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. 98 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 39
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)
__________________________________________________________________
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)
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, 1995
was filed with the Commission on February 29, 1996.
Dreyfus Core Value Fund
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 - Prospectus
- Dreyfus Core Value Fund - Institutional shares
- Dreyfus Core Value Fund - Investor and Class R
shares
- Dreyfus Special Growth Fund
- Premier Limited Term Government Securities Fund
- Premier Managed Income Fund
Part B - Statement of Additional Information
- Dreyfus Core Value Fund - Institutional, Investor
and Class R shares
- 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
--------
- -----------------------------------------------------------------------------
PROSPECTUS MAY 1, 1996
DREYFUS CORE VALUE FUND
- -----------------------------------------------------------------------------
DREYFUS CORE VALUE FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
CAPITAL APPRECIATION FUND," IS A SEPARATE, DIVERSIFIED PORTFOLIO OF THE
DREYFUS/LAUREL FUNDS TRUST, AN OPEN-END MANAGEMENT INVESTMENT COMPANY (THE
"COMPANY"), KNOWN AS A MUTUAL FUND. THE FUND SEEKS LONG-TERM GROWTH OF
CAPITAL, WITH CURRENT INCOME AS A SECONDARY OBJECTIVE, PRIMARILY THROUGH
EQUITY INVESTMENTS, SUCH AS COMMON STOCKS AND SECURITIES CONVERTIBLE INTO
COMMON STOCK.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. ("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. INVESTOR SHARES ARE SOLD PRIMARILY TO RETAIL INVESTORS BY THE
FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER
FINANCIAL INSTITUTIONS (INCLUDING MELLON BANK AND ITS AFFILIATES)
(COLLECTIVELY, "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.
SHARES OF THE FUND MAY BE PURCHASED OR REDEEMED 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.
THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 ("SAI"),
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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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 AN AFFILIATE OF
MELLON BANK 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................................. 4
Financial Highlights............................ 5
Description of the Fund......................... 7
Management of the Fund.......................... 11
How to Buy Fund Shares.......................... 13
Shareholder Services............................ 16
How to Redeem Fund Shares....................... 19
Distribution Plan .............................. 21
Dividends, Other Distributions and Taxes........ 22
Performance Information......................... 23
General Information............................. 24
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES: INVESTOR SHARES CLASS R SHARES INSTITUTIONAL SHARES
--------------- --------------- --------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases...... none none none
Maximum Sales Load Imposed on Reinvestments.. none none none
Deferred Sales Load.......................... none none none
Redemption Fee............................... none none none
Exchange Fee................................. none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee............................... 0.90% 0.90% 0.90%
12b-1 Fee1................................... 0.25% none 0.15%
Other Expenses............................... 0.00% 0.00% 0.00%
----- ------ -----
Total Fund Operating Expenses................ 1.15% 0.90% 1.05%
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 INSTITUTIONAL SHARES
Institutional Shares
--------------- -------------- --------------------
1 Year $ 12 $ 9 $ 11
3 Years $ 37 $ 29 $ 33
5 Years $ 63 $ 50 $ 58
10 Years $140 $111 $128
- --------------
1 See "Distribution Plan" for a description of the Fund's Distribution Plan
for the Investor shares.
</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. The information in the foregoing table does not
reflect any fee waivers or expense reimbursements that may be in effect.
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."
The Company understands that 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 disclose to its clients any compensation payable to
such Agent by the Distributor and any other compensation payable by the
clients for various services provided in connection with their accounts.
In addition to Investor shares and Class R shares, the Fund offers
Institutional shares to those shareholders who have held shares of a
predecessor class of the Fund since April 4, 1994. Institutional shares are
offered through a separate prospectus. Institutional shares are subject to a
12b-1 fee at an annual rate of up to 0.15% of average daily net assets.
Estimated total annual fund operating expenses for Institutional shares are
1.05% of average daily net assets.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor or Class R share
outstanding throughout each fiscal year or period and should be read in
conjunction with the financial statements and related notes that appear in
the Fund's Annual Report dated December 31, 1995 which is incorporated by
reference into the SAI. The financial statements included in the Fund's
Annual Report for the year ended December 31, 1995 have been audited by KPMG
Peat Marwick LLP, independent auditors, whose report appears in the Fund's
Annual Report. Further information about, and management's discussion of, the
Fund's performance is included in the Fund's Annual Report, which may be
obtained without charge by writing to the address, or calling the number set
forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS CORE VALUE FUND
For an Investor Share outstanding throughout each year.(1)
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 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> <C>
Net asset value,
beginning
of year......... $24.56 $27.80 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07 $32.40 $32.10
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Income from investment operations:
Net investment
income #.. 0.41 0.42 0.31 0.36 0.39 0.55 0.87 0.54 0.76 0.90
Net realized and unrealized
gain/(loss)
on investments.. 8.24 (0.29) 3.86 0.70 4.88 (4.23) 6.12 4.51 (0.41) 5.69
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Total from
investment
operations.. 8.65 0.13 4.17 1.06 5.27 (3.68) 6.99 5.05 0.35 6.59
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Less distributions:
Distributions from net
investment income... (0.45) (0.40) (0.30) (0.36) (0.50) (0.55) (0.55) (0.59) (1.32) (0.50)
Distributions from net realized
gains on investments. (2.63) (2.97) (1.53) (2.64) (0.57) (0.06) (7.60) (1.88) (5.36) (5.80)
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Total Distributions... (3.08) (3.37) (1.83) (3.00) (1.07) (0.61) (8.15) (2.47) (6.68) (6.30)
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Net asset value,
end of period.. $30.13 $24.56 $27.80 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07 $32.40
======= ====== ====== ======= ====== ======= ======= ======= ======= =======
Total Return+ ..... 35.56% 0.38% 16.51% 4.03% 22.87% (13.44)% 24.96% 19.54% 0.27% 22.48%
------- ------- ------ ------ ----- ------ ------ ------ ------ ------
Ratios to average net assets/
Supplemental Data:
Net assets, end
of year (000's).. $401,674 $317,868 $349,813 $423,286 $508,971 $474,998 $640,116 $542,510 $431,630 $452,863
Ratio of operating expenses
to average
net assets ++.. 1.13% 1.11% 1.15% 1.22% 1.20% 1.26% 1.23% 1.31% 0.95% 0.95%
Ratio of net investment income
to average
net assets.. 1.43% 1.47% 1.13% 1.33% 1.61% 1.96% 2.75% 2.14% 2.16% 2.65%
Decrease reflected in
above expense ratios
due to undertakings
by Dreyfus... 0.02% 0.01% 0.01% -- -- -- -- -- -- --
Portfolio turnover
rate.. 54% 73% 75% 66% 157% 180% 111% 24% 46% 37%
- -----------------
(1)On February 1, 1993, the Fund began offering Institutional Class shares.
Shares outstanding prior to February 1, 1993 were redesignated as Retail
Class shares. Effective April 4, 1994, the Retail shares were redesignated
as Investor Shares.
+ 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/or investment manager, the annualized ratio of
operating expenses to average net assets for the years ended December 31,
1994 and 1993 would have been 1.12% and 1.16%, respectively.
# Without the voluntary waiver of fees and/or reimbursement of expenses by
the investment adviser and/or investment manager, net investment income for
the years ended December 31, 1994 and 1993 would have been $0.42 and $0.31,
respectively.
## Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for this year because
the use of the undistributed method did not accord with results of operations.
### 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 5
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS CORE VALUE FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR PERIOD
ENDED ENDED
12/31/95 12/31/94*##
------- ---------
<S> <C> <C>
Net asset value, beginning of period $24.56 $28.45
------- ------
Income from investment operations:
Net investment income# 0.62 0.29
Net realized and unrealized gain/loss on investments 8.16 (0.83)
------- ------
Total from investment operations 8.78 (0.54)
------- ------
Less distributions:
Distributions from net investment income (0.53) (0.38)
Distributions from net realized gains on investments (2.63) (2.97)
------- ------
Total Distributions (3.16) (3.35)
------- ------
Net asset value, end of period $30.18 $24.56
======== =======
Total return + 36.05% (2.31)%###
------- ------
Ratios to average net assets / supplemental data:
Net Assets, end of period (in 000's) $185 $1,070
Ratio of operating expenses to average net assets++ 0.88% 0.86%**
Ratio of net investment income to average net assets 1.93% 1.72%**
Decrease reflected in above expense ratios
due to undertaking by Dreyfus 0.02% 0.02%
Portfolio turnover rate 54% 73%###
- --------------
* On August 4, 1994, the Fund commenced selling Trust shares. Effective
October 17, 1994, the Trust shares were redesignated as Class R shares.
** 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 manager, the ratio of expenses to
average net assets for the year ended December 31, 1994 would have been
0.88%.
# Net investment income before the voluntary waiver of fees by the
investment adviser for the year ended December 31, 1994 would have been
$0.29.
## 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.
### Not annualized.
</TABLE>
Page 6
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 sold primarily to retail
investors by the Fund's Distributor and by Agents that have entered into an
Agreement with the Fund's 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 fees paid by Investor shares will cause Investor shares to have a
higher expense ratio and pay lower dividends than Class R shares.
INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks long-term growth of
capital, with current income as a secondary objective, primarily through
equity investments, such as common stocks and securities convertible into
common stocks.
MANAGEMENT POLICIES
Securities are selected for the Fund based on a continuous study of
trends in industries and companies, earning power, growth features and other
investment criteria. Major emphasis is placed on industries and issuers that
are considered by Dreyfus to have particular possibilities for long-term
growth. In general, the Fund's investments are broadly diversified over a
number of industries and, as a matter of operating policy, the Fund will not
invest more than 25% of its total assets in any one industry.
Up to 20% of the Fund's total assets may be invested in foreign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in
fixed-income securities of companies that are close to entering, or already
in, reorganization proceedings. These obligations will likely be rated below
the four highest ratings of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Rating Service, a division of McGraw-Hill Companies, Inc. ("
S&P"). See "Certain Portfolio Securities_Low-Rated and Comparable Unrated
Securities." In addition, the Fund may write covered put and call options on
its portfolio securities, and purchase and write put and call options on
stock indexes. The Fund may also lend its portfolio securities. These
techniques are discussed below under "Investment Techniques."
The Fund may reduce the proportion of its investments in equity
securities and temporarily invest its assets in fixed-income securities and
in U.S. Government Securities and other high-grade, short-term money market
instruments, including repurchase agreements with respect to such
instruments, when, in the opinion of Dreyfus, a defensive posture is
warranted. To this extent, the Fund may not achieve its investment objective.
INVESTMENT TECHNIQUES
In connection with its investment objectives and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. From time to time, the Fund may lend portfolio
securities to brokers, dealers and other financial organizations. Such loans
will not exceed 331/3% of the Fund's total assets, taken at value. Loans of
portfolio securities by the Fund will be collateralized by cash, letters of
credit or securi-
Page 7
ties 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.
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 Company's Board of Trustees determines it to be in the best interest
of the Fund and its shareholders. In making that determination, the Company's
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.
COVERED OPTION WRITING. From time to time, the Fund may write covered
put and call options on portfolio securities and may purchase put and call
options on securities. The Fund could realize fees (referred to as
"premiums") for granting the rights evidenced by the options. However, in
return for the premium, the Fund forfeits the right to any appreciation in
the value of the underlying security while the option is outstanding. A put
option embodies the right of its purchaser to compel the writer of the option
to purchase from the option holder an underlying security at the specified
price at any time during the option period. In contrast, a call option
embodies the right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified price at any
time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may
suffer a loss equal to the difference between the price at which the Fund is
required to purchase the underlying security and its market value at the time
of the option exercise, less the premium received for writing the option.
Upon the exercise of a call option written by the Fund, the Fund may suffer a
loss equal to the excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or to
have the present right to acquire the underlying security for as long as it
remains obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account, cash,
U.S. Government Securities or other high grade debt obligations having a
value at least equal to the exercise price of the underlying securities or
(b) continue to own the equivalent number of puts of the same "series" (that
is, puts on the same underlying security having the same exercise prices and
expiration dates as those written by the Fund), or an equivalent number of
puts of the same "class" (that is, puts on the same underlying security) with
exercise prices greater than those it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
The Fund may engage in a closing purchase transaction to realize a
profit or limit a loss, to prevent an underlying security from being called
or put or, in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the security
prior to the outstanding option's expiration). To effect a closing purchase
transaction, the Fund would purchase, prior to the holder's exercise of an
option that the Fund has written, an option of the same series as that on
which the Fund desires to terminate its obligation. The obligation of the
Fund under an option that it has written would be terminated by a closing
purchase transaction, but the Fund would not be deemed to own an option as a
result of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to do
so. To facilitate closing purchase transactions,
Page 8
however, the Fund will ordinarily write options only if a secondary market for
the options exists on a national securities exchange or in the
over-the-counter market.
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, adverse 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 Company's 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 illiquid
ity to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-rated
securities") will likely have some quality and protective characteristics
that, in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay
interest and to repay principal in accordance with the terms of the
obligation. While the market values of low-rated securities tend to react
less to fluctuations in interest rate levels than the market values of
higher-rated securities, the market values of certain low-rated securities
tend to be
Page 9
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 are generally unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional expenses
to the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence of
limited markets for low-rated securities may diminish the Fund's ability to
obtain accurate market quotations for purposes of valuing such securities and
calculating its net asset value. Further information regarding security
ratings is contained in the SAI.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed
put and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price Index and the NYSE Composite Index.) Options on stock
indexes are similar to options on securities. However, because options on
stock indexes do not involve the delivery of an underlying security, the
option represents the holder's right to obtain from the writer in cash a
fixed multiple of the amount by which the exercise price exceeds (in the case
of a put) or is less than (in the case of a call) the closing value of the
underlying index on the exercise date.
The advisability of using stock index options to hedge against the
risk of market-wide movements will depend on the extent of diversification of
the Fund's stock instruments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed above.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objectives and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for long-term growth of capital and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio
turnover rate of 100% would occur, for example, if all the securities held by
the Fund were replaced once in a period of one year. A higher rate of
portfolio turnover involves correspondingly greater brokerage commissions and
other expenses that must be borne directly by the Fund and, thus, 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
Page 10
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. As a fundamental policy, the Fund
may not (i) borrow money in an amount exceeding 331/3% of the Fund's total
assets at the time of borrowing; (ii) make loans or lend securities in excess
of 331/3% of the Fund's total assets; (iii) purchase, with respect to 75% of
the Fund's total assets, securities of any one issuer representing more than
5% of the Fund's total assets (other than securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities) or more than 10% of
that issuer's outstanding voting securities; and (iv) invest more than 25% of
the value of the Fund's total assets in the securities of one or more issuers
conducting their principal activities in the same industry; provided that
there shall be no such limitation on investments in obligations of the U.S
Government, state and municipal governments and their political subdivisions
or investments in domestic banks, including U.S. branches of foreign banks
and foreign branches of U.S. banks. The SAI describes all of the Fund's
fundamental and non-fundamental restrictions.
The investment objectives, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objectives, 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 29, 1996, Dreyfus managed or administered
approximately $82 billion in assets for more than 1.7 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 one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As the Fund's investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objectives, policies and
restrictions.
The Fund is managed by a committee of portfolio managers of Dreyfus
and no person is primarily responsible for making recommendations to the
committee. This committee, which also comprises the Equity Policy Group of
The Boston Company Asset Management, Inc. ("TBCAM"), is responsible for the
management of over $6 billion in pension and institutional equity assets.
TBCAM is an indirect wholly-owned subsidiary of Mellon.
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.
Page 11
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 $233 billion in assets as of
December 31, 1995, including $81 billion in mutual fund assets. As of
December 31, 1995, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
more than $786 billion in assets, including approximately $60 billion in
mutual fund assets.
Under the Investment Management Agreement, the Fund is contractually
obligated to pay a fee computed daily, and paid monthly, at the annual rate
of .90% of the Fund's average daily net assets. Dreyfus pays all of the
Fund's expenses, except brokerage fees, taxes, interest, Rule 12b-1 fees (if
applicable) and extraordinary 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. For the fiscal year ended December 31,
1995, the Fund paid Dreyfus 0.88% of its average daily net assets in
investment management fees (net of fees waived).
For the fiscal year ended December 31, 1995, total operating expenses
(excluding Rule 12b-1 fees) (net of fees waived) of the Fund were 0.88% of
the average daily net assets of the Investor Class, the Institutional Class
and Class R, respectively.
In addition, Investor and Institutional shares may be subject to
certain distribution and shareholder servicing fees. See "Distribution Plan."
Dreyfus may pay the Fund's Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Distributor may use part or all of such payments to
pay Agents in respect of these services.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, administered or advised by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the SAI.
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 objectives, policie
s and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
DISTRIBUTOR. The Fund's distributor is Premier Mutual Fund Services,
Inc. 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 FDIHoldings, 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 Dreyfus Transfer, Inc. (the "Transfer Agent"), a
wholly-owned sub-
Page 12
sidiary of Dreyfus, located at 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 the 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 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-profit entities or state and local governments. Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
In addition to Investor shares and Class R shares, the Fund also
offers Institutional shares through a separate prospectus. Institutional
shares are not subject to a sales charge on purchases or on redemptions.
Institutional shares are subject to a Rule 12b-1 fee at an annual rate of up
to 0.15% of the Fund's average net assets attributable to Institutional
shares. Institutional shares are offered to those customers of certain
financial planners and investment advisers who held shares of a predecessor
class of the Fund on April 4, 1994. For more information concerning
Institutional shares, see the current prospectus for Institutional shares.
Stock certificates are issued only upon your written request. The
Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of 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.
Investor shares are also offered without regard to the minimum
initial investment requirements through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark, Dreyfus Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step Program. These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You should
be aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
Page 13
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amounts that may be contributed annually to
Retirement Plans. These limitations apply with respect to participants at the
plan level, but generally do not directly affect the amount of plan assets
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 Investor shares and Class R 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 the
telephone number 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 and Trust Company, together with
the applicable Class' DDA# as shown below, for purchase of Fund shares in
your name:
DDA# 043664 Dreyfus Core Value Fund/Class R shares;
DDA# 044113 Dreyfus Core Value Fund/Investor 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 andTrust Company with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS
"4440" Dreyfus Core Value Fund/Class R shares;
"4010" Dreyfus Core Value Fund/Investor shares.
The Distributor may pay dealers a fee of up to 0.5% 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
Page 14
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 PER SHARE ("NAV") -- An investment portfolio's NAV
refers to the worth of one share. The NAV for Investor shares and Class R
shares is computed by adding, with respect to such Class of shares, the value
of the Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by number of
shares of that Class outstanding. The valuation of assets for determining NAV
for the Fund may be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at a fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Trustees.
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 such close of business are effective on, and will receive
the price determined on, that day (except investments made by electronic
funds transfer, which are effective two business days after your call). Invest
ment, exchange and redemption requests received after such close of business
are effective on, and receive the share price determined on, the next
business day.
The public offering price of Investor shares and Class R shares, both
of which are offered on a continuous basis, is the NAV 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 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 TELETRANSFER purchase of Fund shares by telephoning 1-800-645-6561
or, if calling from overseas, 516-794-5452.
Page 15
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.
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 1-800-645-6561 or, if calling
from overseas, 516-794-5452. 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 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.
Page 16
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
and, therefore, an exchanging shareholder (other than a qualified Retirement
Plan) may realize a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS
R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however a sales load may be charged with respect to exchanges of
Investor shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder (other than a
tax-exempt Retirement Plan) may realize a taxable gain or loss. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and other distributions, if any, paid by the Fund in shares of
the same class of certain other funds in the Dreyfus Family of Funds of which
you are an investor. Shares of the other fund will be purchased at the
then-current NAVs; 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 other
distributions, if any, from the Fund to a designated bank account. Only an
account maintained
Page 17
at a domestic financial institution which is an ACH member may be so
designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these Privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these Privileges is effective three business days
following receipt. These Privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
Privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of 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.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Investor shares without
regard to the Fund's minimum initial investment requirements through Dreyfus-A
UTOMATIC Asset BuilderRegistration Mark, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Fund's
Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund
reserves the right to redeem your account if you have terminated your
participation in the Program and your account's net asset value is $500 or
less. See "How to Redeem Fund Shares." The Fund may modify or terminate this
Program at any time. Investors who wish to pur-
Page 18
chase Investor shares through Dreyfus Step Program in conjunction with a
Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs and IRA
"Rollover Accounts."
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.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL -- You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined net asset value as described below. If you hold
Fund shares of more than one Class, any request for redemption must specify
the Class of shares being redeemed. If you fail to specify the Class of
shares to be redeemed or if you own fewer shares of the Class than specified
to be redeemed, the redemption request may be delayed until the Transfer
Agent receives further instructions from you or your 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 net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL
Page 19
OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until
the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege or the 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 redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus
retirement plan accounts to the Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest financial center, please call the telephone
number listed under "General Information." Redemption requests must be signed
by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion
Program. For more information with respect to signature-guarantees, please
call the telephone number 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.
Page 20
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 1-800-645-6561 or, if
calling from overseas, 516-794-5452. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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 any
time 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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 and Institutional shares are subject to a
Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the 1940
Act ("Rule 12b-1"). The Investor shares and Institutional shares of the Fund
bear some of the cost of selling those shares under the Plan. The Plan allows
the Fund to spend annually up to 0.25% of its average daily net assets
attributable to Investor shares, and 0.15% of its average daily net assets
attributable to Institutional shares, to compensate 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 and
Institutional 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 Agreements with the Distributor. Under the
Agreements, the Agents are obligated to provide distrib-
Page 21
ution related services with regard to the Fund and/or shareholder services
to the Agent's clients that own Investor shares or Institutional shares of
the Fund.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and 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.
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, four times yearly and distributes net realized capital 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 capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by each Class are calculated at the same time and in the same
manner and are in the same amount, except that the expenses attributable
solely to a particular Class will be borne exclusively by that Class.
Investor shares will receive lower per share dividends than Class R shares
because of the higher expenses borne by the Investor shares. See "Expense
Summary."
Investors other than qualified Retirement Plans may choose whether to
receive dividends and other distributions in cash or to receive dividends in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares;
dividends and other distributions paid to qualified Retirement Plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
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 and realized gains 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 (collectively, "dividend distributions"), paid by the Fund are
taxable to U.S. shareholders, including certain non-qualified Retirement
Plans, as ordinary income to the extent of the Fund; earnings and profits,
whether received in cash or reinvested in additional Fund shares. Distribution
s from the Fund's net capital gain (the excess of net long-term capital gain
over short-term capital loss) are taxable to such shareholders as long-term
capital gains, regardless of how long the shareholders have held their Fund
shares and whether such distributions are received in cash or reinvested in
additional 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.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the non-resident foreign investor claims the benefit of a lower rate
specified in a tax treaty. Capital gain distributions paid by the Fund to a
non-resident foreign investor, as well as the proceeds of any redemptions by
such an investor, regardless of the extent to which gain or loss may be
realized, generally are not 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.
Page 22
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 capital gain
distributions, if any, paid during the year.
Dividends and other distributions 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 distributions 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 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. If a distributee of an "eligible rollover distribution" from a
qualified Retirement Plan does not elect to have the eligible rollover
distribution paid directly from the Plan to an eligible retirement plan in a
"direct rollover," the eligible rollover distribution is subject to a 20%
income tax withholding.
With respect to individual investors and certain non-qualified
Retirement Plans, Federal laws and regulations generally require the Fund to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of
dividends, capital gain distributions and any redemption proceeds, regardless
of the extent to which gain or loss may be realized, paid to such a
shareholder if the 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 that the shareholder is being subject to
backup withholding as a result of a failure to properly report taxable
dividend or interest income on a Federal income tax return. Furthermore, the
IRS may notify the Fund to institute backup withholding if the IRS determines
that shareholder's TIN is incorrect or that 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 distribution and
shareholder servicing fees. As a result, at any given time, the performance
of the Investor shares should be expected to be lower than that of Class R
shares. 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
Page 23
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 per
share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return.
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 of such class 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 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 is a portfolio of the Company. The
Fund's shares are classified into three Classes_ Institutional shares,
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
Page 24
a separate class. Only holders of Investor shares and Institutional 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 voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York, 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 25
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Page 26
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Page 27
DREYFUS
Core Value
Fund --
Investor shares
Class R shares
Prospectus
(LION LOGO)
Copy Rights 1996 Dreyfus Service Corporation
312/712p050196
Registration Mark
- ----------------------------------------------------------------------------
PROSPECTUS MAY 1, 1996
DREYFUS CORE VALUE FUND
- ----------------------------------------------------------------------------
DREYFUS CORE VALUE FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
CAPITAL APPRECIATION FUND," IS A SEPARATE, DIVERSIFIED PORTFOLIO OF THE
DREYFUS/LAUREL FUNDS TRUST, AN OPEN-END MANAGEMENT INVESTMENT COMPANY (THE
"COMPANY"), KNOWN AS A MUTUAL FUND. THE FUND SEEKS LONG-TERM GROWTH OF
CAPITAL, WITH CURRENT INCOME AS A SECONDARY OBJECTIVE, PRIMARILY THROUGH
EQUITY INVESTMENTS, SUCH AS COMMON STOCKS AN SECURITIES CONVERTIBLE INTO
COMMON STOCK.
BY THIS PROSPECTUS, THE FUND IS OFFERING INSTITUTIONAL SHARES.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INSTITUTIONAL
SHARES OF THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING
FEES.
SHARES OF THE FUND MAY BE PURCHASED OR REDEEMED 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.
THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 ("SAI"),
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 GLENNCURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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 AN AFFILIATE OF
MELLON BANK, N.A. ("MELLON BANK") 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.
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Expense Summary....................................... 3
Financial Highlights.................................. 4
Description of the Fund............................... 5
Management of the Fund................................ 9
How to Buy Fund Shares................................ 10
Shareholder Services.................................. 12
How to Redeem Fund Shares............................. 15
Distribution Plan..................................... 18
Dividends, Other Distributions and Taxes.............. 18
Performance Information............................... 20
General Information................................... 21
- ----------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------
[This Page Intentionally Left Blank]
Page 2
<TABLE>
<CAPTION>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES: INVESTOR SHARES CLASS R SHARES INSTITUTIONAL SHARES
----------------- --------------- ----------------------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases........ none none none
Maximum Sales Load Imposed on Reinvestments.... none none none
Deferred Sales Load............................ none none none
Redemption Fee................................. none none none
Exchange Fee................................... none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee................................. .90% .90% 0.90%
12b-1 Fee1..................................... .25% none 0.15%
Other Expenses................................. 0.00% 0.00% 0.00%
_____ _____ ______
Total Fund Operating Expenses................ 1.15% .90% 1.05%
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 INSTITUTIONAL SHARES
----------------- ---------------- ----------------------
1 Year $ 12 $ 9 $ 11
3 Years $ 37 $ 29 $ 33
5 Years $ 63 $ 50 $ 58
10 Years $140 $111 $128
- ---------
1 See "Distribution Plan" for a description of the Fund's Distribution Plan
for the Institutional shares.
</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 Institutional 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. The information in the foregoing
table does not reflect any fee waivers or expense reimbursements that may be
in effect. Certain Agents (as described below) may charge their clients
direct fees for effecting transactions in Fund shares; such fees are not
reflected in the foregoing table. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan."
The Company understands that banks, securities brokers or dealers and
other financial institutions (including Mellon Bank and its affiliates)
(collectively "Agents") may charge fees to their clients who are owners of
the Fund's Institutional shares for various services provided in connection
with a client's account. These fees would be in addition to any amounts
received by an Agent under its Selling Agreement (the "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 clients for
various services provided in connection with their accounts.
Institutional shares are offered to holders of shares of a
predecessor class of the Fund as of April 4, 1994. The Fund also offers
Investor shares and Class R shares. Investor shares are primarily sold to
retail investors by the Distributor and by Agents that have entered into an
Agreement with the Distributor. Class R shares are sold primarily to bank
trust departments and other financial service providers acting on behalf of
customers having a qualified trust or investment account or relationship at su
ch 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 and Class R shares are offered pursuant to a separate Prospectus.
Page 3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Institutional share outstanding
throughout each fiscal year or period and should be read in conjunction with
the financial statements and related notes that appear in the Fund's Annual
Report dated December 31, 1995 which is incorporated by reference in the SAI.
The financial statements included in the Fund's Annual Report for the year
ended December 31, 1995 have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report appears in the Fund's Annual Report.
Further information about, and management's discussion of, the Fund's
performance is included in the Fund's Annual Report, which may be obtained
without charge by writing to the address, or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS CORE VALUE FUND
FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94## 12/31/93+++
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $24.56 $27.80 $25.96
------- -------- ------
Income from investment operations:
Net investment income# 0.47 0.47 0.32
Net realized and unrealized gain/loss on investments 8.20 (0.31) 3.38
------- -------- ------
Total from investment operations 8.67 0.16 3.70
------- -------- ------
Less distributions:
Distributions from net investment income (0.48) (0.43) (0.33)
Distributions from net realized gains on investments (2.63) (2.97) (1.53)
------- -------- ------
Total distributions (3.11) (3.40) (1.86)
------- -------- ------
Net asset value, end of period $30.12 $24.56 $27.80
====== ====== =======
Total return + 35.60% 0.49% 14.38%
====== ====== =======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $75,607 $59,435 $79,656
Ratio of operating expenses to average net assets++ 1.03% 1.02% 1.04%**
Ratio of net investment income to average net assets 1.53% 1.57% 1.24%**
Decrease reflected in above expense ratios due to
undertakings by Dreyfus 0.02% 0.01% --
Portfolio turnover rate 54% 73% 75%
- -----------------------------------------------------------------------------------------------------------------
* The Fund commenced selling Institutional shares on February 1, 1993.
** 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/or investment manager, the annualized ratio of
operating expenses to average net assets for the year ended December 31, 1994
and for the period ended December 31, 1993 would have been 1.03% and 1.04%,
respectively.
+++ Per share amounts have been calculated using the monthly average
share method, which more appropriately presents the per share data for this
year because the use of the undistributed method did not accord with results
of operations.
# Net investment income per share before the voluntary reimbursement
expenses and/or waiver of fees by the investment adviser, for the year ended
December 31, 1994 and for the period ended December 31, 1993 would have been
$0.46 and $0.31, 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
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks long-term growth of
capital, with current income as a secondary objective, primarily through
equity investments, such as common stocks and stocks convertible into common
stocks.
MANAGEMENT POLICIES
Securities are selected for the Fund based on a continuous study of
trends in industries and companies, earning power, growth features and other
investment criteria. Major emphasis is placed on industries and issuers that
are considered by Dreyfus to have particular possibilities for long-term
growth. In general, the Fund's investments are broadly diversified over a
number of industries and, as a matter of operating policy, the Fund will not
invest more than 25% of its total assets in any one industry.
Up to 20% of the Fund's total net assets may be invested in foreign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in
fixed-income securities of companies that are close to entering, or already
in, reorganization proceedings. These obligations will likely be rated below
the four highest ratings of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Rating Service, a division of McGraw-Hill Companies, Inc.
("S&P"). See "Certain Portfolio Securities -- Low-Rated and Comparable
Unrated Securities". In addition, the Fund may write covered put and call
options on its portfolio securities, and purchase and write put and call
options on stock indexes to hedge its portfolio. The Fund may also lend its
portfolio securities. These techniques are discussed in more detail below
under "Investment Techniques."
The Fund may reduce the proportion of its investments in equity
securities and temporarily invest its assets in fixed-income securities and
in U.S. Government Securities and other high-grade, short-term money market
instruments, including repurchase agreements with respect to such
instruments, when, in the opinion of Dreyfus, a defensive posture is
warranted. To this extent, the Fund may not achieve its investment objective.
INVESTMENT TECHNIQUES
In connection with its investment objectives and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. From time to time, the Fund may lend portfolio
securities to brokers, dealers and other financial organizations. Such loans
will not exceed 331/3% of the Fund's total assets, taken at value. Loans of
portfolio securities by the Fund will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities.
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 determines it to be in the best interest
of the Fund and its shareholders. In making that determination, the Company's
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 Company's 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.
Page 5
COVERED OPTION WRITING. From time to time, the Fund may write covered
put and call options on portfolio securities and may purchase put and call
options on securities. The Fund could realize fees (referred to as
"premiums") for granting the rights evidenced by the options. However, in
return for the premium, the Fund forfeits the right to any appreciation in
the value of the underlying security while the option is outstanding. A put
option embodies the right of its purchaser to compel the writer of the option
to purchase from the option holder an underlying security at the specified
price at any time during the option period. In contrast, a call option
embodies the right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified price at any
time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may
suffer a loss equal to the difference between the price at which the Fund is
required to purchase the underlying security and its market value at the time
of the option exercise, less the premium received for writing the option.
Upon the exercise of a call option written by the Fund, the Fund may suffer a
loss equal to the excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or
have the present right to acquire the underlying security for as long as it
remains obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account, cash,
U.S. Government Securities or other high-grade debt obligations having a
value at least equal to the exercise price of the underlying securities or
(b) continue to own an equivalent number of puts of the same "series" (that
is, puts on the same underlying security having the same exercise prices and
expiration dates as those written by the Fund), or an equivalent number of
puts of the same "class" (that is, puts on the same underlying security) with
exercise prices greater 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 or limit a loss, to prevent an underlying security from being called
or put or, in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the security
prior to the outstanding option's expiration). To effect a closing purchase
transaction, the Fund would purchase, prior to the holder's exercise of an
option that the Fund has written, an option of the same series as that on
which the Fund desires to terminate its obligation. The obligation of the
Fund under an option that it has written would be terminated by a closing
purchase transaction, but the Fund would not be deemed to own an option as
the result of the transaction. There can be no assurance that the Fund will
be able to effect closing purchase transactions at a time when it wishes to
do so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists on
a national securities exchange or in the over-the-counter market.
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, adverse 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
Page 6
use or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes
that would reduce the yield on such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that are readily marketable are not deemed illiquid for purposes
of this limitation (irrespective of any legal or contractual restrictions on
resale). The Fund may invest in commercial obligations issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended ("Section 4(2)
paper"). The Fund may also purchase securities that are not registered under
the Securities Act of 1933, as amended, but which can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Section 4(2) paper is restricted as to disposition under the
federal securities laws, and generally is sold to institutional investors
(such as the Fund) that agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold to other qualified institutional buyers. Determinations as to
the liquidity of investments in Section 4(2) paper and Rule 144A securities
will be made by the Company's Board of Trustees. The Board will consider
availability of reliable price information and other relevant information in
making such determinations. If a particular investment in Section 4(2) paper
or Rule 144A Securities is not determined to be liquid, that investment will
be included within the percentage limitation on investment in illiquid
securities. The ability to sell Rule 144A securities to qualified
institutional buyers is a recent development and it is not possible to
predict how this market will mature. Investing in Rule 144A securities could
have the effect of increasing the level of Fund illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low
rated" securities) will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are
outweighed by large uncertainties or major risk exposures to adverse
conditions; and are predominantly speculative with respect to the issuer's
capacity to pay interest and 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.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed
put and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price
Page 7
Index and the New York Stock Exchange Composite Index.) Options on stock
indexes are similar to options on securities. However, because options on
stock indexes do not involve the delivery of an underlying security, the
option represents the holder's right to obtain from the writer
in cash a fixed multiple of the amount by which the exercise price exceeds
(in the case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the exercise date.
The advisability of using stock index options to hedge against the
risk of market-wide movements will depend on the extent of diversification of
the Fund's stock investments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreements
transactions in pursuit of its investment objective. A repurchase agreement
involves the purchase of a security by the Fund and a simultaneous agreement
(generally with a bank or broker-dealer) to repurchase that security from the
Fund at a specified price and date or upon demand. This technique offers a
method of earning income on idle cash. A risk associated with repurchase
agreements is the failure of the seller to repurchase the securities as
agreed, which may cause the Fund to suffer a loss if the market value of such
securities declines before they can be liquidated on the open market.
Repurchase agreements with a duration of more than seven days are considered
illiquid securities and are subject to the limit on illiquid securities
stated above.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with its investment objectives and policies and permissible under
the Investment Company Act of 1940, as amended (the "1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for capital appreciation and not for short-term
trading profits, in the past the portfolio turnover rate of the Fund has
exceeded 100% and may exceed 100% in the future. A portfolio turnover rate of
100% would occur, for example, if all the securities held by the Fund were
replaced once in a period of one year. In past years the Fund's rate of
portfolio turnover exceeded that of certain other mutual funds with the same
investment objective. A higher rate of portfolio turnover (100% or greater)
involves correspondingly greater brokerage commissions and other expenses
which must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result in
the realization of larger amounts of short-term capital gains which, when
distributed to the Fund's shareholders, are taxable to them as ordinary
income. 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.
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. As a fundamental policy, the Fund
may not (i) borrow money in an amount exceeding 331/3% of the Fund's total
assets at the time of borrowing; (ii) make loans or lend securities in excess
of 331/3% of the Fund's total assets; (iii) purchase, with respect to 75% of
the Fund's total assets, securities of any one issuer representing more than
5% of the Fund's total assets (other than securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities) or more than 10% of
that issuer's outstanding voting securities; and (iv) invest more than 25% of
the value of the Fund's total assets in the securities of one or more issuers
conducting their principal activities in the same industry; provided that
there shall be no such limitation on investments in
Page 8
obligations of the U.S Government, state and municipal governments and their
political subdivisions or investments in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks. The SAI
describes all of the Fund's fundamental and non-fundamental restrictions.
The investment objectives, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objectives, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's shares in certain states,
the Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of the
Fund, it may consider terminating sales of its shares in the states involved.
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 29, 1996, Dreyfus managed or administered
approximately $82 billion in assets for more than 1.7 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 one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As the Fund's investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objectives, policies and
restrictions.
The Fund is managed by a committee of portfolio managers of Dreyfus
and no person is primarily responsible for making recommendations to the
committee. This committee, which also comprises the Equity Policy Group of
The Boston Company Asset Management, Inc. ("TBCAM"), is responsible for the
management of over $6 billion in pension and institutional equity assets.
TBCAM is an indirect wholly-owned subsidiary of Mellon.
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 $233 billion in assets as of
December 31, 1995, including $76 billion in mutual fund assets. As of
December 31, 1995, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
more than $786 billion in assets, including approximately $60 billion in
mutual fund assets.
Under the Investment Management Agreement, the Fund is contractually
obligated to pay a fee computed daily, and paid monthly, at the annual rate
of .90% of the Fund's average daily net assets. Dreyfus pays all of the
Fund's expenses, except brokerage fees, taxes, interest, Rule 12b-1 fees (if
applicable) and extraordinary 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,
Page 9
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, 1995, the Fund paid Dreyfus 0.88% of
its average daily net assets in investment management fees (net of fees
waived).
For the fiscal year ended December 31, 1995, total operating expenses
(excluding Rule 12b-1 fees) (net of fees waived) of the Fund were 0.88% of
the average daily net assets of the Investor Class, the Institutional Class
and Class R, respectively. For more information concerning Investor or Class
R shares, see the current prospectus for Investor or Class R shares.
In addition, Institutional and Investor shares may be subject to
certain distribution and shareholder servicing fees. See "Distribution Plan."
Dreyfus may pay the Fund's Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Distributor may use part or all of such payments to
pay Agents in respect of these services.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, advised or administered by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the SAI.
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 objectives,
policies and restrictions, the Fund may invest in securities of companies
with which Mellon Bank has a lending relationship.
DISTRIBUTOR. The Fund's distributor is Premier Mutual Fund Services,
Inc. 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 Dreyfus Transfer, Inc. (the "Transfer Agent"), a
wholly-owned subsidiary of Dreyfus, located at 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 the
Fund.
HOW TO BUY FUND SHARES
GENERAL -- Institutional shares are offered to those customers of
certain financial planners and investment advisers who held shares of a
predecessor class of the Fund on April 4, 1994. In addition to Institutional
shares, the Fund also offers Investor and Class R shares through a separate
prospectus. Investor shares are offered to any investor and may be purchased
through the Distributor or Agents that have entered into Agreements with the
Distributor. Investor and Class R shares are not subject to a sales charge on
purchases or redemptions. Investor shares are subject to a Rule 12b-1 fee at
an annual rate of up to .25 of 1% of the Fund's average net assets
attributable to Investor shares. 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. For more information concerning Investor or Class R shares, see
the current prospectus for Investor and Class R shares.
Page 10
Stock certificates are issued only upon your written request. The
Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500. Subsequent investments must
be at least $100.
Shares may be purchased by check or wire, 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.
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. To purchase Institutional shares in
your name, immediately available funds may be transmitted by wire to Boston
Safe Deposit and Trust Company, DDA# 044121.
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 andTrust Company with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "4020".
The Distributor may pay dealers a fee of up to 0.5% 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 infor-
Page 11
mation 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 PER SHARE ("NAV"). An investment portfolio's NAV
refers to the worth of one share. The NAV for the Institutional shares of the
Fund is computed by adding with respect to that class of shares the value of
all the class' investments, cash, and other assets, deducting liabilities and
dividing the result by number of shares of that class outstanding. The
valuation of assets for determining NAV for the Fund may be summarized as
follows:
The portfolio securities of the Fund, except as otherwise noted,
listed or traded on a stock exchange, are valued at the latest sale price. If
no sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Trustees.
NAV is determined at the close of the New York Stock Exchange
("NYSE") on each day that the NYSE is open (a "business day"). Investments
and requests to exchange or redeem shares received by the Transfer Agent
before the close of regular trading on the NYSE (usually 4 p.m., Eastern
Time) are effective on, and will receive the price determined, that day.
Investment, exchange or redemption requests received after close of business
are effective on, and receive the first share price determined on, the next
business day.
The public offering price of Institutional shares is the NAV of that
class.
The public offering price of Investor shares and Class R shares, both
of which are offered on a continuous basis, is the NAV of each respective
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 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 TELETRANSFER purchase of Institutional shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
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 Institutional shares of the Fund,
shares 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.
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
Page 12
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 1-800-645-6561
or, if calling from overseas, 516-794-5452. 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 Institutional shares into
funds sold with a sales load. If you are exchanging Institutional 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 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
and, therefore, an exchanging shareholder (other than a qualified Retirement
Plan) may realize a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for
Institutional shares of the Fund, in shares other funds in the Dreyfus Family
of Funds of which you are currently an investor. The amount you designate,
which can be expressed either in terms of a specific dollar or share amount
($100 minimum), will be exchanged automatically on the first and/or fifteenth
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 Institutional 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 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 (other
than a tax-exempt Retirement Plan) may realize a tax-
Page 13
able gain or loss. For more information concerning this Privilege and the
funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an 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
6587, Providence, Rhode Island 02940-6587, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and other distributions, if any, paid by the Institutional
shares of the Fund in shares of another fund in 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. See
"Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you to
transfer electronically on the payment date dividends or dividends and other
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 6587, Providence, Rhode Island 02940-6587. 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
Page 14
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 6587,
Providence, Rhode Island 02940-6587. 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. 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
Page 15
UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS
DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY
WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A
PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC
ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE
PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR
IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER
THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES -- You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege or the 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 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 6587, Providence, Rhode Island 02940-6587, or if for the Dreyfus
retirement plan accounts to the Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. 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 the
telephone number listed under "General Information."
Page 16
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 1-800-645-6561 or, if
calling from overseas, 516-794-5452. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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 any
time 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
Page 17
DISTRIBUTION PLAN
Institutional and Investor shares are subject to a Distribution Plan
(the "Plan") adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1"). The Institutional and 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 0.15% of its average daily net assets attributable to
Institutional shares and 0.25% of its average daily net assets attributable
to Investor shares, to compensate the Distributor for shareholder servicing
activities and for activities or expenses primarily intended to result in the
sale of Institutional and Investor shares of the Fund, and Dreyfus Service
Corporation, an affiliate of Dreyfus, 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 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 Institutional or
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.
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, four times yearly and distributes net realized capital 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 capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by each Class are calculated at the same time and in the same
manner and are 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 Institutional and
Class R shares because of the higher expenses borne by the Investor shares.
Institutional shares will receive lower per share dividends than Class R
shares because of the higher expenses borne by the Institutional shares. See
"Expense Summary."
Investors other than qualified retirement plans may choose whether to
receive dividends and other distributions in cash or to receive dividends in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares;
dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
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 and realized gains 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 (collectively, "divided distributions"), paid by the Fund are
taxable to U.S. shareholders, including certain non-qualified retirement
plans, as ordinary income whether to the extent of the Fund's earnings and
profits received in cash or reinvested in additional Fund shares.
Distributions from the Fund's capital gain (the excess of net long-term
capital gain over short-term capi-
Page 18
tal loss) are taxable to such shareholders as long-term
capital gains, regardless of how long the shareholders have held their Fund
shares and whether such distributions are received in cash or reinvested in
additional 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.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the non-resident foreign investor claims the benefit of a lower rate
specified in a tax treaty. Capital gain distributions paid by the Fund to a
non-resident foreign investor, as well as the proceeds of any redemptions by
such an investor regardless of the extent to which gain or loss may be
realized, generally are not 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 capital gain
distributions, if any, paid during the year.
Dividends and other distributions 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 distributions 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 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 laws and regulations generally require the Fund to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of
dividends, capital gain distributions and any redemption proceeds, regardless
of the extent to which gain or loss may be realized, paid to such a
shareholder if the 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 that the shareholder's subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines that
shareholder's TIN is incorrect or if that 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 19
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 distribution and
shareholder servicing fees. As a result, at any given time, the performance
of the Investor shares should be expected to be lower than that of the
Institutional shares and the performance of the Institutional shares should
be expected to be lower than that of Class R shares. Performance for each
Class will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial
payment of $1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of dividends and
other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period.
Advertisements of the Fund's performance will include the Fund's average
annual total return for one, five and ten year periods, or for shorter periods
depending upon the length of time during which the Fund has operated.
Computations of average annual total return for periods of less than one year
represent an annualization of the Fund's actual total return for the
applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the application
of the percentage rate of total return.
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 of such Class 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.
Page 20
GENERAL INFORMATION
The Company was organized as a 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 is a portfolio of the Company. The
Fund's shares are classified into three Classes_ Institutional shares,
Investor shares and Class R. The Company's Agreement and Declaration of Trust
permits the Board of Trustees to create an unlimited number of investment
portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of all
funds (and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Institutional or 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 voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York, 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 21
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Page 22
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Page 23
DREYFUS
Core Value
Fund --
Institutional Shares
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
392p050196
- -----------------------------------------------------------------------------
PROSPECTUS MAY 1, 1996
DREYFUS SPECIAL GROWTH FUND
- -----------------------------------------------------------------------------
DREYFUS SPECIAL GROWTH FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
SPECIAL GROWTH FUND," IS A SEPARATE, DIVERSIFIED PORTFOLIO OF THE
DREYFUS/LAUREL FUNDS TRUST, AN OPEN-END MANAGEMENT INVESTMENT COMPANY (THE
"COMPANY"), KNOWN AS A MUTUAL FUND. THE FUND 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 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. ("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. INVESTOR SHARES ARE SOLD PRIMARILY TO RETAIL INVESTORS BY THE
FUND'S DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER
FINANCIAL INSTITUTIONS (INCLUDING MELLON BANK AND ITS AFFILIATES),
(COLLECTIVELY, "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.
SHARES OF THE FUND MAY BE PURCHASED OR REDEEMED 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.
THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 ("SAI"),
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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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 AN AFFILIATE OF
MELLON BANK 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........................ 4
Financial Highlights................... 5
Description of the Fund................ 7
Management of the Fund................. 11
How to Buy Fund Shares................. 13
Shareholder Services................... 15
How to Redeem Fund Shares.............. 19
Distribution Plan (Investor Shares Only) 21
Dividends, Other Distributions and Taxes 22
Performance Information................ 23
General Information.................... 24
Page 2
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Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
---------------- ---------------
<S> <C> <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 Expenses.......................................... 0.00% 0.00%
_____ ______
Total Fund Operating Expenses......................... 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 Investor shares.
</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. The information in the foregoing table does not
reflect any fee waivers or expense reimbursements that may be in effect.
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 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 disclose to its clients any compensation payable to
such Agent by the Distributor and any other compensation payable by the
clients for various services provided in connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor or Class R share
outstanding throughout each fiscal year or period, and should be read in
conjunction with the financial statements and related notes that appear in
the Fund's Annual Report dated December 31, 1995 which is incorporated by
reference in the SAI. The financial statements included in the Fund's Annual
Report for the year ended December 31, 1995, have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report appears in the Fund's Annual
Report. Further information about, and management's discussion of, the Fund's
performance is included in the Fund's Annual Report, which may be obtained
without charge by writing to the address or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS SPECIAL GROWTH FUND
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
12/31/95 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> <C>
PER SHARE DATA
PER SHARE DATA
Net asset value, beginning
of year............ $14.65 $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21 $20.95
------- ------- ------ ------ ----- ------ ----- ------ ----- ------
Income from investment operations:
Net investment income/(loss)#.. (0.11) (0.09) (0.20) (0.10) (0.05) 0.03 0.14 0.37 0.63 0.13
Net realized and unrealized gain/
(loss) on investments.. 4.57 (3.18) 3.51 3.77 3.90 (0.72) 2.49 2.22 (0.91) 1.40
------- ------- ------ ------ ----- ------ ----- ------ ----- ------
Total from investment operations 4.46 (3.27) 3.31 3.67 3.85 (0.69) 2.63 2.59 (0.28) 1.53
Less distributions:
Distributions from net
investment income.. -- -- -- -- -- (0.03) (0.25) (0.34) (0.81) (0.31)
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)
------- ------- ------ ------ ----- ------ ----- ------ ----- ------
Net asset value, end of year... $19.11 $14.65 $17.97 $16.45 $14.59 $13.56 $14.28 $14.27 $12.02 $17.21
------- ------- ------ ------ ----- ------ ----- ------ ----- ------
Total Return........... 30.44% (18.22)% 20.01% 26.19% 29.22% (4.84)% 18.83% 21.49% (3.81)% 7.66%
====== ======= ======= ====== ====== ====== ====== ===== ====== ======
Ratios / Supplemental Data:
Net assets, end of year
(in 000's)......... $66,201 $64,839 $83,879 $64,071 $41,522$43,591 $39,759 $35,227 $30,678 $35,860
Ratio of operating expenses to
average net assets++... 1.40% 1.42% 1.73% 1.57% 1.70% 1.62% 1.72% 1.58% 1.49% 1.32%
Ratio of net investment income/loss
to average net assets.. (0.57)% (0.51)% (1.09)% (0.71)% (0.34)% 0.19% 0.82% 2.70% 3.25% 1.16%
Portfolio turnover rate.. 69% 133% 94% 112% 141% 222% 184% 180% 322% 192%
- ------------
* 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.
# Without the voluntary waiver of fees and/or reimbursement of expenses by
the investment adviser, net investment loss for the the year ended
December 31, 1993 would have been $(0.21)
Page 5
## 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>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS SPECIAL GROWTH FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94## 12/31/93*+++
--------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year $14.78 $18.06 $17.31
-------- ------- -------
Income from investment operations:
Net gain (loss)# (0.03) (0.02) (0.10)
Net realized and unrealized gain (loss) on investments 4.52 (3.21) 2.64
-------- ------- -------
Total from investment operations 4.55 (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 year $19.33 $14.78 $18.06
-------- ------- -------
Total return+ 30.79% (17.91)% 15.78%
======= ======= ======
Ratios / Supplemental data:
Net Assets, end of year (in 000's) $5,314 $6,784 $14,941
Ratio of operating expenses to average net assets++ 1.15% 1.15% 1.19%**
Ratio of net investment loss to average net assets (0.31)% (0.24)% (0.55)%**
Portfolio turnover rate 69% 133% 94%
</TABLE>
- -------------------------------------------------------------------
* On February 1, 1993, the Fund commenced selling Investment Class shares.
Effective April 4, 1994, the Investment Class shares were reclassified
as Trust shares.On October 17, 1994, Trust shares were reclassified as
Class R shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated.
++ Without the 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
the 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.
Page 6
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 sold primarily to retail
investors by the Distributor and by Agents that have entered into an
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
fees paid by Investor shares will cause Investor shares to have a higher
expense ratio and pay lower dividends than Class R shares.
INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks above-average growth of
capital without regard to income. The Fund seeks to achieve this objective
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 ("S&P 500")) 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. 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. 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 7
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
purchase and sell various financial instruments ("Derivative Instruments"),
such as financial futures contracts (such as interest rate, index and foreign
currency futures contracts), options (such as options on securities, indices,
foreign currencies and futures contracts), forward currency contracts and
interest rate, equity index and currency swaps, caps, collars and floors. The
index Derivative Instruments the Fund may use may be based on indices of U.S.
or foreign equity or debt securities. These Derivative Instruments may be
used, for example, to preserve a return or spread, to lock in unrealized
market value gains or losses, to facilitate or substitute for the sale or
purchase of securities, to manage the duration of securities, to alter the
exposure of a particular investment or portion of the Fund's portfolio to
fluctuations in interest rates or currency rates, to uncap a capped security
or to convert a fixed rate security into a variable rate security or a
variable rate security into a fixed rate security.
The Fund's ability to use these instruments may be limited by market
conditions, regulatory limits and tax considerations. The Fund might not use
any of these strategies and there can be no assurance that any strategy that
is used will succeed. See the SAI for more information regarding these
instruments and the risks relating thereto.
The Fund may not purchase put or call options that are traded on a
national stock exchange in an amount exceeding 5% of its net assets.
FOREIGN CURRENCY TRANSACTIONS. The Fund may engage in currency
exchange transactions on a spot or forward basis. The Fund may exchange
foreign currency on a spot basis at the spot rate then prevailing for
purchasing or selling foreign currencies in the foreign exchange market.
The Fund may also enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date either
with respect to specific transactions or portfolio positions in order to
minimize the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies. For example, when the Fund
anticipates purchasing or selling a security denominated in a foreign
currency, the Fund may enter into a forward contract in order to set the
exchange rate at
Page 8
which the transaction will be made. The Fund may also enter
into a forward contract to sell an amount of foreign currency approximating
the value of some or all of the Fund's securities positions denominated in
that currency.
Forward currency contracts may substantially change the Fund's
investment exposure to changes in currency exchange rates and could result in
losses if currencies do not perform as Dreyfus anticipates. There is no
assurance that Dreyfus' use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time.
RISKS OF DERIVATIVE INSTRUMENTS. The use of Derivative Instruments
involves special risks, including: (1) possible imperfect or no correlation
between price movements of the portfolio investments (held or intended to be
purchased) involved in the transaction and price movements of the Derivative
Instruments involved in the transaction; (2) possible lack of a liquid
secondary market for any particular Derivative Instrument at a particular
time; (3) the need for additional portfolio management skills and techniques;
(4) losses due to unanticipated market price movements; (5) the fact that,
while such strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in portfolio investments; (6) incorrect forecasts by Dreyfus
concerning interest or currency exchange rates or direction of price
fluctuations of the investment involved in the transaction, which may result
in the strategy being ineffective; (7) loss of premiums paid by the Fund on
options it purchases; and (8) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable
for it to do so, or the need to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with such transactions and the possible
inability of the Fund to close out or liquidate its positions.
Dreyfus may use Derivative Instruments for hedging purposes (to
adjust the risk characteristics of the Fund's portfolio) and may use these
instruments to adjust the return characteristics of the Fund's portfolio of
investments. This can increase investment risk. If Dreyfus judges market
conditions incorrectly or employs a strategy that does not correlate well
with the Fund's investments, these techniques could result in a loss,
regardless of whether the intent was to reduce risk or increase return. These
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. In
addition, these techniques could result in a loss if the counterparty to the
transaction does not perform as promised or if there is not a liquid
secondary market to close out a position that the Fund has entered into.
Options and futures transactions may increase portfolio turnover
rates, which results in correspondingly greater commission expenses and
transaction costs, and may result in certain tax consequences.
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 Company's Board of Trustees determines it to be in the best interest
of the Fund and its shareholders. In making that determination, the Company's
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
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 secu-
Page 9
rities presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse 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 Company's 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 illiquid
ity 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 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 and/or
long-term capital gains that, when distributed to the Fund's shareholders,
Page 10
are taxable to them at the then current rate. 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. As a fundamental policy, the Fund
may not (i) borrow money in an amount exceeding 331/3% of the Fund's total
assets at the time of borrowing; (ii) make loans or lend securities in excess
of 331/3% of the Fund's total assets; (iii) purchase, with respect to 75% of
the Fund's total assets, securities of any one issuer representing more than
5% of the Fund's total assets (other than securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities) or more than 10% of
that issuer's outstanding voting securities; and (iv) invest more than 25% of
the value of the Fund's total assets in the securities of one or more issuers
conducting their principal activities in the same industry; provided that
there shall be no such limitation on investments in obligations of the U.S
Government, state and municipal governments and their political subdivisions
or investments in domestic banks, including U.S. branches of foreign banks
and foreign branches of U.S. banks. 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 29, 1996, Dreyfus managed or administered
approximately $82 billion in assets for more than 1.7 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 one or more third parties to provide, 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 Michael Schonberg. Mr. Schonberg has managed
the Fund since February 1, 1996 and has been employed by Dreyfus since July
1995. From March 1994 to July 1995, Mr. Schoenberg was a General Partner of
Omega Advisors, L.P. Prior thereto, he served as Managing Director and Chief
Investment Officer for UBS Asset Management (N.Y.), Inc.
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
page 11
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 $233 billion in assets as of December 31, 1995,
including approximately $81 billion in mutual fund assets. As of December 31,
1995, Mellon, through various subsidiaries including Dreyfus, provided
non-investment services, such as custodial or administration services, for
more than $786 billion in assets, including approximately $60 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, Rule 12b-1 fees (if applicable) and
extraordinary 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. For the fiscal year ended December 31, 1995, the Fund paid Dreyfus
1.15% of its average daily net assets in investment management fees.
For the fiscal year ended December 31, 1995, total operating expenses
(excluding Rule 12b-1 fees) of each Class of the Fund were 1.18% and 1.15% of
the average daily net assets of Investor shares and Class R shares,
respectively.
In addition, Investor shares may be subject to certain distribution
and shareholder servicing 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.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, advised or administered by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the SAI.
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.
DISTRIBUTOR. The Fund's distributor is Premier Mutual Fund Services,
Inc.. 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 Dreyfus Transfer, Inc. (the "Transfer Agent"), a
wholly-owned subsidiary of Dreyfus, located at One American Express Plaza,
Providence, Rhode Island 02903. Premier
Page 12
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 -- Investor shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into 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-profit entities or state and local governments. 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.
Investor shares are also offered without regard to the minimum
initial investment requirements through Dreyfus-AUTOMATIC Asset Builder,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan
pursuant to the Dreyfus Step Program. These services enable you to make
regularly scheduled investments and may provide you with a convenient way to
invest for long-term financial goals. You should be aware, however, that
periodic investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amounts that may be contributed by individuals
annually to a Retirement Plan, but generally, do not directly affect the
amount of plan assets 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
Page 13
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 the
telephone number 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 and Trust Company, 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 and Trust Company 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 0.5% 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.
Page 14
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 PER SHARE ("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.
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 such close of business 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 such
close of business are effective on, and receive the share price determined
on, the next business day.
The public offering price of Investor and Class R shares, both of
which are offered on a continuous basis, is the NAV 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
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 Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
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
Page 15
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 1-800-645-6561 or, if calling
from overseas, 516-794-5452. 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 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
and, therefore, an exchanging shareholder (other than a tax-exempt Retirement
Plan)may realize, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of 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
Page 16
exchanged at the then-current NAV; however a sales load may be charged with
respect to exchanges of Fund 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 and, therefore, an exchanging shareholder (other than a tax-exempt
Retirement Plan) may realize a taxable gain or loss. For more information
concerning this Privilege and the funds in the Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an 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 other distributions, if any, paid by the Fund in shares of
the same class of certain other funds in the Dreyfus Family of Funds of which
you are an investor. Shares of the other fund will be purchased at the
then-current 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 other
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.
Page 17
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.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Investor shares without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account,
you must supply the necessary information on the Fund's Account Application
and file the required authorization form(s) with the Transfer Agent. For more
information concerning this Program, or to request the necessary
authorization form(s), please call toll free 1-800-782-6620. You may
terminate your participation in this Program at any time by discontinuing
your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be,
as provided under the terms of such Privilege(s). The Fund reserves the right
to redeem your account if you have terminated your participation in the
Program and your account's net asset value is $500 or less. See "How to
Redeem Fund Shares." The Fund may modify or terminate this Program at any
time. Investors who wish to purchase Investor shares through Dreyfus Step
Program in conjunction with a Dreyfus-sponsored retirement plan may do so
only for IRAs, SEP-IRAs and IRA "Rollover Accounts."
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
from 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.
Page 18
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 the 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
Page 19
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 the telephone number 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 1-800-645-6561 or, if
calling from overseas, 516-794-5452. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's 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
Page 20
mailed to your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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 any
time 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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 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.
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.
Page 21
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment income,
if any, annually and distributes net realized capital and foreign currency
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 capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by each Class are calculated at the same time and in the same
manner and are in the same amount, except that the expenses attributable
solely to a particular Class are borne exclusively by that Class. Investor
shares will receive lower per share dividends than Class R shares because of
the higher expenses borne by the Investor shares. See "Expense Summary."
Investors other than qualified Retirement Plans may choose whether to
receive dividends and other distributions in cash, or to receive dividends in
cash and reinvest other distributions in additional fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified Retirement Plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
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, certain foreign
currency gains and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds (collectively, "dividend
distributions"), paid by the Fund are taxable to U.S. shareholders, including
certain non-qualified Retirement Plans, as ordinary income to the extent of
the Fund's earnings and profits, whether received in cash or reinvested in
additional Fund shares. Distributions from the Fund's net capital gains (the
excess of net long-term capital gain over short-term capital loss) are
taxable to such shareholders as long-term capital gains, regardless of how
long the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in additional 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.
Dividend distributions paid by the Fund to a non-resident investor
generally are subject to U.S. withholding tax at the rate of 30%, unless the
non-resident investor claims the benefit of a lower rate specified in a tax
treaty. Capital gain distributions paid by the Fund to a non-resident foreign
investor, as well as the proceeds of any redemptions from a non-resident
investor account, regardless of the extent to which gain or loss may be
realized, generally are not 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 capital gain
distributions, if any, paid during the year.
Dividends and other distributions 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 22
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. If a distributee of an "eligible rollover distribution" from a
qualified Retirement Plan does not elect to have the eligible rollover
distribution paid directly from the Plan to an eligible Retirement Plan in a
"direct rollover," the eligible rollover distribution is subject to a 20%
income tax withholding.
With respect to individual investors and certain non-qualified
Retirement Plans, Federal laws and regulations generally require the Fund to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of
dividends, capital gains distributions and any redemption proceeds,
regardless of the extent to which gain or loss may be realized, paid to such
a shareholder if the 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 that the shareholder is
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding if
the IRS determines that shareholder's TIN is incorrect or if that 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 distribution and
shareholder servicing fees. As a result, at any given time, the performance
of the Investor shares should be expected to be lower than that of Class R
shares. 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.
Page 23
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 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 NAV of such Class 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, S&P 500, 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 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
Page 24
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, 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 25
[This Page Intentionally Left Blank]
Page 26
[This Page Intentionally Left Blank]
Page 27
DREYFUS
Special Growth
Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
322/722050196
- ---------------------------------------------------------------------------
PREMIER MANAGED INCOME FUND
(LION LOGO)
PROSPECTUS MAY 1, 1996
- ---------------------------------------------------------------------------
Premier Managed Income Fund (the "Fund"), formerly called the
"Laurel Managed Income Fund," is a separate, diversified portfolio of The
Dreyfus/Laurel Funds Trust, an open-end management investment company
(the "Company"), known as a mutual fund. The Fund seeks high current
income consistent with what is believed to be prudent risk of capital.
The Fund invests primarily 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.
The Statement of Additional Information ("SAI") dated May 1,
1996, 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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. 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 AN
AFFILIATE OF MELLON BANK, N.A. ("MELLON BANK") 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 maximum 4.0% 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.
Each Class of shares may be purchased or redeemed by
telephone using the TELETRANSFER Privilege.
TABLE OF CONTENTS
Expense Summary................................ 3
Financial Highlights........................... 4
Alternative Purchase Methods................... 9
Description of the Fund........................ 10
Management of the Fund......................... 17
How to Buy Fund Shares......................... 19
Shareholder Services........................... 24
How to Redeem Fund Shares...................... 28
Distribution Plans (Class A Plan and Class B and C Plans). 32
Dividends, Other Distributions and Taxes........... 33
Performance Information........................ 35
General Information............................ 36
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) 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
ANNAUL 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 Expenses.......................... 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 $57/172 $27/172 $7
3 YEARS $74 $84/542 $54 $22
5 YEARS $95 $112/922 $92 $39
10 YEARS $156 $162** $201 $87
</TABLE>
- ------------
* "A contingent deferred sales charge may be imposed on the redemption of
Class A shares that are purchased without an initial sales charge. See "How
to Buy Fund Shares--Class A shares."
** Assumes conversion of Class B shares to Class A shares approximately six
years after the date of purchase and, therefore, reflects Class A expenses
for years seven through ten.
1 See "Distribution Plans (Class A Plan and Class B and C Plans)" for a
description of the Fund's Distribution Plans and Service Plan for Class A, B
and C shares.
2 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 banks, securities brokers and
dealers ("Securities Dealers") or other financial institutions (including
Mellon Bank and its affiliates) (collectively "Agents") may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Fund," "How to
Buy Fund Shares" and "Distribution Plans (Class A Plan and Class B and C
Plans)."
The Company understands that 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 clients for various services provided in connection with their
accounts.
Page 3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A, Class B, Class C
and Class R share outstanding throughout each year or period and should
be read in conjunction with the financial statements and related notes
that appear in the Fund's Annual Report dated December 31, 1995 which is
incorporated by reference in the SAI. The financial statements included
in the Fund's Annual
<TABLE>
<CAPTION>
PREMIER MANAGED INCOME FUND
FOR A CLASS A 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
12/31/95 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> <C>
Net Asset Value, beginning
of year..... $10.12 $11.38 $11.45 $11.41 $10.55 $11.12 $11.43 $11.29 $11.91 $11.80
-------- -------- ------- -------- -------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income #.. 0.75 0.69 0.78 0.87 0.86 0.93 0.98 1.01 1.20 0.86
Net realized and unrealized gain/(loss)
on investments.. 0.96 (1.26) 0.83 0.10 0.86 (0.47) (0.36) 0.09 (0.52) 0.28
-------- -------- ------- -------- -------- -------- -------- ------- ------- -------
Total from investment
operations.. 1.71 (0.57) 1.61 0.97 1.72 0.46 0.62 1.10 0.68 1.14
Less distributions:
Distributions from net
investment income.. (0.75) (0.69) (0.75) (0.87) (0.86) (1.03) (0.93) (0.96) (1.20) (0.96)
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.. (0.75) (0.69) (1.68) (0.93) (0.86) (1.03) (0.93) (0.96) (1.30) (1.03)
-------- -------- ------- -------- -------- -------- -------- ------- ------- -------
Net Asset Value,
end of year... $11.08 $10.12 $11.38 $11.45 $11.41 $10.55 $11.12 $11.43 $11.29 $11.91
-------- -------- ------- -------- -------- -------- -------- ------- ------- -------
Total Return+ $17.32% (5.14)% 14.54% 8.77% 17.03% 4.40% 5.56% 10.05% 5.96% 10.09%
======= ====== ======== ======= ======= ======== ======= ======== ===== ======
Ratios/Supplemental data:
Net assets, end
of year(in 000's).... $80,782 $79,548 $58,052 $98,207 $84,203 $71,132 $83,912 $65,105 $51,765 $49,272
Ratio of expenses to average
net assets+++.. 0.95% 0.98% 1.14% 1.02% 1.13% 1.19% 1.15% 1.14% 0.94% 0.88%
Ratio of net income to average
net assets... 7.08% 6.32% 6.55% 7.58% 7.91% 8.65% 8.76% 8.81% 10.30% 10.01%
Portfolio turnover rate 236% 270% 333% 216% 119% 183% 142% 139% 306% 71%
</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.
# 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 4 and 5
FINANCIAL HIGHLIGHTS (CONTINUED)
Report dated December 31, 1995 have been audited by KPMG Peat Marwick
LLP, independent auditors, whose report appears in the Fund's Annual
Report. Further information about, and management's discussion of, the
Fund's performance is included in the Fund's Annual Report which may be
obtained without charge by writing to the address or calling the number
set forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PREMIER MANAGED INCOME FUND
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT THE YEAR.
CLASS B SHARES
YEAR
ENDED
12/31/95(1)
- ---------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period $10.12
--------
INVESTMENT OPERATIONS:
Investment income-net .67
Net realized and unrealized gain on investments .96
--------
Total from investment operations 1.63
--------
DISTRIBUTIONS:
Dividends from investment income-net (.67)
--------
TOTAL DISTRIBUTIONS (0.67)
--------
Net Asset Value, end of period $11.08
=======
TOTAL INVESTMENT RETURN(2) 16.55%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.69%(3)
Ratio of net investment income to average net assets 6.41%(3)
Portfolio turnover rate 236%(4)
Net Assets, end of period (in 000's) $2,236
- ---------------------------------------------------------------------------------------------
(1) The Fund commenced offering Class B shares on December 19, 1994.
(2) Exclusive of Sales Load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 6
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PREMIER MANAGED INCOME FUND
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE YEAR.
CLASS C SHARES
YEAR
ENDED
12/31/95(1)
- ---------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period $10.12
--------
INVESTMENT OPERATIONS:
Investment income-net .67
Net realized and unrealized gain on investments .96
--------
Total from investment operations 1.63
--------
DISTRIBUTIONS:
Dividends from investment income-net (.67)
--------
TOTAL DISTRIBUTIONS (.67)
--------
Net Asset Value, end of period $11.08
=======
TOTAL INVESTMENT RETURN(2) 16.54%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.66%(3)
Ratio of net investment income to average net assets 6.03%(3)
Portfolio turnover rate 236%(4)
Net Assets, end of period (in 000's) $67
- ---------------------------------------------------------------------------------------------
(1)The Fund commenced offering Class B shares on December 19, 1994.
(2)Exclusive of Sales Load.
(3)Annualized.
(4)Not annualized.
</TABLE>
PAGE 7
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
PREMIER MANAGED INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*##
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.12 $11.38 $11.62
------- ------- -------
Income from investment operations:
Net investment income # 0.78 0.72 0.74
Net Realized and unrealized gain/(loss) on investments 0.96 (1.26) 0.67
------- ------- -------
Total from investment operations 1.74 (0.54) 1.41
------- ------- -------
Less Distributions:
Dividends from net investment income (0.78) (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 (0.78) (0.72) (1.65)
------- ------- -------
Net Asset Value, end of period $11.08 $10.12 $11.38
======== ======= =======
Total Return+ 17.71% (4.88)% 12.59%
======== ======= =======
Ratios/Supplemental data:
Net Assets, end of period (in 000's) $11,532 $9,588 $1,338
Ratio of operating expenses to average net assets++ 0.70% 0.71% 0.83%***
Ratio of net investment income to average net assets 7.31% 6.59% 6.86%***
Portfolio turnover rate 263% 270% 333%
- --------------------------------------------------------------------------------------------------------
*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.
</TABLE>
Page 8
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 (or, in the case of Class B shares of
the Fund acquired through exchanges of Class B shares of another fund
advised by Dreyfus, the date of purchase of the original Class B shares
of the fund exchanged), 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 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 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. In addition, 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 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 Agreements with the
Distributor.
Page 9
The decision as to which Class of shares is most beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the 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. The Fund
invests primarily in investment-grade corporate and U.S. Government
obligations and in obligations having maturities of 10 years or less.
The Fund seeks to achieve this objective by investing in U.S. government
and agency securities, mortgage-backed securities and their derivatives,
debt securities of corporations including convertible and convertible
preferred issues, asset-backed securities, tax-exempt securities, foreign
issues including Yankee bonds, Eurobonds and non-U.S. dollar securities,
money market instruments, Rule 144A securities and derivative securities.
There is no assurance that the Fund will achieve its objective.
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 ("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. A discussion of the
Moody's and S&P rating categories is contained in Appendix B 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
Page 10
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 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 backed by the full faith and credit of the United
States or issued or guaranteed as to both principal and interest by the
U.S. Government or its agencies or instrumentalities. In addition to
direct obligations of the U.S. Treasury, 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 carry the full faith and
credit of the United States. Other agencies obligations in which the Fund
may invest include those issued by the Federal Home Loan Mortgage
Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"),
Federal Home Loan Banks and Student Loan Marketing Association.
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.
Page 11
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 331/3% of the Fund's total
assets, taken at value. Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies, which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
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 at least equal at all times 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 determines 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 prepay-
Page 12
ments, 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 as certain other forms of debt
securities. Conversely, in periods of sharply rising rates, prepayments
generally slow, increasing the security's average life and its potential
for price depreciation.
COMMERCIAL PAPER. The Fund may invest in commercial paper.
These instruments are short-term obligations issued by banks and
corporations that have maturities ranging from 2 to 270 days. Each
instrument may be backed only by the credit of the issuer or may be
backed by some form of credit enhancement, typically in the form of a
guarantee by a commercial bank. Commercial paper backed by guarantees of
foreign banks may involve additional risk due to the difficulty of
obtaining and enforcing judgments against such banks and the generally
less restrictive regulations to which such banks are subject. The Fund
will only invest in commercial paper of U.S. and foreign companies rated
at the time of purchase at least A-1 by S&P, Prime-1 by Moody's, F-1 by
Fitch Investors Service, Inc., Duff 1 by Duff & Phelps, Inc., or A1 by
IBCA, Inc.
ECDS, ETDS AND YANKEE CDS. The Fund may invest in ECDs, ETDs
and Yankee CDs. ECDs are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks. ETDs are U.S.
dollar-denominated time deposits in a foreign branch of a U.S. bank or a
foreign bank. Yankee CDs are certificates of deposit issued by a U.S.
branch of a foreign bank denominated in U.S. dollars and held in the
United States. ECDs, ETDs and Yankee CDs are subject to somewhat
different risks than are the obligations of domestic banks. See ("Foreign
Securities.")
EURODOLLAR BONDS AND NOTES. The Fund may invest in Eurodollar
bonds and notes. Eurodollar bonds and notes are obligations which pay
principal and interest in U.S. dollars held in banks outside the United
States, primarily in Europe. Investments in Eurodollar bonds and notes
involve risks that differ from investments in securities of domestic
issuers. See ("Foreign 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. 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,
adverse 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
Page 13
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 outweighed by large uncertainties or major risk
exposures to adverse conditions; and are predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While the market values of
low-rated securities tend to react less to fluctuations in interest rate
levels than the market values of higher-rated securities, the market
values of certain low-rated securities tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally
present a higher degree of credit risk. Issuers of low-rated securities
are often highly leveraged and may not have more traditional methods of
financing available to them so that their ability to service their debt
obligations during an economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by
such issuers is significantly greater because low-rated securities
generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. The Fund may incur additional expenses to
the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence
of limited markets for low-rated securities may diminish the Fund's
ability to obtain accurate
Page 14
market quotations for purposes of valuing such securities and calculating
its net asset value. Securities rated B by Moody's are judged to lack
characteristics of desirable investment; assurance of
interest and principal payments or of maintenance or other terms over any
long period may be small. Securities rated B by S&Pare judged currently
to have capacity to meet interest and principal payments, but adverse
business, financial or economic conditions will likely impair capacity or
willingness to make such payments. Securities rated Caa by Moody's are
judged to be of poor standing and may be in default or reflect present
elements of danger with respect to principal or interest. Securities
rated CCC by S&Phave a currently identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and principal. Securities
rated Ca by Moody's are judged to be speculative in a high degree, often
being in default or having other marked short-comings. Securities rated
CC by S&Ptypically are subordinated to senior debt which is assigned an
actual or implied CCC rating.
Securities rated C by S&Ptypically are subordinated to senior
debt which is assigned an actual or implied CCC- rating and may be used
to cover situations where a bankruptcy petition has been filed, but debt
service payments are continued.
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 GNMA, FNMA and 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,
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 mod-
Page 15
eling 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 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
Page 16
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 and/or long-term capital gains that, when
distributed to the Fund's shareholders, are taxable to them at the then
current rate. 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. As a fundamental policy,
the Fund may not (i) borrow money in an amount exceeding 331/3% of the
Fund's total assets at the time of borrowing; (ii) make loans or lend
securities in excess of 331/3% of the Fund's total assets; (iii) purchase,
with respect to 75% of the Fund's total assets, securities of any one
issuer representing more than 5% of the Fund's total assets (other than
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities) or more than 10% of that issuer's outstanding voting
securities; and (iv) invest more than 25% of the value of the Fund's
total assets in the securities of one or more issuers conducting their
principal activities in the same industry; provided that there shall be
no such limitation on investments in obligations of the U.S Government,
state and municipal governments and their political subdivisions or
investments in domestic banks, including U.S. branches of foreign banks
and foreign branches of U.S. banks. 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 29, 1996, Dreyfus managed or
administered approximately $82 billion in assets for more than 1.7 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
Page 17
with Massachusetts law. Pursuant to the Investment Management Agreement,
Dreyfus provides, or arranges for one or more third parties to provide,
investment advisory, administrative, custody, fund accounting and
transfer agency 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 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.
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 and is a chartered Financial Analyst.
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 $233 billion in assets as of December 31,
1995, including approximately $81 billion in mutual fund assets. As of
December 31, 1995, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services,
for more than $786 billion in assets, including approximately $60
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, Rule 12b-1 fees
(if applicable) and extraordinary 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, 1995, the Fund paid Dreyfus 0.70% of its
average daily net assets in investment management fees.
For the fiscal year ended December 31, 1995, total operating
expenses (excluding Rule 12b-1 fees) of each class of the Fund were 0.70%
of the average daily net assets.
In addition, Class A, B and C shares may be subject to
certain distribution and shareholder servicing fees. See "Distribution
Plans (Class A Plan and Class B and C Plans)."
Page 18
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.
In allocating brokerage transactions for the Fund, Dreyfus
seeks to obtain the best execution of orders at the most favorable net
price. Subject to this determination, Dreyfus may consider, among other
things, the receipt of research services and/or the sale of shares of the
Fund or other funds managed, advised or administrated by Dreyfus as
factors in the selection of broker-dealers to execute portfolio
transactions for the Fund. See "Portfolio Transactions" in the SAI.
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.
DISTRIBUTOR -- The Fund's Distributor is Premier Mutual Fund
Services, Inc. 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,
Pennsylvania 15258, is the Fund's custodian. The Fund's Transfer and
Dividend Disbursing Agent is Dreyfus Transfer, Inc. (the "Transfer
Agent"), a wholly-owned subsidiary of Dreyfus, located at 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 the Fund.
HOW TO BUY FUND SHARES
GENERAL -- Class A shares, Class B shares and Class C shares
may be purchased only by 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.
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.
Page 19
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 amounts that may be contributed
annually 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")
but these limitations generally 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 and
Trust Company, 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
1-800-645-6561 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
Page 20
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 Company 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 PER SHARE ("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. Shares
of each Class of the Fund are offered on a continuous basis. 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 21
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.
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 such close of business 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 such close of business 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 before the close of its business day.
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 Shares" (other than the amount of the CDSC and its time
periods) and "How to Redeem Fund Shares -- Waiver of CDSC" 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-
Page 22
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.
Class A shares also may be purchased at NAV, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a
registered open-end management investment company not managed by Dreyfus
or its affiliates. The purchase of Class A shares of the Fund must be
made within 60 days of such redemption and the shareholder must have
either (i) paid an initial sales charge or a CDSC or (ii) been obligated
to pay at any time during the holding period, but did not actually pay on
redemption, a deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at NAV, subject to
appropriate documentation, by
(i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United
States, (ii) a State, county or city or instrumentality thereof, (iii) a
charitable organization (as defined in Section 501(c)(3) of the Code)
investing $50,000 or more in Fund shares, and (iv) a charitable remainder
trust (as defined in Section 501(c)(3) of the Code).
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 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.
Page 23
CLASS C SHARES -- The public offering price for Class C shares is the
NAV of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC is imposed, however, 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 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
1-800-645-6561 or, if calling from overseas, 516-794-5452.
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
Page 24
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 1-800-645-6561 or, if calling from overseas,
516-794-5452. 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 and, therefore, an exchanging shareholder (other than a
tax-exempt Retirement Plan) may realize 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
Page 25
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 and, therefore, an
exchanging shareholder (other than a tax-exempt Retirement Plan) may
realize 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.
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 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 other 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 other 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.
Page 26
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 from 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.
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.
Page 27
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 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, 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
Page 28
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 DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST
WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF
YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH
SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE
ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if the net asset value
of your account is $500 or less and remains so during the notice period.
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. During the second year
after the purchase the investor decided to redeem $500 of his or her
Page 29
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.
For purposes of determining the applicable CDSC payable with
respect to redemption of Class B shares of the Fund where such shares
were acquired through exchange of Class B shares of another fund advised
by Dreyfus, the year since purchase payment was made is based on the date
of purchase of the original Class B shares of the fund exchanged.
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
(and to certain Class A 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 701/2 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
Board of Trustees determines 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
Page 30
or fraudulent instructions. Neither the Fund nor the Transfer Agent will
be liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a TELETRANSFER redemption or an exchange of Fund shares. In
such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in
your redemption request being processed at a later time than it would
have been if TELETRANSFER redemption had been used. During the delay, the
Fund's NAV may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure,
you may redeem your shares by written request mailed to Premier Managed
Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
Redemption requests 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
1-800-554-4611.
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
1-800-645-6561 or, if calling from overseas, 516-794-5452. 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
Page 31
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 Fund exchanges. 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 for activities or 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 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 com-
Page 32
pensation 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 capital
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 capital gains
unless all capital loss carryovers, if any, have been utilized or have
expired. 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 are calculated at the same time and in the
same manner and are in the same amount, except that the expenses
attributable solely to a particular Class are 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."
Investors other than qualified Retirement Plans may choose
whether to receive dividends and other distributions in cash to receive
distributions in cash and reinvest other distributions in additional Fund
shares at NAV, or to reinvest both dividends and other distributions in
additional Fund shares at NAV; dividends and other distributions paid to
qualified Retirement Plans are reinvested automatically in additional
Fund shares at NAV.
It is expected that the Fund will continue to qualify for
treatment 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 (collectively, "dividend distributions"),
paid by the Fund are taxable to U.S. shareholders, including certain
non-qualified Retirement Plans, as ordinary income to the extent of the
Fund's earnings and profits whether received in cash or reinvested in
Fund shares. Distributions from the Fund's net capital gain (the excess
of net long-term capital gain over short-term capital loss) are taxable
to such shareholders as long-term capital gains, regardless of how long
the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in additional 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.
Dividend distributions paid by the Fund to a non-resident
foreign investor generally are subject to U.S. withholding tax at the
rate of 30%, unless the non-resident foreign investor claims the benefit
of a lower rate specified in a tax treaty. Capital gain distributions
paid by the Fund to a non-resident foreign investor, as well as the
proceeds of any redemptions by such an investor, regardless of the extent
to which gain or loss may be realized, generally are not 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.
Page 33
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 capital gain distributions, 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 and other distributions 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 distributions 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 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. If a
distributee of an "eligible rollover distribution" from a qualified
Retirement Plan does not elect to have the eligible rollover distribution
paid directly from the Plan to an eligible retirement plan in a "direct
rollover," the eligible rollover distribution is subject to a 20% income
tax withholding.
With respect to individual investors and certain
non-qualified Retirement Plans, Federal laws and regulations generally
require the Fund to withhold ("backup withholding") and remit to the U.S.
Treasury 31% of dividends, distributions and any redemption proceeds,
regardless of the extent to which gain or loss may be realized, paid to
such shareholder if the 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 that the shareholder is
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines that shareholder's TIN is incorrect or if that
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.
Page 34
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 gain
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 distribution and shareholder servicing 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
Page 35
Government/Corporate Index. Performance rankings as reported in CHANGING
TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL,
IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD
INVESTOR, MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND
WORLD REPORT, FORBES, FORTUNE, BARRON'S and similar publications may also
be used in comparing the Fund's performance. Furthermore, the Fund may
quote its shares' total returns and yields in advertisements or in
shareholder reports. The Fund may also advertise non-standardized
performance information, such as total return for periods other than
those required to be shown or cumulative performance data. The Fund may
advertise a quotation of yield or other similar quotation demonstrating
the income earned or distributions made by the Fund.
GENERAL INFORMATION
The Company was organized as a 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
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 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 Plans 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/050196
Page 36
- ------------------------------------------------------------------------------
PREMIER LIMITED TERM
GOVERNMENT SECURITIES FUND
(LION LOGO)
PROSPECTUS MAY 1, 1996
- -----------------------------------------------------------------------------
Premier Limited Term Government Securities Fund (the "Fund"),
formerly called the "Laurel Intermediate Term
Government Securities Fund," is a separate, diversified portfolio of The
Dreyfus/Laurel Funds Trust, an open-end management investment company (the
"Company"), known as a mutual fund. The Fund seeks high current income
consistent with the preservation of capital by investing primarily in
debt obligations of varying maturities 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.
The Statement of Additional Information dated May 1, 1996
("SAI"), 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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. 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 AN
AFFILIATE OF MELLON BANK, N.A. ("MELLON BANK") 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 maximum 3.0% 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.
Each class of shares may be purchased or redeemed by
telephone using the TELETRANSFER Privilege.
TABLE OF CONTENTS
Expense Summary.................................. 3
Financial Highlights............................. 4
Alternative Purchase Methods..................... 9
Description of the Fund.......................... 10
Management of the Fund........................... 15
How to Buy Fund Shares........................... 17
Shareholder Services............................. 22
How to Redeem Fund Shares........................ 25
Distribution Plans(Class A Plan and Class B and C Plans) 29
Dividends, Other Distributions and Taxes......... 30
Performance Information.......................... 32
General Information.............................. 33
Page 2
<TABLE>
<CAPTION>
EXPENSE SUMMARY
CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
...... (as a percentage of offering price) 3.00% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) .none* 3.00% 0.75% none
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.......................... 0.60% 0.60% 0.60% 0.60%
12b-1 Fee(1)............................ 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%
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 $38 $44/$14(2) $21/$14(2) $6
3 YEARS $56 $63/$43(2) $43 $19
5 YEARS $76 $84/$74(2) $74 $33
10 YEARS $132 $136** $162 $75
* A contingent deferred sales charge may be imposed on the redemption of
Class A shares that are purchased without an initial sales charge. See
"How to Buy Fund Shares -- Class A shares."** Assumes conversion of
Class B shares to Class A shares approximately six years after the date
of purchase and, therefore, reflects Class A expenses for years seven
through ten.1 See "Distribution Plans (Class A Plan and Class B and C Plans)"
for a description of the Fund's Distribution Plans and Service Plan for
Class A, B and C shares.
2 Assuming no redemption of shares.
</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 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 banks, securities brokers and
dealers ("Selected Dealers") or other financial institutions (including
Mellon Bank and its affiliates) (collectively "Agents") may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Fund," "How to
Buy Fund Shares" and "Distribution Plans (Class A Plan and Class B and C
Plans)."
The Company understands that 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 clients for various services provided in connection with their
accounts.
Page 3
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A, Class B,
Class C and Class R share outstanding throughout each year or period and
should be read in conjunction with the financial statements and related
notes that appear in the Fund's Annual Report dated December 31, 1995,
which is incorporated by reference into the SAI. The financial statements
included in the Fund's Annual Report for the year ended December 31, 1995
have been audited by KPMG Peat Marwick LLP, independent auditors, whose
report appears in
<TABLE>
<CAPTION>
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 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> <C>
Net Asset Value,
beginning of year $11.89 $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# 0.74 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 1.00 (1.23) 0.40 (0.05) 0.82 0.02 0.33 (0.09) (0.88) 0.13
--------- --------- -------- -------- -------- -------- ------- -------- -------- --------
Total from investment
operations 1.74 (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 (0.75) (0.70) (0.74) (0.72) (0.74) (0.81) (0.91) (0.81) (0.99) (0.88)
Distributions from net
realized gains ._ ._ (0.03) ._ ._ ._ ._ ._ ._ ._
Distributions in excess
of net
realized gains ._ ._ (0.00)** ._ ._ ._ (0.01) ._ ._ ._
--------- --------- -------- -------- -------- -------- ------- -------- -------- --------
Total Distributions (0.75) (0.70) (0.77) (0.72) (0.74) (0.81) (0.92) (0.81) (0.99) (0.88)
--------- --------- -------- -------- -------- -------- ------- -------- -------- --------
Net Asset Value,
end of year $12.88 $11.89 $13.14 $12.76 $12.81 $11.99 $11.97 $11.66 $11.75 $12.63
--------- --------- -------- -------- -------- -------- ------- -------- -------- --------
Total Return + 14.98% (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) $15,055 $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+++ 0.85% 1.02% 1.40% 1.67% 1.91% 1.92% 1.85% 1.63% 1.04% 0.65%++
Ratio of net income to
average
net assets 5.98% 5.59% 5.56% 5.70% 6.09% 6.87% 7.61% 6.91% 8.20% 8.21%++
Portfolio turnover rate 172% 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.
</TABLE>
Page 4
FINANCIAL HIGHLIGHTS
the Fund's Annual Report. Further information about, and management's
discussion of the Fund's performance is included in the Fund's Annual Report,
which may be obtained without charge by writing to the address or calling the
number set forth on the cover page of this Prospectus.
- ----------
# 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.
Page 5
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR ENDED
DECEMBER 31,
1995(1)
----------------
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of year..... $11.89
--------
INVESTMENT OPERATIONS:
Investment income-net.................. .68
Net realized and unrealized gain on investments .99
--------
TOTAL FROM INVESTMENT OPERATIONS....... 1.67
--------
DISTRIBUTIONS;
Dividends from investment income-net... (.68)
--------
Net asset value, end of year........... $12.88
========
TOTAL INVESTMENT RETURN(2)................. 14.40%
RATIOS/SUPPLEMENTAL DATA:
Ratios of expenses to average net assets 1.35%
Ratios of net investment income to average net assets 5.17%
Portfolio Turnover Rate................ 172%
Net assets, end of year (000's omitted) $274
(1) On December 19, 1994, the Fund commenced offering Class B shares.
(2) Exclusive of sales load.
</TABLE>
Page 6
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR ENDED
DECEMBER 31,
1995(1)
----------------
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of year..... $11.89
-------
INVESTMENT OPERATIONS:
Investment income-net.................. .68
Net realized and unrealized gain on investments 1.00
-------
TOTAL FROM INVESTMENT OPERATIONS....... 1.68
-------
DISTRIBUTIONS;
Dividends from investment income-net... (.68)
-------
Net asset value, end of year........... $12.89
=======
TOTAL INVESTMENT RETURN(2)................. 14.48%
RATIOS/SUPPLEMENTAL DATA:
Ratios of expenses to average net assets 1.35%
Ratios of net investment income to average net assets 4.83%
Portfolio Turnover Rate................ 172%
Net assets, end of year (000's omitted) --
(1) On December 19, 1994, the Fund commenced offering Class C shares.
(2) Exclusive of sales load.
</TABLE>
Page 7
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PREMIER LIMITED TERM GOVERNMENT SECURITIES FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR ENDED
DECEMBER 31,
1995(1)
----------------
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of year..... $11.89
--------
INVESTMENT OPERATIONS:
Investment income-net.................. .77
Net realized and unrealized gain on investments 1.01
--------
TOTAL FROM INVESTMENT OPERATIONS....... 1.78
--------
DISTRIBUTIONS;
Dividends from investment income-net... (.78)
--------
Net asset value, end of year........... $12.89
========
TOTAL INVESTMENT RETURN(2)................. 15.34%
RATIOS/SUPPLEMENTAL DATA:
Ratios of expenses to average net assets .64%
Ratios of net investment income to average net assets 6.20%
Portfolio Turnover Rate................ 172%
Net assets, end of year (000's omitted) $183
(1) On April 8, 1994, the Fund commenced offering Class R shares.
(2) Exclusive of sales load.
</TABLE>
Page 8
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 (or, in the case of Class B shares of the Fund
acquired through exchange of Class B shares of another fund advised by
Dreyfus, the date of purchase of the original Class B shares of the fund
exchanged), 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 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 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. In addition, 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 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 Agreements with the
Distributor.
The decision as to which Class of shares is most 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
Page 9
CDSC, if any, on Class B or Class C shares would be less than the initial
sales charge on Class A shares purchased at the same time, and to what
extent, if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the 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 high 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. There is no assurance that the Fund will achieve its
objective.
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.
Page 10
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. 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 and may purchase put
and call options on 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
Page 11
received for writing the option. Upon the exercise of a call option
written by the Fund, the Fund may suffer a loss equal to the excess of
the security's market value at the time of the option exercise over the
Fund's acquisition cost of the security less the premium received for
writing the option.
Whenever the Fund writes a call option it will continue to
own or have the present right to acquire the underlying security for as
long as it remains obligated as the writer of the option. To support its
obligation to purchase the underlying security if a put option is
exercised, the Fund will either (a) deposit with the Fund's custodian in
a segregated account, cash, U.S. Government Securities or other high
grade debt obligations having a value at least equal to the exercise
price of the underlying securities or (b) continue to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
security having the same exercise prices and expiration dates as those
written by the Fund), or an equivalent number of puts of the same "class"
(that is, puts on the same underlying security) with exercise prices
greater than those that it has written (or, if the exercise prices of the
puts it holds are less than the exercise prices of those it has written,
it will deposit the difference with the Fund's custodian in a segregated
account).
The Fund may engage in a closing purchase transaction to
realize a profit or limit a loss, to prevent an underlying security from
being called or put or, in the case of a call option or limit a loss, 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 331/3% 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.
Page 12
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund
may led portfolio securities to brokers, dealers and other financial
organizations. Such loans will not exceed 33 1/3% of the Fund's total
assets, taken at value. Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies, which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S.
Government Securities on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by
the other party to the transaction. The purchase of securities on a
when-issued or delayed delivery basis involves the risk that, as a result
of an increase in yields available in the marketplace, the value of the
securities purchased will decline prior to the settlement date. The sale
of securities for delayed 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 at least equal at all times 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 determines 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
Page 13
determinations. If a particular investment in Section 4(2)
paper or Rule 144A securities is not determined to be liquid, that
investment will be included within the percentage limitation on
investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and
it is not possible to predict how this market will mature. Investing in
Rule 144A securities could have the effect of increasing the level of
Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities.
COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage
obligations ("CMOs") are a type of bond secured by an underlying pool of
mortgages or mortgage pass-through certificates that are structured to
direct payments on underlying collateral to different series or classes
of the obligations. CMO classes may be specially structured in a manner
that provides any of a wide variety of investment characteristics, such
as yield, effective maturity and interest rate sensitivity. CMO
structuring is accomplished by in effect stripping out portions of the
cash flows (comprised of principal and interest payments) on the
underlying mortgage assets and prioritizing the payments of those cash
flows. In the most extreme case, one class will be a "principal-only"
(PO) security, the holder of which receives the principal payments made
by the 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 14
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, in the past the portfolio turnover rate of
the Fund has exceeded 100% and may exceed 100% in the future. A portfolio
turnover rate of 100% would occur, for example, if all the securities
held by the Fund were replaced once 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 and/or long term capital gains that, when
distributed to the Fund's shareholders, are taxable to them at the then
current rate. 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. As a fundamental policy,
the Fund may not (i) borrow money in an amount exceeding 33 1/3% of the
Fund's total assets at the time of borrowing; (ii) make loans or lend
securities in excess of 33 1/3% of the Fund's total assets; (iii)
purchase, with respect to 75% of the Fund's total assets, securities of
any one issuer representing more than 5% of the Fund's total assets
(other than securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities) or more than 10% of that issuer's
outstanding voting securities; and (iv) invest more than 25% of the value
of the Fund's total assets in the securities of one or more issuers
conducting their principal activities in the same industry; provided that
there shall be no such limitation on investments in obligations of the
U.S. Government, state and municipal governments and their political
subdivisions or investments in domestic banks, including U.S. branches of
foreign banks and foreign branches of U.S. banks. 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 29, 1996, Dreyfus managed or
administered approximately $82 billion in assets for more than 1.7 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 one or more third parties to provide,
investment adviso-
Page 15
ry, 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 a 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 began his career with The
Boston Company in 1984 as Portfolio Manager in the Personal Trust
Division. Mr. Goduti holds a Bachelor of Science Degree in Finance and
Computer Science from Boston College and is a Chartered Financial
Analyst.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Bank
Holding Company Act of 1956, as amended. Mellon provides a comprehensive
range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO
Credit Corporation and a number of companies known as Mellon Financial
Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed approximately $233 billion in assets as of December 31,
1995, including approximately $81 billion in mutual fund assets. As of
December 31, 1995, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services,
for more than $786 billion in assets, including approximately $60 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, Rule 12b-1 fees
(if applicable) and extraordinary 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, 1995, the Fund paid Dreyfus 0.60% of its
average daily net assets in investment management fees.
For the fiscal year ended December 31, 1995, total operating
expenses (excluding Rule 12b-1 fees) of each class of the Fund were 0.60%
of the average daily net assets.
In addition, Class A, B and C shares may be subject to
certain distribution and shareholder servicing fees. See "Distribution
Plans (Class A Plan and Class B and C Plans)."
Dreyfus may pay the Fund's distributor for shareholder
services from Dreyfus' 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.
In allocating brokerage transactions for the Fund, Dreyfus
seeks to obtain the best execution of orders at the most favorable net
price. Subject to this determination, Dreyfus may consider, among other
things, the receipt of research services and/or the sale of shares of the
Fund or other funds managed, advised or administered by Dreyfus as
factors in the selection of broker-dealers to execute portfolio
transactions for the Fund. See "Portfolio Transactions" in the SAI.
Page 16
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.
DISTRIBUTOR -- 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, Pennsylvania
15258 is the Fund's custodian. The Fund's Transfer and Dividend
Disbursing Agent is Dreyfus Transfer, Inc. (the "Transfer Agent"), a
wholly-owned subsidiary of Dreyfus, located at 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 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 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 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. 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 sub-
sequent 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-
Page 17
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 amounts that may be contributed
annually 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"),
but these limitations generally do not directly affect the amount of plan
assets 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 and
Trust Company, 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 and Trust Company 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.
Page 18
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 PER SHARE ("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. Shares of each Class of the
Fund are offered on a continuous basis. 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.
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 such close of business are effective
on, and will receive the price determined on, that day (except purchase
orders made through the TELETRANSFER Privilege which are effective one
business day after your call). Investment, exchange and redemption
requests received after such close of business 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
Page 19
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.
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 shares" (other than the amount of the CDSC and its time periods)
and "How to Redeem Fund Shares _ Waiver of CDSC" 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.
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
Page 20
"wrap account" or a similar program under which such clients pay a fee
to such broker-dealer or other financial institution.
Class A shares also may be purchased at NAV, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a
registered open-end management investment company not managed by Dreyfus
or its affiliates. The purchase of Class A shares of the Fund must be
made within 60 days of such redemption and the shareholder must have
either (i) paid an initial sales charge or a CDSC or (ii) been obligated
to pay at any time during the holding period, but did not actually pay on
redemption, a deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at NAV, subject to
appropriate documentation, by (i) qualified separate accounts maintained
by an insurance company pursuant to the laws of any State or territory
of the United States, (ii) a State, county or city or instrumentality
thereof, (iii) a charitable organization (as defined in Section 501(c)(3)
of the Code) investing $50,000 or more in Fund shares, and (iv) a
charitable remainder trust (as defined in Section 501(c)(3) of the Code).
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 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 of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC, is imposed, however, on redemptions of Class C shares
made within the first year of purchase. See "Class B shares" above and
"How to Redeem Fund Shares."
CLASS R SHARES--The public offering price for Class R shares is the
NAV 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.
Page 21
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
1-800-645-6561 or, if calling from overseas, 516-794-5452.
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 1-800-645-6561 or, if calling from overseas,
516-794-5452. 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, TELE-
TRANSFER 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
Page 22
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 and, therefore, an exchanging shareholder (other than a
tax-exempt Retirement Plan) may realize 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 (other than a tax-exempt
Retirement Plan) may realize 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.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the bank account designated by you will be debited in the
specified amount,
Page 23
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 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 other 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 other 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.
Page 24
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 from 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.
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
Page 25
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. HOW-
EVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE 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, 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 TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST
WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF
YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH
SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE
ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed
until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if the net asset value
of your account is $500 or less and remains so during the notice period.
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:
Page 26
<TABLE>
<CAPTION>
Year Since CDSC AS A % OF AMOUNT
Purchase Payment INVESTED OR REDEMPTION
WAS MADE PROCEEDS
<S> <C> <C>
First.................................................... 3.00
Second................................................... 3.00
Third.................................................... 2.00
Fourth................................................... 2.00
Fifth.................................................... 1.00
Sixth.................................................... .00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that
results in the lowest possible rate. It will be assumed that the
redemption is made first of amounts representing shares acquired pursuant
to the reinvestment of dividends and other distributions; then of amounts
representing the increase in 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.
For purposes of determining the applicable CDSC payable with
respect to redemption of Class B shares of the Fund where such shares
were acquired through exchange of Class B shares of another fund advised
by Dreyfus, the year since purchase payment was made is based on the date
of purchase of the original Class B shares of the fund exchanged.
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 (and to certain Class A 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 701/2 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
Board of Trustees determines 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.
Page 27
PROCEDURES--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or through the TELETRANS-
FER 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.
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 1-800-554-4611.
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 pro-
ceeds 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
Page 28
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
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this privilege.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer
of a Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the NYSE (currently 4:00 p.m., New York time), the redemption
request will be effective on that day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the NYSE, the redemption request will be effective on the next business
day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close
of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee prior to the close of its business day
(normally 5:15 p.m., New York time) are effected at the price determined
as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is
the responsibility of the Selected Dealer to transmit orders on a timely
basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE--CLASS A SHARES. Upon written request,
you may reinvest up to the number of Class A shares you have redeemed,
within 30 days of redemption, at the then-prevailing NAV without a sales
load, or reinstate your account for the purpose of exercising Fund
exchanges. 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 for activities or 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 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.
Page 29
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 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 capital
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 capital gains
unless all capital loss carryovers, if any, have been utilized or have
expired. 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 are calculated at the same time and in the
same manner and are in the same amount, except that the expenses
attributable solely to a particular Class are 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."
Investors other than qualified Retirement Plans may choose
whether to receive dividends and other distributions in cash, to receive
dividends in cash and reinvest other distributions in additional Fund
shares at NAV, or to reinvest both dividends and other distributions in
additional Fund shares at NAV; dividends and other distributions paid to
qualified Retirement Plans are reinvested automatically in additional
Fund shares at NAV.
It is expected that the Fund will continue to qualify for
treatment 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 (collectively, "dividend distributions"),
Page 30
paid by the Fund are taxable to U.S. shareholders, including certain
non-qualified Retirement Plans, as ordinary income to the extent the
Fund's earnings and profits, whether received in cash or reinvested in
Fund shares. Distributions from the Fund's capital gain (the excess of
net long-term capital gain over short-term capital loss) will be taxable
to such shareholders as long-term capital gains, regardless of how long
the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in additional 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.
Dividend distributions paid by the Fund to a non-resident
foreign investor generally are subject to U.S. withholding tax at the
rate of 30%, unless the non-resident foreign investor claims the benefit
of a lower rate specified in a tax treaty. Capital gain distributions
paid by the Fund to a non-resident foreign investor, as well as the
proceeds of any redemptions by such an investor, regardless of the extent
to which gain or loss may be realized, generally are not 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 capital gain distributions, 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 and other distributions 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 distributions 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 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. If a
distributee of an "eligible rollover distribution" from a qualified
Retirement Plan does not elect to have the eligible Retirement Plan in a
"direct rollover," the eligible rollover distribution is subject to a 20%
income tax withholding.
With respect to individual investors and certain
non-qualified Retirement Plans, Federal laws and regulations generally
require the Fund to withhold ("backup withholding") and remit to the U.S.
Treasury 31% of dividends, capital gain distributions and of any
redemption proceeds, regardless of the extent to which gain or loss may
be realized, paid to such shareholder if the 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 that the
Page 31
shareholder is subject to backup withholding as a result of a failure to
properly report taxable dividend or interest income on a Federal income
tax return. Furthermore, the IRS may notify the Fund to institute backup
withholding if the IRS determines that shareholder's TIN is incorrect or
if that 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 gain
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 distribution and shareholder servicing 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 manage-
Page 32
ment 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 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 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
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 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 Plans 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.
PLG/050196
Page 33
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, 1996
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, 1996, as they may be revised from time to time. The Funds are
separate, diversified portfolios of The Dreyfus/Laurel Funds Trust
(formerly, The Laurel Funds Trust), an open-end management investment
company (the "Trust"), known as a mutual fund. To obtain a copy of a
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call one of 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 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-14
Management Arrangements . . . . . . . . . . . . . . . . . . . . .B-20
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . .B-21
Distribution Plans. . . . . . . . . . . . . . . . . . . . . . . .B-23
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . .B-25
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . .B-26
Determination of Net Asset Value. . . . . . . . . . . . . . . . .B-29
Dividends, Other Distributions and Taxes. . . . . . . . . . . . .B-29
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . .B-33
Performance Information . . . . . . . . . . . . . . . . . . . . .B-35
Information About the Funds . . . . . . . . . . . . . . . . . . .B-37
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . .B-38
Financial Statements. . . . . . . . . . . . . . . . . . . . . . .B-39
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . .B-40
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . . .B-41
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Description of the Fund."
Portfolio Securities
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
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 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). 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 and FHLMC are guaranteed by those entities as to
payment of principal and interest.
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). Each Fund may invest in
various mortgage backed securities, as described in its Prospectus.
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 FHLMC and 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 Service, a division of McGraw-
Hill Companies, Inc. ("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.
Repurchase Agreements (Each Fund). The Funds may enter into
repurchase agreements with U.S. Government Securities dealers recognized by
the Federal Reserve Board, with member banks of the Federal Reserve System,
or with such other brokers or dealers that meet the credit guidelines of
the Board of Trustees. In a repurchase agreement, the Fund buys a security
from a seller that has agreed to repurchase the same security at a mutually
agreed upon date and price. A Fund's resale price will be in excess of the
purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate on the underlying security.
Repurchase agreements may also be viewed as a fully collateralized loan of
money by the Fund to the seller. The period of these repurchase agreements
will usually be short, from overnight to one week, and at no time will a
Fund invest in repurchase agreements for more than one year. A Fund will
always require that it receive as collateral securities whose market value
including accrued interest is, and during the entire term of the agreement
remains, at least equal to 100% of the dollar amount invested by the Fund
in each agreement, and the Fund will make payment for such securities only
upon physical delivery or upon evidence of book entry transfer to the
account of the Fund's custodian. If the seller defaults, the Fund might
incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of
a repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. Dreyfus seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the credit guidelines of
the Trust's Board of Trustees.
When-Issued Securities (Each Fund). New issues of U.S. Treasury and
Government securities are often offered on a when-issued basis. This means
that delivery and payment for the securities normally will take place
approximately 7 to 45 days after the date the buyer commits to purchase
them. The payment obligation and the interest rate that will be received on
securities purchased on a when-issued basis are each fixed at the time the
buyer enters into the commitment. Each Fund will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities or dispose of the
commitment before the settlement date if it is deemed advisable as a matter
of investment strategy. Cash or marketable high-grade debt securities equal
to the amount of the above commitments will be segregated on each Fund's
records. For the purpose of determining the adequacy of these securities
the segregated securities will be valued at market. If the market value of
such securities declines, additional cash or securities will be segregated
on the Fund's records on a daily basis so that the market value of the
account will equal the amount of such commitments by the Fund.
Securities purchased on a when-issued basis and the securities held by
each Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates --
i.e., they will appreciate in value when interest rates decline and
decrease in value when interest rates rise. Therefore, if in order to
achieve higher interest income each Fund remains substantially fully
invested at the same time that it has purchased securities on a "when-
issued" basis, there will be a greater possibility of fluctuation in the
Fund's net asset value.
When payment for when-issued securities is due, each Fund will meet
its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Commercial Paper (Each Fund). The Funds may invest in commercial
paper issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933
("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition
under the federal securities laws and generally is sold to investors who
agree that they are purchasing the paper for an investment and not with a
view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper is normally resold to other
investors through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) paper, thus providing liquidity.
Pursuant to guidelines established by the Trust's Board of Trustees,
Dreyfus may determine that Section 4(2) paper is liquid for the purposes of
complying with the Fund's investment restriction relating to investments in
illiquid securities.
Management Policies
The Funds engage, except as noted, in the following practices in
furtherance of their investment objectives.
Loans of Fund Securities (Each Fund). Each Fund has authority to lend
its portfolio securities provided (1) the loan is secured continuously by
collateral consisting of U.S. Government Securities or cash or cash
equivalents adjusted daily to make a market value at least equal to the
current market value of these securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated
that a Fund may share with the borrower some of the income received on the
collateral for the loan or that it will be paid a premium for the loan. In
determining whether to lend securities, Dreyfus considers all relevant
factors and circumstances including the creditworthiness of the borrower.
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.
Investment Restrictions
The following limitations have been adopted by each Fund. A Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of a Fund are present or represented by proxy; or (b) more than 50%
of the outstanding shares of a Fund, whichever is less. Each Fund may not:
1. Purchase any securities which would cause 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
Investment Company Act of 1940, as amended (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.
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.
Each Fund has adopted the following additional non-fundamental
investment restrictions. These non-fundamental restrictions may be changed
without shareholder approval, in compliance with applicable law and
regulatory policy.
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 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 shall not constitute purchasing securities on margin.
10. No Fund shall purchase any security while borrowings 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.
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. 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
Principal Shareholders
The following shareholder owned of record more than 5% of Class B
shares of the Premier Limited Term Government Securities Fund at April 1,
1996: Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive,
Jacksonville, Florida 32246-6484, 23%.
The following shareholders owned of record more than 5% of Class B
shares of the Premier Managed Income Fund at April 1, 1996: Merrill Lynch
Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive, Jacksonville, Florida
32246-6484, 17%; R.W. Clarton, Inc., 4000 Massachusetts Avenue, Washington
DC 20016-5139, 8%; George Brodsky, 55 Maple Avenue, Rockville Center, New
York, 11570, 7%.
The following shareholders owned of record more than 5% of Class C
shares of the Premier Managed Income Fund at April 1, 1996: NFSC FEBO #
OCB-323098, Hanna K. Ford, 1 Baywater Drive, Darien, Connecticut 06820,
44%; Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive,
Jacksonville, Florida 32246-6484, 39%; NFSC FEBO # ARG-52249, NFSC/FMIC
IRA, FBO Joseph Hackman, 1613 Brent Road, Oreland, PA 19075, 6%.
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, N.A. ("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, 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 twelve 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 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 Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds") and Mr. DiMartino serves as a Board member for 93
other funds advised by Dreyfus.
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: 81
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 and Vice Chairman of the Board, Home
Owners Federal Savings and Loan (prior to May 1990). Age: 79 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 thereto, he was President and a director Dreyfus and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus and until August 24,
1994, the Fund's distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Bank Corporation. He is Chairman of the
Board of Noel Group, Inc., a venture capital company, a trustee of
Bucknell University; and a director of the Muscular Dystrophy
Association, Health Plan Services Corporation, Belding Heminway, Inc.,
Curtis Industries, Inc., Simmons Outdoor Corporation and Staffing
Resources, Inc. Age: 51 years old. His address is 200 Park Avenue,
New York, New York 10166.
o+JAMES M. FITZGIBBONS. Trustee of the Trust; Chairman, Howes Leather
Company, Inc.; Chairman, CEO and Director, Fieldcrest-Cannon Inc.;
Director, Lumber Mutual Insurance Company; Director, Barrett
Resources, Inc. Age: 61 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: 68 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. Age: 74 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; Former 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. Age: 49 years old. Address: Himmel and Company,
Inc., 399 Boylston Street, 11th Floor, Massachusetts 02116.
o*ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant, Director,
Acess Capital Strategic Community. Age: 78 years old. Address:
1817 Foxcroft Lane, Unit 306, 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: 48
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: 68 years old. Address:
15 Waverly Lane, Grosse Pointe Farms, Michigan 48236.
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: 64 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director, Harvard
Pilgrim Health Care, Inc.; Director, Massachusetts Electric Company;
Director, the Hymas Foundation, Inc., prior to February, 1993; Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 46 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
# ELIZABETH BACHMAN. Vice President and Assistant Secretary of the Trust,
The Dreyfus/Laurel Funds, Inc. and The Dreyfus/Laurel Tax-Fee
Municipal Funds (since January 1996); Counsel, Premier Mutual Fund
Services, Inc. Prior to September 1995, she was enrolled at the
Fordham University School of Law and received her J.D. in May 1995.
Prior to September 1992, she was an Assistant at the National
Association for Public Interest Law. Age: 26 years old. Address: 200
Park Avenue, New York, New York 10166.
#MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Funds, Inc. 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
994); Senior Vice President and Director of Financial Administration,
The Boston Company Advisors, Inc. (December 1988 to May 1993). Age:
37 years old. Address: One Exchange Place, Boston, Massachusetts
02109.
#FREDERICK C. DEY. Vice President of the Trust, 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). Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President (since September 1994) and Assistant
Secretary (since January 1996) of the Trust, The Dreyfus/Laurel Tax
Free Municipal Funds and The Dreyfus/Laurel Funds, Inc.; 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). Age: 31
year old. Address: 200 Park Avenue, New York, New York 10166.
RICHARD W. HEALEY. Vice President of the Trust, 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). Age: 41 years old.
Address: One Exchange Place, Boston, Massachusetts 02109.
# MARGARET PARDO. Assistant Secretary of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Paralegal, Premier Mutual Fund Services, Inc. Prior to
April 1995, she was a Medical Coordination Officer at ORBIS
International. Prior to June 1992, she worked as a Program
Coordinator at Physicians World Communications Group. Age: 27 years
old. Address: 200 Park Avenue, New York, New York 10166.
#JOHN E. PELLETIER. Vice President and Secretary of the Trust, 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). Age: 32 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
# JOHN J. PYBURN. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); and Vice President of Premier Mutual Fund Services,
Inc. From 1984 to July 1994, he was Assistant Vice President in the
Mutual Fund Accounting Department of Dreyfus. Age: 61 years old.
Address: 200 Park Avenue, New York, New York 10166.
# JOSEPH F. TOWER, III. Assistant Treasurer of the Trust, The
Dreyfus/Laurel Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal
Funds (since January 1996) and Senior Vice President, Treasurer and
Chief Financial Officer of Premier Mutual Fund Services, Inc. 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. Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by 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 April 1,
1996.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate 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, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an officer or employee of Premier or Dreyfus or
any of their affiliates, $27,000 per annum (and an additional $75,000 for
the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel
Funds). In addition, the Dreyfus/Laurel Funds pay 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 reimburse each Trustee/Director for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1995, the aggregate amount of
fees and expenses received by each current Trustee of the Trust from the
Trust and all other funds in The Dreyfus Family of Funds for which such
person is a Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From the
Benefits Estimated Trust
Accrued as Annual and Fund
Aggregate Part of the Benefits Complex
Compensation Trust's Upon Paid to Board
Name of Board Member From Trust# Expenses Retirement Member
<S> <C> <C> <C> <C>
Ruth Marie Adams $ 4,595 none none $ 34,500
Francis P. Brennan* 14,884 none none 111,500
James M. Fitzgibbons 4,723 none none 35,500
Joseph S. DiMartino** none none none 448,618***
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 4,732 none none 35,464
Kenneth A. Himmel 4,515 none none 33,750
Arch S. Jeffery** none none none none
Stephen J. Lockwood 4,491 none none 33,750
Robert D. McBride 4,726 none none 35,500
John J. Sciullo 4,462 none none 33,500
Roslyn M. Watson 4,591 none none 34,500
# Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a
portion of the management fee payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested
Trustees. Amount does not include reimbursed expenses for attending Board meetings, which amounted to $2,331
for the Trust.
* Compensation of Francis P. Brennan includes $75,000 paid by the Dreyfus/Laurel Funds to be the Chairman of the
Board.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the fiscal year ended December 31, 1995, the
aggregate amount of fees and expenses received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery
from Dreyfus for serving as a Board member of the Trust were $3,933, $4,856 and $4,726, respectively, and for
serving as a Board member of all funds in the Dreyfus/Laurel Funds (including the Trust) were $29,500, $36,500
and $35,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino, Fort and Jeffery a total of $611 for
expenses attributable to the Trust's Board meetings which is not included in the $2,331 amount noted above).
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for the fiscal year ended December 31,
1995.
</TABLE>
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in each 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 (the "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 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 its 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 60 days' 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; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Patrice Kozlowski; Vice-President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President-Human Resources; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Andrew S. Wasser, Vice President-Information Systems;
Maurice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, directors.
As compensation for Dreyfus' 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 1993, 1994 and 1995 fiscal years.
1995 1994 1993
Fee Fee Fee
Premier Limited Term 95,714 105,130(3) 150,007(1)
Government Securities Fund
Premier Managed Income Fund 632,276 630,564(4) 586,196(2)
_______________________
(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 The Boston Company Advisors, Inc.
(3) The Boston Company Advisors, Inc. 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, 1995.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectuses 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.
For the fiscal year ended December 31, 1995, the Distributor retained
$1,227 and $2,566 for Premier Limited Term Government Securities Fund and
Premier Managed Income Fund, respectively, from sales loads on the Funds'
Class A shares. For the fiscal year ended December 31, 1995, the
Distributor retained $240 and $294 from the contingent deferred sales
charge ("CDSC") on Class B shares for Premier Limited Term Government
Securities Fund and Premier Managed Income Fund, respectively. For the
same period, the Distributor retained no fees from the CDSC on Class C
shares for Premier Limited Term Government Securities Fund and Premier
Managed Income Fund, respectively.
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
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange ("NYSE") are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 P.M., New York time, on
any business day the Transfer Agent and the NYSE are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the NYSE is
not open for business), will be credited to the shareholder's Fund account
on the second bank business day following such purchase order.
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.
In-Kind Purchases. If the following conditions are satisfied, a Fund
may at its discretion, permit the purchase of shares through an "in-kind"
exchange of securities. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis for the exchange will depend upon the relative NAV of the
shares purchased and securities exchanged. Securities accepted by a Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities. For
further information about "in-kind" purchases, call 1-800-645-6561.
DISTRIBUTION PLANS
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Distribution Plan (Class A Plan and Class B and C Plans)."
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 may, directly or indirectly, bear
the expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Distribution Plan--Class A Shares. The Trust has adopted a
Distribution Plan pursuant to the Rule with respect to the Class A shares
of each Fund ("Class A Plan"), whereby 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 Class A Plan provides that a report of the amounts expended under
the Class A Plan, and the purposes for which such expenditures were
incurred, must be made to the Trust's Trustees for their review at least
quarterly. In addition, the Class A Plan provides that it may not be
amended to increase materially the costs which a Fund may bear for
distribution pursuant to the Class A Plan without approval of a Fund's
shareholders, and that other material amendments of the Class A Plan must
be approved by the vote of a majority of the 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 Class A Plan, cast in person at a meeting called for the
purpose of considering such amendments. The Class A Plan is subject to
annual approval by the entire Board of Trustees and by the Trustees who are
neither interested persons nor have any direct or indirect financial
interest in the operation of the Class A Plan, by vote cast in person at a
meeting called for the purpose of voting on the Class A Plan. The Class A
Plan is terminable, as to a Fund's class of shares, at any time by vote of
a majority of the Trustees who are not interested persons and have no
direct or indirect financial interest in the operation of the 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
Trust's 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.
For the fiscal year ended December 31, 1995 the distribution and
service fees paid by the Funds were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Class A Class B Class C Class R
Premier Limited Term Government (Distribution and $40,218 (Distribution Fee $564 $.08 --
Securities Fund Service Fee) (Service Fee) $282 $.04 --
Premier Managed Income Fund (Distribution and $201,030 (Distribution Fee $7,027 $187 --
Service Fee) (Service Fee) $1,866 $62 --
</TABLE>
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. Each 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 last approved by the
Trustees at a meeting held on January 31, 1996. 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 each Fund's Prospectus entitled "How to
Redeem Fund Shares."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification. For
more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
TeleTransfer Privilege. 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. Each Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of the Fund's net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. In the
case of requests for redemption in excess of such amount, the Board of
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 each Fund's portfolio is valued. If the recipient sold
such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE is
closed (other than customary weekend and holiday closings), (b) when
trading in the markets a Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the SEC so that disposal of a Fund's
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit
to protect a Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in each 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 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. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. 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 other 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 other 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 other 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 other 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 each 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 which 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 Day and
Christmas Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectuses 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 for treatment as a regulated investment company ("RIC")
under the Code, 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 ("Distribution Requirement"), 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 of shares 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, if a shareholder
sells shares of a Fund held 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 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 investors.
Gains from the sale or other disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
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 certain foreign
currency denominated securities (including debt instruments, certain
financial forward, futures and option contracts and 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 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by a Fund
from certain futures, 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 as ordinary income.
If a 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. A 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) could, under special tax rules,
affect the amount and timing 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 could need and to distribute such income to satisfy the Distribution
Requirement and to avoid the 4% excise tax referred in each Fund's
Prospectus under "Dividends, Other Distributions and Taxes." 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 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 it is deemed to be conducting
business, the Fund may be subject to the tax laws thereof. 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, such as
a foreign shareholder entitled to claim the benefits of an applicable tax
treaty. 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 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).
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain the excess of long-
term capital gain over short-term capital loss), 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. 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 a foreign
shareholder's ownership of the Fund's shares 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.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with the Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. The Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to
the benefits received. Dreyfus also places transactions for other accounts
that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Trust's procedures adopted in accordance with Rule 17e-1 of the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligation to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Trust's Board of Trustees periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of a Fund and reviews the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Funds,
investment decisions for a Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Funds are concerned. In other cases, however, the ability of the
Funds to participate in volume transactions will produce better executions
for the Funds. While the Trustees will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to a Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the fiscal year ended December 31, 1994, the Fund paid $3,289 in
brokerage commissions to non-affiliated brokers. For the fiscal years
ended December 31, 1995 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 (other than tax-
exempt shareholders) at ordinary income tax rates.
The portfolio turnover rates for the fiscal years ended 1994 and 1995
for the Premier Managed Income Fund were, 270% and 236.10%, respectively;
and for the Premier Limited Term Government Securities Fund, were 165% and
171.63%, 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 each Fund's Prospectus entitled
"Performance Information."
The Premier Managed Income Fund's current yield for the 30-day period
ended December 31, 1995 was 5.76%, 5.26%, 5.22% and 6.24% for its Class A,
Class B, Class C and Class R shares, respectively. The Premier Limited
Term Government Securities Fund's current yield for the 30-day period ended
December 31, 1995 was 4.81%, 4.46%, 4.46% and 5.22%, for its Class A, Class
B, Class C and Class R shares, respectively. Current yield is computed
pursuant to a formula which operates, with respect to each Class, as
follows: the amount of the Fund's expenses with respect to such Class
accrued for the 30-day period (net of reimbursements) is subtracted from
the amount of the dividends and interest earned (computed in accordance
with regulatory requirements) by the Fund with respect to such Class during
the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were
entitled to receive dividends, and (b) the maximum offering price per share
in the case of Class A or the net asset value per share in the case of
Class B, Class C and Class R on the last day of the period less any
undistributed earned income per share reasonably expected to be declared as
a dividend shortly thereafter. The quotient is then added to 1, and that
sum is raised to the 6th power, after which 1 is subtracted. The current
yield is then arrived at by multiplying the result by 2.
The Premier Limited Term Government Securities Fund's average annual
total returns for Class A shares for the 1, 5 and 9.8 year periods ended
December 31, 1995 were 11.50%, 6.87% and 6.91% respectively. The average
annual total returns for Class B shares for the 1 year period ended
December 31, 1995 and for the period December 19, 1994 (inception of Class
B) through December 31, 1995, were 11.40% and 10.84%, respectively.
The average annual total returns for Class C shares for the 1 year period
ended December 31, 1995 and for the period December 19, 1994 (inception of
Class C) through December 31, 1995, were 13.73%, and 13.76% respectively.
The average annual total returns for Class R shares for the 1 year period
ended December 31, 1995 and for the period April 8, 1994 (inception of
Class R) through December 31, 1995, were 15.34% and 7.67%; respectively.
The Premier Managed Income Fund's average annual total returns for
Class A shares for the 1, 5, 10 and 16.4 year periods ended December 31,
1995 were 12.01%, 9.13%, 8.15% and 9.67% respectively. The average annual
total returns for Class B shares for the 1 year period ended December 31,
1995 and for the period December 19, 1994 (inception of Class B) through
December 31, 1995 were 12.55% and 11.38%, respectively. The average annual
total returns for Class C shares for the 1 year period ended December 31,
1995 and for the period December 19, 1994 (inception of Class C) through
December 31, 1995 were 15.54%, and 15.16%, respectively. The average
annual total returns for Class R shares for the 1 year period ended
December 31, 1995 and for the period February 1, 1993 (inception of Class
R) through December 31, 1995 were 17.71% and 8.25%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) 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'
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.
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.
The Premier Limited Government Securities Fund's total return for the
period March 3, 1986 (commencement of operations) to December 31, 1995 for
Class A was 93.00%. Based on net asset value per share, the total return
for Class A was 99.01% for this period. The Premier Limited Term
Government Securities Fund's total return for Class B and Class C for the
period from December 19, 1994 (inception date of Class B and Class C)
through December 31, 1995 was 11.42% and 14.50%, respectively. Without
giving effect to the applicable CDSC, the total return for Class B and C
was 14.42% and 14.50%, respectively. The Premier Limited Term Government
Securities Fund's total return for Class R for the period from April 8,
1994 (inception date of Class R) through December 31, 1995 was 13.68%.
The Premier Managed Income Fund's total return for the period August
1, 1979 (commencement of operations) to December 31, 1995 for Class A was
355.40%. Based on net asset value per share, the total return for Class A
was 376.83% for this period. The Premier Managed Income Fund's total
return for Class B and Class C for the period from December 19, 1994
(inception date of Class B and Class C) through December 31, 1995 was
11.98% and 15.98%, respectively. Without giving effect to the applicable
CDSC, the total return for Class B and C was 15.98% and 15.98%,
respectively. The Premier Managed Income Fund's total return for the
period February 1, 1993 (inception date of Class R) through December 31,
1995 was 26.06%.
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.
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 a Fund's performance. Furthermore, a Fund may quote its yields
in advertisements or in shareholder reports.
From time to time, advertising material for a Fund may including
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "General
Information."
Each Fund share, 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
of 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 Fund property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund 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.
Each Fund is currently one of four portfolios of the Trust.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Funds' custodian. Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, is located at One American Express Plaza, Providence, Rhode Island
02903, and is the Funds' transfer and dividend disbursing agent. Under a
transfer agency agreement with each Fund, the Transfer Agent arranges for
the maintenance of shareholder account records for the Fund, the handling
of certain communication between shareholders and the Fund and the payment
of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis for the
number of shareholder accounts it maintains for the Fund during the month,
and is reimbursed for certain out-of-pocket expenses. Dreyfus Transfer,
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.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, Second 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, 1996,
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 filed on behalf
of the Funds.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1995,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report are 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 A
Premier Managed Income Fund
Asset Composition Information
For Fiscal Year Ended December 31, 1995
MUNICIPAL BOND MUNICIPAL BONDS
MOODY's RATING S&P's RATING
Percent of Value
Aaa 71.3% AAA 71.3%
Aa2 0.0 AA+ 0.0
Aa 1.1 AA 1.1
A1 0.0 AA- 0.0
A2 0.0 A+ 0.0
A 8.1 A 8.1
Baa2 0.0 A- 0.0
Baa3 0.0 BBB+ 0.0
Baa 6.8 BBB 6.8
Ba2 0.0 BBB- 0.0
B1 0.0 BB+ 0.0
Ba 15.7 BB 15.7
B 2.6 B 2.6
Not Rated 0.3 Not Rated .3
Net Cash (5.9) Net Cash (5.9)
===== =====
TOTAL 100.00% 100.00%
The chart above indicates the weighted average composition of the
securities held by the Premier Managed Income Fund for the period ended
December 31, 1995, with the debt securities rated by Moody's Investors
Service, Inc. and Standard & Poor's separated into the indicated
categories. The weighted average indicated above was calculated on a
dollar weighted basis and was computed as of the end of each month during
the fiscal year. The chart does not necessarily indicate what the
composition of the securities held by the Premier Managed Income Fund will
be in the current and subsequent fiscal years.
For a description of Moody's Investors Services, Inc.'s and Standard &
Poor's rating of municipal securities, see Appendix B to the SAI.
APPENDIX B
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.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Principal
Bonds and Notes_98.0% Amount Value
_____________________________________ _____- _____-
<S> <C> <C>
U.S. Treasury Notes_82.6%
5-1/2%, 4/15/2000..................................................... $ 3,000,000 $ 3,028,125
7%, 4/15/1999......................................................... 2,800,000 2,942,626
7-1/8%, 10/15/1998.................................................... 3,300,000 3,459,327
7-1/8%, 2/29/2000..................................................... 44,000 46,874
7-1/4%, 8/15/2004..................................................... 1,060,000 1,179,747
7-3/8%, 5/15/1996..................................................... 200,000 201,547
7-3/4%, 1/31/2000..................................................... 1,800,000 1,956,375
_____-
Total U.S. Treasury Notes................................................. 12,814,621
======
Mortgage-Backed Securities_15.4%
Federal Home Loan Mortgage Corp.,
Participation Certificates;
11%, 11/1/2015........................................................ 5,491 6,089
_____-
Federal National Mortgage Association;
7-1/2%, 10/1/2025..................................................... 790,178 810,422
_____-
Government National Mortgage Association I:
8%, 9/15/2024......................................................... 753,998 786,043
9%, 2/15/2019-2/15/2020............................................... 519,026 550,329
9-1/2%, 10/15/2009.................................................... 69,333 74,468
10%, 5/15/2019........................................................ 65,775 72,167
10-1/2%, 2/15/2014-4/15/2016.......................................... 58,235 64,532
11-1/2%, 12/15/2015................................................... 27,097 30,721
_____-
1,578,260
_____-
Total Mortgage-Backed Securities.......................................... 2,394,771
======
TOTAL INVESTMENTS
(cost $14,500,653)...................................................... 98.0% $15,209,392
===== ======
CASH AND RECEIVABLES (NET)................................................ 2.0% $ 302,900
===== ======
NET ASSETS............................................................... 100.0% $15,512,292
===== ======
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $14,500,653)_see Statement
of Investments........................................................ $15,209,392
Cash.................................................................... 111,882
Interest receivable..................................................... 232,303
Paydowns receivable..................................................... 170
_____-
15,553,747
LIABILITIES:
Due to The Dreyfus Corporation_Note 2(a)............................... $15,142
Due to Distributor_Note 2(b)........................................... 3,318
Payable for shares of Beneficial Interest redeemed...................... 21,673
Trustees' fees payable_Note 2(c)....................................... 1,322 41,455
___- _____-
NET ASSETS.................................................................. $15,512,292
======
REPRESENTED BY:
Paid-in capital......................................................... $15,173,710
Accumulated distributions in excess of investment income_net........... (2,773)
Accumulated net realized (loss) on investments.......................... (367,384)
Accumulated gross unrealized appreciation on investments................ 708,739
_____-
NET ASSETS at value......................................................... $15,512,292
======
NET ASSET VALUE, per share:
Class A Shares
unlimited number of shares of Beneficial Interest
($15,054,839 / 1,168,411 shares of Beneficial Interest outstanding)... $12.88
======
Class B Shares
unlimited number of shares of Beneficial Interest
($274,716 / 21,321 shares of Beneficial Interest outstanding)......... $12.88
======
Class C Shares
unlimited number of shares of Beneficial Interest
($16.74 / 1.299 shares of Beneficial Interest outstanding)............ $12.89
======
Class R Shares
unlimited number of shares of Beneficial Interest
($182,720 / 14,171 shares of Beneficial Interest outstanding)......... $12.89
======
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Statement of Operations year ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest Income......................................................... $1,106,816
Expenses:
Investment management fee_Note 2(a).................................. $ 95,714
Distribution fee_Note 2(b)........................................... 40,782
Trustees' fees and expenses_Note 2(c)................................ 1,622
Service fee_Note 2(b)................................................ 282
_____
Total Expenses.................................................... 138,400
_____
INVESTMENT INCOME_NET............................................ 968,416
REALIZED AND UNREALIZED GAIN ON INVESTMENTS_Note 3:
Net realized (loss) on investments...................................... $ (173,203)
Net unrealized appreciation on investments.............................. 1,508,417
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 1,335,214
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,303,630
======
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
______________-______________-
1995 1994
_____- _____-
<S> <C> <C>
OPERATIONS:
Investment income_net............................................... $ 968,416 $ 1,122,433
Net realized (loss) on investments................................... (173,203) (183,515)
Net unrealized appreciation (depreciation) on investments for the year 1,508,417 (1,875,149)
_____- _____-
Net Increase (Decrease) In Net Assets Resulting From Operations.. 2,303,630 (936,231)
_____- _____-
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net:
Class A Shares..................................................... (966,462) (942,903)
Institutional Class................................................ _ (179,530)
Class B Shares..................................................... (5,926) _
Class C Shares..................................................... (1) _
Class R Shares..................................................... (1,188) _
_____- _____-
Total Dividends.................................................. (973,577) (1,122,433)
_____- _____-
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A Shares(1).................................................. 1,733,856 8,436,807
Class B Shares..................................................... 286,680 15
Class C Shares..................................................... _ 15
Class R Shares..................................................... 180,000 15
Dividends reinvested:
Class A Shares(1).................................................. 857,024 1,029,275
Class B Shares..................................................... 2,838 _
Class C Shares..................................................... _ _
Class R Shares..................................................... 1,187 _
Cost of shares redeemed:
Class A Shares(1).................................................. (6,542,409) (12,277,432)
Class B Shares..................................................... (21,787) _
Class C Shares..................................................... _ _
Class R Shares..................................................... _ _
_____- _____-
(Decrease) In Net Assets From Beneficial Interest Transactions... (3,502,611) (2,811,305)
_____- _____-
Total (Decrease) In Net Assets................................. (2,172,558) (4,869,969)
NET ASSETS:
Beginning of year.................................................... 17,684,850 22,554,819
_____- _____-
End of year [including distributions in excess of investment income-net;
$(2,773) in 1995 and undistributed investment income-net;
$2,388 in 1994].................................................... $15,512,292 $17,684,850
====== ======
</TABLE>
<TABLE>
<CAPTION>
Shares
______________________________________________________________________________
Class A Class B Class C Class R
__________________________ ____________ ____________ ____________
Year Ended December 31, Year Ended Year Ended Year Ended
__________________________ December 31, December 31, December 31,
1995 1994(2)(3) 1995(4) 1995(4) 1995(5)
___- _____ ______ ______ ______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.................. 141,378 671,131 22,818 _ 14,077
Shares issued for dividends..
reinvested................. 68,726 83,300 224 _ 93
Shares redeemed.............. (529,321) (983,069) (1,722) _ _
____ ____ ___ ___ ___
Net Increase (Decrease)
In Shares Outstanding.... (319,217) (228,638) 21,320 _ 14,170
==== ==== === === ===
<FN>
___________
(1) 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.
(2) 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.
(3) Number of shares includes 257,667 of subscriptions, 12,997 of
reinvestments and 292,971 of redemptions for the Institutional Class up to
April 4, 1994.
(4) The Fund commenced offering Class B and Class C shares on December 19,
1994. As of December 31, 1994, the Fund had issued 1,259 Class B shares and
1.259 Class C shares.
(5) The Fund commenced selling Class R shares on April 4, 1994. As of
December 31, 1994, the Fund had issued 1.216 Class R shares.
</TABLE>
See notes to financial statements.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Financial Highlights
Reference is made to page 4 of the Fund's Prospectus dated May 1, 1996.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
NOTES TO FINANCIAL STATEMENTS
NOTE 1_Significant Accounting Policies:
Premier Limited Term Government Securities 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. The Dreyfus/Laurel
Funds Trust (the "Trust") is registered under the Investment Company Act of
1940 ("Act") and operates as a series company currently offering four series
including the Fund. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, 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.
The Fund currently offers four classes of shares: Class A, Class B and
Class C shares are sold primarily to the 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 are subject to a
contingent deferred sales charge ("CDSC"). 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 distribution fees and voting rights on
matters affecting a single class.
Investment Income, net of expenses (other than class specific expenses)
and realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each
class.
(a) Portfolio Valuation: The Fund's investments (excluding U.S.
Government obligations and short-term investments) are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as
to values from dealers; and general market conditions. Investments in U.S.
Government obligations are valued at the mean between quoted bid and asked
prices. Short-term investments are carried at amortized cost, which approximat
es value.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income including amortization of discount and premium on investments is
recognized on the accrual basis.
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Distributions to Shareholders: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, it is the policy of the Fund not to distribute such
gain.
(d) Federal Income Taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $367,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1995. If not
applied, $175,000 of the carryover expires in fiscal 2002 and $192,000 of the
carryover expires in fiscal 2003.
NOTE 2_Investment Management Fee and Other Transactions With Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. 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 .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 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).
(b) Distribution and Service Plan: The Fund has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Class A, B and C shares. Under the Plan, the Fund may pay annually up to .25%
of the value of its average daily net assets attributable to its Class A
shares to compensate the Distributor and Dreyfus Service Corporation, an
affiliate of the Manager, for shareholder servicing activities and the
Distributor for activities and expenses primarily intended to result in the
sale of Class A shares. Under the Plan, the Fund may pay the Distributor for
distributing the Fund's Class B and Class C shares at an aggregate annual
rate of .50% of the value of the average daily net assets of Class B and
Class C shares. 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 the Distributor for providing certain services to the
holders of Class B and Class C shares a fee at the annual rate of .25% of the
value of the average daily net assets of Class B and Class C shares. Class R
shares bear no service or distribution fee. For the year ended December 31,
1995, the service fee for Class B shares was $282. For the year
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
NOTES TO FINANCIAL STATEMENTS (continued)
ended December 31, 1995, the distribution fee for Class A and Class B
shares was $40,218 and $564, respectively.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Trustees who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
(c) Trustees' Fees: Each trustee who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition the
Chairman of the Board receives an annual fee of $75,000 per year. These fees
and expenses are charged and allocated to each series based on net assets.
NOTE 3_Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
December 31, 1995, amounted to $27,004,714 and $30,552,814, respectively.
At December 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Premier Limited Term Government Securities Fund
______________________________________-
Independent Auditors' Report
Board of Trustees and Shareholders:
The Dreyfus/Laurel Funds Trust
We have audited the accompanying statement of assets and liabilities of
the Premier Limited Term Government Securities Fund of The Dreyfus/Laurel
Funds Trust as of December 31, 1995, and the related statement of operations
for the year then ended, and the statement of changes in net assets and the
financial highlights for each of the two years in the period 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 audits. The
financial highlights for each of the years or periods in the three-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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Premier Limited Term Government Securities Fund of The
Dreyfus/Laurel Funds Trust, as of December 31, 1995, and the results of its
operations for the year then ended, changes in its net assets, and the
financial highlights for each of the years in the two year period then ended,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 6, 1996
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Principal
Convertible Subordinated Debentures-.7% Amount Value
______ ______
<S> <C> <C> <C>
Foreign; Rogers Communications,
2%, 2005
(cost $662,550)............................... $ 1,295,000 $ 696,063
======
Bonds and Notes-98.0%
___________________________________________
Banking-.8% First USA Bank,
Medium-Term Notes, 8.10%, 1997................ 710,000 728,670
______
Consumer-1.0% Federated Department Stores,
Sr. Notes, 10%, 2001.......................... 840,000 913,500
______
Finance-5.4% Donaldson, Lufkin & Jenrette,
Sr. Notes, 6-7/8%, 2005....................... 522,000 535,839
Lincoln National,
Deb., 7-1/4%, 2005............................ 770,000 817,069
Paine Webber Group,
Medium-Term Sr. Notes, Ser. C, 7.31%, 2000.... 1,750,000 1,813,287
Prudential Insurance Company of America,
Surplus Notes, 7.65%, 2007.................... 900,000(a) 956,250
Smith Barney Holdings,
Notes, 7-7/8%, 1999........................... 1,000,000 1,066,253
______
5,188,698
______
Finance/Asset Backed-2.0% AT&T Universal Card Master Trust,
Floating Rate Asset Backed Ctfs.,
Ser. 1995-3, Cl. A, 5.95%, 2002............... 968,000(b) 972,685
EQCC Home Equity Loan Trust 1993-3,
Asset Backed Notes, 5.15%, 2008............... 912,631 891,841
______
1,864,526
______
Industrial-5.7% ADT Operations,
Sr. Notes (Gtd. by ADT Ltd.), 8-1/4%, 2000.... 950,000 1,009,375
American Home Products,
Notes, 7.70%, 2000............................ 516,000 552,905
Jones Intercable,
Sr. Notes, 9-5/8%, 2002....................... 900,000 970,875
Lenfest Communications,
Sr. Notes, 8-3/8%, 2005....................... 667,000 670,335
Paging Network,
Sr. Sub. Notes, 8-7/8%, 2006.................. 470,000 483,512
Tenet Healthcare,
Sr. Notes, 9-5/8%, 2002....................... 920,000 1,016,600
</TABLE>
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
______ ______
<S> <C> <C> <C>
Industrial (continued) USG,
Sr. Notes, Ser. B, 9-1/4%, 2001............... $ 200,000 $ 214,000
Valassis Inserts,
Sr. Sub. Notes, 9-3/8%, 1999.................. 440,000 449,506
______
5,367,108
______
Foreign- 8.6% Aegon N.V.,
Sub. Notes, 8%, 2006.......................... 972,000 1,097,038
Bangkok Bank plc,
Sub. Notes, 7-1/4%, 2005...................... 900,000(a) 940,632
Carter Holt Harvey Ltd.,
Sr. Notes, 8-7/8%, 2004....................... 381,000 446,694
China International Trust and Investment,
Bonds, 9%, 2006............................... 1,150,000 1,286,636
Hanson Overseas B.V.,
Sr. Notes (Gtd. by Hanson plc), 6-3/4%, 2005.. 619,000 642,090
International Semi-Tech Microelectronics,
Sr. Sec. Discount Notes, Zero Coupon, 2000.... 1,250,000(c) 662,500
Malayan Banking Berhad,
Sub. Notes, 7-1/8%, 2005...................... 563,000 586,289
Mass Transit Railway,
Notes, 7-1/4%, 2005........................... 440,000 458,004
Midland Bank plc,
Sub. Notes, 8-5/8%, 2004...................... 600,000 691,020
Repsol International Finance B.V.,
Notes (Gtd. by Repsol, S.A.), 7%, 2005........ 1,027,000 1,099,372
Rogers Cablesystems Ltd.,
Sr. Sec. Second Priority Notes, 9-5/8%, 2002.. 225,000 237,375
______
8,147,650
______
U.S. Government
and Agencies-74.5% Federal National Mortgage Association:
8%, 10/1/2010................................. 3,526,777 3,656,810
14-3/4%, 8/1/2012............................. 40,783 46,989
7-1/2%, 4/1/2025.............................. 1,212,050 1,243,103
7-1/2%, 4/1/2025.............................. 3,969,209 4,070,901
8-1/2%, 9/1/2025.............................. 3,868,395 4,041,235
7%, 10/1/2025................................. 3,268,815 3,298,431
7-1/2%, 10/1/2025............................. 4,052,233 4,156,052
Real Estate Mortgage Investment
Conduit Trust, Pass-Through Ctfs.
(Collateralized by FNMA Pass-Through
Ctfs.), Ser. G92-20, Cl. SA, 437-7/8%,
2022 (Interest Only Obligation)............. (d) 199,680
Government National Mortgage Association I:
8-1/2%, 12/15/2024............................ 3,368,621 3,551,774
8%, 1/15/2025................................. 1,947,157 2,037,214
8-1/2%, 4/15/2025............................. 1,451,744 1,530,676
7-1/2%, 9/15/2025............................. 5,255,852 5,429,927
8%, 9/15/2025................................. 8,616,465 9,014,977
</TABLE>
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Principal
Bonds and Notes (continued) Amount Value
______ ______
<S> <C> <C> <C>
U.S. Government
and Agencies (continued) U.S. Treasury Bonds:
7-7/8%, 8/15/2001............................. $ 665,000 $ 743,241
7-1/8%, 2/15/2023............................. 7,077,000 8,092,111
U.S. Treasury Notes:
6-7/8%, 10/31/1996............................ 1,879,000 1,903,369
7-7/8%, 1/15/1998............................. 2,691,000 2,828,074
6-1/2%, 4/30/1999............................. 64,000 66,360
6-3/8%, 8/15/2002............................. 3,871,000 4,063,644
7-1/4%, 8/15/2004............................. 7,289,000 8,112,431
5-7/8%, 11/15/2005............................ 2,320,000 2,372,562
______
70,459,561
______
TOTAL BONDS AND NOTES
(cost $89,281,611)............................ $92,669,713
======
TOTAL INVESTMENTS (cost $89,944,161).................................................. 98.7% $93,365,776
===== ======
CASH AND RECEIVABLES (NET)............................................................ 1.3% $ 1,251,705
===== ======
NET ASSETS............................................................................ 100.0% $94,617,481
===== ======
</TABLE>
Notes to Statement of Investments;
_______________________________________
(a) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1995, these securities amounted to $1,896,882 or 2.0% of net assets.
(b) Variable rate security - interest rate subject to periodic change.
(c) Zero Coupon until 8/15/00, date on which a stated coupon rate of 11-1/2%
becomes effective; the stated maturity date is 2003.
(d) Nominal face $19,017.
See notes to financial statements.
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $89,944,161)-see Statement of Investments.................... $93,365,776
Cash.................................................................... 186,667
Receivable for shares of Beneficial Interest subscribed................. 8,000
Interest receivable..................................................... 1,370,582
______
94,931,025
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $109,096
Due to the Distributor-Note 2(b)........................................ 18,970
Payable for shares of Beneficial Interest redeemed...................... 177,551
Trustees' fees payable-Note 2(c)........................................ 7,927 313,544
____ ______
NET ASSETS.................................................................. $94,617,481
======
REPRESENTED BY:
Paid-in capital......................................................... $98,874,418
Accumulated distributions in excess of investment income-net........... (1,500)
Accumulated net realized (loss) on investments ......................... (7,677,052)
Accumulated net unrealized appreciation on investments-Note 3 .......... 3,421,615
______
NET ASSETS at value........................................................ $94,617,481
======
NET ASSET VALUE, per share:
Class A Shares
unlimited number of shares of Beneficial Interest
($80,782,345 / 7,290,689 shares of Beneficial Interest outstanding)... $11.08
======
Class B Shares
unlimited number of shares of Beneficial Interest
($2,236,556 / 201,840 shares of Beneficial Interest outstanding)...... $11.08
======
Class C Shares
unlimited number of shares of Beneficial Interest
($66,622 / 6,011 shares of Beneficial Interest outstanding)........... $11.08
======
Class R Shares
unlimited number of shares of Beneficial Interest
($11,531,958 / 1,040,655 shares of Beneficial Interest outstanding)... $11.08
======
</TABLE>
See notes to financial statements.
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Operations year ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest.............................................................. $ 7,355,308
Cash dividends........................................................ 57,500
______
Total Income...................................................... $ 7,412,808
______
Expenses:
Investment management fee-Note 2(a)................................... $ 632,276
Distribution fee-Note 2(b)............................................ 208,244
Trustees' fees and expenses-Note 2(c)................................. 13,817
Service fee-Note 2(b)................................................. 1,928
______
Total Expenses.................................................... 856,265
______
INVESTMENT INCOME-NET............................................. 6,556,543
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments ..................................... $ (862,188)
Net unrealized appreciation on investments.............................. 9,120,356
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 8,258,168
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $14,814,711
======
</TABLE>
See notes to financial statements.
<PAGE>
Premier Managed Income Fund
_______________________________________
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
________________________________
1995 1994
______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 6,556,543 $ 6,214,116
Net realized (loss) on investments................................... (862,188) (3,956,546)
Net unrealized appreciation (depreciation) on investments for the year 9,120,356 (7,391,645)
______ ______
Net Increase (Decrease) In Net Assets Resulting From Operations.... 14,814,711 (5,134,075)
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A Shares..................................................... (5,668,955) (5,050,079)
Institutional Class................................................ _ (444,891)
Class B Shares..................................................... (55,908) _
Class C Shares..................................................... (1,493) _
Class R Shares..................................................... (797,413) (817,994)
______ ______
Total Dividends.................................................. (6,523,769) (6,312,964)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A Shares(1).................................................. 10,220,352 51,614,329
Class B Shares..................................................... 2,207,592 15
Class C Shares..................................................... 87,477 15
Class R Shares..................................................... 6,078,239 5,912,410
Dividends reinvested:
Class A Shares(1).................................................. 4,488,158 4,468,073
Class B Shares..................................................... 29,712 _
Class C Shares..................................................... 405 _
Class R Shares..................................................... 647,434 489,170
Cost of shares redeemed:
Class A Shares(1).................................................. (20,718,702) (52,983,942)
Class B Shares..................................................... (68,609) _
Class C Shares..................................................... (22,587) _
Class R Shares..................................................... (5,758,344) (6,716,707)
______ ______
Increase (Decrease) In Net Assets From Beneficial Interest
Transactions................................................... (2,808,873) 2,783,363
______ ______
Total Increase (Decrease) In Net Assets........................ 5,482,069 (8,663,676)
NET ASSETS:
Beginning of year.................................................... 89,135,412 97,799,088
______ ______
End of year [including distributions in excess of investment
income-net: ($1,500) in 1995 and ($34,274) in 1994]................ $ 94,617,481 $ 89,135,412
====== ======
</TABLE>
<TABLE>
<CAPTION>
Shares
____________________________________________________________________________________
Class A Class B Class C Class R
_______________________ ____________ ____________ _______________________
Year Ended December 31, Year Ended Year Ended Year Ended December 31,
________________________ December 31, December 31, ________________________
1995 1994(2) 1995(3) 1995(3) 1995 1994(4)
_____ _____ ______ ______ ____ ____
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.................... 973,428 4,868,476 205,379 8,049 574,177 538,268
Shares issued for dividends
reinvested................... 420,887 421,059 2,738 37 60,440 46,123
Shares redeemed................ (1,961,160) (5,028,074) (6,278) (2,076) (541,031) (633,398)
_____ _____ ____ ___ ____ ____
Net Increase (Decrease) In
Shares Outstanding......... (566,845) 261,461 201,839 6,010 93,586 (49,007)
===== ===== ==== === ==== ====
<FN>
________
(1) 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.
(2) Number of shares includes 464,962 of subscriptions, 35,257 of
reinvestments and 524,902 of redemptions for the Institutional Class up to
April 4, 1994.
(3) The Fund commenced offering Class B and Class C shares on December 19,
1994. As of December 31, 1994, the Fund had issued 1.472 Class B shares and
1.472 Class C shares.
(4) Effective April 4, 1994, the Retail and Institutional Classes were
redesignated 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 Class A and Class R shares,
respectively.
</TABLE>
See notes to financial statements.
<PAGE>
Premier Managed Income Fund
_______________________________________
Financial Highlights
Reference is made to page 4 of the Fund's Prospectus dated May 1, 1996.
<PAGE>
Premier Managed Income Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS
NOTE 1-Significant Accounting Policies:
Premier Managed Income Fund (the "Fund") is a diversified income
fund that seeks high current income consistent with what is believed to be
prudent risk of capital primarily through investments in investment-grade
corporate and U.S. Government obligations and in obligations having
maturities of 10 years or less. The Dreyfus/Laurel Funds Trust (the "Trust")
is registered under the Investment Company Act of 1940 ("Act") and operates
as a series company currently offering four series including the Fund. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, 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.
The Fund currently offers four classes of shares: Class A, Class B,
Class C and Class R shares. Class A, Class B and Class C shares are sold
primarily to retail investors through financial intermediaries and bear a
distribution fee and/or service fee. Class A shares are sold with a front-end
sales charge, while Class B and Class C shares are subject to a contingent
deferred sales charge ("CDSC") and a service 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 or service fee. Class R shares are
offered without a front-end sales load or CDSC. Each class of shares has
identical rights and privileges, except with respect to distribution fees and
voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific
expenses) and realized and unrealized gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets of each
class.
(a) Portfolio Valuation: The Fund's investments (excluding short-term
investments and U.S. Government obligations) are valued each business day by
an independent pricing service ("Service") approved by the Board of Trustees.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the dire
ction of the Board of Trustees. Investments in U.S. Government obligations
are valued at the mean between quoted bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value.
<PAGE>
Premier Managed Income Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recorded on the ex-dividend date. Interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(c) Distributions to Shareholders: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, it is the policy of the Fund not to distribute such
gain.
(d) Federal Income Taxes: It is the policy of the Fund to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $7,010,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1995. The
carryover does not include net realized securities losses from November 1,
1995 through December 31, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $6,470,000 of the
carryover expires in fiscal 2002 and $540,000 of the carryover expires in
fiscal 2003.
NOTE 2_Investment Management Fee and Other Transactions with Affiliates:
(a) Investment Management Fee: Pursuant to an Investment
Management agreement with the Manager, the Manager provides or arranges for
one or more third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. 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 .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 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).
(b) Distribution and Service Plan: The Fund has adopted a
distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act
relating to its Class A, B and C shares. Under the Plan, the Fund may pay
annually up to .25% of the value of its average daily net assets attributable
to its Class A shares to compensate the Distributor and Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities and expenses primarily intended
to result in the sale of Class A shares. Under the Plan, the Fund may pay the
Distributor for distributing the Fund's Class B and Class C shares at an
aggregate annual rate of .75% of the value of the average daily net assets of
Class B
<PAGE>
Premier Managed Income Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
and Class C shares. 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 the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual
rate of .25% of the value of the average daily net assets of Class B and
Class C shares. Class R shares bear no service or distribution fee. For the
year ended December 31, 1995, the service fee for Class B and Class C shares
was $1,866 and $62, respectively. For the year ended December 31, 1995, the
distribution fee for Class A, Class B and Class C shares was $201,030, $7,027
and $187, respectively.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Trustees who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
(c) Trustees' Fees: Each trustee who is not an "interested person"
as defined in the Act receives $27,000 per year, $1,000 for each Board
meeting attended and $750 for each Audit Committee attended and is reimbursed
for travel and out-of-pocket expenses. These expenses are paid in total by
the following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel
Tax-Free Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition
the Chairman of the Board receives an annual fee of $75,000 per year. These
fees and expenses are charged and allocated to each series based on net
assets.
NOTE 3_Securities Transactions:
The aggregate amount of purchase and sales of investment
securities, excluding short-term securities, during the year ended December
31, 1995, amounted to $214,727,712 and $209,198,172, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $3,421,615, consisting of $3,881,211 gross unrealized
appreciation and $459,596 gross unrealized depreciation.
At December 31, 1995, the cost of investments for Federal income
tax purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Premier Managed Income Fund
_______________________________________
Independent Auditors' Report
Board of Trustees and Shareholders:
The Dreyfus/Laurel Funds Trust
We have audited the accompanying statement of assets and liabilities of
the Premier Managed Income Fund of The Dreyfus/Laurel Funds Trust as of
December 31, 1995, and the related statement of operations for the year then
ended, and the statement of changes in net assets and the financial
highlights for each of the two years in the period 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 financ
ial statements and financial highlights based on our audits. The financial
highlights for each of the years or periods in the three-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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Premier Managed Income Fund of The Dreyfus/Laurel Funds
Trust, as of December 31, 1995, and the results of its operations for the
year then ended, changes in its net assets, and the financial highlights for
each of the years in the two year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 6, 1996
DREYFUS CORE VALUE FUND
INVESTOR, INSTITUTIONAL AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
May 1, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
describing the Class R and Investor shares of the Dreyfus Core Value Fund
(formerly, the Laurel Capital Appreciation Fund) (the "Fund") and the
current Prospectus describing the Institutional shares of the Fund, each
dated May 1, 1996, as they may be revised from time to time. The Fund is a
separate, diversified portfolio of The Dreyfus/Laurel Funds Trust (the
"Trust"), an open-end management investment company known as a mutual fund.
To obtain a copy of the Fund's 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 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 Objectives and Management Policies. . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . B-17
Management Arrangements. . . . . . . . . . . . . . . . . B-23
Purchase of Fund Shares. . . . . . . . . . . . . . . . . B-24
Distribution Plan. . . . . . . . . . . . . . . . . . . . B-25
Redemption of Fund Shares. . . . . . . . . . . . . . . . B-26
Shareholder Services . . . . . . . . . . . . . . . . . . B-28
Determination of Net Asset Value . . . . . . . . . . . . B-31
Dividends, Other Distributions and Taxes . . . . . . . . B-31
Portfolio Transactions . . . . . . . . . . . . . . . . . B-35
Performance Information. . . . . . . . . . . . . . . . . B-37
Information About the Fund . . . . . . . . . . . . . . . B-38
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors. . . . . . . . B-39
Financial Statements . . . . . . . . . . . . . . . . . . B-40
INVESTMENT OBJECTIVES 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 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 repayments
(attributable to voluntary prepayments or forclosures).
FNMA and FHLMC are Government sponsored corporations owned entirely by
private stockholders. Each is subject to general regulation by an official
of the Department of Housing and Urban Development. FNMA and FHLMC
purchase residential mortgages from a list of approved seller/services
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 and FHLMC are guaranteed
by those entities as to payment of principal and interest.
Bank Obligations. The Fund is permitted to invest in high-quality,
short-term money market instruments. The Fund may invest temporarily, and
without limitation in bank certificates of deposit, time deposits, and
bankers' acceptances when, in Dreyfus' opinion, a "defensive" investment
posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable obligations
of commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with international
transactions. Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and are required
to be members of the Federal Reserve System and to be insured by the
Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, all banks whose certificates of deposit may be
purchased by the Trust are insured by the FDIC and are subject to Federal
examination and to a substantial body of Federal law and regulation. As a
result of governmental regulations, domestic branches of foreign banks are,
among other things, generally required to maintain specified levels of
reserves, and are subject to other supervision and regulations designed to
promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and
TDs, may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific obligation and
by governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would
be the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the
Trust may be subject to the risks associated with the holdings of such
property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about
a domestic bank. The Trust will carefully consider these factors in making
such investments.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities. The effect a recession might have on such securities is
not known. Any such recession, however, could severely disrupt the market
for such securities and adversely affect the value of such securities. Any
such economic downturn also could adversely affect 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 Service, a division of McGraw-
Hill Companies, Inc. ("S&P") generally represent the opinions of those
organizations as to the quality of the securities that they rate. Such
ratings, however, are relative and subjective, are not absolute standards
of quality and do not evaluate the market risk of the securities. Although
Dreyfus uses these ratings as a criterion for the selection of securities
for the Fund, Dreyfus also relies on its independent analysis to evaluate
potential investments for the Fund. The Fund's achievement of its
investment objective may be more dependent on Dreyfus' credit analysis of
low-rated and unrated securities than would be the case for a portfolio of
higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. In addition, it is possible that an NRSRO might
not timely change its ratings of a particular issue to reflect subsequent
events. None of these events will require the sale of the securities by the
Fund, although Dreyfus will consider these events in determining whether
the Fund should continue to hold the securities. To the extent that the
ratings given by an NRSRO for securities may change as a result of changes
in the rating systems or due to a corporate reorganization of the NRSRO,
the Fund will attempt to use comparable ratings as standards for its
investments in accordance with the investment objectives and policies of
the Fund.
The Fund intends to invest in these securities when their issuers will
be close to, or already have entered, reorganization proceedings. As a
result, it is expected that at or shortly after the time of acquisition by
the Fund, these securities will have ceased to meet their interest payment
obligations, and accordingly would trade in much the same manner as an
equity security. Consequently, the Fund intends to make such investments on
the basis of potential appreciation in the price of these securities,
rather than any expectation of realizing income.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government Securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Trustees. In a repurchase agreement, the Fund buys a security from a seller
that has agreed to repurchase the same security at a mutually agreed upon
date and price. The Fund's resale price will be in excess of the purchase
price, reflecting an agreed upon interest rate. This interest rate is
effective for the period of time the Fund is invested in the agreement and
is not related to the coupon rate on the underlying security. Repurchase
agreements may also be viewed as a fully collateralized loan of money by
the Fund to the seller. The period of these repurchase agreements will
usually be short, from overnight to one week, and at no time will the Fund
invest in repurchase agreements for more than one year. The Fund will
always require that it receive as collateral securities whose market value
including accrued interest is, and during the entire term of the agreement
remains, at least equal to 100% of the dollar amount invested by the Fund
in each agreement, and the Fund will make payment for such securities only
upon physical delivery or upon evidence of book entry transfer to the
account of the custodian. If the seller defaults, the Fund might incur a
loss if the value of the collateral securing the repurchase agreement
declines and might incur disposition costs in connection with liquidating
the collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of a security which is the subject of a repurchase
agreement, realization upon the collateral by the Fund may be delayed or
limited. The Fund seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligors under
repurchase agreements, in accordance with the credit guidelines of the
Trust's Board of Trustees.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors who agree that
they are purchasing the paper for an investment and not with a view to
public distribution. Any resale by the purchaser must be pursuant to
registration or exemption therefrom. Section 4(2) paper is normally resold
to other investors through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. Pursuant to guidelines established by the Trust's Board of
Trustees, Dreyfus may determine that Section 4(2) paper is liquid for the
purposes of complying with the Fund's investment restriction relating to
investments in illiquid securities.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Derivative Instruments. The Fund may purchase and sell various
financial instruments ("Derivative Instruments"), such as financial futures
contracts (such as index futures contracts), options (such as options on
U.S. and foreign securities or indices of such securities). The index
Derivative Instruments the Fund may use may be based on indices of U.S. or
foreign equity securities. These Derivative Instruments may be used, for
example, to preserve a return or spread or to facilitate or substitute for
the sale or purchase of securities.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose
price is expected to move in the opposite direction of the price of the
investment being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is
sometimes referred to as an anticipatory hedge. In an anticipatory hedge
transaction, the Fund does not own a corresponding security and, therefore,
the transaction does not relate to a security the Fund owns. Rather, it
relates to a security that the Fund intends to acquire. If the Fund does
not complete the hedge by purchasing the security it anticipated
purchasing, the effect on the Fund's portfolio is the same as if the
transaction were entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that
the Fund owns or intends to acquire. Derivative Instruments on indices, in
contrast, generally are used to attempt to hedge against price movements in
market sectors in which the Fund has invested or expects to invest.
The use of Derivative Instruments is subject to applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures Trading
Commission ("CFTC") and various state regulatory authorities. In addition,
the Fund's ability to use Derivative Instruments will be limited by tax
considerations. See "Dividends, Other Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional opportunities
in connection with other Derivative Instruments. These new opportunities
may become available as Dreyfus develops new techniques, as regulatory
authorities broaden the range of permitted transactions and as new
techniques are developed. Dreyfus may utilize these opportunities to the
extent that they are consistent with the Fund's investment objective, and
permitted by the Fund's investment policies and applicable regulatory
authorities.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability to predict movements of the overall securities and
interest rate markets, which requires different skills than predicting
changes in the prices of individual securities. There can be no assurance
that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in
value of the hedged investment, the hedge would not be fully successful.
Such a lack of correlation might occur due to factors unrelated to the
value of the investments being hedged, such as speculative or other
pressures on the markets in which Derivative Instruments are traded. The
effectiveness of hedges using Derivative Instruments on indices will depend
on the degree of correlation between price movements in the index and price
movements in the securities being hedged.
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts
available will not match the Fund's current or anticipated investments
exactly. The Fund may invest in options and futures contracts based on
securities with different issuers, maturities, or other characteristics
from the securities in which it typically invests, which involves a risk
that the options or futures position will not track the performance of the
Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected a
decline in the price of a security in the Fund's portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the Derivative
Instrument. Moreover, if the price of the Derivative Instrument declined
by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a better
position had it not attempted to hedge at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Derivative Instruments involving obligations to third
parties (i.e., Derivative Instruments other than purchased options). If
the Fund were unable to close out its positions in such Derivative
Instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired or matured.
These requirements might impair the Fund's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time. The Fund's ability to close out a position in a
Derivative Instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a market,
the ability and willingness of the other party to the transaction
("counterparty") to enter into a transaction closing out the position.
Therefore, there is no assurance that any position can be closed out at a
time and price that is favorable to the Fund.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The
Fund will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, futures or options, or (2)
cash and short-term liquid debt securities with a value sufficient at all
times to cover its potential obligations to the extent not covered as
provided in (1) above. The Fund will comply with SEC guidelines regarding
cover for Derivative Instruments and will, if the guidelines so require,
set aside cash, U.S. Government Securities or other liquid, high-grade debt
securities in a segregated account with its custodian in the prescribed
amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities except that
all settlements are in cash and gain or loss depends on changes in the
index in question rather than on price movements in individual securities.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment appreciates to a price higher than the exercise price of the
call option, it can be expected that the option will be exercised and the
Fund will be obligated to sell the investment at less than its market
value.
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the
Fund will be obligated to purchase the investment at more than its market
value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the
underlying investment and general market conditions. Options that expire
unexercised have no value.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and over-the-
counter ("OTC") options. Exchange-traded options in the United States are
issued by a clearing organization that, in effect, guarantees completion of
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty (usually a securities
dealer or a bank) with no clearing organization guarantee. Thus, when the
Fund purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of
such transaction, the sum of (i) the market value of outstanding OTC
options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund, and
(iii) the market value of all other assets of the Fund that are illiquid or
are not otherwise readily marketable, would exceed 15% of the net assets of
the Fund, taken at market value. However, if an OTC option is sold by the
Fund to a primary U.S. Government Securities dealer recognized by the
Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the
amount by which the option is "in-the-money" (the difference between the
current market value of the underlying securities and the option's strike
price). The repurchase price with primary dealers is typically a formula
price that is generally based on a multiple of the premium received for the
option plus the amount by which the option is "in-the-money."
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the counterparty, or by a transaction in the secondary market
if any such market exists. Although the Fund will enter into OTC options
only with major dealers in unlisted options, there is no assurance that the
Fund will in fact be able to close out an OTC option position at a
favorable price prior to expiration. In the event of insolvency of the
counterparty, the Fund might be unable to close out an OTC option position
at any time prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call option
on the same security with a lower strike price.
Futures Contracts and Options on Futures Contracts. When the Fund
purchases a futures contract, it incurs an obligation to take delivery of a
specified amount of the obligation underlying the futures contract at a
specified time in the future for a specified price. When the Fund sells a
futures contract, it incurs an obligation to deliver a specified amount of
the obligation underlying the futures contract at a specified time in the
future for an agreed upon price. With respect to index futures, no
physical transfer of the securities underlying the index is made. Rather,
the parties settle by exchanging in cash an amount based on the difference
between the contract price and the closing value of the index on the
settlement date.
When the Fund writes an option on a futures contract, it becomes
obligated, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during the term
of the option. If the Fund has written a call, it assumes a short futures
position. If the Fund has written a put, it assumes a long futures
position. When the Fund purchases an option on a futures contract, it
acquires the right, in return for the premium it pays, to assume a position
in a futures contract (a long position if the option is a call and a short
position if the option is a put).
The purchase of futures or call options on futures can serve as a long
hedge, and the sale of futures or the purchase of put options on futures
can serve as a short hedge. Writing call options on futures contracts can
serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indices. Similarly, writing put
options on futures contracts can serve as a limited long hedge.
No price is paid upon entering into a futures contract. Instead, at
the inception of a futures contract the Fund is required to deposit
"initial margin" consisting of cash or U.S. Government Securities in an
amount generally equal to 10% or less of the contract value. Margin must
also be deposited when writing a call or put option on a futures contract,
in accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction
if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required
by an exchange to increase the level of its initial margin payment.
Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a process
known as "marking-to-market." Variation margin does not involve borrowing,
but rather represents a daily settlement of the Fund's obligations to or
from a futures broker. When the Fund purchases an option on a future, the
premium paid plus transaction costs is all that is at risk. In contrast,
when the Fund purchases or sells a futures contract or writes a call or put
option thereon, it is subject to daily variation margin calls that could be
substantial in the event of adverse price movements. If the Fund has
insufficient cash to meet daily variation margin requirements, it might
need to sell securities at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions
on options, by selling or purchasing, respectively, an instrument identical
to the instrument purchased or sold. Positions in futures and options on
futures may be closed only on an exchange or board of trade that provides a
secondary market. Although the Fund intends to enter into futures and
options on futures only on exchanges or boards of trade where there appears
to be a liquid secondary market, there can be no assurance that such a
market will exist for a particular contract at a particular time. In such
event, it may not be possible to close a futures contract or options
position.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures or an option on a futures
contract can vary from the previous day's settlement price; once that limit
is reached, no trades may be made that day at a price beyond the limit.
Daily price limits do not limit potential losses because prices could move
to the daily limit for several consecutive days with little or no trading,
thereby preventing liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures or options on futures
position due to the absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Fund would continue
to be required to make daily variation margin payments and might be
required to maintain the position being hedged by the future or option or
to maintain cash or securities in a segregated account.
To the extent that the Fund enters into futures contracts, options on
futures contracts, or options on foreign currencies traded on an exchange
regulated by the CFTC, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and
premiums required to establish those positions (excluding the amount by
which options are "in-the-money" at the time of purchase) will not exceed
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into. This policy does not limit to 5% the percentage of the
Fund's assets that are at risk in futures contracts and options on futures
contracts.
Foreign Currency Strategies - Special Considerations. The Fund may
use Derivative Instruments on foreign currencies to hedge against movements
in the values of the foreign currencies in which the Fund's securities are
denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of
particular currency when no Derivative Instruments on that currency are
available or such Derivative Instruments are more expensive than certain
other Derivative Instruments. In such cases, the Fund may hedge against
price movements in that currency by entering into transactions using
Derivative Instruments on another currency or a basket of currencies, the
values of which Dreyfus believes will have a high degree of positive
correlation to the value of the currency being hedged. The risk that
movements in the price of the Derivative Instrument will not correlate
perfectly with movements in the price of the currency being hedged is
magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged by
having to deal in the odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices
that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and
the price. Forward contracts are used as a hedge against future movements
in foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund
may purchase a forward contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to
acquire. Forward contracts may also serve as short hedges -- for example,
the Fund may sell a forward contract to lock in the U.S. dollar equivalent
of the proceeds from the anticipated sale of a security denominated in a
foreign currency or from anticipated dividend or interest payments
denominated in a foreign currency. Dreyfus may seek to hedge against
changes in the value of a particular currency by using forward contracts on
another foreign currency or basket of currencies, the value of which
Dreyfus believes will bear a positive correlation to the value of the
currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because forward contracts are
usually entered into a principal basis, no fees or commissions are
involved. When the Fund enters into a forward contract, it relies on the
counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would
result in the loss of any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets generally
do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by
negotiating directly with the counterparty. Thus, there can be no
assurance that the Fund will in fact be able to close out a forward
contract at a favorable price prior to maturity. In addition, in the event
of insolvency of the counterparty, the Fund might be unable to close out a
forward contract at any time prior to maturity. In either event, the Fund
would continue to be subject to market risk with respect to the position,
and would continue to be required to maintain a position in the securities
or currencies that are the subject of the hedge or to maintain cash or
securities in a segregated account.
The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because the
value of such securities measured in the foreign currency will change after
the forward contract has been established. Thus, the Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.
Swaps, Caps, Collars and Floors. Swap agreements, including interest
rate, equity index and currency swaps, caps, collars and floors, may be
individually negotiated and structured to include exposure to a variety of
different types of investments or market factors. Swaps involve two
parties exchanging a series of cash flows at specified intervals. In the
case of an interest rate swap, the parties exchange interest payments based
on an agreed upon principal amount (referred to as the "notional principal
amount"). Under the most basic scenario, Party A would pay a fixed rate on
the notional principal amount to Party B, which would pay a floating rate
on the same notional principal amount to Party A. Depending on their
structure, swap agreements may increase or decrease the Fund's exposure to
long or short-term interest rates (in the U.S. or abroad), foreign currency
values, mortgage securities, corporate borrowing rates, or other factors.
Swap agreements can take many different forms and are known by a variety of
names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
The Fund will set aside cash or appropriate liquid assets to cover its
current obligations under swap transactions. If the Fund enters into a
swap agreement on a net basis (that is, the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net
amount of the two payments), the Fund will maintain cash or liquid assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis or writes a cap, collar or floor,
it will maintain cash or liquid assets with a value equal to the full
amount of the Fund's accrued obligations under the agreement.
The most important factor in the performance of swap agreements is the
change in the specific interest rate, currency or other factor(s) that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declines, the value of a swap agreement would likely
decline, potentially resulting in losses.
The Fund will enter into swaps, caps, collars and floors only with
banks and recognized securities dealers believed by Dreyfus to present
minimal credit risks in accordance with guidelines established by the
Trust's Board of Trustees. If there is a default by the other party to
such a transaction, the Fund will have to rely on its contractual remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant
to the agreement relating to the transaction.
The Fund understands that it is the position of the staff of the SEC
that assets involved in swap transactions are illiquid and, therefore, are
subject to the limitations on illiquid investments.
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, the Fund can increase its income by
continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when U.S.
Government Securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees must
terminate the loan and regain the right to vote the securities. The risks
in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy; or (b) more than
50% of the outstanding shares of the Fund, whichever is less. The Fund may
not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government securities, and state or municipal governments
and their political subdivisions are not considered members of any
industry. In addition, this limitation does not apply to investments in
domestic banks, including U.S. branches of foreign banks and foreign
branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") except that (a)
the Fund may borrow money in an amount not exceeding one-third of the
Fund's total assets at the time of such borrowings, and (b) the Fund may
issue multiple classes of shares. The purchase or sale of futures contracts
and related options shall not be considered to involve the borrowing of
money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments and repurchase agreements
shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests
therein).
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
and options 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 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 options.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in such percentage resulting from a change in
the values of assets will not constitute a violation of such restriction,
except as otherwise required by the 1940 Act.
In order to permit the sale of the Fund's shares in certain states,
the Trust may make commitments more restrictive than the investment
restrictions described above. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust and its
shareholders, it will revoke the commitment by terminating sales of its
shares in the state involved. Further, the Fund has given a representation
that investments will not be made in real estate limited partnerships.
MANAGEMENT OF THE FUND
Principal Shareholders
As of April 1, 1996, there were no controlling shareholders, as that
term is defined under the 1940 Act, of the Fund's Investor shares.
As of April 1, 1996, there were no controlling shareholders, as that
term is defined under the 1940 Act, of the Fund's Class R shares.
As of April 1, 1996, there were no controlling shareholders as that
term is defined under the 1940 Act, of the Fund's Institutional share.
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, N.A. ("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, 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 these arrangements are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
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 of the Trust
The Trust has a Board composed of twelve Trustees which supervises the
Trust's investment activities and reviews contractual arrangements with
companies that provide the Fund 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 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 Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds") and Mr. DiMartino serves as a Board member for 93
other funds advised by Dreyfus.
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: 80
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: 78 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 thereto, he was President and a director of Dreyfus and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus and until August 24,
1994, the Fund's distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Bank Corporation. He is Chairman of the
Board of Noel Group, Inc., a venture capital company, a trustee of
Bucknell University; and a director of the Muscular Dystrophy
Association, Health Plan Services Corporation, Belding Heminway, Inc.,
Curtis Industries, Inc., Simmons Outdoor Corporation and Staffing
Resources, Inc. Age: 52 years old. Address: 200 Park Avenue, New
York, New York 10166.
o + JAMES M. FITZGIBBONS. Trustee of the Trust; 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: 60 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. Since May 1991, Mr. Goeschel has
served as Trustee of Sewickley Valley Hospital. Age: 73 years old.
Address: Way Hallow Road and Woodland Road, Sewickley, Pennsylvania
15143.
o + KENNETH A. HIMMEL. Trustee of the Trust; Former 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. Age: 49 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: 48
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o + ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman and CEO,
McLouth Steel; Director, Salem Corporation. Director, SMS/Concast,
Inc. (1983-1991). Age: 67 years old. Address: 15 Waverly Lane,
Grosse Pointe Farms, Michigan 48236.
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: 63 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224.
o + ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director, Harvard
Community Health Plan, Inc., Director, Massachusetts Electric Company;
Director, The Hymas Foundation, Inc.; prior to February, 1993; Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 45 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
# ELIZABETH BACHMAN. Vice President and Assistant Secretary of the Trust,
The Dreyfus/Laurel Funds, Inc. and The Dreyfus/Laurel Tax-Fee
Municipal Funds (since January 1996); Counsel, Premier Mutual Fund
Services, Inc. Prior to September 1995, she was enrolled at the
Fordham University School of Law and received her J.D. in May 1995.
Prior to September 1992, she was an Assistant at the National
Association for Public Interest Law. Age: 26 years old. Address: 200
Park Avenue, New York, New York 10166.
# MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds,
Inc. (since September 1994); Vice President of the Trust, 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). Age: 37
years old. Address: One Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Trust, 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). Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
# ERIC B. FISCHMAN. Vice President and Assistant Secretary (since January
1996) of the Trust, 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). Age: 31 years
old. Address: 200 Park Avenue, New York, New York 10166.
RICHARD W. HEALEY. Vice President of the Trust, The Dreyfus/Laurel Tax-
Free Municipal Funds and The Dreyfus/Laurel Funds, Inc. (since March
1994); Senior Vice President, Funds Distributor, Inc. (since March
1993); Vice President, The Boston Company Inc., (March 1993 to May
1993); Vice President of Marketing, Calvert Group (1989 to March
1993); Fidelity Investments (prior to 1989). Age: 41 years old.
Address: One Exchange Place, Boston, Massachusetts 02109.
# MARGARET PARDO. Assistant Secretary of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Paralegal, Premier Mutual Fund Services, Inc. Prior to
April 1995, she was a Medical Coordination Officer at ORBIS
International. Prior to June 1992, she worked as a Program
Coordinator at Physicians World Communications Group. Age: 27 years
old. Address: 200 Park Avenue, New York, New York 10166.
# JOHN E. PELLETIER. Vice President and Secretary of the Trust, 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). Age: 31 year old. Address: One Exchange Place,
Boston, Massachusetts 02109.
# JOHN J. PYBURN. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Vice President of Premier Mutual Fund Services, Inc.
From 1984 to July 1994, he was Assistant Vice President in the Mutual
Fund Accounting Department of Dreyfus. Age: 61 years old. Address:
200 Park Avenue, New York, New York 10166.
JOSEPH F. TOWER, III. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Senior Vice President, Treasurer and Chief Financial
Officer of Premier Mutual Fund Services, Inc. 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. Age: 33 years old. Address: One Exchange Place, Boston,
Massachusetts 02109.
__________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by Dreyfus.
The officers and Trustees of the Trust as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of April 1,
1996.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate 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, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act), $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Trustees/Directors of the Dreyfus/Laurel Funds).
In addition, the Dreyfus/Laurel Funds pay each Trustee/Director who is not
an "interested person" of the Trust (as defined in the 1940 Act) $1,000 per
joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1995, the aggregate amount of
fees and expenses received by each current Trustee from the Trust# and all
other funds in the Dreyfus Family of Funds for which such person is a Board
member were as follows:
<TABLE>
<CAPTION>
Total
Pension of Compensation
Retirement From the
Benefits Estimated Trust
Accrued as Annual and Fund
Aggregate Part of the Benefits Complex
Compensation Trust's Upon Paid to Board
Name of Board Member From Trust# Expenses Retirement Member
<S> <C> <C> <C> <C>
Ruth Marie Adams $ 4,595 none none $ 34,500
Francis P. Brennan* 14,884 none none 111,500
James M. Fitzgibbons 4,723 none none 35,500
Joseph S. DiMartino** none none none 448,618***
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 4,732 none none 35,464
Kenneth A. Himmel 4,515 none none 33,750
Arch S. Jeffery** none none none none
Stephen J. Lockwood 4,491 none none 33,750
Robert D. McBride 4,726 none none 35,500
John J. Sciullo 4,462 none none 33,500
Roslyn M. Watson 4,591 none none 34,500
# Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a
portion of the management fee payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested Trustees.
Amount does not include reimbursed expenses for attending Board meetings, which amounted to $2,331 for the Trust.
* Compensation of Francis P. Brennan includes $75,000 paid by the Dreyfus/Laurel Funds to be the Chairman of the
Board.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the fiscal year ended December 31, 1995, the
aggregate amount of fees and expenses received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from
Dreyfus for serving as a Board member of the Trust were $3,933, $4,856 and $4,726, respectively, and for serving as
a Board member of all funds in the Dreyfus/Laurel Funds (including the Trust) were $29,500, $36,500 and $35,500,
respectively. In addition, Dreyfus reimbursed Messrs. DiMartino, Fort and Jeffery a total of $611 for expenses
attributable to the Trust's Board meetings which is not included in the $2,331 amount noted above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for the fiscal year ended December 31,
1995.
</TABLE>
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 (the "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 its continuance. The Trustees 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 Trustees.
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; Christopher M. Condron, President, Chief
Operating Officer and a director, Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Diane M. Coffey, Vice-President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President-Human Resources; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting;Andrew S. Wasser, Vice President-Information Systems;
Maurice Bendrihem, Controller; Elvira Oslapas; Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, Directors.
For the last three fiscal years, the Fund has had the following
expenses:
For the Fiscal Year Ended December 31,
1995(1) 1994 1993
Advisory and/or $3,796,468 $3,413,996 $3,280,789
Management Fee
________________
1 For the fiscal year ended December 31, 1995, the management fee payable
by the Fund amounted to $3,863,417, which amount was reduced by $66,949
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $3,796,468 for fiscal 1995.
Prior to April 4, 1994, The Boston Company Advisors, Inc. served as
the Fund's investment adviser. From April 4, 1994 to October 16, 1994,
Mellon Bank served as the Fund's investment manager. With respect to the
1994 fiscal year fee, $59,679 was waived by the investment manager. With
respect to the 1993 fiscal year fee, $31,482 was reimbursed by The Boston
Company Advisors, Inc. (the investment manager prior to April 4, 1994).
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's Transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange ("NYSE") are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 P.M., New York time, on
any business day the Transfer Agent and the NYSE are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the NYSE is
not open for business), will be credited to the shareholder's Fund account
on the second bank business day following such purchase order.
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.
In-Kind Purchases. If the following conditions are satisfied, the
Fund may at its discretion, permit the purchase of shares through an "in-
kind" exchange of securities. Any securities exchanged must meet the
investment objectives, policies and limitations of the Fund, must have a
readily ascertainable market value, must be liquid and must not be subject
to restrictions on resale. The market value of any securities exchanged,
plus any cash, must be at least equal to $25,000. Shares purchased in
exchange for securities generally cannot be redeemed for fifteen days
following the exchange in order to allow time for the transfer to settle.
The basis for the exchange will depend upon the relative NAV of the
shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities. For
further information about "in-kind" purchases, call 1-800-645-6561.
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 and Institutional 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 may, directly or indirectly, bear the expenses of distributing
their shares. The Rule defines distribution expenses to include
expenditures for "any activity which is primarily intended to result in the
sale of fund shares." The Rule, among other things, provides that an
investment company may bear such expenses only pursuant to a plan adopted
in accordance with the Rule.
With respect to the Investor and Institutional shares of the Fund, the
Trust has adopted a Distribution Plan ("Plan"), pursuant to which the
Distributor may enter into agreements with Agents pursuant to that Class
Plan. Under the Plan, the Fund may spend annually up to 0.25% of the
average of the net asset values attributable to the Investor shares, and up
to 0.15% of the average of its net asset values attributable to the
Institutional shares, for costs and expenses incurred in connection with
the distribution of, and shareholder servicing with respect to, shares of
those respective Classes.
The Plan provides that a report of the amounts expended under the
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
Plan provides that it may not be amended to increase materially the costs
which the Fund may bear for distribution pursuant to the Plan without
approval of the Fund's shareholders, and that other material amendments of
the 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 Plan, cast in person at a meeting called for the
purpose of considering such amendments. The 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 Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan. The Plan is terminable, as
to the Fund's Class of shares, at any time by vote of a majority of the
Trustees who are not interested persons and have no direct or indirect
financial interest in the operation of the Plan or by vote of the holders
of a majority of the outstanding shares of such class of the Fund.
For the fiscal year ended December 31, 1995, the Fund paid $909,513 of
which was paid to the Distributor and $898,724 of which was paid to Dreyfus
Service Corporation pursuant to the Plan with respect to Investor shares.
For the fiscal year ended December 31, 1995, the Fund paid $106,386,
$14,285 of which was paid to the Distributor and $92,101 of which was paid
to Dreyfus Service Corporation.
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, 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 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 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 redemptions 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. Investor and Class R shares of the Fund may be
exchanged for shares of the same class of certain other funds advised or
administered by Dreyfus. Institutional shares may be exchanged for shares
of certain other funds managed or administered by Dreyfus. Shareholders
are limited to six exchanges out of the Fund during the calendar year.
Shares 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.
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 Investor and Class R
shares of the Fund, shares of the same Class of another fund in the Dreyfus
Family of Funds, and in exchange for Institutional shares of the Fund,
shares of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. With respect to Class R shares held
by a Retirement Plan, exchanges may be made only between the investor's
Retirement Plan account in one fund and such investor's Retirement Plan
account in another fund. Shares will be exchanged on the basis of relative
net asset value as described above under " Fund Exchanges." Enrollment in
or modification or cancellation of this Privilege is effective three
business days following notification by the investor. An investor will be
notified if the investor's account falls below the amount designated to be
exchanged under this Privilege. In this case, an investor's account will
fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange transaction. Shares held
under IRA and other retirement plans are eligible for this Privilege.
Exchanges of IRA shares may be made between IRA accounts and from regular
accounts to IRA accounts, but not from IRA accounts to regular accounts.
With respect to all other retirement accounts, exchanges may be made only
among those accounts.
Fund 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 by calling 1-800-645-6561. 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 Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. Automatic Withdrawal may be established by completing the
appropriate application available from the Distributor. 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 Investor or Class R shares of the Fund in
shares of the same Class of another fund in the Dreyfus Family of Funds of
which the investor is a shareholder and from Institutional shares of the
Fund into another fund in the Dreyfus Family of Funds of which the investor
is a shareholder. Shares of such other funds purchased pursuant to this
Privilege will be purchased on the basis of relative net asset value per
share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and 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 which 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 Day and
Christmas Day.
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 for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code"), 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 ("Distribution Requirement"), 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 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.
Any dividend or other distribution paid shortly after an investor's
purchase of shares 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, if a shareholder
sells shares of the Fund held for six months or less and receives 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 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 investors.
Gains from the sale or other disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
gains income from 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 continue
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 certain foreign
currency denominated securities (including debt instruments, certain
financial forward, futures and option contracts and 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 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss 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 as 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) could, under special tax rules,
affect the amount and timing 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 could need to distribute such income to satisfy the Distribution
Requirement and to avoid the 4% excise tax referred in the Fund's
Prospectus under "Dividends, Other Distributions and Taxes." 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 requirements.
The Fund may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general,
meets either of the following tests: (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances,
the Fund will be subject to federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition
of the stock (collectively "PFIC Income"), plus interest thereon, even if
the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the
Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as "qualified
electing fund," then in lieu of the foregoing tax and interest obligation,
the Fund would be required to include in income each year its pro rata
share of the qualified electing fund's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) -- which probably would have to be distributed to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax -- even it
those earnings and gain were not received by the Fund. In most instances
it will be very difficult, if not impossible, to make this election because
of certain requirements thereof.
Proposed regulations have been published pursuant to which open-end
RICs, such as the Fund, would be entitled to elect to "mark-to-market"
their stock in certain PFICs. "Marking-to-market," in this context, means
recognizing as gain for each taxable year the excess, as of the end of that
year, of the fair market value of each such PFIC's stock over the adjusted
basis in that stock (including mark-to-market gain for each prior year for
which an election was in effect).
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which deemed to be conducting
business, the Fund may be subject to the tax laws thereof. Shareholders
are also advised to consult their tax advisers concerning the application
of state and local taxes to them.
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, such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. 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 U.S. federal withholding tax
of 30% (or lower treaty rate).
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain (the excess of long-
term capital gain over short-term capital loss) 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. 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 a foreign
shareholder's ownership of the Fund's shares 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 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.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with the Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. The Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to
the benefits received. Dreyfus also places transactions for other accounts
that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Trust's procedures adopted in accordance with Rule 17e-1 of the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligation to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Trust's Board of Trustees periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and reviews the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Trustees will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
Total brokerage commissions paid for the fiscal years ended December
31, 1994 and 1993 were $1,025,551, and $716,054, respectively and for the
six month period ending December 31, 1995 were $331,739. The brokerage
concession on transactions for the six month period ending December 31,
1995 were $20,100.
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 rate for the Fund will generally
not exceed 100%. Higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. In addition, to the
extent the Fund realizes short-term gains as a result of more portfolio
transactions, such gains would be taxable to shareholders at ordinary
income tax rates.
The portfolio turnover rates for the fiscal years ended December 31,
1995 and 1994 for the Fund were 54.42% and 73%, 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 (expressed as a percentage) for the
Investor shares of the Fund for each of the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1995
1 Year 5 Years 10 Years Inception
Investor Shares 35.56% 15.13% 12.38% 10.74%
(2/6/47)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return (expressed as a percentage) for the
Institutional shares of the Fund for each of the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1995
1 Year 5 Years 10 Years Inception
Institutional Shares 35.60% -- -- 16.41%
(2/1/93)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return (expressed as a percentage) for the Class
R shares of the Fund for each of the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1995
1 Year 5 Years 10 Years Inception
Class R 36.05% -- -- 22.36%
(8/4/94)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and 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.
The Fund's total return for the Investor shares, Class R shares and
Institutional shares for the periods February 6, 1947, August 4, 1994 and
February 1, 1993 to December 31, 1995 were 4596.89%, 55.86% and 32.01%,
respectively. 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 shares, Class R
shares and Institutional Shares to that of other mutual funds, relevant
indices or rankings prepared by independent services or other financial or
industry publications that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No
Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News
and World Report, Forbes, Fortune, Barron's, Financial Planning, Financial
Planning on Wall Street, Certified Financial Planner Today, Investment
Advisor, Kiplinger's, Smart Money and similar publications may also be used
in comparing the Fund's performance. Furthermore, the Fund may quote its
Investor, Class R and Institutional Class yields in advertisements or in
shareholder reports.
From time to time, advertising material for the Fund may including
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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, 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
of 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 Fund property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. 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.
The Fund is currently one of four portfolios of the Trust.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Fund's custodian. Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, is located at One American Express Plaza, Providence, Rhode Island
02903, and is the Fund's transfer and dividend disbursing agent. Under a
transfer agency agreement with the Fund, the Transfer Agent arranges for
the maintenance of shareholder account records for the Fund, the handling
of certain communication between shareholders and the Fund and the payment
of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis of the
number of shareholder accounts it maintains for the Fund during the month,
and is reimbursed for certain out-of-pocket expenses. Dreyfus Transfer,
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 LLP, 1800 Massachusetts Avenue, N.W., Second
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, 1996,
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 filed on behalf
of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1995,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements included in the Annual
Report are incorporated herein by reference.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Common Stocks_97.9% Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Domestic Common Stocks_80.8%
Basic Industries_2.0% Grace (W.R) & Co................................ 75,400 $ 4,458,025
James River..................................... 83,300 2,009,613
Praxair......................................... 66,800 2,246,150
Rayonier........................................ 25,625 855,234
______
9,569,022
______
Capital Goods_5.0% General Electric................................ 74,500 5,364,000
ITT............................................. 54,600 2,893,800
ITT Hartford Group.............................. 54,600 2,641,275
ITT Industries.................................. 54,600 1,310,400
Rockwell International.......................... 113,000 5,974,875
TRW............................................. 31,400 2,433,500
Varity.......................................... 93,000(a) 3,452,625
______
24,070,475
______
Consumer Cyclical_.3% Safeway......................................... 23,500(a) 1,210,250
______
Consumer Durables_2.0% Black & Decker.................................. 105,783 3,728,851
Ford Motor...................................... 200,000 5,800,000
______
9,528,851
______
Consumer Non-durables_7.1% Archer-Daniels Midland.......................... 157,710 2,838,780
Dial............................................ 132,400 3,922,350
Fruit of the Loom, Cl. A........................ 194,500(a) 4,740,938
Philip Morris Cos............................... 119,200 10,787,600
Polaroid........................................ 47,000 2,226,625
RJR Nabisco Holdings............................ 211,000 6,514,626
Sherwin Williams................................ 71,300 2,905,475
______
33,936,394
______
Consumer Services_11.7% American Stores................................. 152,300 4,074,025
Dillard Department Stores, Cl. A................ 139,000 3,961,500
Eckerd.......................................... 65,300(a) 2,914,013
Knight-Ridder................................... 30,500 1,906,250
Kroger.......................................... 153,500(a) 5,756,250
Limited......................................... 205,800 3,575,775
Liz Claiborne................................... 78,200 2,170,050
Loews........................................... 98,200 7,696,426
May Department Stores........................... 31,000 1,309,750
Melville........................................ 173,800 5,344,350
Rite Aid........................................ 182,000 6,233,500
Sears, Roebuck & Co............................. 70,000 2,730,000
Tandy........................................... 121,500 5,042,250
Toys R Us....................................... 152,300(a) 3,312,525
______
56,026,664
______
Energy_7.5% Amerada Hess.................................... 35,000 1,855,000
Baker Hughes.................................... 159,000 3,875,625
</TABLE>
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Energy (continued) Dresser Industries.............................. 93,400 $ 2,276,625
Exxon........................................... 103,000 8,252,876
MAPCO........................................... 68,000 3,714,500
Mobil........................................... 34,500 3,864,000
Oryx Energy..................................... 318,400(a) 4,258,600
Tosco........................................... 113,500 4,327,188
Union Texas Petroleum........................... 163,300 3,163,938
______
35,588,352
______
Financial Services_13.9% Allmerica Financial............................. 83,800 2,262,600
American Express................................ 158,000 6,537,250
American International Group.................... 46,050 4,259,625
Bank of Boston.................................. 150,000 6,937,500
BankAmerica..................................... 103,930 6,729,469
BayBanks........................................ 31,900 3,134,175
Chase Manhattan................................. 63,400 3,843,625
Dean Witter, Discover & Co...................... 134,000 6,298,000
First Chicago NBD............................... 132,130 5,219,135
First Colony.................................... 50,000 1,268,750
Fleet Financial Group........................... 136,855 5,576,841
Morgan (JP) & Co................................ 55,000 4,413,750
Republic New York............................... 37,000 2,298,625
SAFECO.......................................... 56,800 1,959,600
St. Paul Cos.................................... 99,000 5,506,875
______
66,245,820
______
Health Care_10.5% Allergan........................................ 141,000 4,582,500
Baxter International............................ 159,400 6,674,875
Bristol-Myers Squibb............................ 77,300 6,638,138
Columbia/HCA Healthcare......................... 88,560 4,494,420
Lilly (Eli) & Co................................ 73,582 4,138,988
Nu-Med.......................................... 13,812(a) 0
Pharmacia & Upjohn.............................. 238,300 9,234,125
Progressions Health Systems..................... 69,060(a) 60,428
Schering Plough................................. 106,000 5,803,500
Tenet Healthcare................................ 395,000(a) 8,196,250
______
49,823,224
______
Insurance_.7% American Financial Group........................ 42,000 1,286,250
Equitable Cos................................... 93,400 2,241,600
______
3,527,850
______
Real Estate_1.2% Associated Estates Realty....................... 70,700 1,520,050
Avalon Properties............................... 97,000 2,085,500
Camden Property Trust........................... 83,333 1,989,575
______
5,595,125
______
Technology_3.3% Digital Equipment............................... 70,700(a) 4,533,638
Harris.......................................... 32,300 1,764,388
</TABLE>
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Technology (continued) International Business Machines................. 105,000 $ 9,633,750
______
15,931,776
______
Transportation_4.5% Lockheed Martin................................. 129,400 10,222,600
Pittston Services Group......................... 157,000 4,925,875
Union Pacific................................... 97,700 6,448,200
______
21,596,675
______
Utilities_11.1% AT&T............................................ 200,500 12,982,376
CMS Energy...................................... 179,300 5,356,588
GTE............................................. 183,000 8,052,000
Illinova........................................ 154,100 4,623,000
MCI Communications.............................. 274,000 7,158,250
NYNEX........................................... 131,100 7,079,400
Pinnacle West Capital........................... 85,000 2,443,750
Unicom.......................................... 113,000 3,700,750
Western Resources............................... 53,200 1,775,550
______
53,171,664
______
Total Domestic Common Stocks.................... 385,822,142
======
Foreign Common Stocks_17.1%
Argentina_.8% YPF Sociedad Anonima............................ 178,000 3,849,250
______
Australia_.3% Amocor.......................................... 20,000 141,075
Boral........................................... 120,000 302,940
Goodman Fielder Limited......................... 166,000 166,394
Southcorp Holdings Limited...................... 100,000 232,402
Westpac Banking................................. 85,635 378,961
______
1,221,772
______
Austria_.0% Creditanstalt-Bankverein........................ 1,200 171,004
______
Belgium_.0% Electrabel Com NPV.............................. 800 189,701
______
Bermuda_.6% ACE Limited..................................... 68,500 2,722,875
______
Canada_4.4% Canadian National Railway ADR................... 257,000 3,855,000
Canadian Pacific ADR............................ 543,500 9,850,937
Horsham ADR..................................... 234,500 3,165,750
Quebecor Printing ADR........................... 92,000(a) 1,552,500
TransCanada Pipeline ADR........................ 179,000 2,461,250
______
20,885,437
______
Denmark_.1% Tele Danmark ADR................................ 14,000 386,750
______
France_.5% Alcatel Alsthom................................. 1,584 136,287
Alcatel Alsthom ADR............................. 14,635 256,113
Chargeurs....................................... 1,600 320,195
C.S.F. (Thompson)............................... 10,148 225,626
Danone.......................................... 2,038 335,583
</TABLE>
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
France (continued) Elf Auitaine ADR................................ 8,158 $ 299,807
Guyenne & Gascogne.............................. 1,000 272,060
Societe Generale................................ 4,362 537,806
Societe Nationale Elf Equitiane................. 3,193 234,773
______
2,618,250
______
Germany_.5% Adidas AG....................................... 6,900 364,573
Bayer AG........................................ 2,000 526,976
Deutsche Bank AG................................ 10,000 473,164
SGL Carbon AG................................... 5,000 386,356
Siemens AG...................................... 700 382,527
VEBA AG......................................... 9,000 381,552
______
2,515,148
______
Great Britain_1.6% BTR............................................. 120,837 616,606
Boots........................................... 70,700 642,034
British Airways................................. 25,205 182,173
British Airways PLC ADR......................... 2,000 145,500
British Gas..................................... 70,000 275,767
British Gas ADR................................. 5,000 195,625
Hanson PLC...................................... 35,000 533,751
Laird Group PLC................................. 80,000 479,569
National Westminster Bank....................... 60,918 612,728
Powergen........................................ 80,401 664,038
RTZ............................................. 20,000 290,347
Scapa Group..................................... 80,862 278,425
SmithKline Beecham PLC ADR...................... 50,000 2,775,000
______
7,691,563
______
Hong Kong_.2% Cheung Kong (Holdings).......................... 61,000 371,562
HSBC (Holdings)................................. 21,682 328,069
Yue Yue Industrial (Holdings)................... 650,000 172,324
______
871,955
______
Italy_.2% Fiat Spa........................................ 45,000 146,221
Istituto Mobiliare Italiano ADR................. 15,000 283,125
Stet, Di Risp (Non Cnv)......................... 185,000 377,456
______
806,802
______
Japan_2.0% Canon........................................... 20,000 361,352
Chudenko........................................ 9,450 323,217
Dai-Tokyo Fire & Marine Insurance............... 80,000 609,083
Fuji Photo Film Limited......................... 7,000 201,545
Hitachi......................................... 43,000 432,077
Hitachi Koki.................................... 45,000 406,956
Honda Motor..................................... 10,000 205,797
Ito-Yokado...................................... 10,000 614,493
Kao............................................. 40,000 494,686
Mabuchi Motor................................... 9,000 558,261
Mikuni Coca Cola................................ 40,000 544,928
</TABLE>
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Japan (continued) Mitsubishi Heavy Industries..................... 50,000 $ 397,584
Murata Manufacturing............................ 15,400 557,972
Nishimatsu Construction......................... 35,000 409,178
Ono Pharmaceutical.............................. 10,000 383,574
Sekisui House................................... 50,000 637,682
Sumitomo........................................ 35,000 355,072
Toshiba......................................... 50,000 390,821
Toyota Motor.................................... 32,000 677,102
Yamanouchi Pharmaceutical....................... 15,000 321,739
Yamato Transport................................ 38,500 457,537
______
9,340,656
______
Luxembourg_.0% Espirito Santo Financial........................ 9,000 106,875
______
Malaysia_.0% Affin Holdings Berhad........................... 85,000 164,040
______
Mexico_.0% Telefonos De Mexico, Series L................... 120,000 192,873
Telefonos De Mexico, Series L, ADR.............. 1,000 31,875
______
224,748
______
Netherlands_2.6% ABN Amro Holdings............................... 13,300 604,621
Hollandsche Beton Groep......................... 1,000 152,363
ING Groep....................................... 4,887 325,800
Koninklinke KNP................................. 10,000 256,218
Philips Electronics NV ADR...................... 222,300 7,975,013
Royal Dutch Petroleum ADR....................... 12,300 1,735,838
Royal PTT Nederland............................. 6,500 235,625
Stad Rotterdam CVA.............................. 13,925 413,939
Unilever NV ADR................................. 4,000 563,000
______
12,262,417
______
New Zealand_.1% Air New Zealand................................. 47,000 159,593
Brierley Investments............................ 220,000 173,828
______
333,421
______
Norway_.0% Christiania Bank................................ 65,000 150,591
______
Portugal_.0% Portugal Telecom SA, ADR........................ 12,000(a) 228,000
______
Singapore_.1% Far East Levingston Shipbuilding................ 37,000 174,009
Malaysian International Shipping................ 106,666 279,112
______
453,121
______
Spain_1.1% Corporacion Bancaria De Espana.................. 18,000 362,250
Iberdrola SA.................................... 40,000 364,981
Repsol SA....................................... 8,000 261,405
Repsol SA, ADR.................................. 126,600 4,161,976
______
5,150,612
</TABLE>
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Sweden_.6% AGA AB, Series B................................ 19,000 $ 261,507
Astra AB, Class A, ADR.......................... 61,500 2,452,312
Volvo AB `B'.................................... 10,000 205,938
______
2,919,757
______
Switzerland_1.4% Ciba-Geigy AG................................... 600 527,730
Ciba-Geigy AG ADR............................... 100,000 4,425,000
Magazine Zum Globus............................. 450 257,365
Nestle SA....................................... 450 497,574
Schweizerischer Banksverein..................... 1,200 489,775
Zurich Versicherungs............................ 900 271,013
______
6,468,457
______
Total Foreign Common Stocks..................... 81,733,202
======
TOTAL COMMON STOCKS
(cost $379,642,232)........................... $467,555,344
======
Foreign Preferred Stocks_.1%
___________________________________________-
Germany; RWE AG (Non-Voting)
(cost $418,818)............................... 1,800 $ 501,218
======
Warrants_.0%
___________________________________________-
Chase Manhattan
(cost $3,671)................................. 534 $ 13,951
======
<CAPTION>
Principal
Short-Term Investments_.5% Amount
___________________________________________- _____
<S> <C> <C>
Commercial Paper: Ford Motor Credit Corporation
6% due 1/2/96
(cost $2,400,000)............................. $2,400,000 $ 2,400,000
======
TOTAL INVESTMENTS (cost $382,464,721).................................................. 98.5% $470,470,513
===== ======
CASH AND RECEIVABLES (NET)............................................................. 1.5% $ 6,995,485
===== ======
NET ASSETS............................................................................. 100.0% $477,465,998
===== ======
<FN>
Note to Statement of Investments;
___________________________________________
(a) Non-income producing.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $382,464,721)_see Statement
of Investments ....................................................... $470,470,513
Cash and foreign currency (cost $6,190,332)............................. 6,176,635
Receivable for investment securities sold............................... 1,130,097
Receivable for shares of Beneficial Interest subscribed................. 57,237
Dividends and interest receivable....................................... 1,153,810
______
478,988,292
LIABILITIES:
Due to The Dreyfus Corporation_Note 2(a)............................... $693,350
Due to Distributor_Note 2(b)........................................... 97,132
Payable for investment securities purchased............................. 691,971
Payable for shares of Beneficial Interest redeemed...................... 2,133
Trustees' fees payable_Note 2(c)....................................... 37,708 1,522,294
____ ______
NET ASSETS.................................................................. $477,465,998
======
REPRESENTED BY:
Paid-in capital......................................................... $379,428,169
Accumulated undistributed investment income_net........................ 35,924
Accumulated undistributed net realized gain on investments.............. 10,009,543
Accumulated net unrealized appreciation on investments and foreign
currency transactions................................................. 87,992,362
______
NET ASSETS at value......................................................... $477,465,998
======
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
unlimited number of shares of Beneficial Interest
($401,674,361 / 13,330,949 shares of Beneficial Interest outstanding). $30.13
======
Institutional Shares
unlimited number of shares of Beneficial Interest
($75,607,117 / 2,510,148 shares of Beneficial Interest outstanding).... $30.12
======
Class R Shares
unlimited number of shares of Beneficial Interest
($184,520 / 6,114 shares of Beneficial Interest outstanding).......... $30.18
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Operations year ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Cash dividends (net of $240,056 foreign taxes withheld at source)..... $10,412,780
Interest.............................................................. 729,848
_____-
Total Income...................................................... $ 11,142,628
Expenses:
Investment management fee_Note 2(a).................................. 3,863,417
Distribution fee_Note 2(b)........................................... 1,015,899
Trustees' fees and expenses_Note 2(c)................................ 43,638
_____-
Total Expenses.................................................... 4,922,954
Less_reduction in management fee due to undertakings_Note 2(a)...... 66,949
_____-
Net Expenses...................................................... 4,856,005
______
INVESTMENT INCOME_NET............................................ 6,286,623
______
REALIZED AND UNREALIZED GAIN ON INVESTMENTS_Note 3:
Net realized gain on investments and foreign currency transactions...... $44,702,570
Net realized gain on forward currency exchange contracts................ 5,791
_____-
Net Realized Gain..................................................... 44,708,361
Net unrealized appreciation on investments and foreign currency transactions 80,269,570
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 124,977,931
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $131,264,554
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
________________________________-
1995 1994
______ ______
<S> <C> <C>
OPERATIONS:
Investment income_net..................................................... $ 6,286,623 $ 6,090,607
Net realized gain on investments........................................... 44,708,361 38,921,441
Net unrealized appreciation (depreciation) on investments for the year..... 80,269,570 (42,542,693)
______ ______
Net Increase In Net Assets Resulting From Operations..................... 131,264,554 2,469,355
______ ______
DIVIDENDS TO SHAREHOLDERS:
From investment income_net:
Investor Shares.......................................................... (5,652,275) (4,790,982)
Institutional Shares..................................................... (1,170,331) (1,036,131)
Class R Shares........................................................... (20,018) (14,497)
From net realized gain on investments:
Investor Shares.......................................................... (32,708,062) (35,173,927)
Institutional Shares..................................................... (6,089,493) (7,027,785)
Class R Shares........................................................... (14,693) (147,807)
______ ______
Total Dividends........................................................ (45,654,872) (48,191,129)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares.......................................................... 32,376,118 35,429,803
Institutional Shares..................................................... 92,766,522 342,392,264
Class R Shares........................................................... 3,629,228 1,806,424
Dividends reinvested:
Investor Shares.......................................................... 34,209,203 35,673,508
Institutional Shares..................................................... 7,078,027 7,485,142
Class R Shares........................................................... 17,322 123,153
Cost of shares redeemed:
Investor Shares.......................................................... (53,537,298) (64,780,077)
Institutional Shares..................................................... (97,834,686) (362,837,656)
Class R Shares........................................................... (5,221,642) (665,997)
______ ______
Increase (Decrease) In Net Assets From Beneficial Interest
Transactions......................................................... 13,482,794 (5,373,436)
______ ______
Total Increase (Decrease) In Net Assets.............................. 99,092,476 (51,095,210)
NET ASSETS:
Beginning of year.......................................................... 378,373,522 429,468,732
______ ______
End of year (including undistributed investment income_net:
$35,924 in 1995 and $591,925 in 1994).................................... $477,465,998 $378,373,522
====== ======
</TABLE>
<TABLE>
<CAPTION>
Shares
______________________________________________________________________________________----
Investor Institutional Class R
____________-____________- _____________-_____________- _____________-_____________
Year Ended Period Ended
Year Ended December 31, Year Ended December 31, December 31, December 31,
____________-____________- _____________-____________- __________ ____________
1995 1994 1995 1994 1995 1994*
____- ____- ____- _____ ___- ___-
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.............. 1,133,898 1,267,535 3,304,350 12,106,152 138,967 63,627
Shares issued for dividends
reinvested............. 1,141,448 1,410,642 236,346 295,150 577 4,890
Shares redeemed.......... (1,888,328) (2,315,216) (3,450,788) (12,845,855) (177,018) (24,929)
____- ____- ____- _____ ___- ___-
Net Increase (Decrease) In
Shares Outstanding... 387,018 362,961 89,908 (444,553) (37,474) 43,588
===== ===== ===== ===== ==== ====
<FN>
______
* The Fund commenced selling Trust shares on April 4, 1994. Effective
October 17, 1994, the Trust shares were reclassified as Class R shares.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Financial Highlights
Reference is made to page 4 of the Dreyfus Core Value Fund/Institutional
Shares Prospectus dated May 1, 1996.
Reference is made to page 5 of the Dreyfus Core Value Fund/Investor and
Class R Shares Prospectus dated May 1, 1996.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS
NOTE 1_Significant Accounting Policies:
Dreyfus Core Value Fund (the "Fund") is a diversified equity fund seeking
long-term growth of capital, with current income as a secondary objective,
primarily through investments primarily in common stocks and securities
convertible into common stock. The Dreyfus/Laurel Funds Trust (the "Trust")
is registered under the Investment Company Act of 1940 ("Act") and operates
as a series company currently offering four series including the Fund. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, 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.
The Fund currently offers three classes of shares: Investor,
Institutional and Class R shares. Investor shares are sold primarily to
retail investors and bear a distribution fee. Institutional shares are
offered only to those customers of certain financial planners and investment
advisers who held shares of a predecessor class of the Fund as of April 4,
1994, 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 fee and voting rights on matters
affecting a single class.
Investment income, net of expenses (other than class specific expenses)
and realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets of each
class.
(a) Portfolio Valuation: Investments in securities are valued at the last
sales price on the securities exchange on which such securities are primarily
traded or at the last sales price on the national securities market.
Securities not listed on an exchange or the national securities market, or
securities for which there were no transactions, are valued at the average of
the most recent bid and asked prices. Bid price is used when no asked price
is available. Securities for which there are no such valuations are valued at
fair value as determined in good faith under the direction of the Board of
Trustees. Investments denominated in foreign currencies are translated to
U.S. dollars at the prevailing rates of exchange. Forward currency exchange
contracts are valued at the forward rate.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(c) Foreign Currency Transactions: The Fund does not isolate that portion
of the results of the operations resulting from changes in foreign exchange
rates on investment from the fluctuations arising from changes in the market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
<PAGE>
Dreyfus Core Value Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amount of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(d) Forward Currency Exchange Contracts: The Fund enters into forward
currency exchange contracts in order to hedge its exposure to changes in
foreign currency exchange rates on its foreign portfolio holdings. When
executing forward currency exchange contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the
future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency
exchange contracts which is typically limited to the unrealized gains on such
contracts that are recognized in the statement of assets and liabilities. At
December 31, 1995, there were no open forward currency exchange contracts.
(e) Distributions to Shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net are declared and paid
quarterly. Dividends from net realized capital gain are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute
such gain.
(f) Federal Income Taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2_Investment Management Fee and Other Transactions With Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. 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 .90% of the value of the Fund's
average daily net
<PAGE>
Dreyfus Core Value Fund
_______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
assets. The Manager has voluntarily agreed to waive this fee to .88% of
the Fund's average daily net assets excluding certain fees outlined below.
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). The reduction in
management fee, pursuant to the undertaking amounted to $66,949 for the year
ended December 31, 1995.
(b) Distribution Plan: The Fund has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its Investor
and Institutional 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 and up to .15% of the value of the average daily net assets
attributable to its Institutional shares to compensate the Distributor and
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and the Distributor for activities primarily intended to
result in the sale of Investor and Institutional shares. The Class R shares
bear no distribution fee. For the year ended December 31, 1995, the
distribution fee for the Investor and Institutional shares was $909,513 and
$106,386, respectively.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Trustees who are not "interested persons" of the Investment Company and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
(c) Trustees' Fees: Each trustee who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition the
Chairman of the Board receives an annual fee of $75,000 per year. These fees
and expenses are charged and allocated to each series based on net assets.
NOTE 3_Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the year ended December 31, 1995 amounted to $228,658,073 and
$251,837,814, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $88,005,792, consisting of $93,749,273 gross unrealized
appreciation and $5,743,481 gross unrealized depreciation.
At December 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Dreyfus Core Value Fund
_______________________________________
Independent Auditors Report
Board of Trustees and Shareholders:
The Dreyfus/Laurel Funds Trust
We have audited the accompanying statement of assets and liabilities of
the Dreyfus Core Value Fund of The Dreyfus/Laurel Funds Trust as of December
31, 1995, and the related statement of operations for the year then ended,
and the statement of changes in net assets and the financial highlights for
each of the two years in the period 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 audits. The financial highlights for each
of the years or periods in the three-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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Dreyfus Core Value Fund of The Dreyfus/Laurel Funds Trust, as
of December 31, 1995, and the results of its operations for the year then
ended, changes in its net assets, and the financial highlights for each of
the years in the two year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 6, 1996
DREYFUS SPECIAL GROWTH FUND
INVESTOR AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1996
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, 1996, as it may be revised from time to
time. The Fund is a separate, diversified portfolio of The Dreyfus/Laurel
Funds Trust (the "Trust"), an open-end 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 one of 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 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-17
Management Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . B-23
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . B-24
Distribution Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . B-26
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . B-27
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . B-30
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . . . B-31
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . B-37
Information About the Fund . . . . . . . . . . . . . . . . . . . . . . . B-38
Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . B-39
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . B-39
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
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).
FNMA and FHLMC are Government sponsored corporations owned entirely by
private stockholders. Each is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA and FHLMC 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 and FHLMC are guaranteed by those
entities as to payment of principal and interest.
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 Fund 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.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government Securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Trustees. In a repurchase agreement, the Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually agreed
upon date and price. The Fund's resale price will be in excess of the
purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate on the underlying security.
Repurchase agreements may also be viewed as a fully collateralized loan of
money by the Fund to the seller. The period of these repurchase agreements
will usually be short, from overnight to one week, and at no time will the
Fund invest in repurchase agreements for more than one year. The Fund will
always receive as collateral securities whose market value including
accrued interest is, and during the entire term of the agreement remains,
at least equal to 100% of the dollar amount invested by the Fund in each
agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of
the custodian. If the seller defaults, the Fund might incur a loss if the
value of the collateral securing the repurchase agreement declines and
might incur disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of a security which is the subject of a repurchase
agreement, realization upon the collateral by the Fund may be delayed or
limited. Dreyfus seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligors under
repurchase agreements, in accordance with the credit guidelines of the
Trust's Board of Trustees.
Derivative Instruments. The Fund may purchase and sell various
financial instruments ("Derivative Instruments"), such as financial futures
contracts (such as interest rate, index and foreign currency futures
contracts), options (such as options on securities, indices, foreign
currencies and futures contracts), forward currency contracts and interest
rate, equity index and currency swaps, caps, collars and floors. The index
Derivative Instruments the Fund may use may be based on indices of U.S. or
foreign equity or debt securities. These Derivative Instruments may be
used, for example, to preserve a return or spread, to lock in unrealized
market value gains or losses, to facilitate or substitute for the sale or
purchase of securities, to manage the duration of securities, to alter the
exposure of a particular investment or portion of the Fund's portfolio to
fluctuations in interest rates or currency rates, to uncap a capped
security or to convert a fixed rate security into a variable rate security
or a variable rate security into a fixed rate security.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose
price is expected to move in the opposite direction of the price of the
investment being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is
sometimes referred to as an anticipatory hedge. In an anticipatory hedge
transaction, the Fund does not own a corresponding security and, therefore,
the transaction does not relate to a security the Fund owns. Rather, it
relates to a security that the Fund intends to acquire. If the Fund does
not complete the hedge by purchasing the security it anticipated
purchasing, the effect on the Fund's portfolio is the same as if the
transaction were entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that
the Fund owns or intends to acquire. Derivative Instruments on indices, in
contrast, generally are used to attempt to hedge against price movements in
market sectors in which the Fund has invested or expects to invest.
Derivative Instruments on debt securities may be used to hedge either
individual securities or broad debt market sectors.
The use of Derivative Instruments is subject to applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures Trading
Commission ("CFTC") and various state regulatory authorities. In addition,
the Fund's ability to use Derivative Instruments will be limited by tax
considerations. See "Dividends, Other Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional opportunities
in connection with other Derivative Instruments. These new opportunities
may become available as Dreyfus develops new techniques, as regulatory
authorities broaden the range of permitted transactions and as new
techniques are developed. Dreyfus may utilize these opportunities to the
extent that they are consistent with the Fund's investment objective, and
permitted by the Fund's investment policies and applicable regulatory
authorities.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability to predict movements of the overall securities, currency
and interest rate markets, which requires different skills than predicting
changes in the prices of individual securities. There can be no assurance
that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in
value of the hedged investment, the hedge would not be fully successful.
Such a lack of correlation might occur due to factors unrelated to the
value of the investments being hedged, such as speculative or other
pressures on the markets in which Derivative Instruments are traded. The
effectiveness of hedges using Derivative Instruments on indices will depend
on the degree of correlation between price movements in the index and price
movements in the securities being hedged.
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts
available will not match the Fund's current or anticipated investments
exactly. The Fund may invest in options and futures contracts based on
securities with different issuers, maturities, or other characteristics
from the securities in which it typically invests, which involves a risk
that the options or futures position will not track the performance of the
Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected a
decline in the price of a security in the Fund's portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the Derivative
Instrument. Moreover, if the price of the Derivative Instrument declined
by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a better
position had it not attempted to hedge at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Derivative Instruments involving obligations to third
parties (i.e., Derivative Instruments other than purchased options). If
the Fund were unable to close out its positions in such Derivative
Instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired or matured.
These requirements might impair the Fund's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time. The Fund's ability to close out a position in a
Derivative Instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a market,
the ability and willingness of the other party to the transaction
("counterparty") to enter into a transaction closing out the position.
Therefore, there is no assurance that any position can be closed out at a
time and price that is favorable to the Fund.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The
Fund will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, futures, options, currencies
or forward contracts or (2) cash and short-term liquid debt securities with
a value sufficient at all times to cover its potential obligations to the
extent not covered as provided in (1) above. The Fund will comply with SEC
guidelines regarding cover for Derivative Instruments and will, if the
guidelines so require, set aside cash, U.S. Government Securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities or currencies
except that all settlements are in cash and gain or loss depends on changes
in the index in question rather than on price movements in individual
securities or currencies.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment appreciates to a price higher than the exercise price of the
call option, it can be expected that the option will be exercised and the
Fund will be obligated to sell the investment at less than its market
value.
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the
Fund will be obligated to purchase the investment at more than its market
value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the
underlying investment and general market conditions. Options that expire
unexercised have no value.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and over-the-
counter ("OTC") options. Exchange-traded options in the United States are
issued by a clearing organization that, in effect, guarantees completion of
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty (usually a securities
dealer or a bank) with no clearing organization guarantee. Thus, when the
Fund purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of
such transaction, the sum of (i) the market value of outstanding OTC
options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund, and
(iii) the market value of all other assets of the Fund that are illiquid or
are not otherwise readily marketable, would exceed 15% of the net assets of
the Fund, taken at market value. However, if an OTC option is sold by the
Fund to a primary U.S. Government Securities dealer recognized by the
Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the
amount by which the option is "in-the-money" (the difference between the
current market value of the underlying securities and the option's strike
price). The repurchase price with primary dealers is typically a formula
price that is generally based on a multiple of the premium received for the
option plus the amount by which the option is "in-the-money."
Generally, the OTC debt and foreign currency options used by the Fund
are European-style options. This means that the option is only exercisable
immediately prior to its expiration. This is in contrast to American-style
options, which are exercisable at any time prior to the expiration date of
the option.
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the counterparty, or by a transaction in the secondary market
if any such market exists. Although the Fund will enter into OTC options
only with major dealers in unlisted options, there is no assurance that the
Fund will in fact be able to close out an OTC option position at a
favorable price prior to expiration. In the event of insolvency of the
counterparty, the Fund might be unable to close out an OTC option position
at any time prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call option
on the same security with a lower strike price.
Futures Contracts and Options on Futures Contracts. When the Fund
purchases a futures contract, it incurs an obligation to take delivery of a
specified amount of the obligation underlying the futures contract at a
specified time in the future for a specified price. When the Fund sells a
futures contract, it incurs an obligation to deliver a specified amount of
the obligation underlying the futures contract at a specified time in the
future for an agreed upon price. With respect to index futures, no
physical transfer of the securities underlying the index is made. Rather,
the parties settle by exchanging in cash an amount based on the difference
between the contract price and the closing value of the index on the
settlement date.
When the Fund writes an option on a futures contract, it becomes
obligated, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during the term
of the option. If the Fund has written a call, it assumes a short futures
position. If the Fund has written a put, it assumes a long futures
position. When the Fund purchases an option on a futures contract, it
acquires the right, in return for the premium it pays, to assume a position
in a futures contract (a long position if the option is a call and a short
position if the option is a put).
The purchase of futures or call options on futures can serve as a long
hedge, and the sale of futures or the purchase of put options on futures
can serve as a short hedge. Writing call options on futures contracts can
serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indices. Similarly, writing put
options on futures contracts can serve as a limited long hedge.
Futures strategies also can be used to manage the average duration of
the Fund's fixed-income portfolio. If Dreyfus wishes to shorten the
average duration of the Fund's fixed-income portfolio, the Fund may sell an
interest rate futures contract or a call option thereon, or purchase a put
option on that futures contract. If Dreyfus wishes to lengthen the average
duration of the Fund's fixed-income portfolio, the Fund may buy an interest
rate futures contract or a call option thereon, or sell a put option
thereon.
No price is paid upon entering into a futures contract. Instead, at
the inception of a futures contract the Fund is required to deposit
"initial margin" consisting of cash or U.S. Government Securities in an
amount generally equal to 10% or less of the contract value. Margin must
also be deposited when writing a call or put option on a futures contract,
in accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction
if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required
by an exchange to increase the level of its initial margin payment.
Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a process
known as "marking-to-market." Variation margin does not involve borrowing,
but rather represents a daily settlement of the Fund's obligations to or
from a futures broker. When the Fund purchases an option on a future, the
premium paid plus transaction costs is all that is at risk. In contrast,
when the Fund purchases or sells a futures contract or writes a call or put
option thereon, it is subject to daily variation margin calls that could be
substantial in the event of adverse price movements. If the Fund has
insufficient cash to meet daily variation margin requirements, it might
need to sell securities at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions
on options, by selling or purchasing, respectively, an instrument identical
to the instrument purchased or sold. Positions in futures and options on
futures may be closed only on an exchange or board of trade that provides a
secondary market. Although the Fund intends to enter into futures and
options on futures only on exchanges or boards of trade where there appears
to be a liquid secondary market, there can be no assurance that such a
market will exist for a particular contract at a particular time. In such
event, it may not be possible to close a futures contract or options
position.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures or an option on a futures
contract can vary from the previous day's settlement price; once that limit
is reached, no trades may be made that day at a price beyond the limit.
Daily price limits do not limit potential losses because prices could move
to the daily limit for several consecutive days with little or no trading,
thereby preventing liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures or options on futures
position due to the absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Fund would continue
to be required to make daily variation margin payments and might be
required to maintain the position being hedged by the future or option or
to maintain cash or securities in a segregated account.
To the extent that the Fund enters into futures contracts, options on
futures contracts, or options on foreign currencies traded on an exchange
regulated by the CFTC, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and
premiums required to establish those positions (excluding the amount by
which options are "in-the-money" at the time of purchase) will not exceed
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into. This policy does not limit to 5% the percentage of the
Fund's assets that are at risk in futures contracts and options on futures
contracts.
Foreign Currency Strategies - Special Considerations. The Fund may
use Derivative Instruments on foreign currencies to hedge against movements
in the values of the foreign currencies in which the Fund's securities are
denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of
particular currency when no Derivative Instruments on that currency are
available or such Derivative Instruments are more expensive than certain
other Derivative Instruments. In such cases, the Fund may hedge against
price movements in that currency by entering into transactions using
Derivative Instruments on another currency or a basket of currencies, the
values of which Dreyfus believes will have a high degree of positive
correlation to the value of the currency being hedged. The risk that
movements in the price of the Derivative Instrument will not correlate
perfectly with movements in the price of the currency being hedged is
magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged by
having to deal in the odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices
that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and
the price. Forward contracts are used as a hedge against future movements
in foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund
may purchase a forward contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to
acquire. Forward contracts may also serve as short hedges -- for example,
the Fund may sell a forward contract to lock in the U.S. dollar equivalent
of the proceeds from the anticipated sale of a security denominated in a
foreign currency or from anticipated dividend or interest payments
denominated in a foreign currency. Dreyfus may seek to hedge against
changes in the value of a particular currency by using forward contracts on
another foreign currency or basket of currencies, the value of which
Dreyfus believes will bear a positive correlation to the value of the
currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because forward contracts are
usually entered into a principal basis, no fees or commissions are
involved. When the Fund enters into a forward contract, it relies on the
counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would
result in the loss of any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets generally
do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by
negotiating directly with the counterparty. Thus, there can be no
assurance that the Fund will in fact be able to close out a forward
contract at a favorable price prior to maturity. In addition, in the event
of insolvency of the counterparty, the Fund might be unable to close out a
forward contract at any time prior to maturity. In either event, the Fund
would continue to be subject to market risk with respect to the position,
and would continue to be required to maintain a position in the securities
or currencies that are the subject of the hedge or to maintain cash or
securities in a segregated account.
The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because the
value of such securities measured in the foreign currency will change after
the forward contract has been established. Thus, the Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.
Swaps, Caps, Collars and Floors. Swap agreements, including interest
rate, equity index and currency swaps, caps, collars and floors, may be
individually negotiated and structured to include exposure to a variety of
different types of investments or market factors. Swaps involve two
parties exchanging a series of cash flows at specified intervals. In the
case of an interest rate swap, the parties exchange interest payments based
on an agreed upon principal amount (referred to as the "notional principal
amount"). Under the most basic scenario, Party A would pay a fixed rate on
the notional principal amount to Party B, which would pay a floating rate
on the same notional principal amount to Party A. Depending on their
structure, swap agreements may increase or decrease the Fund's exposure to
long or short-term interest rates (in the U.S. or abroad), foreign currency
values, mortgage securities, corporate borrowing rates, or other factors.
Swap agreements can take many different forms and are known by a variety of
names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
The Fund will set aside cash or appropriate liquid assets to cover its
current obligations under swap transactions. If the Fund enters into a
swap agreement on a net basis (that is, the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net
amount of the two payments), the Fund will maintain cash or liquid assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis or writes a cap, collar or floor,
it will maintain cash or liquid assets with a value equal to the full
amount of the Fund's accrued obligations under the agreement.
The most important factor in the performance of swap agreements is the
change in the specific interest rate, currency or other factor(s) that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declines, the value of a swap agreement would likely
decline, potentially resulting in losses.
The Fund will enter into swaps, caps, collars and floors only with
banks and recognized securities dealers believed by Dreyfus to present
minimal credit risks in accordance with guidelines established by the
Trust's Board of Trustees. If there is a default by the other party to
such a transaction, the Fund will have to rely on its contractual remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant
to the agreement relating to the transaction.
The Fund understands that it is the position of the staff of the SEC
that assets involved in swap transactions are illiquid and, therefore, are
subject to the limitations on illiquid investments.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
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, the Fund can increase its income by
continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or by
obtaining yield in the form of interest paid by the borrower when U.S.
Government Securities are used as collateral. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral or equivalent
securities from the borrower; (2) the borrower must increase such
collateral whenever the market value of the loaned securities rises above
the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the
loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a
material event adversely affecting the investment occurs, the Trustees must
terminate the loan and regain the right to vote the securities. The risks
in lending portfolio securities, as well as with other extensions of
secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. Loans will be made
to firms deemed by Dreyfus to be of good standing and will not be made
unless, in the judgment of Dreyfus, the consideration to be earned from
such loans would justify the risk.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy; or (b) more than
50% of the outstanding shares of the Fund, whichever is less. The Fund may
not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government Securities, and state or municipal governments
and their political subdivisions are not considered members of any
industry. In addition, this limitation does not apply to investments in
domestic banks, including U.S. branches of foreign banks and foreign
branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended (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 objective, 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
and options 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 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 options.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in such percentage resulting from a change in
the values of assets will not constitute a violation of such restriction,
except as otherwise required by the 1940 Act.
In order to permit the sale of the Fund's shares in certain states,
the Trust may make commitments more restrictive than the investment
restrictions described above. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust and its
shareholders, it will revoke the commitment by terminating sales of its
shares in the state involved. Further, the Fund has given a representation
that investments will not be made in real estate limited partnerships.
MANAGEMENT OF THE FUND
Principal Shareholders
The following shareholder(s) owned of record 5% or more of the Class R
shares of the Fund as of April 1, 1996: Boston Safe Deposit & Trust
Company, P.O. Box 3198, Pittsburgh, PA 15230-3198, 96% 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, N.A. ("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 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 these 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 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 Trust has a Board composed of twelve Trustees which supervises the
Trust's investment activities and reviews contractual arrangements with
companies that provide the Fund 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 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 Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds") and Mr. DiMartino serves as a Board member of 93
other funds advised by Dreyfus.
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: 81
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 and Vice Chairman of the Board, Home
Owners Federal Savings and Loan (prior to May 1990). Age: 79 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 thereto, he was President and a director of Dreyfus and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus and until August 29,
1994, the Fund's distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Bank Corporation. He is Chairman of the
Board of Noel Group, Inc., a venture capital company, a trustee of
Bucknell University; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway, Inc.,
Simmons Outdoor Corporation and Staffing Resources, Inc. Age: 52
years old. Address: 200 Park Avenue, New York, New York 10166.
o +JAMES M. FITZGIBBONS. Trustee of the Trust; Chairman, Howes Leather
Company, Inc.; Chairman, CEO and Director, Fieldcrest-Cannon Inc.;
Director, Lumber Mutual Insurance Company; Director, Barrett
Resources, Inc. Age: 61 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. Age: 74 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o +KENNETH A. HIMMEL. Trustee of the Trust; present 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. Age: 49 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. Director,
Access Capital Strategies Community Investment Fund, Inc. Age: 78
years old. Address: 1817 Foxcroft Lane, Unit 306, 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: 48
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: 68 years old.
Address: 15 Waverly Lane, Grosse Pointe Farms, Michigan 48236.
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: 64 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224.
o +ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures;
Director, American Express Centurion Bank; Director Hanaet Community
Health Plan, Inc.; Director, Massachusetts Electric Company; Director,
The Hyams Foundation, Inc. prior to February, 1993; Real Estate
Development Project Manager and Vice President, The Gunwyn Company.
Age: 46 years old. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
#ELIZABETH BACHMAN. Vice President and Assistant Secretary of the Trust,
The Dreyfus/Laurel Funds, Inc. and The Dreyfus/Laurel Tax-Free
Municipal Funds (since January 1996); Counsel, Premier Mutual Fund
Services, Inc. Prior to September 1995, she was enrolled at the
Fordham University School of Law and received her J.D. in May 1995.
Prior to September 1992, she was an Assistant at the National
Association for Public Interest Law. Age: 26 years old. Address: 200
Park Avenue, New York, New York 10166.
#MARIE E. CONNOLLY. President and Treasurer of the Trust, The
Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds,
Inc. (since September 1994); Vice President of the Trust, 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). Age: 37
years old. Address: One Exchange Place, Boston, Massachusetts 02109.
#FREDERICK C. DEY. Vice President of the Trust, 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). Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President and Assistant Secretary of the Trust,
The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel
Funds, Inc. (since January 1996);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). Age: 31 years old. Address: 200 Park
Avenue, New York, New York 10166.
RICHARD W. HEALEY. Vice President of the Trust, 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). Age: 41 years old.
Address: One Exchange Place, Boston, Massachusetts 02109.
#MARGARET M. PARDO. Assistant Secretary of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Paralegal, Premier Mutual Fund Services, Inc. Prior to
April 1995, she was a Medical Coordination Officer at ORBIS
International. Prior to June 1992, she worked as a Program
Coordinator at Physicians World Communications Group. Age: 27 years
old. Address: 200 Park Avenue, New York, New York 10166.
#JOHN E. PELLETIER. Vice President and Secretary of the Trust, 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). Age: 31 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
#JOHN J. PYBURN. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal Funds (since
January 1996); Vice President of Premier Mutual Fund Services, Inc.
From 1984 to July 1994, he was Assistant Vice President in the Mutual
Fund Accounting Department of Dreyfus. Age: 61 years old. Address:
200 Park Avenue, New York, New York 10166.
#JOSEPH F. TOWER, III. Assistant Treasurer of the Trust, The
Dreyfus/Laurel Funds, Inc. and The Dreyfus/Laurel Tax-Free Municipal
Funds (since January 1996); Senior Vice President, Treasurer and Chief
Financial Officer of Premier Mutual Fund Services, Inc. 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. Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
___________________________
* Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by Dreyfus.
The officers and Trustees of the Trust as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of April 1,
1996.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate 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, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act), $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Trustees/Directors of the Dreyfus/Laurel Funds).
In addition, the Dreyfus/Laurel Funds pay each Trustee/Director who is not
an "interested person" of the Trust (as defined in the 1940 Act) $1,000 per
joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1995, the aggregate amount of
fees and expenses received by each current Trustee of the Trust from the
Trust and all other funds in the Dreyfus Family of Funds for which such
person is a Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension of Compensation
Retirement From the
Benefits Estimated Trust
Accrued as Annual and Fund
Aggregate Part of the Benefits Complex
Compensation Trust's Upon Paid to Board
Name of Board Member From Trust# Expenses Retirement Member
<S> <C> <C> <C> <C>
Ruth Marie Adams $ 4,595 none none $ 34,500
Francis P. Brennan* 14,884 none none 111,500
James M. Fitzgibbons 4,723 none none 35,500
Joseph S. DiMartino** none none none 448,618***
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 4,732 none none 35,464
Kenneth A. Himmel 4,515 none none 33,750
Arch S. Jeffery** none none none none
Stephen J. Lockwood 4,491 none none 33,750
Robert D. McBride 4,726 none none 35,500
John J. Sciullo 4,462 none none 33,500
Roslyn M. Watson 4,591 none none 34,500
# Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a
portion of the management fee payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested Trustees.
Amount does not include reimbursed expenses for attending Board meetings, which amounted to $2,331 for the Trust.
* Compensation of Francis P. Brennan includes $75,000 paid by the Dreyfus/Laurel Funds to be the Chairman of the
Board.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the fiscal year ended December 31, 1995, the
aggregate amount of fees and expenses received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from
Dreyfus for serving as a Board member of the Trust were $3,933, $4,856 and $4,726, respectively, and for serving as
a Board member of all funds in the Dreyfus/Laurel Funds (including the Trust) were $29,500, $36,500 and $35,500,
respectively. In addition, Dreyfus reimbursed Messrs. DiMartino, Fort and Jeffery a total of $611 for expenses
attributable to the Trust's Board meetings which is not included in the $2,331 amount noted above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for the fiscal year ended December 31,
1995.
</TABLE>
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 (the "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 objective,
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 its 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; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President-Human Resources; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Andrew S. Wasser, Vice President-Information Systems;
Maurice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, directors.
For the last three fiscal years, the Fund has had the following
investment management expenses:
For the Fiscal Year Ended December 31,
1995 1994 1993
$824,186 $1,029,132 $941,416
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 at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange ("NYSE") are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 P.M., New York time, on
any business day the Transfer Agent and the NYSE are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the NYSE is
not open for business), will be credited to the shareholder's Fund account
on the second bank business day following such purchase order.
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.
In-Kind Purchases. If the following conditions are satisfied, the
Fund may at its discretion, permit the purchase of shares through an "in-
kind" exchange of securities. Any securities exchanged must meet the
investment objective, policies and limitations of the Fund, must have a
readily ascertainable market value, must be liquid and must not be subject
to restrictions on resale. The market value of any securities exchanged,
plus any cash, must be at least equal to $25,000. Shares purchased in
exchange for securities generally cannot be redeemed for fifteen days
following the exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the
shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities. For
further information about "in-kind" purchases, call 1-800-645-6561.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan (Investor Shares Only)."
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 may, directly or indirectly, bear the expenses of distributing their
shares. The Rule defines distribution expenses to include expenditures for
"any activity which is primarily intended to result in the sale of fund
shares." The Rule, among other things, provides that an investment company
may bear such expenses only pursuant to a plan adopted in accordance with
the Rule. With respect to Investor shares of the Fund, the Trust has
adopted a Distribution Plan (the "Plan"), pursuant to which the Distributor
may enter into Agreements with banks, securities brokers or dealers and
other financial institutions ("Agents").
Under the 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 Plan provides that a report of the amounts expended under the
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
Plan provides that it may not be amended to increase materially the costs
which the Fund may bear for distribution pursuant to the Plan without
approval of the Fund's shareholders, and that other material amendments of
the 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 Plan, cast in person at a meeting called for the
purpose of considering such amendments. The 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 Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan. The 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 Plan or by vote of the holders of a
majority of the outstanding shares of such class of the Fund.
For the fiscal year ended December 31, 1995, the Fund paid $165,253 of
which $5,556 was paid to the Distributor and $159,697 of which was paid to
Dreyfus Service Corporation pursuant to the Plan with respect to Investor
shares.
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, 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 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 redemptions 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. Shareholders are limited to six exchanges out of
the Fund during the calendar year. 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.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500 invested
among the funds in the Dreyfus Family of Funds. To exchange shares held in
a personal retirement plan account, the shares exchanged must have a
current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of the same Class of another fund in the Dreyfus Family of Funds. This
Privilege is available only for existing accounts. With respect to Class R
shares held by a Retirement Plan, exchanges may be made only between the
investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if the investor's account falls
below the amount designated to be exchanged under this Privilege. In this
case, an investor's account will fall to zero unless additional investments
are made in excess of the designated amount prior to the next 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 by calling 1-800-645-6561. 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 Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. 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 other 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 other 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 other 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 which 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 Day and
Christmas Day.
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 for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code"), 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, ("Distribution Requirement") 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 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.
Any dividend or other distribution paid shortly after an investor's
purchase of shares 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, if a shareholder
sells shares of the Fund held for six months or less and receives 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 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 investors.
Gains from the sale or other disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
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, forward contracts and foreign currency positions
beyond the time when it otherwise would be advantageous to do so, in order
for the Fund to continue 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 certain foreign
currency dollar denominated securities (including debt instruments, certain
financial forward, futures and option contracts and 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 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain futures, 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 as 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) 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 could need to distribute such income to satisfy the Distribution
Requirement and to avoid the 4% excise tax referred in the Fund's
Prospectus under "Dividends, Other Distributions and Taxes". 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 requirements.
The Fund may invest in the stock of "passive foreign investment
companies ("PFICs"). A PFIC is a foreign corporation that, in general,
meets either of the following tests: (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances,
the Fund will be subject to federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition
of the stock (collectively, "PFIC income"), plus interest thereon, even if
the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the
Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund," then in lieu of the foregoing tax and interest obligation,
the Fund would be required to include in income each year its pro rata
share of the qualified electing fund's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) -- which probably would have to be distributed to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax -- even if
those earnings and gain were not received by the Fund. In most instances
it will be very difficult, if not impossible, to make this election because
of certain requirements thereof.
Proposed regulations have been published pursuant to which open-end
RICs, such as the Fund, would be entitled to elect to "mark-to-market"
their stock in certain PFICs. "Marking-to-market," in this context, means
recognizing as gain for each taxable year the excess, as of the end of that
year, of the fair market value of each such PFIC's stock over the adjusted
basis in that stock (including mark-to-market gain for each prior year for
which an election was in effect).
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities are deemed to be conducting business,
the Fund may be subject to the tax laws thereof. Shareholders are advised
to consult their tax advisers concerning the application of state and local
taxes to them.
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, such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. 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 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).
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain (the excess of long-
term capital gain over short-term capital loss), 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. 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 a foreign
shareholder's ownership of the Fund's shares 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 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.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with the Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. The Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to
the benefits received. Dreyfus also places transactions for other accounts
that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Trust's procedures adopted in accordance with Rule 17e-1 of the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligation to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Trust's Board of Trustees periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and reviews the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Trustees will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the fiscal years ending December 31, 1993, 1994 and 1995 the Fund
paid brokerage fees of $262,685, $354,891 and $118,062, respectively. The
decrease in brokerage fees for the fiscal year ended December 31, 1995 was
due primarily to a decrease in the Fund's portfolio turnover.
For the fiscal year ended December 31, 1994, the Fund paid $3,290 in
brokerage commissions (or 1% of the Fund's total brokerage fees) 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 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 fiscal years ended 1994 and 1995
for the Fund were 133% and 69%, 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 (expressed as a percentage) for the
Investor shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Periods Ended December 31, 1995
1 Year 5 Years 10 Years Inception
Investor Shares 30.44% 15.82% 11.49% 14.95%
(5/3/82)
Inception date appears in parentheses following the average annual total
return since inception.
Average annual total return (expressed as a percentage) for the Class
R shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Periods Ended December 31, 1995
1 Year 5 Years 10 Years Inception
Class R Shares 30.79% -- -- 7.74%(2/1/93)
Inception date appears in parentheses following the average annual total
return since inception.
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.
The Fund's total return for Investor shares and Class R shares for the
periods May 3, 1982 and February 1, 1993 to December 31, 1995 was 571.60%
and 24.31%, respectively. 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.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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 above performance
data for Investor shares is reflective of the Fund's Retail Class of
Shares' performance through April 3, 1994 and the Fund's Investor shares
performance thereafter. In addition, the above performance data for Class
R shares of the Fund reflects performance of the Fund's former Investment
Class of Shares and Trust shares.
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 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
of 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 the Fund property
for all losses and expenses of any shareholder held personally liable for
the obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund 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.
The Fund is currently one of four portfolios of the Trust.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258,
is the Fund's custodian. Dreyfus Transfer, Inc., a wholly-owned subsidiary
of Dreyfus, is located at One American Express Plaza, Providence, Rhode
Island 02903, and is the Fund's transfer and dividend disbursing agent.
Under a transfer agency agreement with the Fund, the Transfer Agent
arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund
and the payment of dividends and distributions payable by the Fund. For
these services, the Transfer Agent receives a monthly fee computed on the
basis of the number of shareholder accounts it maintains for the Fund
during the month, and is reimbursed for certain out-of-pocket expenses.
Dreyfus Transfer, 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 LLP, 1800 Massachusetts Avenue, N.W., Second
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, 1996,
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 filed on behalf
of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1995,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements included in 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 ("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.
<PAGE>
Dreyfus Special Growth Fund
_______________________________________
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Common Stocks_93.2% Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Domestic Common Stocks_84.9%
___________________________________________-
Auto Parts_.1% Capco Automotive ............................... 11,300 $ 80,513
_____-
Basic Industries_2.7% Boise Cascade .................................. 23,000 796,375
Mariah International ........................... 950,000(a) 14,250
Stone Container ................................ 80,000 1,150,000
_____-
1,960,625
_____-
Capital Goods_2.4% General Instrument ............................. 32,000(a) 748,000
Raychem ........................................ 17,000 966,875
_____-
1,714,875
_____-
Consumer Non-durables_6.3% Authentic Fitness .............................. 45,000 933,750
Quiksilver ..................................... 22,000(a) 752,125
Robert Mondavi ................................. 55,000(a) 1,519,375
Seda Speciality Packaging ...................... 104,500(a) 1,293,188
_____-
4,498,438
_____-
Consumer Services_11.2% AirTouch Communications ........................ 51,000(a) 1,440,750
CMG Information Services ....................... 18,000(a) 1,671,750
Comcast, Cl. A ................................. 88,000 1,551,000
Liberty Media Group, Cl. A ..................... 21,781(a) 585,371
Tele-Communications, Cl. A ..................... 77,125(a) 1,532,859
Vanguard Cellular Systems ...................... 61,500(a) 1,245,375
_____-
8,027,105
_____-
Energy_26.2% Apache ......................................... 40,000 1,180,000
Global Marine .................................. 497,000(a) 4,348,750
Reading & Bates ................................ 120,000(a) 1,800,000
Seagull Energy ................................. 41,000(a) 912,250
Sonat Offshore Drilling ........................ 90,000 4,027,500
Triton Energy .................................. 26,000 1,491,750
Varco International ............................ 207,500(a) 2,490,000
Weatherford International ...................... 85,750(a) 2,476,031
_____-
18,726,281
_____-
Financial Services_4.4% MGIC Investment ................................ 34,000 1,844,500
Vesta Insurance Group .......................... 24,000 1,308,000
_____-
3,152,500
_____-
Health Care_11.6% Amgen .......................................... 42,000(a) 2,493,750
BioChem Pharma ................................. 57,000(a) 2,287,125
Genesis Health Ventures ........................ 24,000(a) 876,000
Genzyme General Division ....................... 26,000(a) 1,621,750
Genzyme Tissue Repair........................... 9,990(a) 158,591
Nellcor Puritan Bennett ........................ 15,000(a) 870,000
_____-
8,307,216
_____-
</TABLE>
<PAGE>
Dreyfus Special Growth Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Technology_15.1% ANADIGICS ...................................... 28,000(a) $ 595,000
Alpha Industries ............................... 43,000(a) 607,375
Aspen Technology ............................... 25,000(a) 843,750
FTP Software ................................... 24,000(a) 696,000
INSO ........................................... 19,000(a) 807,500
McAfee Associates .............................. 45,000(a) 1,974,375
Myriad ......................................... 14,000(a) 456,750
Read-Rite ...................................... 30,000(a) 697,500
Softkey International .......................... 43,000(a) 994,375
Spyglass ....................................... 21,200(a) 1,208,400
Symantec ....................................... 57,000(a) 1,325,250
TSL Holdings ................................... 10(a) 0
TriQuint Semiconductor ......................... 45,000(a) 607,500
_____-
10,813,775
_____-
Transportation_4.9% AMR ............................................ 15,000(a) 1,113,750
Delta Air Lines................................. 19,000 1,403,625
Southwest Airlines.............................. 43,000 999,750
_____-
3,517,125
_____-
Total Domestic Common Stocks.................... 60,798,453
======
Foreign Common Stocks_8.3%
___________________________________________-
Argentina_.4% Central Costanera, Cl. B........................ 12,000 36,956
Telecom Argentina STET.......................... 23,000 108,549
Telefonica De Argentina S.A..................... 42,000 113,389
YPF Sociedad Anonima............................ 2,500 54,063
_____-
312,957
_____-
Bermuda_3.4% Mid Ocean....................................... 36,000 1,336,500
Partnerre Holdings.............................. 40,000 1,100,000
_____-
2,436,500
_____-
Brazil_.5% Aracruz Celulose, S.A........................... 7,200 55,800
Compania Energentina De Minas Gerais............ 4,200(a) 92,662
Refrigeracao Parana S.A......................... 8,000 88,500
Telecomunicacoes Brasileiras S.A................ 3,000 142,125
_____-
379,087
_____-
Chile_.3% Compania De Telecomucicaciones.................. 1,000 82,875
Cristalerias De Chille S.A...................... 4,400 97,900
_____-
180,775
_____-
Finland_.1% Nokia AB........................................ 1,500 59,208
_____-
Hong Kong_.5% Ek Chor China Motorcycle........................ 5,000 58,125
HSBC Holdings................................... 6,000 90,785
Hong Kong & Shanghai Hotels..................... 80,000 115,875
Yue Yuen Industrial............................. 346,000 91,730
_____-
356,515
_____-
</TABLE>
<PAGE>
Dreyfus Special Growth Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Hungary_.1% MOL Mahyar Olaj-ES Gazipari..................... 5,000 $ 41,000
_____-
Indonesia_.2% H.M. Sampoerna.................................. 12,500 130,197
_____-
Malaysia_1.0% AMMB Holdings Berhad............................ 10,000 114,218
Affin Holdings Berhad........................... 45,000 86,845
Crest Petroleum................................. 20,000(a) 39,071
Leader Universal Holdings Berhad................ 30,000 68,531
Malayan Banking Berhad.......................... 10,000 84,285
Pacific & Orient Berhad......................... 13,000(a) 40,961
Telekom Malaysia Berhad......................... 12,000 93,580
United Engineers................................ 25,000 159,512
_____-
687,003
_____-
Mexico_.5% ALFA............................................ 4,500 57,874
Fomento Economico Mexicano...................... 25,000 56,567
Tablex S.A...................................... 40,000(a) 59,818
Telefonos de Mexico, Series L................... 3,000 95,625
Transportacion Maritima......................... 14,800(a) 123,950
_____-
393,834
_____-
Portugal_.1% Portucel Industrial............................. 12,000(a) 70,847
_____-
Singapore_.4% Far East Levingston Ship Building............... 30,000 141,089
Overseas Union Bank............................. 16,000 110,325
_____-
251,414
_____-
South Africa_.1% Barlow LTD...................................... 4,000 57,000
_____-
Thailand_.7% Advanced Information Services................... 9,000 157,921
Bangkok Bank Public............................. 10,000 121,477
Srithai Superware............................... 12,000 80,031
Telecomasia..................................... 2,000(a,b) 60,250
Thai Telephone & Telecommuncation............... 10,000(a) 55,358
_____-
475,037
_____-
Total Foreign Common Stocks..................... 5,831,374
======
TOTAL COMMON STOCKS
(cost $53,903,013)............................ $66,629,827
======
Foreign Preferred Stocks_.3%
___________________________________________-
Brazil_.1% Ceval Alimentos S.A............................. 7,500 $ 85,781
_____-
Philippines_.2% Philippine Long Distance Telecommunications..... 2,000 104,125
_____-
TOTAL FOREIGN PREFERRED STOCKS
(cost $201,313)............................... $ 189,906
======
</TABLE>
<PAGE>
Dreyfus Special Growth Fund
_______________________________________
Statement of Investments (continued) December 31, 1995
<TABLE>
<CAPTION>
Warrants_.5% Shares Value
___________________________________________- ____ ______
<S> <C> <C>
Ann Taylor Stores
(cost $472,700)............................... 145,000(a) $ 326,250
======
<CAPTION>
Principal
Convertible Foreign Bonds_.0% Amount
___________________________________________- _____
<S> <C> <C>
Malaysia; AMMB Holdings Berhab
(cost $3,901)................................. $ 10,000 $ 5,317
======
Short-Term Investments_5.4%
___________________________________________-
Commercial Paper: General Electric Capital Corporation,
5.85% due 1/2/96.............................. $ 339,000 $ 339,000
Ford Motor Credit Corporation,
6% due 1/2/96................................. 3,561,000 3,561,000
_____-
TOTAL SHORT-TERM INVESTMENTS
(cost $3,900,000)............................. $ 3,900,000
======
TOTAL INVESTMENTS (cost $58,480,927)................................................... 99.4% $71,051,300
===== ======
CASH AND RECEIVABLES (NET)............................................................. .6% $ 463,828
===== ======
NET ASSETS ............................................................................ 100.0% $71,515,128
===== ======
</TABLE>
Notes to Statement of Investments:
______________________________________-
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1995, this security amounted to $60,250 or approximately .1% of net assets.
See notes to financial statements.
<PAGE>
Dreyfus Special Growth Fund
______________________________________
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $58,480,927)_see Statement
of Investments........................................................ $71,051,300
Cash and foreign curency (cost $338,182)................................ 336,463
Receivable for shares of Beneficial Interest subscribed................. 172,500
Receivable for investment securities sold............................... 103,282
Dividends and interest receivable....................................... 13,512
_____-
71,677,057
LIABILITIES:
Due to The Dreyfus Corporation_Note 2(a)............................... $140,529
Due to Distributor_Note 2(b)........................................... 14,299
Payable for investment securities purchased............................. 1,020
Trustees' fees payable_Note 2(c)....................................... 6,081 161,929
____ _____-
NET ASSETS.................................................................. $71,515,128
======
REPRESENTED BY:
Paid-in capital......................................................... $58,571,749
Accumulated investment (loss)........................................... (397,865)
Accumulated undistributed net realized gain on investments.............. 772,324
Accumulated net unrealized appreciation on investments and
foreign currency transactions......................................... 12,568,920
_____-
NET ASSETS at value......................................................... $71,515,128
======
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
unlimited number of shares of Beneficial Interest
($66,201,183 / 3,464,089 shares of Beneficial Interest outstanding)..... $19.11
======
Class R Shares
unlimited number of shares of Beneficial Interest
($5,313,945 / 274,849 shares of Beneficial Interest outstanding)........ $19.33
======
</TABLE>
Statement of Operations Year ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT (LOSS):
Income:
Interest.............................................................. $ 302,308
Cash dividends (net of $12,623 foreign taxes withheld at source)...... 296,496
_____
Total Income...................................................... $ 598,804
Expenses:
Investment management fee_Note 2(a).................................. 824,186
Distribution fee (Investor shares)_Note 2(b)......................... 165,253
Trustees' fees and expenses_Note 2(c)................................ 7,230
_____
Total Expenses.................................................... 996,669
_____-
INVESTMENT (LOSS)................................................. (397,865)
_____-
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments and foreign currency transactions...... $1,509,827
Net realized gain on forward currency exchange contracts................ 10,979
_____
Net Realized Gain..................................................... 1,520,806
Net unrealized appreciation on investments and foreign
currency transactions................................................. 18,222,938
_____-
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 19,743,744
_____-
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $19,345,879
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Special Growth Fund
______________________________________
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
_______________-
1995 1994
______ ______
<S> <C> <C>
OPERATIONS:
Investment (loss).................................................... $ (397,865) $ (440,961)
Net realized gain (loss) on investments.............................. 1,520,806 (633,633)
Net unrealized appreciation (depreciation) on investments for the year 18,222,938 (18,173,370)
______ ______
Net Increase (Decrease) In Net Assets Resulting From Operations.... 19,345,879 (19,247,964)
______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
From net realized gain on investments:
Investor Shares.................................................... _ (228,089)
Class R Shares..................................................... _ (28,254)
In excess of net realized gain on investments:
Investor Shares.................................................... _ (184)
Class R Shares..................................................... _ (23)
______ ______
Total Dividends.................................................. _ (256,550)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:(1,2)
Net proceeds from shares sold:
Investor Shares.................................................... 27,132,927 32,031,183
Class R Shares..................................................... 2,905,819 1,390,092
Dividends reinvested:
Investor Shares.................................................... _ 217,665
Class R Shares..................................................... _ 25,347
Cost of shares redeemed:
Investor Shares.................................................... (43,483,029) (53,882,803)
Class R Shares..................................................... (6,009,549) (7,223,159)
______ ______
(Decrease) In Net Assets From Beneficial Interest Transactions... (19,453,832) (27,441,675)
______ ______
Total (Decrease) In Net Assets................................. (107,953) (46,946,189)
NET ASSETS:
Beginning of year.................................................... 71,623,081 118,569,270
______ ______
End of year [including accumulated investment income (loss);
($397,865) in 1995]................................................ $ 71,515,128 $ 71,623,081
====== ======
</TABLE>
<TABLE>
<CAPTION>
Shares(1)
__________________________________________________________________
Investor Shares Class R Shares
Year Ended December 31, Year Ended December 31,
_______________ _____________
1995 1994(3) 1995 1994
_____ _____ ____ ____
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 1,584,544 1,941,895 168,019 82,480
Shares issued for dividends reinvested _ 14,090 _ 1,624
Shares redeemed..................... (2,544,847) (3,294,041) (352,040) (452,409)
_____ _____ ____ ____
Net (Decrease) In Shares Outstanding (960,303) (1,338,056) (184,021) (368,305)
===== ===== ==== ====
<FN>
_______-
(1) 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 and effective
October 17, 1994, the Trust Shares were reclassified as Class R shares.
(2) Amounts include 2,791,543 of subscriptions and 8,392,173 of redemptions
for the Institutional Class up to April 4, 1994.
(3) Number of shares includes 157,588 of subscriptions and 477,271 of
redemptions for the Institutional Class up to April 4, 1994.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Special Growth Fund
______________________________________
Financial Highlights
Reference is made to page 5 of the Fund's Prospectus dated May 1, 1996.
<PAGE>
Dreyfus Special Growth Fund
______________________________________
NOTES TO FINANCIAL STATEMENTS
NOTE 1_Significant Accounting Policies:
Dreyfus Special Growth 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 and potential. The Dreyfus/Laurel Funds Trust (the
"Trust") is registered under the Investment Company Act of 1940 ("Act") and
operates as a series company currently offering four series including the
Fund. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon
Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, 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.
The Fund is currently authorized to issue two classes of shares:
Investor shares and 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 fee and voting
rights on matters affecting a single class.
Investment income, net of expenses (other than class specific
expenses) and realized and unrealized gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets of each
class.
(a) Portfolio Valuation: Investments in securities are valued at the
last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities
market. Securities not listed on an exchange or the national securities
market, or securities for which there were no transactions, are valued at the
average of the most recent bid and asked prices. Bid price is used when no
asked price is available. Securities for which there are no such valuations
are valued at fair value as determined in good faith under the direction of
the Board of Trustees. Investments denominated in foreign currencies are
translated to U.S. dollars at the prevailing rates of exchange. Forward
currency contracts are valued at the forward rate.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(c) Foreign Currency Transactions: The Fund does not isolate that
portion of the results of the operations resulting from changes in foreign
exchange rates on investment from the fluctuations arising from changes in
the market prices of securities held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference
<PAGE>
Dreyfus Special Growth Fund
______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
between the amount of dividends, interest, and foreign withholding
taxes recorded on the Fund's books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities other than
investments in securities, resulting from changes in exchange rates. Such
gains and losses are included with net realized and unrealized gain or loss
on investments.
(d) Forward Currency Exchange Contracts: The Fund enters into forward
currency exchange contracts in order to hedge its exposure to changes in
foreign currency exchange rates on its foreign portfolio holdings. When
executing forward currency exchange contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the
future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency
exchange contracts which is typically limited to the unrealized gains on such
contracts that are recognized in the statement of assets and liabilities. At
December 31, 1995, there were no open forward currency exchange contracts.
(e) Distributions to Shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the distributio
n requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(f) Federal Income Taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes. For Federal income tax purposes, each series is treated as a
single entity for the purpose of determining such qualification.
During the year ended December 31, 1995, the Fund had a net operating
loss of $397,865 for book purposes. Substantially all of this is not
deductible for Federal income tax purposes.
NOTE 2_Investment Management Fee and Other Transactions with Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. 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 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
<PAGE>
Dreyfus Special Growth Fund
______________________________________
NOTES TO FINANCIAL STATEMENTS (continued)
(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).
(b) 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 the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the year ended December 31,
1995, the distribution fee for the Investor shares was $165,253.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Trustees who are not "interested persons" of the Investment Company and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
(c) Trustees' Fees: Each trustee who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: the Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and the Dreyfus/Laurel Funds Trust. In addition the
Chairman of the Board receives an annual fee of $75,000 per year. These fees
and expenses are charged and allocated to each series based on net assets.
NOTE 3_Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the year ended December 31, 1995 amounted to $45,903,163 and
$62,436,096, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $12,570,373, consisting of $17,956,846 gross unrealized
appreciation and $5,386,473 gross unrealized depreciation.
At December 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Dreyfus Special Growth Fund
______________________________________
Independent Auditors' Report
Board of Trustees and Shareholders:
The Dreyfus/Laurel Funds Trust
We have audited the accompanying statement of assets and liabilities of
the Dreyfus Special Growth Fund of The Dreyfus/Laurel Funds Trust as of
December 31, 1995, and the related statement of operations for the year then
ended, and the statement of changes in net assets and the financial
highlights for each of the two years in the period 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 financ
ial statements and financial highlights based on our audits. The financial
highlights for each of the years or periods in the three-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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Dreyfus Special Growth Fund of The Dreyfus/Laurel Funds Trust
as of December 31, 1995, and the results of its operations for the year then
ended, changes in its net assets, and the financial highlights for each of
the years in the two year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 6, 1996
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 1, 1996.
- Reports of Independent Auditors.
- 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 is incorporated by
reference to Post-Effective Amendment No. 94.
11(b) Consent of Coopers & Lybrand LLP is incorporated by
reference to Post-Effective Amendment No. 94.
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). Incorporated by reference
to Post-Effective Amendment No. 93 filed on December 13,
1994.
16 Performance Information is incorporated by reference to
Post-Effective Amendment No. 76.
18 Rule 18f-3 Plan dated April 26, 1995. Incorporated by
reference to Post-Effectiive Amendment No. 96.
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 on
April 1, 1996.
<TABLE>
<CAPTION>
Number of Record Holders
Investor Institutional
Title of Class Class Class Class A Class B Class C Class R
<S> <C> <C> <C> <C> <C> <C>
Dreyfus Special Growth Fund 6,314 13
Premier Limited Term Government 1,960 16 2
Securities Fund
Premier Managed Income Fund 5,118 166 5
Dreyfus Core Value 1,923 44
Fund
</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.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
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
JULIAN M. SMERLING None
Director
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****
Vice Chairman of the Board:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****
Operating Officer The Boston Company*****
and Director Deputy Director:
Mellon Trust****
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****
Laurel Capital Advisors****
Boston Group Holdings, Inc.
Executive Vice President:
Mellon Bank, N.A.****
Boston Safe Deposit & Trust*****
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales 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++
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President and Lion Management, Inc.*;
General Counel Secretary:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
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 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is 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 Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth Fund
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth and Value Funds, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus Life and Annuity Index Fund, Inc.
37) Dreyfus LifeTime Portfolios, 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 Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Short-Term Income Fund, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) The Dreyfus Third Century Fund, Inc.
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) General California Municipal Bond Fund, Inc.
77) General California Municipal Money Market Fund
78) General Government Securities Money Market Fund, Inc.
79) General Money Market Fund, Inc.
80) General Municipal Bond Fund, Inc.
81) General Municipal Money Market Fund, Inc.
82) General New York Municipal Bond Fund, Inc.
83) General New York Municipal Money Market Fund
84) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
85) Peoples Index Fund, Inc.
86) Peoples S&P MidCap Index Fund, Inc.
87) Premier Insured Municipal Bond Fund
88) Premier California Municipal Bond Fund
89) Premier Capital Growth Fund, Inc.
90) Premier Global Investing, Inc.
91) Premier GNMA Fund
92) Premier Growth Fund, Inc.
93) Premier Municipal Bond Fund
94) Premier New York Municipal Bond Fund
95) Premier State Municipal Bond Fund
96) Premier Strategic Growth Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Mary Nelson+ Assistant Treasurer None
Margaret Pardo++ Paralegal Assistant
Secretary
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston,
Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02903-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the 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, in the City of
New York, and State of New York on the 1st day of May, 1996.
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, and the Investment Company Act of 1940, 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 05/01/96
Marie E. Connolly
/s/Ruth Marie Adams*
_________________________ Trustee 05/01/96
Ruth Marie Adams
/s/Joseph S. DiMartino
_________________________ Trustee 05/01/96
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Trustee 05/01/96
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Trustee 05/01/96
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Trustee 05/01/96
Stephen J. Lockwood
/s/Roslyn M. Watson*
________________________ Trustee 05/01/96
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Trustee 05/01/96
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Trustee 05/01/96
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Trustee 05/01/96
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Trustee 05/01/96
Robert D. McBride
/s/John J. Sciullo*
________________________ Trustee 05/01/96
John J. Sciullo
*By: /s/Eric B. Fischman
--------------------
Eric B. Fischman
Attorney-in-Fact
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
THOMAS M. LEAHEY
(202) 922-9082
April 30, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
RE: The Dreyfus/Laurel Funds Trust
Post-Effective Amendment No. 98 Under the Securities Act of 1933
(1933 Act File No. 33-43846)
Counsel's Representation Pursuant to Rule 485(b)
Dear Sir or Madam:
In my capacity as counsel to The Dreyfus/Laurel Funds Trust (the
"Registrant"), I have reviewed Post-Effective Amendment No. 98 to the
Registrant's Registration Statement on Form N-1A, which is to become effective
on May 1, 1996, pursuant to Rule 485(b) under the Securities Act of 1933, as
amended. In my view, the amendment does not contain any disclosures that would
render it ineligible to become effective pursuant to Rule 485(b).
Very truly yours,
Thomas M. Leahey
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
THOMAS M. LEAHEY
(202) 922-9082
April 29, 1996
The Dreyfus/Laurel Funds Trust
200 Park Avenue
New York, New York 10166
Ladies and Gentlemen:
We hereby consent to the reference to our firm as "Counsel" in the
Statements of Additional Information incorporated by reference into the
Prospectuses filed in Post-Effective Amendment No. 98 to the Registration
Statement on Form N-1A (File No. 33-43846) which The Dreyfus/Laurel Funds Trust
is about to file with the Securities and Exchange Commission, pursuant to the
Securities Act of 1933, as amended.
Very truly yours,
Kirkpatrick & Lockhart LLP
Independent Auditors' Consent
The Board of Trustees and Shareholders
The Dreyfus/Laurel Funds Trust:
We consent to the use of our report dated February 6, 1996 with respect to
the Dreyfus Special Growth Fund, the Premier Limited Term Government
Securities Fund, the Premier Managed Income Fund and the Dreyfus Core
Value Fund (the four funds comprising "The Dreyfus/Laurel Funds Trust")
incorporated by reference in each respective Prospectus and Statement of
Additional Information under the heading "Financial Statements" and to the
reference to our Firm under the heading "Financial Highlights" in each
respective Prospectus and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" in each respective Statement of
Additional Information dated May 1, 1996 in amendment number 39 under the
Investment Company Act of 1940 and post-effective amendment number 98
under the Securities Act of 1933.
Pittsburgh, Pennsylvania
May 1, 1996
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