINE OF CREDIT
The Fund and several affiliated entities participate in a $20 million line of
credit provided by Bank of America (formerly Continental Bank N.A.) under a
Line of Credit Agreement (the "Agreement") dated March 31, 1992, primarily for
temporary or emergency purposes, including the meeting of redemption requests
that otherwise might require the untimely disposition of securities. Under the
Agreement, the Fund may borrow up to the amount specified in its Borrowing
Base Certificate. Interest is payable either at the bank's Money Market Rate
or the London Interbank Offered Rate (LIBOR) plus .375% on an annualized
basis. The Fund and the other affiliated entities are charged an aggregate
commitment fee of $50,000, which is allocated equally among each of the
participants. The Agreement requires, among other provisions, each
participating fund to maintain a ratio of net assets (not including funds
borrowed pursuant to the Agreement) to aggregate amount of indebtedness
pursuant to the Agreement of no less than 4 to 1. During the year ended
December 31, 1994, the Fund did not borrow under the Agreement.
25
................................................................................
<PAGE>
INDEPENDENT AUDITORS' REPORT
................................................................................
[LOGO]
The Board of Trustees and Shareholders
The Dreyfus/Laurel Funds Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Dreyfus Special Growth Fund of
The Dreyfus/Laurel Funds Trust (formerly The Boston Company Fund) as of
December 31, 1994, and the related statement of operations, statement of
changes in net assets, and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended December 31, 1993 and
financial highlights for each of the years or periods in the nine-year period
ended December 31, 1993 were audited by other auditors whose report thereon,
dated February 14, 1994, expressed an unqualified opinion on that statement
and those financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1994, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Dreyfus Special Growth Fund of The Dreyfus/Laurel Funds Trust as of December
31, 1994, the results of its operations, changes in its net assets, and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 17, 1995
26
The Dreyfus/Laurel Funds Trust --
Premier Limited Term Government Securities Fund
February 17, 1995
TABLE OF CONTENTS
Shareholder Letter .......................... 1
Economic Review ............................. 3
Portfolio Overview .......................... 4
Performance Summary ........................ 5
Portfolio of Investments .................... 6
Statement of Assets and Liabilities ........ 8
Statement of Operations ..................... 9
Statement of Changes in Net Assets ......... 10
Financial Highlights ........................ 11
Notes to Financial Statements ............... 15
Independent Auditors' Report ............... 21
Tax Information ............................ 22
ECONOMIC REVIEW
THE ECONOMY MARCHES ON/ECONOMIC STRENGTH CONTINUES
Following several years of stop-and-start recovery, the U.S. economy fi-
nally established a steady pace of expansion early in 1994. Report after
government report brought confirming evidence. New orders for manufactur-
ing, housing starts and sales, and even consumer spending all went up. At
the same time, unemployment fell to its lowest level in nearly four years.
RISING INTEREST RATES DOMINATED THE MARKET
The robust economy raised the inflationary antennae of the Federal Reserve
Board. Determined to head off any price pressures that might be building
along with the economy's strength, the Fed raised short-term interest
rates six times between February and November, 1994. These moves repre-
sented a definitive shift away from the Fed's previous "easy" policy and
ended a nearly 5-year period of declining short-term rates.
The Fed acted in a preemptory fashion -- actual inflation had not yet ap-
peared, although the economy seemed to be growing a bit too rapidly for
comfort. Later in the year, producer prices did begin to rise. The Fed was
concerned that these price increases would eventually flow through to the
consumer level unless it raised interest rates again. Recoveries in for-
eign markets pose yet another challenge for the Fed, since their growth
creates demand for U.S. goods and services which puts inflationary pres-
sures on our economy.
BOND PRICES DECLINED
Financial markets, especially the bond market, had trouble adjusting to
higher interest rates. In line with the Fed's actions, other interest
rates rose and prices of lower yielding bonds fell in order to bring their
yields in line with those of comparable new issues. Investors had been en-
joying exceptional returns during the past two years of declining rates as
the bond market had continued to rally. This new rising rate environment
dealt investor confidence a heavy blow, especially since people did not
know when rates would level off and some stability would return to the
market. Many investors sold off their bond holdings. The U.S. mortgage se-
curities market was particularly hard hit, as were bond markets in many
emerging countries. High yield bond prices held up best, because the for-
tunes of these issues are tied more closely to the economy than to changes
in interest rates.
RATES MAY CONTINUE TO RISE
In assessing the outlook for the bond market, we evaluate four main fac-
tors: the state of the business cycle, prospects for inflation, the direc-
tion of foreign interest rates, and the policy of the Federal Reserve
Board. Presently, three of these factors suggest the possibility of higher
interest rates ahead. The business cycle, or economy, remains strong and
this puts pressure on rates. Foreign interest rates are rising, another
pressure on U.S. rates. And the Fed is now pursuing a tighter monetary
policy, emphasizing its willingness to raise rates to stop inflation. The
lone positive for stabilizing rates is inflation itself. Inflation is
still low and although it may rise somewhat during 1995 as higher producer
prices flow through to the consumer level, it should remain low in rela-
tion to prevailing interest rates. In sum, we believe that the trend seems
to be toward higher interest rates, although a slowing economy or other
developments could certainly alter this outlook.
PORTFOLIO OVERVIEW
Like most bond funds investing primarily in government securities, the
Fund felt the effects of the bond market's severe downturn during the most
recent annual period. The Fund's total return was (4.24)% for Class A
shares* for the twelve months ended December 31, 1994.
The Fund's performance was hurt by its investments in intermediate term
securities. The Fund's investment policy requires that it invest at least
65% of its assets in U.S. Government securities with remaining maturities
of between three and eight years. Unfortunately, the intermediate portion
of the market was the hardest hit by interest rate increases, as yields
rose higher and prices dropped more severely than in other sectors. Still,
significant holdings (20% of assets through October) in cash and short-
term securities did provide the Fund with a measure of protection against
price volatility. In addition, we also invested approximately 15% of the
Fund's government securities allocation in issues with longer, 10-year ma-
turities.
Looking forward, we have begun to invest some of the Fund's cash in
shorter-term government securities with maturities between three and five
years. These securities have gained value from the flattening of the yield
curve, whereby the gap between short-term and long-term interest rates has
begun to close. In the months ahead, we will continue to evaluate opportu-
nities throughout the government securities market. While short-term in-
terest rates may continue to rise, we believe it is time to seek to take
advantage of attractive values and begin reinvesting cash in the Fund's
primary market of intermediate- term government securities.
* Does not reflect the maximum front-end sales load of 3.0%.
PERFORMANCE SUMMARY
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND (UNAUDITED)
CHANGE IN VALUE OF $10,000 INVESTED FROM MARCH 3, 1986 TO DECEMBER 31,
1994+
DESCRIPTION OF MOUNTAIN CHART IN COVERS (CLASS A)
A line graph depicting the total growth (including reinvestment of divi-
dends and capital gains) of a hypothetical investment of $10,000 in Pre-
mier Limited Term Government Securities Fund Class A shares on March 3,
1986 through December 31, 1994 as compared with the growth of a $10,000
investment in Lehman Brothers Intermediate Term Government Bond Index. The
plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
INVESTMENT IN THE
LEHMAN BROTHERS
GROWTH OF $10,000 INTERMEDIATE TERM
MONTH INVESTED IN CLASS A GOVERNMENT
ENDED SHARES OF THE FUND BOND INDEX
<S> <C> <C>
2/86 -- $10,000
3/3/86 $ 9,700 --
3/86 -- $10,269
6/86 $ 9,847 $10,450
9/86 $10,135 $10,710
12/86 $10,514 $10,977
3/87 $10,689 $11,107
6/87 $10,404 $11,015
9/87 $10,152 $10,873
12/87 $10,621 $11,373
3/88 $10,966 $11,729
6/88 $11,022 $11,843
9/88 $11,217 $12,028
12/88 $11,285 $12,101
3/89 $11,329 $12,226
6/89 $12,120 $13,038
9/89 $12,233 $13,186
12/89 $12,513 $13,636
3/90 $12,426 $13,618
6/90 $12,765 $14,044
9/90 $12,924 $14,315
12/90 $13,425 $14,937
3/91 $13,666 $15,266
6/91 $13,832 $15,522
9/91 $14,527 $16,260
12/91 $15,239 $17,042
3/92 $14,934 $16,863
6/92 $15,480 $17,517
9/92 $16,221 $18,284
12/92 $16,072 $18,224
3/93 $16,764 $18,906
6/93 $17,198 $19,278
9/93 $17,675 $19,684
12/93 $17,534 $19,713
3/94 $17,130 $19,349
6/94 $16,748 $19,241
9/94 $16,871 $19,387
12/94 $16,791 $19,367
</TABLE>
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES (FORMERLY RETAIL SHARES)
<TABLE>
<CAPTION>
WITH 3.0% WITHOUT
SALES CHARGE SALES CHARGE
<S> <C> <C>
Year Ended 12/31/94 (7.11)% (4.24)%
Five Years Ended 12/31/94 5.41% 6.06%
Inception (3/3/86) through 12/31/94 6.05% 6.41%
<FN>
+ Hypothetical illustration of $10,000 invested in Class A Shares (for-
merly Retail Shares) at inception (March 3, 1986) assuming deduction of
a maximum 3.00% sales charge at the time of investment and reinvestment
of dividends and capital gains at net asset value through December 31,
1994.
The Lehman Brothers Intermediate Term Government Bond Index is comprised
of all publicly issued, non-convertible debt of the U.S. government or
any agency thereof, quasi-federal corporations, and corporate debt guar-
anteed by the U.S. government with a maturity of between one and ten
years.
Index information is available at month-end only, therefore, the closest
month-end to inception date of the Fund has been used.
This period was one in which bond prices fluctuated and the results
should not be considered as representative of dividend income or capital
gain or loss which may be realized from an investment in the Fund today.
No adjustment has been made for a shareholder's tax liability on divi-
dends or capital gains.
Further information relating to Fund performance, including fee waivers
and/or expense reimbursements, is contained in the Financial Highlights
section of the Prospectus and elsewhere in the report.
NOTE: All figures cited here and on the following pages represent past
performance and do not guarantee future results. Investment return and
principal value of an investment will fluctuate so that an investor's
shares upon redemption may be worth more or less than original cost.
</TABLE>
PORTFOLIO OF INVESTMENTS
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
<S> <C> <C> <C> <C>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 90.8%
U.S. TREASURY NOTES -- 89.8%
$2,000,000 U.S Treasury Notes 3.785% 04/30/95 $ 1,985,520
695,000 U.S Treasury Notes 5.125 03/31/96 675,797
3,000,000 U.S Treasury Notes 6.875 03/31/97 2,946,330
4,000,000 U.S Treasury Notes 5.125 03/31/98 3,695,760
2,000,000 U.S Treasury Notes 5.875 03/31/99 1,859,400
650,000 U.S Treasury Notes 5.500 04/15/00 586,177
4,100,000 U.S Treasury Notes 8.000 05/15/01 4,133,743
15,882,727
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 1.0%
166,948 Small Business Administration 9.375 04/25/03 171,956
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $16,640,053) 16,054,683
MORTGAGE-BACKED SECURITIES -- 7.8%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) CERTIFICATES -- 5.7%
11,600 GNMA 9.000 02/15/19 11,721
430,737 GNMA 9.000 02/15/20 435,196
233,750 GNMA 9.000 09/15/21 236,120
79,392 GNMA 9.500 10/15/09 81,891
78,705 GNMA 10.000 05/15/19 82,591
34,270 GNMA 10.500 02/15/14 36,459
46,052 GNMA 11.500 12/15/15 50,266
71,909 GNMA 10.500 04/15/16 76,515
1,010,759
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) CERTIFICATES -- 1.5%
450,000 FNMA, Remic Series
92-12SA (I/O) 5.351(1) 01/25/22 270,563
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) CERTIFICATES -- 0.6%
6,655 FHLMC, (Group #17-0147) 11.000% 11/01/15 7,093
11,272 FHLMC, Series 1220B (I/O) 435.888(2) 02/15/22 90,172
97,265
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $1,592,895) 1,378,587
TOTAL INVESTMENTS (Cost $18,232,948*) 98.6% 17,433,270
OTHER ASSETS AND LIABILITIES (NET) 1.4 251,580
NET ASSETS 100.0% $17,684,850
<FN>
* Aggregate cost for Federal tax purposes.
(1) Current yield: 10.500% (unaudited).
(2) Current yield: 12.000% (unaudited).
I/O Interest Only Security.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $18,232,948) (Note 1)
See accompanying schedule $17,433,270
Cash 80,681
Interest receivable 220,687
Receivable for investment securities sold 203
TOTAL ASSETS 17,734,841
LIABILITIES
Payable for Fund shares redeemed $20,600
Investment management fee payable (Note 2) 10,186
Dividends payable 7,444
Accrued Trustee' fees and expenses (Note 2) 1,555
Distribution fee payable (Note 3) 483
Accrued expenses and other payables 9,723
TOTAL LIABILITIES 49,991
NET ASSETS $17,684,850
NET ASSETS consist of:
Undistributed net investment income $ 2,388
Accumulated net realized loss on investments sold (194,181)
Unrealized depreciation of investments (799,678)
Paid-in capital 18,676,321
TOTAL NET ASSETS $17,684,850
NET ASSET VALUE:
CLASS A SHARES
Net asset value and redemption price per share
($17,684,805 / 1,487,628 shares of beneficial in-
terest outstanding) $ 11.89
Maximum offering price per share ($11.89 / .97)
(based on sales charge of 3.0% of the offering
price at December 31, 1994) $ 12.26
CLASS B SHARES
Net asset value and offering price per share+
($14.97 / 1.259 shares of beneficial interest out-
standing) $ 11.89
CLASS C SHARES
Net asset value and offering price per share+
($14.97 / 1.259 shares of beneficial interest out-
standing) $ 11.89
CLASS R SHARES
Net asset value, offering and redemption price per
share ($14.46 / 1.216 shares of beneficial inter-
est outstanding) $ 11.89
<FN>
+ Redemption price per share is equal to Net Asset Value less any applica-
ble contingent deferred sales charge.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $ 1,321,025
EXPENSES
Investment management fee (Note 2) $ 82,964
Investment advisory fee (Note 2) 36,993
Distribution fee (Note 3) 36,694
Registration and filing fees 21,830
Transfer agent fees (Note 2) 13,330
Custodian fees (Note 2) 4,448
Trustees' fees and expenses (Note 2) 2,383
Other 14,777
Fees waived and expenses reimbursed by invest-
ment adviser (Note 2) (14,827)
TOTAL EXPENSES 198,592
NET INVESTMENT INCOME 1,122,433
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(Notes 1 and 4):
Net realized loss on investments sold during
the year (183,515)
Net change in unrealized depreciation of in-
vestments during the year (1,875,149)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (2,058,664)
NET DECREASE IN NET ASSETS RESULTING FROM OPER-
ATIONS $ (936,231)
</TABLE>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/94 12/31/93
<S> <C> <C>
Net investment income $ 1,122,433 $ 1,270,147
Net realized gain/(loss) on investments sold
during the year (183,515) 526,000
Net unrealized appreciation/(depreciation) on
investments during the year (1,875,149) 228,960
Net increase/(decrease) in net assets resulting
from operations (936,231) 2,025,107
Distributions to shareholders from net invest-
ment income:
Class A (formerly Retail Class) (942,903) (598,477)
Institutional Class (179,530) (671,695)
Distributions to shareholders from net realized
gain on investments:
Class A (formerly Retail Class) -- (16,054)
Institutional Class -- (26,018)
Distributions to shareholders in excess of net
realized gain on investments:
Class A (formerly Retail Class) -- (868)
Institutional Class -- (1,406)
Net increase in net assets from Fund share
transactions (Note 5):
Class A (formerly Retail Class) (2,811,350) (14,690,131)
Institutional Class -- 13,620,656
Class B 15 --
Class C 15 --
Class R (formerly Trust Shares) 15 --
Net decrease in net assets (4,869,969) (358,886)
NET ASSETS:
Beginning of year 22,554,819 22,913,705
End of year (including undistributed net in-
vestment income of $2,388 and $14,852, respec-
tively) $17,684,850 $ 22,554,819
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
Reference is made to pages 4 and 5 of the Fund's Prospectus dated
May 1, 1995.
FINANCIAL HIGHLIGHTS
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/93*
<S> <C>
Net asset value, beginning of period $ 13.00
Income from investment operations:
Net investment income# 0.66
Net realized and unrealized gain on investments 0.16
Total from investment operations 0.82
Less distributions:
Distributions from net investment income (0.66)
Distributions from net realized gains on investments (0.02)
Distributions in excess of net realized gains
on investments (0.00)**
Total Distributions: (0.68)
Net asset value, end of period $ 13.14
Total return+ 6.58%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $13,779
Ratio of operating expenses to average net assets+++ 1.50%++
Ratio of net investment income to average net assets 5.46%++
Portfolio turnover rate 74%
<FN>
* On February 1 ,1993, the Fund commenced selling Institutional Class
shares. Effective April 4, 1994 the Retail and Institutional Classes
were reclassified as a single class of shares known as Investor
Shares. On October 17, 1994 Investor Shares were redesignated Class A
shares.
** Amount represents less than $0.01 per share.
+ Total return represents aggregate total return for the period indi-
cated.
++ Annualized.
+++ Without the voluntary reimbursement of expenses and/or waiver of fees
by the investment adviser and distributor, the ratio of expenses to
average net assets for the period ended December 31, 1993 would have
been 1.78%.
# Net investment income before the voluntary waiver of fees and/or reim-
bursement of expenses by the investment adviser for the period ended
December 31, 1993 was $0.63.
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds Trust (the "Trust") (formerly The Boston Company
Fund), The Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Investment Series are all registered
open-end investment companies that are now part of The Dreyfus Family of
Funds. The Trust is an investment company which consists of four funds:
Premier Managed Income Fund, Dreyfus Core Value Fund, Dreyfus Special
Growth Fund and Premier Limited Term Government Securities Fund (the
"Fund"). The Trust is a "Massachusetts business trust" and is registered
with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a diversified, open-end man-
agement investment company. On April 4, 1994, the Retail and Institutional
Classes of shares were reclassified as a single class of shares known as
Investor Shares and the Fund began offering Trust Shares. On October 17,
1994, Investor and Trust shares were redesignated as Class A and Class R
shares, respectively. Effective December 19, 1994 the Trust began offering
two additional classes of shares, Class B and Class C. Class A, B and C
shares are sold primarily to retail investors through financial intermedi-
aries and bear a distribution fee. Class A shares are sold with a front-
end sales charge, while Class B and C may be subject to a contingent de-
ferred sales charge. Class R Shares are sold primarily to bank trust de-
partments and other financial service providers (including Mellon Bank and
its affiliates) acting on behalf of customers having a qualified trust or
investment account or relationship at such institution and bear no distri-
bution fee. Each class of shares has identical rights and privileges ex-
cept with respect to the distribution fees and voting rights on matters
affecting a single class. The following is a summary of significant ac-
counting policies consistently followed by the Fund in the preparation of
its financial statements.
(A) PORTFOLIO VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price or, in the absence of a recorded
sale, at the mean of the closing bid and asked prices. Over-the-counter
securities are valued at the mean of the closing bid and asked prices.
When market quotations for securities are not readily available, they are
valued at fair value, as determined in good faith by the Board of Trust-
ees. Bonds are valued through valuations obtained from a commercial pric-
ing service or at the most recent mean of the bid and asked prices pro-
vided by investment dealers in accordance with procedures established by
the Board of Trustees. Debt Securities with maturities of 60 days or less
from the valuation day are valued on the basis of amortized cost which ap-
proximates market value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Interest income
is recorded on the accrual basis. Realized gains and losses on sales of
investments are determined on the basis of identified cost. Investment in-
come and realized and unrealized gains and losses are allocated based upon
the relative daily net assets of each class of shares.
(C) EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of any
class of shares are pro rated among the classes based upon the relative
average daily net assets of each class. Distribution expense is directly
attributable to a particular class of shares and is charged only to that
class' operations.
(D) DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income of the Fund, if any, are deter-
mined on a class level, are declared each day the Fund is open for busi-
ness and are paid on the first business day of the month. The Fund dis-
tributes any net realized capital gains on a Fund level annually. Distri-
butions to shareholders are recorded on the ex-dividend date. Additional
distributions of net investment income and capital gains for the Fund may
be made at the discretion of the Board of Trustees in order to avoid the
4% nondeductible Federal excise tax. Income distributions and capital gain
distributions on a Fund level are determined in accordance with income tax
regulations which may differ from generally accepted accounting princi-
ples. These differences are primarily due to differing treatments of in-
come and gains on various investment securities held by the Fund, timing
differences and differing characterization of distributions made by the
Fund as a whole. Permanent differences incurred during the Fund's fiscal
year resulting from different book and tax accounting for certain debt se-
curities have been reclassified from income to capital gains at year-end.
(E) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms
of a typical repurchase agreement, the Fund, through its custodian, takes
possession of an underlying debt obligation subject to an obligation of
the seller to repurchase, and the Fund to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during the
Fund's holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Fund's holding pe-
riod. The value of the collateral is at least equal at all times to the
total amount of the repurchase obligations, including interest. In the
event of counterparty default, the Fund has the right to use the collat-
eral to offset losses incurred. There is potential loss to the Fund in the
event the Fund is delayed or prevented from exercising its rights to dis-
pose of the collateral securities including the risk of a possible decline
in the value of the underlying securities during the period while the Fund
seeks to assert its rights. The Fund's investment manager, acting under
the supervision of the Board of Trustees, reviews the value of the collat-
eral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
(F) FEDERAL TAXES
It is the Fund's policy to qualify as a regulated investment company, if
such qualification is in the best interest of its shareholders, by comply-
ing with the requirements of the Internal Revenue Code applicable to regu-
lated investment companies and by distributing all of its taxable income
to its shareholders. Therefore, no Federal income tax provision is re-
quired.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES
AND OTHER RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the Trust's investment management agree-
ment with Mellon Bank, N.A. ("Mellon Bank") was transferred to The Dreyfus
Corporation (the "Manager"), a wholly-owned subsidiary of Mellon Bank. 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 Trust. The Manager also directs the investment of
the Fund in accordance with its investment objective, policies and limita-
tions. For these services, the Fund is contractually obligated to pay the
Manager a fee, calculated daily and paid monthly, at the annual rate of
0.60% of the value of the Fund's average daily net assets. Out of its fee,
the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, Rule 12b-1 distribution fees and expenses, fees and ex-
penses of non-interested Trustees (including counsel fees) and extraordi-
nary expenses. In addition, the Manager is required to reduce its fee in
an amount equal to the Fund's allocable portion of fees and expenses of
the non-interested Trustees (including counsel).
For the period from April 4, 1994 to October 16, 1994, Mellon Bank served
as the Trust's investment manager pursuant to the investment management
agreement described above. Prior to April 4, 1994, the Trust had an in-
vestment advisory agreement under which the Fund paid The Boston Company
Advisors, Inc. ("Boston Advisors"), a wholly-owned subsidiary of Mellon
Bank, a monthly fee at the annual rate of 0.65% of the value of its aver-
age daily net assets. For the year ended December 31, 1994, Boston Advi-
sors, as investment advisor waived fees and reimbursed expenses of
$14,827.
Prior to April 4, 1994, the Trust had individual contracts, which con-
tained specific fee provisions, with Boston Safe Deposit and Trust Com-
pany, a wholly-owned subsidiary of Mellon Bank, and The Shareholder Ser-
vices Group, Inc. to provide custody and transfer agent services, respec-
tively, to the Fund. Effective April 4, 1994, the payment of fees for
custody, accounting and transfer agent services are covered by the invest-
ment management agreement described above.
Operating expenses directly attributable to a particular class of shares
are charged only to that class' operations. In addition to the distribu-
tion fees, gross class specific operating expenses include transfer agent
fees. For the year ended December 31, 1994, Class A shares incurred trans-
fer agent fees of $13,330.
For the period from April 4, 1994 to September 23, 1994, Frank Russell In-
vestment Management Company (the "Administrator") served as the Fund's ad-
ministrator and provided, pursuant to an administration agreement, various
administrative and corporate secretarial services to the Fund. For the pe-
riod from April 4, 1994 to September 23, 1994, Mellon Bank, as investment
manager, paid the Administrator's fee out of the management fee described
above.
Prior to October 17, 1994, the Trust had a contract with Funds Distribu-
tor, Inc. to serve as distributor of the Trust's shares. Effective as of
October 17, 1994, Premier Mutual Fund Services, Inc. ("Premier") serves as
the Trust's distributor. Premier also serves as the Trust's sub-
administrator and, pursuant to a sub-administration agreement with the
Manager, provides various administrative and corporate secretarial
services to the Trust.
No officer or employee of Premier (or of any parent, subsidiary or affili-
ate thereof) receives any compensation from The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Munici-
pal Funds or The Dreyfus/Laurel Investment Series (collectively, "The
Dreyfus/Laurel Funds") for serving as an officer or Director or Trustee of
The Dreyfus/Laurel Funds. In addition, no officer or employee of the Man-
ager (or of any parent, subsidiary or affiliate thereof) serves as an of-
ficer or Director or Trustee of The Dreyfus/Laurel Funds. The Dreyfus/Lau-
rel Funds pays each Director or Trustee who is not an officer or employee
of Premier (or of any parent, subsidiary or affiliate thereof) or of the
Manager, $27,000 per annum, $1,000 for each Board meeting attended and
$750 for each Audit Committee meeting attended, and reimburses each Direc-
tor or Trustee for travel and out-of- pocket expenses.
3. DISTRIBUTION PLAN
Class A shares are subject to a distribution plan adopted pursuant to Rule
12b-1 of the 1940 Act. Under this distribution plan the Fund may pay annu-
ally up to 0.25% of the value of the average daily net assets attributable
to Class A shares to compensate Premier and Dreyfus Service Corporation,
an affiliate of the Manager, for shareholder servicing activities and Pre-
mier for activities and expenses primarily intended to result in the sale
of Class A shares. Class B and Class C shares are subject to a Distribu-
tion Plan adopted pursuant to Rule 12b-1, pursuant to which the Fund pays
Premier for distributing the Fund's Class B and C shares at an aggregate
annual rate of 0.50% of the value of the average daily net assets of Class
B and C. Class B and Class C shares are also subject to a Service Plan
adopted pursuant to Rule 12b-1, pursuant to which the Fund pays Dreyfus
Service Corporation or Premier for providing certain services to the hold-
ers of Class B and C shares a fee at the annual rate of 0.25% of the value
of the average daily net assets of Class B and C. The Class R shares bear
no service or distribution fee. Prior to April 4, 1994, under a distribu-
tion plan, the Fund was authorized to spend up to 0.25% and 0.15%, respec-
tively, of its average daily net assets annually on distribution expenses
for the Retail Class and the Institutional Class which are now reclassi-
fied as Class A (formerly Investor Class) shares.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of
the Trustees and a majority of the Trustees who are not "interested per-
sons" of the Trust and who have no direct or indirect financial interest
in the operation of the Plan or in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of long-term U.S. government se-
curities for the year ended December 31, 1994 were $29,380,723 and
$31,700,918, respectively.
At December 31, 1994, aggregate gross unrealized appreciation for all se-
curities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an ex-
cess of tax cost over value were $15,499 and $815,177, respectively.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of ben-
eficial interest of each class in each separate series, without par value.
The Trust offers four classes of shares of the Fund.
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
December 31, 1994** December 31, 1993 December 31, 1993*
(RETAIL CLASS) (INSTITUTIONAL CLASS)
SHARES+ AMOUNT++ SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
CLASS A
SHARES:
Sold 671,131 $ 8,436,807 157,285 $ 2,059,475 874,584 $ 11,577,262
Issued as
reinvest-
ment of
dividends
and distri-
butions 83,300 1,029,275 39,912 526,165 51,600 683,184
Redeemed (983,069) (12,277,432) (344,242) (4,520,925) (858,820) (11,394,636)
Exchanged for
Institu-
tional
shares -- -- (981,142) (12,754,846) -- --
Issued in ex-
change for
Retail
shares -- -- -- -- 981,142 12,754,846
Net increase/
(decrease) (228,638) $ (2,811,350) (1,128,187) $(14,690,131) 1,048,506 $ 13,620,656
<FN>
* The Fund commenced selling Institutional Class shares on February 1,
1993. Any shares outstanding prior to February 1, 1993 were designated
Retail Class shares.
** Effective April 4, 1994, Retail shares and Institutional shares were
redesignated Investor shares. On October 17, 1994 Investor shares were
redesignated as Class A shares.
+ Number of shares includes 257,667 of subscriptions, 12,997 of reinvest-
ments and 292,971 of redemptions for the Institutional Class up to
April 4, 1994.
++ Amounts include $3,344,448 of subscriptions, $168,039 of reinvestments
and $3,798,430 of redemptions for the Institutional Class up to April
4, 1994.
</TABLE>
As of December 31, 1994, the Fund had issued 1.259 Class B shares, 1.259
Class C shares and 1.216 Class R shares in the amount of $14.97, $14.97
and $14.46, respectively.
6. LINE OF CREDIT
The Fund and several affiliated entities participate in a $20 million line
of credit provided by Bank of America (formerly Continental Bank N.A.)
under a Line of Credit Agreement (the "Agreement") dated March 31, 1992,
primarily for temporary or emergency purposes, including the meeting of
redemption requests that otherwise might require the untimely disposition
of securities. Under this Agreement, the Fund may borrow up to the amount
specified in its Borrowing Base Certificate. Interest is payable either at
the bank's Money Market Rate or the London Interbank Offered Rate (LIBOR)
plus .375% on an annualized basis. The Fund and the other affiliated enti-
ties are charged an aggregate commitment fee of $50,000 which is allocated
equally among each of the participants. The Agreement requires, among
other provisions, each participating fund to maintain a ratio of net as-
sets (not including funds borrowed pursuant to the Agreement) to aggregate
amount of indebtedness pursuant to the Agreement of no less than 4 to 1.
During the year ended December 31, 1994, the Fund did not borrow under the
Agreement.
7. CAPITAL LOSS CARRYFORWARD
At December 31, 1994, the Fund had available for Federal tax purposes and
unused capital carryforward of $174,952 to offset future net capital gains
expiring in 2002.
INDEPENDENT AUDITORS' REPORT
KPMG
The Board of Trustees and Shareholders
The Dreyfus/Laurel Funds Trust
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments of the Premier Limited Term Govern-
ment Securities Fund (formerly the Intermediate Term Government Securities
Fund) of The Dreyfus/Laurel Funds Trust (formerly The Boston Company Fund)
as of December 31, 1994, and the related statement of operations, state-
ment of changes in net assets and financial highlights for the year then
ended. These financial statements and financial highlights are the respon-
sibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on
our audit. The statement of changes in net assets for the year ended
December 31, 1993 and financial highlights for each of the years or peri-
ods in the seven- year period ended December 31, 1993 and for the period
from March 3, 1986 (commencement of operations) to December 31, 1986 were
audited by other auditors whose report thereon, dated February 14, 1994,
expressed an unqualified opinion on that statement and those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and fi-
nancial highlights are free of material misstatement. An audit also in-
cludes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirma-
tion of securities owned as of December 31, 1994, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Premier Limited Term Government Securities Fund of The Dreyfus/Lau-
rel Funds Trust as of December 31, 1994, the results of its operations,
the changes in its net assets and the financial highlights for the year
then ended, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 17, 1995
The Dreyfus/Laurel Funds Trust
Premier Managed Income Fund
February 17, 1995
1
................................................................................
<PAGE>
TABLE of CONTENTS
................................................................................
<TABLE>
<S> <C>
Shareholder Letter........................................ 1
Economic Review........................................... 3
Portfolio Overview........................................ 4
Performance Summary....................................... 5
Portfolio of Investments.................................. 7
Statement of Assets and Liabilities....................... 11
Statement of Operations................................... 12
Statement of Changes in Net Assets........................ 13
Financial Highlights...................................... 14
Notes to Financial Statements............................. 18
Independent Auditors' Report.............................. 26
Tax Information........................................... 27
</TABLE>
2
................................................................................
<PAGE>
ECONOMIC REVIEW
................................................................................
THE ECONOMY MARCHES ON/ECONOMIC STRENGTH CONTINUES
Following several years of stop-and-start recovery, the U.S. economy finally
established a steady pace of expansion early in 1994. Report after government
report brought confirming evidence. New orders for manufacturing, housing
starts and sales, and even consumer spending all went up. At the same time,
unemployment fell to its lowest level in nearly four years.
RISING INTEREST RATES DOMINATED THE MARKET
The robust economy raised the inflationary antennae of the Federal Reserve
Board. Determined to head off any price pressures that might be building along
with the economy's strength, the Fed raised short-term interest rates six
times between February and November, 1994. These moves represented a
definitive shift away from the Fed's previous "easy money" policy and ended a
nearly 5-year period of declining short-term rates.
The Fed acted in a preemptory fashion -- actual inflation had not yet
appeared, although the economy seemed to be growing a bit too rapidly for
comfort. Later in the year, producer prices did begin to rise. The Fed was
concerned that these price increases would eventually flow through to the
consumer level unless it raised interest rates again. Recoveries in foreign
markets pose yet another challenge for the Fed, since their growth creates
demand for U.S. goods and services which puts inflationary pressure on our
economy.
BOND PRICES DECLINED
Financial markets, especially the bond market, had trouble adjusting to higher
interest rates. In line with the Fed's actions, other interest rates rose and
prices of lower yielding bonds fell in order to bring their yields in line
with those of comparable new issues. Investors had been enjoying exceptional
returns during the past two years of declining rates as the bond market had
continued to rally. This new rising environment dealt investor confidence a
heavy blow, especially since people did not know when rates would level off
and some stability would return to the market. Many investors sold off their
bond holdings. The U.S. mortgage securities market was particularly hard hit,
as were bond markets in many developing countries. High yield bond prices held
up best, because the values of these issues are tied more closely to the
economy than to changes in interest rates.
RATES MAY CONTINUE TO RISE
In assessing the outlook for the bond market, we evaluate four main factors:
the state of the business cycle, prospects for inflation, the direction of
foreign interest rates, and the policy of the Federal Reserve Board.
Presently, three of these factors suggest the possibility
3
................................................................................
<PAGE>
ECONOMIC REVIEW (continued)
................................................................................
of higher interest rates ahead. The business cycle, or economy, remains strong
and this puts pressure on rates. Foreign interest rates are rising, another
pressure on U.S. rates. And the Fed is now pursuing a tighter monetary policy,
emphasizing its willingness to raise rates to stop inflation. The lone
positive for stabilizing rates is inflation itself. Inflation is still low
and, although it may rise somewhat during 1995 as higher producer prices flow
through to the consumer level, it should remain low in relation to prevailing
interest rates. In sum, we believe that the trend seems to be toward higher
interest rates, although a slowing economy or other developments could
certainly alter this outlook.
PORTFOLIO OVERVIEW
................................................................................
In a market environment many analysts have called the most difficult in thirty
years, the Fund turned in performance in line with market averages. The Fund's
Class A shares posted a total return of (9.41)%* and Class R shares posted a
total return of (4.88)% for the twelve months ended December 31, 1994.
The Fund has maintained a defensive posture throughout the period. At the
start of the year, we shortened the average maturity of the portfolio to help
preserve principal value in the face of rising interest rates. In seeking high
income, we invested almost 30% of the portfolio in high yield issues which
benefitted from the strengthening economy and performed relatively well
throughout the fiscal year. The Fund suffered some setbacks from the decline
in foreign markets, particularly in its Mexican holdings, and from the
flattening yield curve which hurt the performance of its substantial
intermediate-term securities position.
In the months ahead, we expect to continue building on the Fund's yield
advantage by emphasizing corporate and mortgage-backed securities. By
purchasing some mortgage-backed securities with shorter maturities, we are
attempting to diminish the interest-rate sensitivity of these holdings while
continuing to provide the Fund with a solid income stream.
* Reflects a maximum front-end sales load of 4.5%.
4
................................................................................
<PAGE>
PERFORMANCE SUMMARY
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
CHANGE IN VALUE OF $10,000 INVESTED FROM JANUARY 1, 1985 - DECEMBER 31, 1994 +
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in Premier Managed Income
Fund Class A shares on December 31, 1984 through December 31, 1994 as compared
with the growth of a $10,000 investment in Lehman Brothers Aggregate Bond Index.
The plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Growth of $10,000
Investment in the
Growth of $10,000 Lehman Brothers
Invested in Class A shares Aggregate Bond
Month Ended of the Fund Index
<S> <C> <C>
12/84 $ 9,550 $10,000
3/85 $ 9,777 $10,223
6/85 $10,640 $11,096
9/85 $11,004 $11,333
12/85 $11,635 $12,211
3/86 $12,251 $13,160
6/86 $12,548 $13,318
9/86 $12,527 $13,634
12/86 $12,809 $14,079
3/87 $13,404 $14,311
6/87 $13,351 $14,056
9/87 $13,158 $13,672
12/87 $13,572 $14,466
3/88 $14,184 $15,011
6/88 $14,335 $15,187
9/88 $14,648 $15,490
12/88 $14,936 $15,607
3/89 $15,108 $15,785
6/89 $15,589 $17,042
9/89 $15,803 $17,235
12/89 $15,766 $17,874
3/90 $15,652 $17,731
6/90 $16,076 $18,377
9/90 $16,028 $18,534
12/90 $16,459 $19,472
3/91 $16,936 $20,014
6/91 $17,405 $20,341
9/91 $18,343 $21,497
12/91 $19,262 $22,587
3/92 $19,398 $22,299
6/92 $20,162 $23,200
9/92 $20,949 $24,197
12/92 $20,951 $24,260
3/93 $21,965 $25,264
6/93 $22,737 $25,935
9/93 $23,619 $26,611
12/93 $23,997 $26,625
3/94 $23,347 $25,860
6/94 $22,652 $25,594
9/94 $23,072 $25,751
12/94 $22,764 $25,848
</TABLE>
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<CAPTION>
(FORMERLY RETAIL CLASS SHARES)
<S> <C> <C>
WITH WITHOUT
SALES SALES
CHARGE CHARGE
--------------------------------------------------------------------------------
Year Ended 12/31/94 (9.41)% (5.14)%
-------------------------------------------------------------------
Five Years Ended 12/31/94 8.57% 9.07%
-------------------------------------------------------------------
Ten Years Ended 12/31/94 6.64% 7.62%
-------------------------------------------------------------------
<FN>
+ HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN CLASS A SHARES (FORMERLY
RETAIL CLASS SHARES) AT JANUARY 1, 1985 ASSUMING DEDUCTION OF A MAXIMUM 4.50%
SALES CHARGE AT THE TIME OF INVESTMENT AND REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AT NET ASSET VALUE THROUGH DECEMBER 31, 1994.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS COMPOSED OF THE LEHMAN GOVERNMENT/
CORPORATE INDEX AND THE MORTGAGE-BACKED SECURITIES INDEX AND INCLUDES TREASURY
ISSUES, AGENCY ISSUES, CORPORATE BOND ISSUES AND MORTGAGE-BACKED SECURITIES.
INDEX INFORMATION IS AVAILABLE AT MONTH-END ONLY; THEREFORE, THE CLOSEST
MONTH-END TO INCEPTION DATE OF THE FUND HAS BEEN USED.
THIS PERIOD WAS ONE IN WHICH BOND PRICES FLUCTUATED AND THE RESULTS SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF DIVIDEND INCOME OR CAPITAL GAIN OR LOSS
WHICH MAY BE REALIZED FROM AN INVESTMENT IN THE FUND TODAY. NO ADJUSTMENT HAS
BEEN MADE FOR A SHAREHOLDER'S TAX LIABILITY ON DIVIDENDS OR CAPITAL GAINS.
FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING FEE WAIVERS AND/OR
EXPENSE REIMBURSEMENTS, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF
THE PROSPECTUS AND ELSEWHERE IN THE REPORT.
NOTE: ALL FIGURES CITED HERE REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES UPON REDEMPTION MAY BE WORTH MORE OR
LESS THAN ORIGINAL COST.
</TABLE>
5
................................................................................
<PAGE>
PERFORMANCE SUMMARY (continued)
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
CHANGE IN VALUE OF $10,000 INVESTED FROM FEBRUARY 1, 1993 - DECEMBER 31, 1994 +
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in Premier Managed Income
Fund Class R shares on February 1, 1993 through December 31, 1994 as compared
with the growth of a $10,000 investment in Lehman Brothers Aggregate Bond Index.
The plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Growth of $10,000
Investment in the
Growth of $10,000 Lehman Brother
Invested in Class R shares Aggregate Bond
Month Ended of the Fund Index
<S> <C> <C>
1/93 -- $10,000
2/01/93 $10,000 --
3/93 $10,281 $10,218
6/93 $10,651 $10,489
9/93 $11,073 $10,762
12/93 $11,259 $10,768
3/94 $10,963 $10,459
6/94 $10,643 $10,351
9/94 $10,848 $10,415
12/94 $10,709 $10,454
</TABLE>
AVERAGE ANNUAL TOTAL RETURN -- CLASS R SHARES
<TABLE>
<CAPTION>
(FORMERLY INVESTMENT CLASS)
<S> <C>
-------------------------------------------------------------------
Year Ended 12/31/94 (4.88)%
-------------------------------------------------------------------
Inception (2/1/93) through 12/31/94 7.09%
-------------------------------------------------------------------
<FN>
+ HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN CLASS R SHARES (FORMERLY
INVESTMENT CLASS) AT INCEPTION (FEBRUARY 1, 1993) AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS AT NET ASSET VALUE THROUGH DECEMBER 31, 1994.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS COMPOSED OF THE LEHMAN GOVERNMENT/
CORPORATE INDEX AND THE MORTGAGE-BACKED SECURITIES INDEX AND INCLUDES TREASURY
ISSUES, AGENCY ISSUES, CORPORATE BOND ISSUES AND MORTGAGE-BACKED SECURITIES.
INDEX INFORMATION IS AVAILABLE AT MONTH-END ONLY; THEREFORE, THE CLOSEST
MONTH-END TO INCEPTION DATE OF THE FUND HAS BEEN USED.
THIS PERIOD WAS ONE IN WHICH BOND PRICES FLUCTUATED AND THE RESULTS SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF DIVIDEND INCOME OR CAPITAL GAIN OR LOSS
WHICH MAY BE REALIZED FROM AN INVESTMENT IN THE FUND TODAY. NO ADJUSTMENT HAS
BEEN MADE FOR A SHAREHOLDER'S TAX LIABILITY ON DIVIDENDS OR CAPITAL GAINS.
FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING FEE WAIVERS AND/OR
EXPENSE REIMBURSEMENTS, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF
THE PROSPECTUS AND ELSEWHERE IN THE REPORT.
NOTE: ALL FIGURES CITED HERE REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES UPON REDEMPTION MAY BE WORTH MORE OR
LESS THAN ORIGINAL COST.
</TABLE>
6
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
DOMESTIC CORPORATE OBLIGATIONS -- 27.5%
INDUSTRIAL -- 6.6%
<C> <S> <C> <C> <C>
$1,650,000 ADT Operations Inc. Sr. Note 8.250% 08/01/00 $ 1,518,000
960,000 Kroger Company 9.875 08/01/02 951,600
473,000 Lear Seating Corporation Sub. Note 8.250 02/01/02 417,423
1,000,000 Owens Illinois Inc. Sr. Deb. 11.000 12/01/03 1,038,750
1,100,000 Penn Traffic Sr. Note 8.625 12/15/03 958,375
1,000,000 Stone Container Corporation 10.750 10/01/02 1,002,500
------------
5,886,648
------------
BANKING AND FINANCE -- 5.1%
600,000 Midland Bank, Sub. Notes 8.625 12/15/04 596,250
1,000,000 MNC Financial Inc., Sub. Capital
Note 9.375 05/01/97 1,023,750
570,000 Paine Webber Group Inc. 6.250 06/15/98 525,113
1,375,000 Paine Webber Group Inc. 6.310 07/22/99 1,234,063
225,000 Paine Webber Group Inc. 7.750 09/01/02 205,031
1,000,000 Smith Barney Holdings Inc. 7.875 10/01/99 966,250
------------
4,550,457
------------
OIL, GAS AND COAL -- 3.9%
2,000,000 Consolidation Coal Company++ 8.300 03/06/02 2,037,500
1,440,000 Moran Energy International 8.000 11/01/95 1,386,000
------------
3,423,500
------------
TECHNOLOGY -- 3.1%
1,860,000 Jones Intercable Inc. 11.500 07/15/04 1,927,425
810,000 Paging Network Inc., Sr. Sub. Note 11.750 05/15/02 818,100
------------
2,745,525
------------
TRANSPORTATION -- 2.4%
1,250,000 American President Companies
Limited 7.125 11/15/03 1,084,375
1,100,000 Overseas Shipholding Group Note 8.000 12/01/03 1,087,625
------------
2,172,000
------------
COMPUTER LEASING -- 2.3%
2,000,000 Comdisco Inc., Note 8.950 05/15/95 2,010,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 7
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
DOMESTIC CORPORATE OBLIGATIONS -- (continued)
UTILITIES -- 1.6%
<C> <S> <C> <C> <C>
$ 500,000 First Paulo Verde Funding
Corporation, Leased Security
Obligation, Series 1986A 10.300% 01/15/14 $ 471,250
500,000 First Paulo Verde Funding
Corporation, Series 1986A 10.150 01/15/16 471,250
500,000 Nynex Capital Funding Company 8.100 11/01/99 494,375
------------
1,436,875
------------
MEDIA -- 1.3%
3,000,000 Turner Boradcasting Systems Inc.++ ZERO 02/13/07 1,192,500
COUPON
------------
INSURANCE -- 1.2%
1,200,000 Kemper Corporation Note 6.875 09/15/03 1,077,000
------------
TOTAL DOMESTIC CORPORATE OBLIGATIONS
(Cost $25,157,055) 24,494,505
------------
FOREIGN CORPORATE OBLIGATIONS -- 8.1%
430,000 Carter Holt Harvey Limited Sr. Note 8.875 12/01/04 433,763
950,000 Cemex S.A. 8.875 06/10/98 817,000
730,000 Domtar Inc., Sr. Note 11.750 03/15/99 748,250
2,600,000 Fideicomiso Petacalco++ 8.125 12/15/03 1,898,000
1,450,000 lnternational Semi-Tech, Sr. Note+ ZERO 08/15/03 652,500
COUPON
1,400,000 Petroliam Nasional Berhad++ 6.875 07/01/03 1,258,250
1,450,000 Swire Pacific Limited, Note++ 8.500 09/29/04 1,442,750
------------
TOTAL FOREIGN CORPORATE OBLIGATIONS
(Cost $8,343,661) 7,250,513
------------
FOREIGN GOVERNMENT & AGENCY OBLIGATIONS -- 7.5%
2,000,000 Banco Nacional De Orbas 6.875 10/01/98 1,750,000
1,820,000 Bank China Note 6.750 03/15/99 1,708,525
3,500,000 Republic of Argentina, Bond 8.375 12/20/03 2,537,500
685,000 Republic of Colombia, Notes 8.750 10/06/99 649,038
------------
TOTAL FOREIGN GOVERNMENT & AGENCY OBLIGATIONS
(Cost $7,937,272) 6,645,063
------------
CONVERTIBLE BONDS -- 3.4%
7,000,000 Freeport McMoran Inc., Deb. Conv. ZERO 08/05/06 2,493,750
COUPON
850,000 Pacific Concord Financial, Conv.++ 4.750 12/10/98 580,125
------------
TOTAL CONVERTIBLE BONDS (Cost $3,391,948 ) 3,073,875
------------
</TABLE>
8 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
MORTGAGE-BACKED SECURITIES -- 30.6%
FEDERAL NATIONAL MORTGAGE ASSOCIATION-(FNMA) -- 21.4%
<C> <S> <C> <C> <C>
$6,229,000 FNMA 15 Year TBA 7.500% 02/01/09 $ 5,950,642
6,506,000 FNMA 15 Year TBA 8.000 01/01/10 6,361,648
1,121,325 FNMA 93-97 Guaranteed
Remic (I/O) 2.780(1) 05/25/23 396,668
490,624 FNMA 93-222 Guaranteed Remic (P/O) 0.000(2) 01/25/22 370,421
2,000,000 FNMA 92-12 Guaranteed Remic (I/O) 5.351(3) 01/25/22 1,202,500
22,264 FNMA 92-G20 Guaranteed
Remic (I/O) 437.875(4) 04/25/22 203,711
2,268,820 FNMA 92-204 Guaranteed Remic (I/O) 3.281(5) 10/25/22 138,965
735,517 FNMA 93-182 Guaranteed Remic (I/O) 2.830(6) 09/25/23 258,350
4,208,855 FNMA 8.500 12/01/24 4,140,461
51,073 FNMA 14.750 08/01/12 56,184
------------
19,079,550
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-(GNMA) -- 9.1%
4,920,000 GNMA 7.000 12/15/24 4,424,900
3,763,800 GNMA 8.500 12/15/24 3,703,814
------------
8,128,714
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION-(FHLMC) -- 0.1%
97,753 FHLMC 6.500 04/01/09 89,922
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $28,862,279) 27,298,186
------------
ASSET-BACKED SECURITIES -- 5.0%
900,000 Advanta Credit Card Master 6.405 10/01/01 897,480
1,065,000 Discover Card Master 6.538 10/16/04 1,064,499
1,385,000 MBNA Master Credit Card 6.275 03/15/01 1,376,829
1,187,720 Equa Credit Corporation Home Equity
Loan 5.150 09/15/08 1,105,293
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,528,909) 4,444,101
------------
U.S. TREASURY OBLIGATIONS -- 13.4%
U.S. TREASURY BILLS -- 10.5%
9,495,000 U.S. Treasury Bills 5.424+++ 02/09/95 9,396,226
------------
U.S. TREASURY NOTES -- 2.9%
1,000,000 U.S. Treasury Notes 3.875 04/30/95 992,760
1,000,000 U.S. Treasury Notes 5.125 03/31/96 972,370
50,000 U.S. Treasury Notes 5.125 03/31/98 46,197
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 9
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
U.S. TREASURY NOTES -- (CONTINUED)
<C> <S> <C> <C> <C>
$ 35,000 U.S. Treasury Notes 5.500% 04/15/00 $ 31,563
200,000 U.S. Treasury Notes 7.500 01/31/96 200,468
300,000 U.S. Treasury Notes 8.000 05/15/01 302,469
------------
2,545,827
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $11,963,413) 11,942,053
------------
<CAPTION>
SHARES
<C> <S> <C> <C> <C>
CONVERTIBLE PREFERRED STOCKS -- 2.8%
70,000 Freeport-McMoran Copper & Gold, Conv. Pfd. $5.00 1,452,500
20,000 Newmont Mining Depository Shares Representing 1 Share++ 1,050,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,165,000) 2,502,500
------------
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C> <C> <C>
COMMERCIAL PAPER -- 5.6% (Cost $5,000,000)
$5,000,000 General Electric Capital
Corporation 5.800 01/03/95 5,000,000
------------
REPURCHASE AGREEMENT -- 9.7% (Cost $8,672,000)
Agreement with Morgan Stanley & Company dated 12/30/94
bearing 5.600% to be repurchased at $8,677,396 on
01/03/95, collateralized by $9,450,000 U.S. Treasury
Bond, 7.125% due 02/15/23 8,672,000
8,672,000
------------
TOTAL INVESTMENTS
(Cost $107,021,537*) 113.7% 101,322,796
OTHER ASSETS AND LIABILITIES (NET) (13.7) (12,187,384)
------ ------------
NET ASSETS 100.0% $ 89,135,412
------
------
------------
------------
---------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
+ NON-INTEREST BEARING UNTIL 08/15/00, 11.500% DUE 08/15/03.
++ SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS.
+++ ANNUALIZED YIELD (UNAUDITED).
(1) CURRENT YIELD: 11.000% (UNAUDITED)
(2) CURRENT YIELD: 7.250% (UNAUDITED)
(3) CURRENT YIELD: 10.500% (UNAUDITED)
(4) CURRENT YIELD: 20.000% (UNAUDITED)
(5) CURRENT YIELD: 12.000% (UNAUDITED)
(6) CURRENT YIELD: 10.500% (UNAUDITED)
I/O INTEREST ONLY SECURITY.
P/O PRINCIPAL ONLY SECURITY.
</TABLE>
10 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of ASSETS and LIABILITIES
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value (Cost $107,021,537) (Note 1)
See accompanying schedule $ 101,322,796
Cash 2,041
Interest receivable 888,210
Receivable for investment securities sold 278,583
Receivable for Fund shares sold 30,694
-------------
TOTAL ASSETS 102,522,324
-------------
LIABILITIES:
Payable for investment securities purchased $ 12,685,477
Payable for Fund shares redeemed 477,470
Dividends payable 102,998
Investment management fee payable (Note 2) 96,842
Accrued Trustees' fees and expenses (Note 2) 8,090
Distribution fee payable (Note 3) 2,178
Accrued expenses and other payables 13,857
------------
TOTAL LIABILITIES 13,386,912
-------------
NET ASSETS $ 89,135,412
-------------
-------------
NET ASSETS consist of:
Distributions in excess of net investment income $ (34,274)
Accumulated net realized loss on investments sold (6,814,864)
Unrealized depreciation of investments (5,698,741)
Paid-in capital 101,683,291
-------------
TOTAL NET ASSETS $ 89,135,412
-------------
-------------
NET ASSET VALUE:
CLASS A SHARES:
Net asset value and redemption price per share
($79,547,869 DIVIDED BY 7,857,534 shares of beneficial interest
outstanding) $10.12
------
------
Maximum offering price per share ($10.12 DIVIDED BY .955)
(based on sales charge of 4.5% of the offering price at December
31,1994) $10.60
------
------
CLASS B SHARES:
Net asset value and offering price per share+
($14.89 DIVIDED BY 1.472 shares of beneficial interest
outstanding) $10.12
------
------
CLASS C SHARES:
Net asset value and offering price per share+
($14.89 DIVIDED BY 1.472 shares of beneficial interest
outstanding) $10.12
------
------
CLASS R SHARES:
Net asset value, offering and redemption price per share
($9,587,513 DIVIDED BY 947,069 shares of beneficial interest
outstanding) $10.12
------
------
<FN>
+ REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY APPLICABLE
CONTINGENT DEFERRED SALES CHARGE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 11
................................................................................
<PAGE>
STATEMENT of OPERATIONS
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $41,889) $ 6,872,891
Dividends 244,184
-------------
TOTAL INVESTMENT INCOME 7,117,075
EXPENSES:
Investment management fee (Note 2) $ 487,690
Distribution fee (Note 3) 180,162
Investment advisory fee (Note 2) 155,295
Transfer agent fees (Note 2) 41,972
Trustees' fees and expenses (Note 2) 13,430
Custodian fees (Note 2) 9,757
Legal and audit fees 9,222
Other 17,852
Fees waived and expenses reimbursed by investment adviser
(Note 2) (12,421)
---------
TOTAL EXPENSES 902,959
-------------
NET INVESTMENT INCOME 6,214,116
-------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized loss on:
Securities transactions (3,952,929)
Foreign currencies transactions (3,617)
-------------
Net realized loss on investments sold during the year (3,956,546)
-------------
Net change in unrealized appreciation/(depreciation)
of:
Securities (7,397,005)
Foreign currencies and net other assets 5,360
-------------
Net unrealized depreciation of investments during the
year (7,391,645)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (11,348,191)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (5,134,075)
-------------
-------------
</TABLE>
12 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
<TABLE>
<CAPTION>
YEAR
ENDED YEAR ENDED
12/31/94 12/31/93
<S> <C> <C>
Net investment income $ 6,214,116 $ 6,452,736
Net realized gain/(loss) on investments sold and foreign currency
transactions during the year (3,956,546) 5,292,379
Net unrealized appreciation/(depreciation) on investments and foreign
currency holdings during the year (7,391,645) 1,549,905
------------ -------------
Net increase/(decrease) in net assets resulting from operations (5,134,075) 13,295,020
Distributions to shareholders from net investment income:
Class A (formerly Retail Class) (5,050,079) (3,849,182)
Institutional Class (444,891) (1,680,498)
Class R (formerly Investment Class) (817,994) (646,861)
Distributions to shareholders from net realized gain on investments:
Class A (formerly Retail Class) -- (2,491,789)
Institutional Class -- (1,359,345)
Class R (formerly Investment Class) -- (589,476)
Distributions to shareholders in excess of net realized gain on
investments:
Class A (formerly Retail Class) -- (1,867,962)
Institutional Class -- (806,383)
Class R (formerly Investment Class) -- (298,992)
Net increase/(decrease) in net assets from Fund share transactions (Note
5):
Class A (formerly Retail Class) 3,098,460 (40,569,594)
Institutional Class -- 28,853,134
Class B 15 --
Class C 15 --
Class R (formerly Investment Class) (315,127) 11,604,502
------------ -------------
Net decrease in net assets (8,663,676) (407,426)
NET ASSETS:
Beginning of year 97,799,088 98,206,514
------------ -------------
End of year (including distributions in excess of net investment income of
$34,274 and $80,813, respectively) $ 89,135,412 $ 97,799,088
------------ -------------
------------ -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 13
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
PRIEMIER MANAGED INCOME FUND
Reference is made to pages 5-7 of the Fund's Prospectus dated
May 1, 1995.
SEE NOTES TO FINANCIAL STATEMENTS. 15
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/93*##
<S> <C>
---------------------------------------------------------------
Net asset value, beginning of period $ 11.62
-----------
Income from investment operations:
Net investment income# 0.73
Net realized and unrealized gain on investments 0.65
-----------
Total from investment operations 1.38
Less distributions:
Dividends from net investment income (0.69)
Distributions from net realized gains on
investments (0.60)
Distributions in excess of net realized gains on
investments (0.33)
-----------
Total Distributions: (1.62)
-----------
Net asset value, end of period $ 11.38
-----------
Total return+ 12.35%
-----------
-----------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $28,410
Ratio of operating expenses to average net
assets+++ 1.07%++
Ratio of net investment income to average net
assets 6.62%++
Portfolio turnover rate 333%
---------------------------------------------------------------
<FN>
* ON FEBRUARY 1 ,1993, THE FUND COMMENCED SELLING INSTITUTIONAL CLASS SHARES.
EFFECTIVE APRIL 4, 1994 THE RETAIL AND INSTITUTIONAL CLASSES WERE
RECLASSIFIED AS A SINGLE CLASS OF SHARES KNOWN AS INVESTOR SHARES. ON OCTOBER
17, 1994, INVESTOR SHARES WERE REDESIGNATED CLASS A SHARES.
+ TOTAL RETURN REPRESENTS AGGREGATE TOTAL RETURN FOR THE PERIOD INDICATED.
++ ANNUALIZED.
+++ WITHOUT THE VOLUNTARY 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 1.10%.
# NET INVESTMENT INCOME BEFORE VOLUNTARY WAIVER OF FEES AND/OR REIMBURSEMENT OF
EXPENSES BY THE INVESTMENT ADVISER FOR THE PERIOD ENDED DECEMBER 31, 1993 WAS
$0.73.
## PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY AVERAGE SHARE
METHOD, WHICH MORE APPROPRIATELY PRESENTS THE PER SHARE DATA FOR THIS PERIOD
SINCE THE USE OF THE UNDISTRIBUTED METHOD DID NOT ACCORD WITH RESULTS OF
OPERATIONS.
</TABLE>
16 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS. 17
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS
................................................................................
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds Trust (the "Trust") (formerly The Boston Company
Fund), The Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel Funds,
Inc. and The Dreyfus/Laurel Investment Series are all registered open-end
investment companies that are now part of The Dreyfus Family of Funds. The
Trust is an investment company which consists of four funds: Premier Limited
Term Government Securities Fund, Dreyfus Core Value Fund, Dreyfus Special
Growth Fund and Premier Managed Income Fund (the "Fund"). The Trust is a
"Massachusetts business trust" and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a diversified, open-end management investment company. On
April 4, 1994, the Retail and Institutional Classes of shares were
reclassified as a single class of shares known as the Investor Shares, and the
Investment Class shares were reclassified as the Trust Shares. On October 17,
1994 Investor and Trust Shares was redesignated as Class A and Class R shares,
respectively. Effective December 19, 1994 the Trust began offering two
additional classes of shares, Class B and Class C. Class A, Class B and Class
C shares are sold primarily to retail investors, through financial
intermediaries and bear a distribution fee. Class A shares are sold with a
front-end sales charge, while Class B and Class C shares may be subject to a
contingent deferred sales charge. Class R shares are sold 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 relationship at such institution, and bear no
distribution fee or sales charge. Each class of shares has identical rights
and privileges except with respect to the distribution fees and voting rights
on matters affecting a single class. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.
(A) PORTFOLIO VALUATION
Investments in securities which are traded on a national securities exchange
are valued at the last reported sales price or, in the absence of a recorded
sale, at the mean of the closing bid and asked prices. Over-the-counter
securities are valued at the mean of the closing bid and asked price at the
close of business each day. When market quotations for such securities are not
readily available, securities are valued at fair value, as determined in good
faith 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. Debt securities with maturities of 60
days or less from the valuation day are valued on the basis of amortized cost
which approximates market value. Foreign securities are generally valued at
the preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under
the direction of the Board of Trustees or its delegates.
18
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund takes possession, through its
custodian, of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding
period. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Fund's holding period. The value of the
collateral is at least equal at all times to the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is delayed
or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund's investment manager, acting under the supervision of the
Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate potential risks.
(C) FOREIGN CURRENCY
The books and records of the Fund are maintained in United States (U.S.)
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of
the period, and purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Unrealized gains and losses which result from changes in foreign currency
exchange rates have been included in the unrealized
appreciation/(depreciation) of investments and net other assets. Net realized
foreign currency gains and losses resulting from changes in exchange rates
include foreign currency gains and losses between trade date and settlement
date on investment securities transactions, foreign currency transactions and
the difference between the amounts of interest and dividends recorded on the
books of the Fund and the amount actually received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in
realized gains and losses on investment securities sold.
(D) EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of any class
of shares are prorated among the classes based upon the relative average daily
net assets of each class. Distribution expense is directly attributable to a
particular class of shares and is charged only to that class' operations.
(E) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Realized gains and
19
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
losses on sales of investments are determined on the basis of identified cost.
Investment income and realized and unrealized gains and losses are allocated
based upon relative daily net assets of each class of shares.
(F) DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income, of the Fund if any, are determined
on a class level, are declared each day the Fund is open for business and are
paid on the first business day of the month. The Fund distributes any net
realized capital gains on a Fund level annually. Distributions to shareholders
are recorded on the ex-dividend date. Additional distributions of net
investment income and capital gains for the Fund may be made at the discretion
of the Board of Trustees in order to avoid the 4% nondeductible Federal excise
tax. Income distributions and capital gain distributions on a Fund level are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments of income and gains on various investment securities
held by the Fund, timing differences and differing characterization of
distributions made by the Fund as a whole. Permanent differences incurred
during the Fund's fiscal year resulting from different book and tax accounting
for certain debt securities have been reclassified from income to gains. Also,
permanent differences incurred during the Fund's fiscal year resulting from
different book and tax accounts for foreign currency have been reclassified to
income at year-end.
(G) FEDERAL TAXES
It is the Fund's policy to qualify as a regulated investment company, if such
qualification is in the best interest of its shareholders, by complying with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and by distributing all of its taxable income to its
shareholders. Therefore, no Federal income tax provision is required.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES
AND OTHER RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the Trust's investment management agreement
with Mellon Bank, N.A. ("Mellon Bank") was transferred to The Dreyfus
Corporation (the "Manager"), a wholly-owned subsidiary of Mellon Bank. 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 Trust. The Manager also directs the investments of the
Fund in accordance with its investment objective policies and limitations. For
these services, the Fund is contractually obligated to pay the Manager a fee,
calculated daily and paid monthly, at the annual rate of 0.70% of the value of
the Fund's average daily net assets. Out of its fee, the Manager pays all of
the expenses of the Fund except brokerage fees, taxes, interest, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Trustees
(including counsel fees) and extraordinary
20
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
expenses. In addition, the Manager is required to reduce its fee in an amount
equal to the Fund's allocable portion of fees and expenses of the
non-interested Trustees (including counsel).
For the period from April 4, 1994 to October 16, 1994, Mellon Bank served as
the Trust's investment manager pursuant to the investment management agreement
described above. Prior to April 4, 1994, the Trust had an investment advisory
agreement under which the Fund paid The Boston Company Advisors Inc. ("Boston
Advisors"), a wholly-owned subsidiary of Mellon Bank, a monthly fee at the
annual rate of 0.60% of the value of its average daily net assets. For the
year ended December 31, 1994, Boston Advisors, as investment advisor, waived
fees and reimbursed expenses in the amounts of $7,023 and $5,398,
respectively.
Prior to April 4, 1994, the Trust had individual contracts, which contained
specific fee provisions, with Boston Safe Deposit and Trust Company, a
wholly-owned subsidiary of Mellon Bank, and The Shareholder Services Group,
Inc. to provide custody and transfer agent services, respectively, to the
Fund. Effective April 4, 1994, the payment of fees for custody, accounting and
transfer agent services are covered by the investment management agreement
described above.
Operating expenses directly attributable to a particular class of shares are
charged only to that class' operations. In addition to the distribution fees,
gross class specific operating expenses include transfer agent fees. For the
year ended December 31, 1994, Class A and Class R shares incurred transfer
agent fees of $40,951 and $1,021, respectively.
From April 4, 1994 to September 23, 1994, Frank Russell Investment Management
Company (the "Administrator") served as the Fund's administrator and provided,
pursuant to an administration agreement, various administrative and corporate
secretarial services to the Fund. For the period from April 4, 1994 to
September 23, 1994, Mellon Bank, as investment manager, paid the
Administrator's fee out of the management fee described above.
Prior to October 17, 1994, the Trust had a contract with Funds Distributor,
Inc. to serve as distributor of the Trust's shares. Effective as of October
17, 1994, Premier Mutual Fund Services, Inc. ("Premier") serves as the Trust's
distributor. Premier also serves as the Trust's sub-administrator and,
pursuant to a sub-administration agreement with the Manager, provides various
administrative and corporate secretarial services to the Trust.
No officer or employee of Premier (or of any parent, subsidiary or affiliate
thereof) receives any compensation from The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds or The
Dreyfus/Laurel Investment Series (collectively, "The Dreyfus/Laurel Funds")
for serving as an officer or Director/Trustee of The Dreyfus/Laurel Funds. In
addition, no officer or employee of the Manager (or of any parent, subsidiary
or affiliate thereof) serves as an officer or Director or Trustee of The
Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds pays each Director/ Trustee who
is not an officer or employee of Premier (or of any parent, subsidiary or
21
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
affiliate thereof or of the Manager), $27,000 per annum, $1,000 for each Board
meeting attended and $750 for each Audit Committee meeting attended, and
reimburses each Director or Trustee for travel and out-of-pocket expenses.
3. DISTRIBUTION PLAN
Class A shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 of the 1940 Act. Under this Distribution Plan, the Fund may pay annually
up to 0.25% of the value of the average daily net assets attributable to Class
A shares to compensate Premier and Dreyfus Service Corporation, an affiliate
of the Manager, for shareholder servicing activities and Premier for
activities and expenses primarily intended to result in the sale of Class A
shares. Class B and Class C shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1, pursuant to which the Fund pays Premier for
distributing the Fund's Class B and C shares at an aggregate annual rate of
0.75% of the value of the average daily net assets of Class B and C. Class B
and Class C shares are also subject to a Service Plan adopted pursuant to Rule
12b-1 pursuant to which the Fund pays Dreyfus Service Corporation or Premier
for the provision of certain services to the holders of Class B and C shares a
fee at the annual rate of 0.25% of the value of the average daily net assets
of Class B and C. Class R shares bear no distribution fee. Prior to April 4,
1994, under a distribution plan, the Fund was authorized to spend up to 0.25%
and 0.15%, respectively, of its average daily net assets annually on
distribution expenses for the Retail Class and the Institutional Class which
are now classified as Class A (formerly Investor Class) shares.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of the Trustees who are not "interested persons" of
the Trust and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities, excluding short-term
investments and U.S. government securities for the year ended December 31,
1994, were $47,898,186 and $60,600,209, respectively.
Cost of purchases and proceeds from sales of long-term U.S. government
securities for the year ended December 31, 1994 were $192,495,082 and
$195,497,933, respectively.
At December 31, 1994, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess
of tax cost over value were $242,849 and $5,941,590, respectively.
22
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of
beneficial interest of each class in each separate series, without par value.
The Trust offers four classes of shares of the Fund. On April 4, 1994, the
Retail and Institutional Classes of shares were combined and reclassified as a
single class of shares known as Investor Shares and the Investment Class was
reclassified as the Trust shares. On October 17, 1994 Investor and Trust
shares were redesignated as Class A and Class R shares, respectively, and the
Trust began offering two additional classes of shares, Class B and Class C, on
December 19, 1994.
-------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
YEAR ENDED DECEMBER 31, 1993* DECEMBER 31, 1993*
DECEMBER 31, 1994** (RETAIL CLASS) (INSTITUTIONAL CLASS)
SHARES+ AMOUNT++ SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
CLASS A SHARES:
Sold 4,868,476 $ 51,614,329 1,754,982 $ 20,659,176 2,352,191 $ 28,131,595
Issued as reinvestment of
dividends and distributions 421,059 4,468,073 607,958 7,046,149 311,810 3,614,721
Redeemed (5,028,074) (52,983,942) (2,373,003) (27,963,489) (2,743,133) (32,814,345)
Exchanged for Institutional
shares -- -- (2,574,971) (29,921,163) -- --
Exchanged for Investment
shares -- -- (894,171) (10,390,267) -- --
Issued in exchange for Retail
shares -- -- -- -- 2,574,971 29,921,163
---------- ------------ ----------- ------------- ----------- -------------
---------- ------------ ----------- ------------- ----------- -------------
Net increase/ (decrease) 261,461 $ 3,098,460 (3,479,205) $ (40,569,594) 2,495,839 $ 28,853,134
---------- ------------ ----------- ------------- ----------- -------------
---------- ------------ ----------- ------------- ----------- -------------
------------------------------------------------------------------------------------
</TABLE>
23
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED DECEMBER 31, 1993*
DECEMBER 31, 1994** (INVESTMENT CLASS)
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS R SHARES:
Sold 538,268 $ 5,912,410 379,242 $ 4,513,734
Issued as reinvestment of
dividends and distributions 46,123 489,170 96,990 1,123,017
Redeemed (633,398) (6,716,707) (374,327) (4,422,516)
Issued in exchange for Retail
shares -- -- 894,171 10,390,267
---------- ------------ ----------- -------------
---------- ------------ ----------- -------------
Net increase/ (decrease) (49,007) $ (315,127) 996,076 $ 11,604,502
---------- ------------ ----------- -------------
---------- ------------ ----------- -------------
------------------------------------------------------------------------------------
<FN>
* 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 AND THE
INVESTMENT CLASS WAS RECLASSIFIED AS TRUST SHARES. ON OCTOBER 17, 1994
INVESTOR AND TRUST SHARES WERE REDESIGNATED AS CLASS A AND CLASS R SHARES,
RESPECTIVELY.
+ NUMBER OF SHARES INCUDES 464,962 OF SUBSCRIPTIONS, 35,257 OF REINVESTMENTS
AND 524,902 OF REDEMPTIONS FOR THE INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
++ AMOUNTS INCLUDE $5,339,913 OF SUBSCRIPTIONS, $399,392 OF REINVESTMENTS AND
$6,015,971 OF REDEMPTIONS FOR THE INSTITUTIONAL CLASS UP TO APRIL 4, 1994.
AS OF DECEMBER 31, 1994 THE TRUST HAD ISSUED 1.472 CLASS B AND 1.472 CLASS C
SHARES IN THE AMOUNT OF $14.89 AND $14.89, RESPECTIVELY.
</TABLE>
6. FOREIGN SECURITIES
The Fund may purchase securities of foreign issuers. Investing in securities
of foreign companies and foreign governments involves special risks and
considerations not typically associated with investing in securities of U.S.
companies and the U.S. government. These risks include revaluation of
currencies and future adverse political and economic developments. Moreover,
securities of many foreign companies and foreign governments and their markets
may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
7. LINE OF CREDIT
The Fund and several affiliated entities participate in a $20 million line of
credit provided by Bank of America (formerly Continental Bank N.A.) under a
Line of Credit Agreement (the "Agreement") dated March 31, 1992, primarily for
temporary or emergency purposes, including the meeting of redemption requests
that otherwise might require the
24
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
untimely disposition of securities. Under this Agreement, the Fund may borrow
up to the amount specified in its Borrowing Base Certificate. Interest is
payable either at the bank's Money Market Rate or the London Interbank Offered
Rate (LIBOR) plus .375% on an annualized basis. The Fund and the other
affiliated entities are charged an aggregate commitment fee of $50,000, which
is allocated equally among each of the participants. The Agreement requires,
among other provisions, each participating fund to maintain a ratio of net
assets (not including funds borrowed pursuant to the Agreement) to aggregate
amount of indebtedness pursuant to the Agreement of no less than 4 to 1.
During the year ended December 31, 1994, the Fund did not borrow under the
Agreement.
8. CAPITAL LOSS CARRYFORWARD
At December 31, 1994 the Fund had available for Federal tax purposes an unused
capital loss carryforward of $6,470,191 to offset future net capital gains
expiring in 2002.
25
................................................................................
<PAGE>
INDEPENDENT AUDITORS' REPORT
................................................................................
[LOGO]
The Board of Trustees and Shareholders
The Dreyfus/Laurel Funds Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments of the Premier Managed Income Fund of
The Dreyfus/Laurel Funds Trust (formerly The Boston Company Fund) as of
December 31, 1994, and the related statement of operations, statement of
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended December 31, 1993 and
financial highlights for each of the years or periods in the nine-year period
ended December 31, 1993 were audited by other auditors whose report thereon,
dated February 14, 1994, expressed an unqualified opinion on that statement
and those financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1994, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Premier Managed Income Fund of The Dreyfus/Laurel Funds Trust as of December
31, 1994, the results of its operations, the changes in its net assets and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 17, 1995
26
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.
Included in Part B: The following financial
statements for the period ended December 31, 1995 are incorporated by
reference to the Registrant's Annual Report to Shareholders filed on March
3, 1995:
- 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.
(b) Exhibits:
1(a) Second Amended and Restated Agreement and
Declaration of Trust. Incorporated by reference
to Post-Effective Amendment No. 87.
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.
Incorporated by reference to Post-Effective
Amendment No. 93.
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
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 of counsel is incorporated by reference
to the Registration Statement and to Post-
Effective Amendment No. 93 filed on December 13,
1994. Consent of counsel is filed herewith.
11(a) Consent of KPMG Peat Marwick LLP. Filed
herewith.
11(b) Consent of Coopers & Lybrand LLP. 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.
18 Rule 18f-3 Plans each dated April 26, 1995.
Other Exhibits
--------------
(a) Powers of attorney of the Trustees and Officers dated
April 5, 1995 are incorporated by reference to Post-
Effective Amendment No. 94.
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
Dreyfus Core Value Fund as of March 31, 1995.
Number of Record Holders
Title of Class
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Investor Class R Class A Class B Class C
Class
Dreyfus Special Growth 7,466 22 - - -
Fund
Premier Limited Term - 1 1,199 6 2
Government Securities Fund
Premier Managed Income Fund - - 5,559 36 2
</TABLE>
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
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
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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
535 Madison Avenue
New York, New York 10022;
Director and member of the Executive Committee of
Avnet, Inc.**
Lawrence M. Greene Director:
Director Dreyfus America Fund
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*;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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.*;
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 None
Director
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Robert E. Riley Director:
President, Chief Dreyfus Service Corporation
Operating Officer
and Director
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of
the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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
LAWRENCE S. KASH Chairman, President and Chief Executive Officer:
Vice Chairman,
Distribution The Boston Advisers, Inc.
and a Director 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
PAUL H. SNYDER Director:
Vice President and
Chief Financial Pennsylvania Economy League
Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute
Philadelphia Chapter
Philadelphia, Pennsylvania;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
BARBARA E. CASEY President:
Vice President,
Retirement Services Dreyfus Retirement Services;
Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate
Communications
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Henry D. Gottman Executive Vice President
Vice President-Retal Dreyfus Service Corporation
Sales and Service Vice President:
Dreyfsu Precious Metals
ELIE M. GENADRY President:
Vice President,
Institutioanl Sales
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.)++;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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,
Mutual Fund Accounting
PHILIP L. TOIA Chairman of the Board and Vice President;
Vice Chairman,
Operations and Dreyfus Thrift & Commerce****;
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:
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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 Department of Parks and Recreation of the City of
Vice President, New York
Human Resources 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++;
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, and
Secretary Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
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.
++++ 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.
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.
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
*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.
(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.
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 27th day of April, 1995.
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 4/27/95
Marie E. Connolly
/s/Ruth Marie Adams*
_________________________ Trustee 4/27/95
Ruth Marie Adams
/s/Joseph S. DiMartino Trustee 4/27/95
_________________________
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Trustee 4/27/95
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Trustee 4/27/95
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Trustee 4/27/95
Stephen J. Lockwood
/s/Roslyn M. Watson*
________________________ Trustee 4/27/95
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Trustee 4/27/95
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Trustee 4/27/95
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Trustee 4/27/95
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Trustee 4/27/95
Robert D. McBride
/s/John L. Propst*
________________________ Trustee 4/27/95
John L. Propst
/s/John J. Sciullo*
________________________ Trustee 4/27/95
John J. Sciullo
*By: /s/Eric B. Fischman
--------------------
Eric B. Fischman
Attorney-in-Fact
April 27, 1995
The Dreyfus/Laurel Funds Trust
200 Park Avenue - 55th Floor
New York, New York 10166
Dear Sir or Madam:
In connection with the filing of Post-Effective Amendment No.
95 to the Registration Statement on Form N-1A (File No. 33-43846)
of The Dreyfus/Laurel Funds Trust which you are about to file with
the Securities and Exchange Commission, we hereby consent to the
reference to our firm as "Legal Counsel" in the Statements of
Additional Information incorporated by reference into the
Prospectuses.
Sincerely yours,
Thomas M. Leahey
Independent Auditors' Consent
To the Trustees and Shareholders of
The Dreyfus/Laurel Funds Trust:
We consent to the use of our reports dated February 17, 1995,
included herein and to the references to our firm under the
headings "Financial Highlights" and "Custodian, Transfer and
Dividend Disbursing Agent, Counsel and Independent Auditors" in the
Prospectuses and Statement of Additional Information filed with the
Securities and Exchange Commission in this Post-Effective Amendment
No. 95 to the Registration Statement under the Securities Act of
1933 and in this Amendment No. 36 to the Registration Statement
under the Investment Company Act of 1940.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
April 27, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Dreyfus/Laurel Funds Trust
We consent to the incorporation by reference in the Registration Statement
of The Dreyfus/Laurel Funds Trust of our reports dated February 14, 1994 on our
audits of the financial statements and financial statement highlights of the
Premier Limited Term Government Securities Fund (formerly the Laurel
Intermediate Term Government Securities Fund), the Premier Managed Income Fund
(formerly the Laurel Managed Income Fund) and the Dreyfus Special Growth Fund
(formerly the Laurel Special Growth Fund) of The Dreyfus/Laurel Funds Trust
(formerly The Laurel Funds Trust and previously The Boston Company Fund), which
reports are included in the Annual Reports to Shareholders for the year ended
December 31, 1993 which is incorporated by referenced in the Registration
Statement.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 27, 1995
THE DREYFUS FAMILY OF FUNDS
(Funds Included in Schedule A)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that the Board of an investment company
desiring to offer multiple classes of shares pursuant to said Rule adopt a
plan setting forth the differences among the classes with respect to
shareholder services, distribution arrangements, expense allocations and
any related conversion features or exchange privileges.
The Board, including a majority of the non-interested Board
members, of each of the investment companies, or series thereof, listed on
Schedule A attached hereto (each, a "Fund") which desires to offer
multiple classes has determined that the following plan is in the best
interests of each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into
Investor Class and Class R.
2. Differences in Availability: Investor shares shall be sold
primarily to retail investors by the Fund's Distributor and by banks,
securities brokers or dealers and other financial institutions that have
entered into a Selling Agreement with the Fund's Distributor.
Class R shares shall be sold primarily to bank trust departments
and other financial service providers acting on behalf of customers having
a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship.
3. Differences in Services: Other than shareholder services
provided under the Distribution Plan, the services offered to shareholders
of each Class shall be the same.
4. Differences in Distribution Arrangements: Investor shares
shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan for Investor shares 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 The Dreyfus Corporation ("Dreyfus"), for shareholder
servicing activities, and the Fund's Distributor for shareholder servicing
activities and for activities or expenses primarily intended to result in
the sale of Investor shares.
Class R shares shall not be subject to a Distribution Plan.
5. Expense Allocation. The following expenses shall be
allocated on a Class-by-Class basis: (a) fees under the Distribution
Plan; (b) printing and postage expenses payable by the Fund related to
preparing and distributing materials, such as proxies, to current
shareholders of a specific Class; and (c) litigation or other legal
expenses relating solely to a specific Class.
6. Conversion Features. There shall be no automatic
conversion feature for either the Investor Class or Class R.
7. Exchange Privileges. Investor shares shall be exchangeable
only for (a) Investor shares (however the same may be named) of other
funds managed or administered by Dreyfus; (b) Class A shares (however the
same may be named) of other funds managed or administered by Dreyfus which
are not subject to any contingent deferred sales charge; (c) shares of
funds managed or administered by Dreyfus which do not have separate share
classes; and (d) shares of certain other funds, as specified from time to
time.
Class R shares shall be exchangeable only for (a) Class R shares
(however the same may be named) of other funds managed or administered by
Dreyfus; (b) shares of funds managed or administered by Dreyfus which do
not have separate share classes; and (c) shares of certain other funds, as
specified from time to time.
Dated: April 26, 1995
SCHEDULE A
The Dreyfus/Laurel Funds, Inc. -
Dreyfus Disciplined Stock Fund
Dreyfus Disciplined Midcap Stock Fund
Dreyfus S&P 500 Stock Index Fund
Dreyfus Equity Income Fund
Dreyfus European Fund
Dreyfus Bond Market Index Fund
Dreyfus International Equity Allocation Fund
Dreyfus/Laurel Short-Term Government Securities
Fund
Dreyfus/Laurel Prime Money Market Fund
Dreyfus/Laurel U.S. Treasury Money Market Fund
Dreyfus/Laurel Tax-Exempt Money Market Fund
The Dreyfus/Laurel Funds Trust -
Dreyfus Special Growth Fund
The Dreyfus/Laurel Tax-Free Municipal Funds -
Dreyfus/Laurel Massachusetts Tax-Free Money Fund
Dreyfus/Laurel New York Tax-Free Money Fund
Dreyfus/Laurel California Tax-Free Money Fund
The Dreyfus/Laurel Investment Series -
Dreyfus/Laurel Short-Term Bond Fund
Dreyfus/Laurel Contrarian Fund
THE DREYFUS FAMILY OF FUNDS
(Premier Family of Funds - Equity Funds Included in Exhibit I)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that the Board of an investment company
desiring to offer multiple classes of shares pursuant to said Rule adopt a
plan setting forth the differences among the classes with respect to
shareholder services, distribution arrangements, expense allocations and
any related conversion features or exchange privileges.
The Board, including a majority of the non-interested Board
members, of each of the investment companies, or series thereof, listed on
Exhibit I attached hereto (each, a "Fund") which desires to offer multiple
classes has determined that the following plan is in the best interests of
each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class
A, Class B, Class C and Class R.
2. Differences in Availability: Class A shares, Class B
shares and Class C shares shall be available only to clients of banks,
brokers, dealers and other financial institutions, except that full-time
or part-time employees or directors of The Dreyfus Corporation ("Dreyfus")
or any of its affiliates or subsidiaries, Board members or a fund advised
by Dreyfus, including members of the Fund's Board, or the spouse or minor
child of any of the foregoing may purchase Class A shares directly through
the Distributor.
Class R shares shall be sold primarily to bank trust departments
and other financial service providers acting on behalf of customers having
a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship.
3. Differences in Services: Other than shareholder services
provided under the Distribution Plan for Class A shares and the Service
Plans for Class B and Class C shares, the services offered to shareholders
of each Class shall be substantially the same, except that Right of
Accumulation, Letter of Intent and Reinvestment Privilege shall be
applicable only to holders of Class A shares.
4. Differences in Distribution Arrangements: Class A shares
shall be offered with a front-end sales charge, as such term is defined in
Article III, Section 26(b), of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and a deferred sales charge (a
"CDSC"), as such term is defined in said Section 26(b), may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The amount of the
sales charge and the amount of and provisions relating to the CDSC
pertaining to the Class A shares are set forth on Schedule A hereto.
Class A shares shall be subject to a Distribution Plan adopted pursuant to
Rule 12b-1 under the 1940 Act. The Distribution Plan for Class A shares
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 Fund's Distributor for shareholder servicing
activities and for activities or expenses primarily intended to result in
the sale of Class A shares.
Class B shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC. The amount of and provisions relating to
the CDSC are set forth on Schedule B hereto. Class B shares shall be
subject to a Distribution Plan and Service Plan each adopted pursuant to
Rule 12b-1 under the 1940 Act. Under the Distribution Plan for Class B
shares, the Fund pays the Distributor for distributing the Fund's Class B
shares at an aggregate annual rate of .75 of 1% of the value of the
average daily net assets of Class B. Under the Service Plan for Class B
shares, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B shares a fee
at the annual rate of .25 of 1% of the value of the average daily net
assets of Class B.
Class C shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC. The amount of and provisions relating to
the CDSC are set forth on Schedule C hereto. Class C shares shall be
subject to a Distribution Plan and Service Plan each adopted pursuant to
Rule 12b-1 under the 1940 Act. Under the Distribution Plan for Class C
shares, the Fund pays the Distributor for distributing the Fund's Class C
shares at an aggregate annual rate of .75 of 1% of the value of the
average daily net assets of Class C. Under the Service Plan for Class C
shares, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class C shares a fee
at the annual rate of .25 of 1% of the value of the average daily net
assets of Class C.
Class R shares shall not be subject to a front-end sales charge,
CDSC, distribution plan or service plan.
5. Expense Allocation. The following expenses shall be
allocated on a Class-by-Class basis: (a) fees under the Distribution Plan
and Service Plan; (b) printing and postage expenses payable by the Fund
related to preparing and distributing materials, such as proxies, to
current shareholders of a specific Class; and (c) litigation or other
legal expenses relating solely to a specific Class.
6. Conversion Features. Class B shares shall automatically
convert to Class A shares after a specified period of time after the date
of purchase, based on the relative net asset value of each such Class
without the imposition of any sales charge, fee or other charge, as set
forth on Schedule D hereto. No other Class shall be subject to any
automatic conversion feature.
7. Exchange Privileges. Class A shares shall be exchangeable
only for (a) Class A shares (however the same may be named) of other funds
managed or administered by Dreyfus which, on purchases of $1 million or
more, are not subject to a front-end sales charge but which are subject to
a CDSC if shares are redeemed within two years of purchase; and (b) shares
of certain other funds, as specified from time to time.
Class B shares shall be exchangeable only for (a) Class B shares
(however the same may be named) of other funds managed or administered by
Dreyfus with the same CDSC structure as the Fund; and (b) shares of
certain other funds, as specified from time to time.
Class C shares shall be exchangeable only for (a) Class C shares
(however the same may be named) of other funds managed or administered by
Dreyfus with the same CDSC structure as the Fund; and (b) shares of
certain other funds, as specified from time to time.
Class R shares shall be exchangeable only for (a) Class R shares
(however the same may be named) of other funds managed or administered by
Dreyfus; (b) shares of funds managed or administered by Dreyfus which do
not have separate share classes; and (c) shares of certain other funds,as
specified from time to time.
Dated: April 26, 1995
EXHIBIT I
The Dreyfus/Laurel Funds, Inc. -
Premier Balanced Fund
Premier Small Company Stock Fund
The Dreyfus/Laurel Funds Trust -
Premier Managed Income Fund
SCHEDULE A
Front-End Sales Charge--Class A Shares--The public offering price for
Class A shares shall be the net asset value per share of that Class plus a
sales load as shown below:
Total Sales Load
____________________________
As a % of As a % of
offering net asset
price per value per
Amount of Transaction share share
_________ _________
Less than $50,000. . . . . . . . . 4.50 4.70
$50,000 to less than $100,000. . . 4.00 4.20
$100,000 to less than $250,000 . . 3.00 3.10
$250,000 to less than $500,000 . . 2.50 2.60
$500,000 to less than $1,000,000 . 2.00 2.00
$1,000,000 or more . . . . . . . . -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1% shall be
assessed at the time of redemption of Class A shares purchased without an
initial sales charge as part of an investment of at least $1,000,000 and
redeemed within two years after purchase. The terms contained in Schedule
C pertaining to the CDSC assessed on redemptions of Class B shares (other
than the amount of the CDSC and its time periods), including the
provisions for waiving the CDSC, shall be applicable to the Class A shares
subject to a CDSC. Letter of Intent and Right of Accumulation shall apply
to such purchases of Class A shares.
SCHEDULE B
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the
Fund's Distributor shall be imposed on any redemption of Class B shares
which reduces the current net asset value of such Class B shares to an
amount which is lower than the dollar amount of all payments by the
redeeming shareholder for the purchase of Class B shares of the Fund held
by such shareholder at the time of redemption. No CDSC shall 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 the shareholder's Class B shares above
the dollar amount of all payments for the purchase of Class B shares of
the Fund held by such shareholder at the time of redemption.
If the aggregate value of the 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 shall depend on the number of years from the time the shareholder
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 shall 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:
CDSC as a % of
Year Since Amount Invested
Purchase Payment or Redemption
Was Made Proceeds
- ---------------- _______________
First . . . . . . . . . . . . . . . . 4.00
Second. . . . . . . . . . . . . . . . 4.00
Third . . . . . . . . . . . . . . . . 3.00
Fourth. . . . . . . . . . . . . . . . 3.00
Fifth . . . . . . . . . . . . . . . . 2.00
Sixth . . . . . . . . . . . . . . . . 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible
rate. Therefore, it shall 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.
Waiver of CDSC--The CDSC shall 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 Internal Revenue Code of 1986, as amended (the
"Code"), of the shareholder, (b) redemptions 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 Fund's Distributor exceeds one million dollars, (c)
redemptions as a result of a combination of any investment company with
the Fund by merger, acquisition of assets or otherwise, and (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. Any Fund shares subject
to a CDSC which were purchased prior to the termination of such waiver
shall have the CDSC waived as provided in the Fund's prospectus at the
time of the purchase of such shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1.00% payable
to the Fund's Distributor shall be 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 shall be the method used in calculating the
CDSC for Class B shares. In addition, the provisions for waiving the CDSC
shall be those set forth for Class B shares.
SCHEDULE D
Conversion of Class B Shares--Class B shares shall automatically convert
to Class A shares on the first Fund business day of the month in which the
sixth anniversary of the date of purchase occurs (unless otherwise
specified by the Board), based on the relative net asset values for shares
of each such Class, and shall be subject to the Distribution Plan for
Class A shares but shall no longer be subject to the Distribution Plan and
Service Plan applicable to Class B shares. (Such conversion is subject to
suspension by the Board members if adverse tax consequences might result.)
At that time, Class B shares that have been acquired through the
reinvestment of dividends and distributions ("Dividend Shares") shall be
converted in the proportion that a shareholder's Class B shares (other
than Dividend Shares) converting to Class A shares bears to the total
Class B shares then held by the shareholder which were not acquired
through the reinvestment of dividends and distributions.
THE DREYFUS FAMILY OF FUNDS
(Premier Family of Funds -
Fixed-Income Funds Included in Exhibit I)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that the Board of an investment company
desiring to offer multiple classes of shares pursuant to said Rule adopt a
plan setting forth the differences among the classes with respect to
shareholder services, distribution arrangements, expense allocations and
any related conversion features or exchange privileges.
The Board, including a majority of the non-interested Board
members, of each of the investment companies, or series thereof, listed on
Exhibit I attached hereto (each, a "Fund") which desires to offer multiple
classes has determined that the following plan is in the best interests of
each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class
A, Class B, Class C and Class R.
2. Differences in Availability: Class A shares, Class B
shares and Class C shares shall be available only to clients of banks,
brokers, dealers and other financial institutions, except that full-time
or part-time employees or directors of The Dreyfus Corporation ("Dreyfus")
or any of its affiliates or subsidiaries, Board members or a fund advised
by Dreyfus, including members of the Fund's Board, or the spouse or minor
child of any of the foregoing may purchase Class A shares directly through
the Distributor.
Class R shares shall be sold primarily to bank trust departments
and other financial service providers acting on behalf of customers having
a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship.
3. Differences in Services: Other than shareholder services
provided under the Distribution Plan for Class A shares and the Service
Plans for Class B and Class C shares, the services offered to shareholders
of each Class shall be substantially the same, except that Right of
Accumulation, Letter of Intent and Reinvestment Privilege shall be
applicable only to holders of Class A shares.
4. Differences in Distribution Arrangements: Class A shares
shall be offered with a front-end sales charge, as such term is defined in
Article III, Section 26(b), of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and a deferred sales charge (a
"CDSC"), as such term is defined in said Section 26(b), may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The amount of the
sales charge and the amount of and provisions relating to the CDSC
pertaining to the Class A shares are set forth on Schedule A hereto.
Class A shares shall be subject to a Distribution Plan adopted pursuant to
Rule 12b-1 under the 1940 Act. The Distribution Plan for Class A shares
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 Fund's Distributor for shareholder servicing
activities and for activities or expenses primarily intended to result in
the sale of Class A shares.
Class B shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC. The amount of and provisions relating to
the CDSC are set forth on Schedule B hereto. Class B shares shall be
subject to a Distribution Plan and Service Plan each adopted pursuant to
Rule 12b-1 under the 1940 Act. Under the Distribution Plan for Class B
shares, the Fund pays the Distributor for distributing the Fund's Class B
shares at an aggregate annual rate of .50 of 1% of the value of the
average daily net assets of Class B. Under the Service Plan for Class B
shares, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B shares a fee
at the annual rate of .25 of 1% of the value of the average daily net
assets of Class B.
Class C shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC. The amount of and provisions relating to
the CDSC are set forth on Schedule C hereto. Class C shares shall be
subject to a Distribution Plan and Service Plan each adopted pursuant to
Rule 12b-1 under the 1940 Act. Under the Distribution Plan for Class C
shares, the Fund pays the Distributor for distributing the Fund's Class C
shares at an aggregate annual rate of .50 of 1% of the value of the
average daily net assets of Class C. Under the Service Plan for Class C
shares, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class C shares a fee
at the annual rate of .25 of 1% of the value of the average daily net
assets of Class C.
Class R shares shall not be subject to a front-end sales charge,
CDSC, distribution plan or service plan.
5. Expense Allocation. The following expenses shall be
allocated on a Class-by-Class basis: (a) fees under the Distribution Plan
and Service Plan; (b) printing and postage expenses payable by the Fund
related to preparing and distributing materials, such as proxies, to
current shareholders of a specific Class; and (c) litigation or other
legal expenses relating solely to a specific Class.
6. Conversion Features. Class B shares shall automatically
convert to Class A shares after a specified period of time after the date
of purchase, based on the relative net asset value of each such Class
without the imposition of any sales charge, fee or other charge, as set
forth on Schedule D hereto. No other Class shall be subject to any
automatic conversion feature.
7. Exchange Privileges. Class A shares shall be exchangeable
only for (a) Class A shares (however the same may be named) of other funds
managed or administered by Dreyfus which, on purchases of $1 million or
more, are not subject to a front-end sales charge but which are subject to
a CDSC of shares are redeemed within two years of purchase; and (b) shares
of certain other funds, as specified from time to time.
Class B shares shall be exchangeable only for (a) Class B shares
(however the same may be named) of other funds managed or administered by
Dreyfus with the same CDSC structure as the Fund; and (b) shares of
certain other funds, as specified from time to time.
Class C shares shall be exchangeable only for (a) Class C shares
(however the same may be named) of other funds managed or administered by
Dreyfus with the same CDSC structure as the Fund; and (b) shares of
certain other funds, as specified from time to time.
Class R shares shall be exchangeable only for (a) Class R shares
(however the same may be named) of other funds managed or administered by
Dreyfus; (b) shares of funds managed or administered by Dreyfus which do
not have separate share classes; and (c) shares of certain other funds, as
specified from time to time.
Dated: April 26, 1995
EXHIBIT I
The Dreyfus/Laurel Funds, Inc. -
Premier Limited Term Income Fund
The Dreyfus/Laurel Funds Trust -
Premier Limited Term Government Securities Fund
The Dreyfus/Laurel Tax-Free Municipal Funds -
Premier Limited Term Municipal Fund
Premier Limited Term California Municipal Fund
Premier Limited Term Massachusetts Municipal Fund
Premier Limited Term New York Municipal Fund
SCHEDULE A
Front-End Sales Charge--Class A Shares--The public offering price for
Class A shares shall be the net asset value per share of that Class plus a
sales load as shown below:
Total Sales Load
_____________________________
As a % of As a % of
offering net asset
price per value per
Amount of Transaction share share
_________ _________
Less than $100,000. . . . . . . . 3.00 3.10
$100,000 to less than $250,000. . 2.75 2.80
$250,000 to less than $500,000. . 2.25 2.30
$500,000 to less than $1,000,000. 2.00 2.00
$1,000,000 or more. . . . . . . . -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1% shall be
assessed at the time of redemption of Class A shares purchased without an
initial sales charge as part of an investment of at least $1,000,000 and
redeemed within two years after purchase. The terms contained in Schedule
C pertaining to the CDSC assessed on redemptions of Class B shares (other
than the amount of the CDSC and its time periods), including the
provisions for waiving the CDSC, shall be applicable to the Class A shares
subject to a CDSC. Letter of Intent and Right of Accumulation shall apply
to such purchases of Class A shares.
SCHEDULE B
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the
Fund's Distributor shall be imposed on any redemption of Class B shares
which reduces the current net asset value of such Class B shares to an
amount which is lower than the dollar amount of all payments by the
redeeming shareholder for the purchase of Class B shares of the Fund held
by such shareholder at the time of redemption. No CDSC shall 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 the shareholder's Class B shares above
the dollar amount of all payments for the purchase of Class B shares of
the Fund held by such shareholder at the time of redemption.
If the aggregate value of the 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 shall depend on the number of years from the time the shareholder
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 shall 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:
CDSC as a % of
Year Since Amount Invested
Purchase Payment or Redemption
Was Made Proceeds
________________ _______________
First. . . . . . . . . . . . . . . 3.00
Second . . . . . . . . . . . . . . 3.00
Third. . . . . . . . . . . . . . . 2.00
Fourth . . . . . . . . . . . . . . 2.00
Fifth. . . . . . . . . . . . . . . 1.00
Sixth. . . . . . . . . . . . . . . 0.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible
rate. Therefore, it shall 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 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.
Waiver of CDSC--The CDSC shall 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 Internal Revenue Code of 1986, as amended (the
"Code"), of the shareholder, (b) redemptions 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 Fund's Distributor exceeds one million dollars, (c)
redemptions as a result of a combination of any investment company with
the Fund by merger, acquisition of assets or otherwise, and (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. Any Fund shares subject
to a CDSC which were purchased prior to the termination of such waiver
shall have the CDSC waived as provided in the Fund's prospectus at the
time of the purchase of such shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class C Shares--A CDSC of .75% payable
to the Fund's Distributor shall be 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 shall be the method used in calculating the
CDSC for Class B shares. In addition, the provisions for waiving the CDSC
shall be those set forth for Class B shares.
SCHEDULE D
Conversion of Class B Shares--Class B shares shall automatically convert
to Class A shares on the first Fund business day of the month in which the
sixth anniversary of the date of purchase occurs (unless otherwise
specified by the Board), based on the relative net asset values for shares
of each such Class, and shall be subject to the Distribution Plan for
Class A shares but shall no longer be subject to the Distribution Plan and
Service Plan applicable to Class B shares. (Such conversion is subject to
suspension by the Board members if adverse tax consequences might result.)
At that time, Class B shares that have been acquired through the
reinvestment of dividends and distributions ("Dividend Shares") shall be
converted in the proportion that a shareholder's Class B shares (other
than Dividend Shares) converting to Class A shares bears to the total
Class B shares then held by the shareholder which were not acquired
through the reinvestment of dividends and distributions.
