File Nos. 811-524
33-43846
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. 107 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__]
Amendment No. 107 [X]
(Check appropriate box or boxes.)
THE DREYFUS/LAUREL FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
John E. Pelletier
Secretary
The Dreyfus/Laurel Funds Trust
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on December 1, 1997 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
The following post-effective amendment to the Registration Statement on
Form N-1A relates only to Dreyfus Premier Limited Term High Income Fund and
does not affect the Registration Statements of the following Series of the
Registrant:
DREYFUS PREMIER MANAGED INCOME FUND
DREYFUS CORE VALUE FUND
Items in
Part A of Prospectus
Form N-1A Caption Caption
_________ _______ ____
1 Cover Page Cover
2 Synopsis Expense Summary
3 Condensed Financial Not Applicable
Information
4 General Description Investment Objective
of Registrant Management Policies;
Investment Techniques;
Certain Portfolio
Securities; General
Information
5 Management of the Fund Management of the Fund
General Information
5(a) Management's Discussion Management's Discussion;
of Fund's Performance of Fund's Performance
6 Capital Stock and Alternative Purchase
Other Securities Methods; How to Buy
Shares; How to Redeem
Shares; Dividends Other
Distributions and Taxes;
General Information
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)(continued)
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
_________ _______ ______________________
7 Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; How to Buy
Shares; Shareholder
Services; Distribution
Plans; How to Redeem
Shares
8 Redemption or How to Redeem Shares
Repurchase
9 Pending Legal Not Applicable
Proceedings
10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information Management of the Fund
and History
13 Investment Objectives Investment Objective
and Policies and Management Policies
14 Management of the Fund Management of the Fund; Management
Agreement
15 Control Persons and Management of the Fund
Principal Holders of
Securities
16 Investment Advisory Management of the Fund;
and Other Services Management Agreement;
Shareholder Services
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)(continued)
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
_________ _______ ______________________
17 Investment Allocation Investment Objectives
and Other Services and Management Policies;
Portfolio Transactions
18 Capital Stock and Description of the Fund;
Other Securities See Prospectus -- "Cover
Page" and "How to Redeem
Fund Shares"
19 Purchase, Redemption Purchase of Shares;
and Pricing of Distribution and Service
Securities Being Offered Plans; Redemption of
Shares; Determination
of Net Asset Value
20 Tax Status Dividends, Other
Distributions and Taxes
21 Underwriters Purchase of Shares
Distribution and Service
Plans
22 Calculation of Performance Information
Performance Data
23 Financial Statements To Be Filed By Amendment
24 Financial Statements C-1
and Exhibits
25 Persons Controlled C-3
by or Under Common
Control with Registrant
26 Number of Holders C-3
of Securities
27 Indemnification C-4
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)(continued)
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
_________ _______ ______________________
28 Business and Other C-4
Connections of
Investment Adviser
29 Principal Underwriters C-4
30 Location of Accounts and Records C-10
31 Management Services C-10
32 Undertakings C-10
- -----------------------------------------------------------------------------
PROSPECTUS December 1, 1997
Dreyfus Premier Limited Term High Income Fund
- -----------------------------------------------------------------------------
Dreyfus Premier Limited Term High Income Fund (the "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's investment objective is to provide high current income.
Under normal market conditions, the Fund will invest in a portfolio of
securities that has an effective average duration of 3.5 years or less and an
effective average portfolio maturity of 4 years or less.
THE FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING UP TO ALL OF ITS
ASSETS IN LOWER RATED FIXED-INCOME SECURITIES, COMMONLY KNOWN AS "JUNK
BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND NON-PAYMENT OF INTEREST. INVESTORS SHOULD CAREFULLY ASSESS THE
RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND. SEE "DESCRIPTION OF THE FUND
_ MANAGEMENT POLICIES" AND "INVESTMENT CONSIDERATIONS AND RISKS _ HIGH YIELD -
LOWER RATED SECURITIES."
By this Prospectus, the Fund is offering four Classes of shares _
Class A, Class B, Class C and Class R _ which are described herein. See
"Alternative Purchase Methods."
The Fund provides free redemption checks with respect to Class A,
which you can use in amounts of $500 or more for cash or to pay bills. You
continue to earn income on the amount of the check until it clears. You can
purchase or redeem all Classes of shares by telephone using the 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 December 1, 1997,
which may be revised from time to time ("SAI"), 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. The SEC
maintains a Web site (http://www.sec.gov) that contains the SAI, material
incorporated by reference, and other information regarding the Fund. For a
free copy of the SAI, 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. 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. (the "Distributor").
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
Expense Summary....................................................... 3
Financial Highlights.................................................. 4
Alternative Purchase Methods.......................................... 8
Description of the Fund............................................... 9
Management of the Fund................................................ 11
How to Buy Shares..................................................... 12
Shareholder Services.................................................. 15
How to Redeem Shares.................................................. 18
Additional Information About Purchases, Exchanges and Redemptions..... 21
Distribution Plans (Class A Plan and Class B and C Plans)............. 22
Dividends, Other Distributions and Taxes.............................. 22
Performance Information............................................... 24
General Information................................................... 24
Appendix.............................................................. 26
[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
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees...................................... .70% .70% .70% .70%
12b-1 Fees(1)........................................ .25% .75% 1.00% None
Other Expenses(2).................................... .10% .13% .12% .10%
Total Fund Operating Expenses........................ 1.05% 1.58% 1.82% .80%
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:
CLASS A CLASS B CLASS C CLASS R
_______ _______ ________ ________
1 Year........................................... $55 $56/$16** $28/$18** $ 8
3 Years.............................................. $77 $80/$50** $57 $26
</TABLE>
* A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more. See "How to Buy Shares _ Class A
Shares."
**Assuming no redemption of shares.
(1) See "Distributions Plans (Class A Plan and Class B and Class C Plans)"
for a description of the Fund's Distribution Plans
and Service Plan for Class A, B and C shares.
(2) Does not include fees and expenses of the non-interested Trustees. The
investment adviser is contractually required to reduce its management fee in
an amount equal to the Fund's allocable portion of such fees and expenses,
which are estimated to be less than .01% of the Fund's net assets. (See
"Management of the Fund.")
- ----------------------------------------------------------------------------
The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be greater
or less than those indicated. Moreover, while the example assumes a 5% annual
return, the Fund's actual performance will vary and may result in an actual
return greater or less than 5%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the costs and expenses that investors will bear, directly or indirectly, the
payment of which will reduce investors' return on an annual basis. Other
expenses are based on estimated amounts for the current fiscal year. The
information in the foregoing table does not reflect any fee waivers or
expense reimbursement arrangements that may be in effect. Long-term investors
in Class A, Class B or Class 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"). Certain banks, securities dealers and brokers
("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 Shares,"
"How to Redeem 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 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
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 (Unaudited)
The tables below set forth certain information covering the Fund's
investment results for a single Class A, B, C or R share outstanding for the
period indicated. Further financial data and related notes are included in
the SAI, available upon request. This information has been derived from
information provided in the Fund's financial statements.
<TABLE>
<CAPTION>
Class A Shares
Period Ended
September 30, 1997(1)
_______________________
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.42
Net realized and unrealized gain (loss)
on investments............................................................................. 0.13
______
Total from Investment Operations........................................................... 0.55
______
Distributions:
Dividends from investment income_net....................................................... (0.40)
______
Net asset value, end of period............................................................. $12.65
========
TOTAL INVESTMENT RETURN (2).................................................................. 13.13%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2)................................................ 0.95%
Ratio of interest expense to average net assets (2)........................................ 0.10%
Ratio of net investment income
to average net assets (2).................................................................. 9.68%
Portfolio Turnover Rate (3)................................................................ 13.51%
Net Assets, end of period (000's Omitted).................................................. $22,369
(1) For the period from May 30, 1997 (commencement of operations of
Class A shares) through September 30, 1997.
(2) Exclusive of sales load.
(3) Not annualized.
[Page 4]
Financial Highlights (Unaudited) (continued)
Class B Shares
Period Ended
September 30, 1997(1)
__________________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.38
Net realized and unrealized gain (loss)
on investments............................................................................. 0.15
______
Total from Investment Operations........................................................... 0.53
______
Distributions:
Dividends from investment income_net....................................................... (0.38)
______
Net asset value, end of period............................................................. $12.65
=======
TOTAL INVESTMENT RETURN (2).................................................................. 12.54%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2)................................................ 1.45%
Ratio of interest expense to average net assets (2)........................................ 0.13%
Ratio of net investment income
to average net assets (2).................................................................. 8.97%
Portfolio Turnover Rate (3)................................................................ 13.51%
Net Assets, end of period (000's Omitted).................................................. $89,185
(1) For the period from May 30, 1997 (commencement of operations of Class
B shares) through September 30, 1997.
(2) Exclusive of sales load.
(3) Not annualized.
[Page 5]
Financial Highlights (Unaudited) (continued)
Class C Shares
Period Ended
September 30, 1997(1)
_____________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.37
Net realized and unrealized gain (loss)
on investments............................................................................. 0.16
______
Total from Investment Operations........................................................... 0.53
______
Distributions:
Dividends from investment income_net....................................................... (0.37)
______
Net asset value, end of period............................................................. $12.66
=======
TOTAL INVESTMENT RETURN (2).................................................................. 12.51%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2)................................................ 1.70%
Ratio of interest expense to average net assets (2)........................................ 0.12%
Ratio of net investment income
to average net assets (2).................................................................. 8.78%
Portfolio Turnover Rate (3)................................................................ 13.51%
Net Assets, end of period (000's Omitted).................................................. $33,845
(1) For the period from May 30, 1997 (commencement of operations of
Class C shares) through September 30, 1997.
(2) Exclusive of sales load.
(3) Not annualized.
[Page 6]
Financial Highlights (Unaudited) (continued)
Class R Shares
Period Ended
September 30, 1997(1)
____________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
________
Investment Operations:
Investment income_net...................................................................... 0.50
Net realized and unrealized gain (loss)
on investments............................................................................. 0.04
________
Total from Investment Operations........................................................... 0.54
________
Distributions:
Dividends from investment income_net....................................................... (0.41)
________
Net asset value, end of period............................................................. $12.63
=========
TOTAL INVESTMENT RETURN (2).................................................................. 13.60%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2)................................................ 0.70%
Ratio of interest expense to average net assets (2)........................................ 0.10%
Ratio of net investment income
to average net assets (2).................................................................. 10.15%
Portfolio Turnover Rate (3)................................................................ 13.51%
Net Assets, end of period (000's Omitted).................................................. $126
(1) For the period from May 30, 1997 (commencement of operations of Class
R shares) through September 30, 1997.
(2) Exclusive of sales load.
(3) Not annualized.
DEBT OUTSTANDING (ALL CLASSES)
Period Ended
PER SHARE DATA: September 30, 1997
____________________
Amount of debt outstanding at end of year (in thousands)........................ $5,832
Average amount of debt outstanding throughout year (in thousands)............... $ 684
Average number of shares outstanding throughout year (in thousands)............. 5,420
Average amount of debt per share throughout year................................ $ .13
</TABLE>
Further information about the Fund's performance will be contained in
the Fund's annual report for the fiscal year ending December 31, 1997, which
will be available approximately the end of February 1998, and which may be
obtained without charge by writing to the address or calling the number set
forth on the cover page of this Prospectus.
[Page 7]
Alternative Purchase Methods
The Fund offers you four methods of purchasing Fund shares. You may
choose the Class of shares that best suits your needs, given the amount of
your purchase, the length of time you expect to hold your shares and any
other relevant circumstances. Each Fund share represents an identical pro
rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a maximum
initial sales charge of 4.50% of the public offering price imposed at the
time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Shares _ Class A Shares." These shares are
subject to an annual 12b-1 fee at the rate of .25 of 1% of the value of the
average daily net assets of Class A. See "Distribution Plans _ 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 the first six years of their purchase. See "How
to Buy Shares _ Class B Shares" and "How to Redeem Shares _ Contingent
Deferred Sales Charge _ Class B Shares." These shares also are subject to an
annual distribution fee at the rate of .50 of 1%, and an annual service fee
at the rate of .25 of 1%, of the value of the average daily net assets of
Class B. See "Distribution Plans _ Distribution Plan and Service Plans _
Class B and C Shares." The distribution and service fees 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 will
automatically convert to Class A shares, based on the relative net asset
values for shares of each such Class. The converted shares will no longer be
subject to the service plan fee for Class B shares and will be subject to the
lower distribution fee of Class A shares. (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 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 their
purchase. See "How to Redeem Shares _ Contingent Deferred Sales Charge _
Class C Shares." These shares also are subject to an annual distribution fee
at the rate of .75 of 1%, and an annual service fee at the rate of .25 of 1%,
of the value of the average daily net assets of Class C. See "Distribution
Plans _ Distribution and Service Plans _ Class B and C Shares." The
distribution and service fees 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 to bank trust departments and other financial service
providers (including Mellon Bank and its affiliates) ("Banks") acting on
behalf of customers having a qualified trust or investment account or
relationship at such institution, or to customers who have received and hold
shares of the Fund distributed to them by virtue of such an account or
relationship.
Class A, Class B and Class C shares are sold primarily to clients of
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, service fee and CDSC, if any, on Class B or
Class C shares would be less than the accumulated distribution fee and
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. 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 and service fees on Class B or Class C shares may exceed the
accumulated distribution fee and 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 ongoing distribution and
service fees. 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.
[Page 8]
Description of the Fund
Investment Objective
The Fund's investment objective is to provide high current income. It
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
Management Policies
Under normal market conditions, the Fund will invest at least 65% of
the value of its net assets in bonds, debentures, notes and other debt
instruments (collectively, "Fixed-Income Securities") rated below investment
grade, or, if unrated, determined by Dreyfus to be of comparable quality.
Fixed-Income Securities also include mortgage-related securities,
asset-backed securities, participation interests, zero coupon securities,
municipal obligations, preferred stock, convertible debt obligations and conve
rtible preferred stock. The issuers of Fixed-Income Securities may include
domestic and foreign corporations, partnerships, trusts or similar entities,
and governmental entities or their political subdivisions, agencies or
instrumentalities. The Fund may invest in companies in, or governments of,
developing countries. See "Investment Considerations and Risks _ Foreign
Securities."
Under normal market conditions, the Fund will invest in a portfolio
of securities that has an effective average duration of 3.5 years or less and
an effective average portfolio maturity of 4 years or less. As a measure of a
fixed-income security's cash flow, duration is an alternative to the concept
of "term to maturity" in assessing the price volatility associated with
changes in interest rates. Generally, the longer the duration, the more
volatility an investor should expect. The market price of a bond with a
duration of four years would be expected to increase or decrease twice as
much as the market price of a bond with a two-year duration. Duration is a
way of measuring a security's maturity in terms of the average time required
to receive the present value of all interest and principal payments as
opposed to its term to maturity. The maturity of a security measures only the
time until final payment is due; it does not take account of the pattern of a
security's cash flows over time, which would include how cash flow is
affected by prepayments and by changes in interest rates. Incorporating a
security's yield, coupon interest payments, final maturity and option
features into one measure, duration is computed by determining the weighted
average maturity of a bond's cash flows, where the present values of the cash
flows serve as weights. In computing the effective average duration of the
Fund, Dreyfus will estimate the duration of obligations that are subject to
features such as prepayment or redemption by the issuer, put options retained
by the investor or other imbedded options, taking into account the influence
of interest rates on prepayments and coupon flows. This method of computing
duration is known as option-adjusted duration. See "Appendix_Certain
Portfolio Securities_Mortgage-Related Securities."
Securities rated below investment grade are those rated lower than
Baa by Moody's Investors Service, Inc. ("Moody's") and BBB by Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, L.P. ("Fitch") or Duff
& Phelps Credit Rating Co. ("Duff"). These securities carry a high degree of
risk and are considered speculative by the credit rating agencies. See
"Investment Considerations and Risks_High Yield-Lower Rated Securities" and
"Appendix_Certain Portfolio Securities_High Yield-Lower Rated Securities"
below for a discussion of certain risks, and "Appendix" in the SAI. The Fund
may hold investment grade rated Fixed-Income Securities (or unrated
securities of comparable quality) when the yield differential between below
investment grade and investment grade securities narrows and the risk of loss
may be reduced with only a relatively small reduction in yield. The Fund also
may invest in investment grade rated Fixed-Income Securities when Dreyfus
determines that a defensive investment position is appropriate in light of
market or economic conditions.
The Fund may invest in money market instruments consisting of U.S.
Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under
"Appendix_Certain Portfolio Securities_Money Market Instruments." Under
normal market conditions, the Fund does not expect to have a substantial
portion of its assets invested in money market instruments. However, when
Dreyfus determines that adverse market conditions exist, the Fund may adopt a
temporary defensive posture and invest all of its assets in money market
instruments.
The Fund's annual portfolio turnover rate is not expected to exceed
200%. Higher portfolio turnover rates usually generate additional brokerage
commissions and expenses and the short-term gains realized from these
transactions are taxable to shareholders as ordinary income. The Fund
currently intends to engage in foreign currency transactions, options and
futures transactions, swaps, lending portfolio securities and short-selling.
For a discussion of the investment techniques and their related risks, see
"Investment Considerations and Risks" and "Appendix_Investment Techniques"
below and "Investment Objectives and Management Policies_Management Policies"
in the SAI.
Investment Considerations and Risks
General. The Fund's net asset value per share should be expected to
fluctuate. The Fund's investment in high yield Fixed-Income Securities may
cause the Fund's share price to be highly volatile at times. Investors should
consider the
[Page 9]
Fund as a supplement to an overall investment program and should invest only
if they are willing to undertake the risks involved. See "Investment
Objective and Management Policies" in the SAl for a further discussion of
certain risks.
High Yield-Lower Rated Securities. The Fund generally will invest in
Fixed-Income Securities rated below investment grade such as those rated Ba
by Moody's and BB by S&P, Fitch and Duff or as low as the lowest rating
assigned by Moody's, S&P, Fitch or Duff (commonly known as junk bonds). They
may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated
Fixed-Income Securities. The retail secondary market for these securities
also may be less liquid than that of higher rated securities; adverse
conditions could make it difficult at times for the Fund to sell certain
securities or could result in lower prices than those used in calculating the
Fund's net asset value.
Bond prices are inversely related to interest rate changes; however,
bond price volatility also is inversely related to coupon. Accordingly, below
investment grade Fixed-Income Securities may be relatively less sensitive to
interest rate changes than higher quality Fixed-Income Securities of
comparable maturity, because of their higher coupon. This higher coupon is
what the investor receives in return for bearing greater credit risk. The
higher credit risks associated with below investment grade Fixed-Income
Securities potentially can have greater effect on the value of such
securities than may be the case with higher quality issues of comparable
maturity. See "Appendix_Certain Portfolio Securities_High Yield-Lower Rated
Securities" and "Appendix" in the SAI.
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, 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
generally are not subject to uniform accounting, auditing and financial
reporting standards or to other regulatory practices and requirements
comparable to those applicable to U.S. 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 an
d 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.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Fund have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have
adverse effects on the economies and securities markets of certain of these
countries.
Foreign Currency Transactions. Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by
the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad. See "Appendix_Investment
Techniques_Foreign Currency Transactions."
Use of Derivatives. The Fund may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Fund may use include
domestic or foreign options and futures, forward currency contracts,
mortgage-related securities, asset-backed securities and swaps. The Fund does
not intend to invest in futures and options except for hedging purposes,
which may include preserving a return or spread or locking in unrealized
market value gains or losses. The Fund will not invest in mortgage-related or
asset-backed securities in an amount exceeding, in the aggregate, 25% of its
net assets. While Derivatives can be used effectively in furtherance of the
Fund's investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, can decrease the
liquidity of the Fund's portfolio and make more difficult the accurate
pricing of the Fund's portfolio. See "Appendix_Investment Techniques_Use of
Derivatives" below and "Investment Objective and Management
Policies_Management Policies_Derivatives" in the SAI.
Simultaneous Investments. Investment decisions for the Fund are made
independently from those of the other investment companies advised by
Dreyfus. If, however, such other investment companies desire to invest in, or
dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or
received by the Fund.
[Page 10]
Limiting Investment Risks. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the
holders of a majority of the Fund's outstanding shares. The SAI describes all
of the Fund's fundamental and non-fundamental restrictions. The investment
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.
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 October 31, 1997, Dreyfus managed or administered
approximately $93 billion in assets for approximately 1.7 million investor
accounts nationwide.
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 Company, 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's primary portfolio manager is Roger King. He has held that
position since the Fund's inception, and has been employed by Dreyfus since
February, 1996. Prior thereto, Mr. King was a Vice President of High Yield
Research and, most recently, Director of High Yield Research at Citibank
Securities, Inc. The Fund's other portfolio managers are identified in the
SAI. Dreyfus also provides research services for the Fund and for other funds
advised by Dreyfus through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, 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 more than $299 billion in
assets as of September 30, 1997, including approximately $102 billion in
proprietary mutual fund assets. As of September 30, 1997, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $1.488 trillion 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 .70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, fees and expenses of non-interested
Trustees (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and
expenses of the non-interested Trustees (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee by an amount
equal to the Fund's allocable share of such fees and expenses. From time to
time, Dreyfus may voluntarily waive a portion of the investment management
fees payable by the Fund, which would have the effect of lowering the expense
ratio of the Fund and increasing yield to investors.
In addition, Class A, B and C shares are subject to certain Rule
12b-1 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, 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.
[Page 11]
Distributor_The Fund's distributor is Premier Mutual Fund Services,
Inc., located at 60 State Street, Boston, Massachusetts 02109. The
Distributor's ultimate parent is Boston Institutional Group, Inc.
Transfer and Dividend Disbursing Agent and Custodian_Dreyfus
Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). Mellon Bank, located at One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian.
How to Buy 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 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 a
plan.
When purchasing Fund shares, you must specify which Class is being
purchased. Share 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 for subsequent purchases.
Individuals who open an IRA also may open a non-working spousal IRA with a
minimum initial investment of $250. The initial investment must be
accompanied by the Fund's Account Application. The Fund reserves the right to
offer Fund shares without regard to minimum purchase requirements to
employees participating in certain qualified or non-qualified employee
benefit plans or other programs where contributions or account information
can be transmitted in a manner and form acceptable to the Fund. The Fund
reserves the right to vary further the initial and subsequent investment
minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to certain
qualified or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local government ("Retirement Plans"). These limitations apply with
respect to participants at the plan level and, therefore, do not directly
affect the amount that may be invested in the Fund by a Retirement Plan.
Participants and plan sponsors should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or through the
TeleTransfer Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or if for retirement plan accounts, to "The Dreyfus
Trust Company, Custodian." Payments which are mailed should be sent to
Dreyfus Premier Limited Term High Income Fund, P.O. Box 6587, Providence,
Rhode Island 02940-6587. If you are opening a new account, please enclose
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. For Dreyfus retirement plan
accounts, payments which are mailed 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. Immediately available funds may be
transmitted by wire to Boston Safe Deposit and Trust Company, together with
the Fund's DDA #044350/Dreyfus Premier Limited Term High Income Fund and
applicable Class, for purchase of Fund shares in your name. The wire must
include your Fund account number (for new accounts, your Taxpayer Identificati
on Number ("TIN") should be included instead), account registration and
dealer number, if applicable, and must indicate the Class of shares being
purchased. If your initial purchase of Fund shares is by wire, please call
1-800-554-4611 after completing your wire payment to obtain your Fund account
number. Please include your Fund account number on the 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
[Page 12]
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.
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark and the Government Direct Deposit Privilege
described under "Shareholder Services." These services enable you to make
regularly scheduled investments and may provide you with a convenient way to
invest for long-term financial goals. You should be aware, however, that
periodic investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
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 to Boston Safe Deposit and Trust Company with instructions to credit your
Fund account. The instructions must specify your Fund account registration
and your Fund account number preceded by the digits "4550" for Class A
shares, "4560" for Class B shares, "4570" for Class C shares, and "4580" for
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 $1,000,000 ("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 net asset
value per share ("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 the 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 trading on the floor
of the NYSE (usually 4 p..m. New York time). For purposes of determining NAV,
options and futures contracts will be valued 15 minutes after the close of
trading on the floor of the NYSE. Orders received by the Transfer Agent or
other agent in proper form before the close of trading on the floor of the
NYSE are effective on, and will receive the public offering price determined
on, that day (except investments made by electronic funds transfer, which are
effective two business days after your call). Except in the case of certain
orders transmitted by dealers as described in the following paragraph, orders
received after such close of trading are effective on, and receive the public
offering 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 a 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 dealers' responsibility to transmit orders so that
they will be received by the Distributor or its designee before the close of
its business day. For certain institutions that have entered into Agreements
with the Distributor, payment
[Page 13]
for the purchase of Fund shares may be transmitted, and must be received by
the Transfer Agent, within three business days after the order is placed. If
such payment is not received within three business days after the order is
placed, the order may be canceled and the institution could be held liable
for resulting fees and/or losses.
Class A Shares _ The public offering price for Class A shares is the
NAV 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
$1,000,000 or more...................... -0- -0- -0-
</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 one year after purchase, a CDSC of 1.00%
will be imposed at the time of redemption. The Distributor may pay Agents an
amount up to 1% of the NAV of Class A shares purchased by their clients that
are subject to a CDSC. The terms contained in the section of the Prospectus
entitled "How to Redeem Shares_Contingent Deferred Sales Charge_Class B
Shares" (other than the amount of the CDSC and time periods) and "How to
Redeem 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 sales of Fund 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 Benef
it 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 Dreyfus Premier Family of Funds or the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans.
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).
[Page 14]
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its
own expense, may provide additional promotional incentives to dealers that
sell shares of funds advised by Dreyfus which are sold with a sales load,
such as Class A shares. In some instances, these incentives may be offered
only to certain dealers who have sold or may sell significant amounts of such
shares.
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 Shares." The Distributor compensates
certain Agents for selling Class B and Class C 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 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 Dreyfus 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 have previously
purchased and still hold Class A shares of the Fund, or of any other Eligible
Fund or combination thereof, with an aggregate current market value of
$40,000 and subsequently purchase Class A shares of the Fund or an Eligible
Fund having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All present
holdings of Eligible Funds may be combined to determine the 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 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 TeleTransfer Privilege, you may request a
TeleTransfer purchase of shares by calling 1-800-554-4611 or, if you are
calling from overseas, call 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
Clients of certain Agents may purchase, in exchange for shares of a
Class, shares of the same Class of certain other funds managed 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.
You also may exchange your Fund shares that are subject to a CDSC for shares
of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so purchased
will be held in a special account created solely for this purpose ("Exchange
Account"). Exchanges of shares from an Exchange Account only can be made into
certain other funds managed or administered by Dreyfus. No CDSC is charged
when an investor exchanges into an Exchange Account; however, the applicable
CDSC will be imposed when shares are redeemed from an Exchange Account or
other applicable Fund account. Upon redemption, the applicable CDSC will be
calculated without regard to the time such shares were held in an Exchange
Account. See "How to Redeem Shares." Redemption proceeds for Exchange Account
shares are paid by Federal wire or check only. Exchange Account shares also
are eligible for the Auto-Exchange Privilege, Dividend Sweep and the
Automatic Withdrawal Plan. To use this service, you should consult your Agent
or call 1-800-554-4611 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, 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
[Page 15]
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-554-4611. Except in the case of personal
retirement plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the applicable "No" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, by a separate
signed Shareholder Services Form, available by calling 1-800-554-4611, or by
oral request from any of the authorized signatories on the account, by
calling 1-800-554-4611. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions (including over The
Dreyfus TouchRegistration Mark Automated Telephone System) by calling
1-800-554-4611. If you are calling from overseas, call 516-794-5452. See "How
to Redeem Shares_Procedures." Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Check Redemption Privilege,
TeleTransfer Privilege and the dividend 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 Class C shares
at the time of an exchange; however, Class B or Class C shares acquired
through an exchange will be subject on redemption to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or Class C shares will be calculated from
the date of the initial purchase of the Class B or Class C shares exchanged.
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 you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from shares
purchased with a sales load, or (c) acquired through reinvestment of
dividends or distributions paid with respect to the foregoing categories of
shares. To qualify, at the time of the exchange your 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
the rules promulgated by the SEC. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may
be modified or terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss.
Auto-Exchange Privilege
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same Class of other funds in the Dreyfus Premier
Family of Funds or certain other funds in the Dreyfus Family of Funds of
which you are a shareholder. 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 Class C shares
at the time of an exchange; however, Class B or Class C shares acquired
through an exchange will be subject on redemption to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or Class C shares will be calculated from
the date of the initial purchase of the Class B or Class C shares exchanged.
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 Dreyfus Premier Limited Term High 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. For more
information concerning this Privilege and the funds in the Dreyfus 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 1-800-554-4611.
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
[Page 16]
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 1-800-554-4611. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to Dreyfus Premier Limited Term High 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.
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. 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 from your
Agent or by calling 1-800-554-4611. 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.
Dividend Options
Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares
of the same Class of another fund in the Dreyfus Premier Family of Funds or
certain other funds in the Dreyfus Family of Funds of which you are a
shareholder. 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 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 dividends or dividends and capital gain distributions, if any,
from the Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated.
Banks may charge a fee for this service.
For more information concerning these privileges, or to request a
Dividend Options Form, please call toll free 1-800-554-4611. You may cancel
these privileges by mailing written notification to Dreyfus Premier Limited
Term High 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.
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 Automatic Withdrawal Plan may
be established by filing an Automatic Withdrawal Plan application with the
Transfer Agent or by oral request from any of the authorized signatories on
the account by calling 1-800-554-4611.
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. The Automatic Withdrawal Plan may be
ended at any time by you, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals
made under the Automatic Withdrawal Plan, provided that the amounts withdrawn
under the plan do not exceed on an annual basis 12% of the account value at
the time the shareholder elects to participate in the Automatic Withdrawal
Plan. Withdrawals with respect to Class B shares under the Automatic
Withdrawal Plan that exceed on an annual basis 12% of the value of the
shareholder's account will be subject to a CDSC on the amounts exceeding 12%
of the initial account value. Class C shares, and Class A shares to which a
CDSC applies, that are 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.
[Page 17]
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 1-800-554-4611; 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, which can be obtained by calling
1-800-554-4611, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and conditions set forth in the Letter of Intent. A
minimum initial purchase of $5,000 is required. To compute the applicable
sales load, the offering price of shares you hold (on the date of submission
of the Letter of Intent) in any Eligible Fund that may be used toward "Right
of Accumulation" benefits described above may be used as a credit toward
completion of the Letter of Intent. However, the reduced sales load will be
applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in
the Letter of Intent for payment of a higher sales load if you do not
purchase the full amount indicated in the Letter of Intent. The escrow will
be released when you fulfill the terms of the Letter of Intent by purchasing
the specified amount. If your purchases qualify for a further sales load
reduction, the sales load will be adjusted to reflect your total purchase at
the end of 13 months. If total purchases are less than the amount specified,
you will be requested to remit an amount equal to the difference between the
sales load actually paid and the sales load applicable to the aggregate
purchases actually made. If such remittance is not received within 20 days,
the Transfer Agent, as attorney-in-fact pursuant to the terms of the Letter
of Intent, will redeem an appropriate number of Class A shares 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. Purchases
pursuant to a Letter of Intent will be made at the then-current NAV plus the
applicable sales load in effect at the time such Letter of Intent was
executed.
How to Redeem 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. Agents may charge their clients a fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the
shares redeemed may be more or less than their original cost, depending upon
the Fund's then-current 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 not honor Redemption Checks
under the Check Redemption Privilege, and will reject requests to redeem
shares 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 30 days' written notice if your account's net asset value 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
[Page 18]
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 Class B shares above the dollar amount of
all your payments for the purchase of Class B shares of the Fund held by you
at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may
be applied to the then-current 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 for Class B
shares:
<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 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 NAV has 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.
Class C Shares. A CDSC of 1% payable to the Distributor is imposed on
any redemption of Class C shares within one year of the date of purchase. The
basis for calculating the payment of any such CDSC will be the method used in
calculating the CDSC for Class B shares. See "Contingent Deferred Sales
Charge _ Class B Shares" above.
Waiver of CDSC. The CDSC 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 pursuant to the Automatic Withdrawal Plan, as
described under "Shareholder Services _ Automatic Withdrawal Plan" above. If
the Company's Board determines to discontinue the waiver of the CDSC, the
disclosure in the 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 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 shares by using the regular redemption
procedure through the Transfer Agent, or, through the Check Redemption
Privilege with respect to Class A shares only, which is granted automatically
(if you invest in Class A shares) unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Check
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form. You also may redeem shares through the
Dreyfus TELETRANSFER Privilege, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you are a client of a
Selected Dealer, you may redeem shares
[Page 19]
through the Selected Dealer. Other redemption procedures may be in effect for
clients of certain Agents. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address, and
may limit the amount involved or the number of such requests. The Fund may
modify or terminate any redemption Privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which certificates have been issued, are not eligible for the Check
Redemption or TeleTransfer Privilege.
Your redemption request may direct that the redemption proceeds be
used to purchase shares of other funds advised or administered by Dreyfus
that are not available through the Fund Exchange Privilege. The applicable
CDSC will be charged upon the redemption of Class B or Class C shares. Your
redemption proceeds will be invested in shares of the other fund on the next
business day. Before you make such a request, you must obtain and should
review a copy of the current prospectus of the fund being purchased.
Prospectuses may be obtained by calling 1-800-554-4611. The prospectus will
contain information concerning minimum investment requirements and other
conditions that may apply to your purchase.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select the TeleTransfer
redemption privilege or telephone exchange privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to act
on telephone instructions (including over The Dreyfus TouchRegistration Mark
Automated Telephone System) from any person representing himself or herself to
be you, or a representative of your Agent, and reasonably believed by the
Transfer Agent to be genuine. The Fund will require the Transfer Agent to
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if it does not
follow such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Fund nor
the Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or 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 shares by written request mailed to Dreyfus Premier Limited Term High
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. If you have any questions with respect to
signature-guarantees, please contact your Agent or call the telephone number
listed on the cover of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
Check Redemption Privilege _ Class A Shares _ You may write
Redemption Checks drawn on your Fund account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Potential
fluctuations in the NAV of Class A shares should be considered in determining
the amount of the check. Redemption Checks should not be used to close your
account. Redemption Checks are free, but the Transfer Agent will impose a fee
for stopping payment of a Redemption Check upon your request or if the
Transfer Agent cannot honor the Redemption Check due to insufficient funds or
other valid reason. You should date your Redemption Checks with the current
date when you write them. Please do not postdate your Redemption Checks. If
you do, the Transfer Agent will honor, upon presentment, even if presented
before the date of the check, all postdated Redemption Checks which are dated
within six months of presentment for payment, if they are otherwise in good
order. This Privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding on
redemptions (see "Dividends, Other Distributions and Taxes"). Any Redemption
Check written on an account which has become subject to backup withholding on
redemptions will not be honored by the Transfer Agent. The Check Redemption
Privilege is granted automatically unless you refuse it.
TeleTransfer Privilege _ You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an ACH member may be 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,
[Page 20]
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 not more than
$250,000 within any 30-day period.
If you have selected the TeleTransfer Privilege, you may request a
TeleTransfer redemption of shares by calling 1-800-554-4611 or, if you are
calling from overseas, call 516-794-5452.
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 Shares" for a discussion of
additional conditions or fees that may be imposed upon redemption.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by the
dealer 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 _ Upon written request, you may reinvest up to
the number of Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing NAV without a sales load, or reinstate
your account for the purpose of exercising the Fund Exchange Privilege. Upon
reinvestment, with respect to Class B shares, or Class A shares if such
shares were subject to a CDSC, the shareholder's account will be credited
with an amount equal to the CDSC previously paid upon redemption of the Class
A or Class B shares reinvested. The Reinvestment Privilege may be exercised
only once.
Additional Information About Purchases, Exchanges and Redemptions
It currently is anticipated that these policies will become effective
for the Fund on or about January 15, 1998.
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term
market movements. A pattern of frequent purchases and exchanges can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and its shareholders. Accordingly, if
the Fund's management determines that an investor is engaged in excessive
trading, the Fund, with or without prior notice, may temporarily or permanentl
y terminate the availability of Fund Exchanges, or reject in whole or part
any purchase or exchange request, with respect to such investor's account.
Such investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of the Fund during any calendar year (for calendar year 1998, beginning
on January 15th) or who makes exchanges that appear to coincide with a
market-timing strategy may be deemed to be engaged in excessive trading.
Accounts under common ownership or control will be considered as one account
for purposes of determining a pattern of excessive trading. In addition, the
Fund may refuse or restrict purchase or exchange requests by any person or
group if, in the judgment of the Fund's management, the Fund would be unable
to invest the money effectively in accordance with its investment objective
and policies or could otherwise be adversely affected or if the Fund receives
or anticipates receiving simultaneous orders that may significantly affect
the Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If
an exchange request is refused, the Fund will take no other action with
respect to the shares until it receives further instructions from the
investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if
the amount of the redemption request otherwise would be disruptive to
efficient portfolio management or would adversely affect the Fund. The Fund's
policy on excessive trading applies to investors who invest in the Fund
directly or through financial intermediaries, but does not apply to the
Dreyfus Auto-Exchange Privilege, to any automatic investment or withdrawal
privilege described herein, or to non-IRA retirement plan accounts.
During times of drastic economic or market conditions, the Fund may
suspend the Exchange Privilege temporarily without notice and treat exchange
requests based on their separate components - redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case, the
redemption request would be processed at the Fund's next determined net asset
value but the purchase order would be effective only at the net asset value
next determined after the fund being purchased receives the proceeds of the
redemption, which may result in the purchase being delayed.
[Page 21]
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. The
fees payable under the Distribution and Service Plans are payable without
regard to actual expenses incurred.
Distribution Plan _ Class A Shares _ The Class A shares of the Fund
bear some of the cost of selling those shares under the Distribution Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of its
average daily net assets attributable to Class A shares to compensate Dreyfus
Service Corporation, an affiliate of Dreyfus, for shareholder servicing
activities and the Distributor for shareholder servicing activities and
expenses primarily intended to result in the sale of Class A shares of the
Fund. The Plan allows the Distributor to make payments from the Rule 12b-1
fees it collects from the Fund to compensate Agents that have entered into
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 Shares _ Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and Class C shares at an
aggregate annual rate of .50 of 1% and .75 of 1% of the value of the average
daily net assets of Class B and Class C, respectively. 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 Class 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 Class 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 its clients in connection with the investment
of their assets in Class B and C shares. The Distributor determines the
amounts, if any, to be paid to Agents under the Service Plan and the basis on
which such payments are made. See the SAI for more details on the
Distribution and Service Plans.
Dividends, Other Distributions and Taxes
The Fund ordinarily declares dividends from its net investment income
on each day the NYSE is open for business. Dividends usually are paid on the
last business day of each month, and are automatically reinvested in
additional shares of the same Class from which they were paid at NAV without
a sales load or, at your option, paid in cash. The Fund's earnings for
Saturdays, Sundays and holidays are declared as dividends on the next
business day. If you redeem all shares in your account at any time during the
month, all dividends to which you are entitled will be paid to you along with
the proceeds of the redemption. If you are an omnibus accountholder and
indicate in a partial redemption request that a portion of any accrued
dividends to which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account, such portion
of the accrued dividends will be paid to you along with the proceeds of the
redemption. Distributions from net realized securities gains, if any,
generally are declared and paid once a year, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive dividends and
distributions in cash or to reinvest in additional shares of the same Class
from which they were paid at NAV. All expenses are accrued daily and deducted
before declaration of dividends to investors. Shares begin accruing dividends
on the day following the date of purchase. Dividends paid by each Class will
be calculated at the same time and in the same manner and will be of the same
amount, except that the expenses attributable solely to a particular Class
will be borne exclusively by such Class. Class B and Class C shares will
receive lower per share dividends than Class A shares because of the higher
expenses borne by the relevant Class. See "Expense Summary."
Under the Code, the Fund is treated as a separate entity. 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.
[Page 22]
Dividends derived from net investment income, together with
distributions from net realized short-term securities 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 will be taxable to U.S. shareholders as ordinary income to
the extent of the Fund's earnings and profits, whether received in cash or
reinvested in additional shares. No dividend paid by the Fund will qualify
for the dividends received deduction allowable to certain U.S. corporations.
Distributions from net capital gain (the excess of net long-term capital gain
over net short-term capital loss) of the Fund will be taxable to such
shareholders as long-term capital gains, regardless of how long shareholders
have held their Fund shares and whether such distributions are received in
cash or reinvested in Fund shares. Dividends and distributions may be subject
to local taxes.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
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 foreign investor claims the benefit of a lower rate specified in a
tax treaty. Distributions from net capital gain 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 or her non-U.S. residency status.
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 regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number, IRS individual taxpayer
identification 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 is 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 adviser regarding specific questions as
to Federal, state or local taxes.
[Page 23]
Performance Information
For purposes of advertising, performance for each Class may be
calculated on several bases, including current yield, average annual total
return and/or total return. These total return figures reflect changes in the
price of 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. Class A total return figures include the maximum
initial sales charge and Class B and Class C total return figures include any
applicable CDSC. These figures also take into account any applicable
distribution and 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 Classes A, B and C should be expected to be
lower than that of Class R. Performance for each Class will be calculated
separately.
Current yield refers to the annualized net investment income per
share of a Class of the Fund over a 30-day period, expressed as a percentage
of NAV (or maximum offering price in the case of Class A) at the end of the
period. For purposes of calculating current yield, the amount of net
investment income per share during that 30-day period, computed in accordance
with regulatory requirements, is compounded by assuming that it is reinvested
at a constant rate over a six-month period. An identical result is then
assumed to have occurred during a second six-month period which, when added
to the result for the first six months, provides an "annualized" yield for an
entire one-year period. Calculations of current yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See "Management
of the Fund."
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
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.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and 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 for Class A) 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 may also
be calculated using the NAV at the beginning of the period instead of the
maximum offering price for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B or Class C shares.
Calculations based on NAV do not reflect the deduction of the applicable
sales charge on Class A shares which, if reflected, would reduce the
performance quoted.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors 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.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Bond Buyer's
20-Bond Index, Morningstar, Inc. and other industry publications.
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") without shareholder
approval. 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 inve
stment 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.
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
[Page 24]
shareholders of the affected fund or Class are entitled to vote, each as a
separate class. Only holders of Class A, Class B or Class C shares, as the
case may be, will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution and/or Service Plan relating to that Class.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Trustee from office and
for any other purpose. Company shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Company's outstanding shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account. Shareholder inquiries may be made to
your Agent or by writing to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
[Page 25]
Appendix
Investment Techniques
In connection with its investment objective and policies, the Fund
may engage in the following investment techniques, among others, to attempt
to hedge various market risks or to enhance total return:
Foreign Currency Transactions _ Foreign currency transactions may be
entered into for a variety of purposes, including: to fix in U.S. dollars,
between trade and settlement date, the value of a security the Fund has
agreed to buy or sell; to hedge the U.S. dollar value of securities the Fund
already owns, particularly if it expects a decrease in the value of the
currency in which the foreign security is denominated; or to gain exposure to
the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Fund's success in these transactions will depend principally on
the ability of Dreyfus to predict accurately the future exchange rates
between foreign currencies and the U.S. dollar.
Short-Selling _ In these transactions, the Fund sells a security it
does not own in anticipation of a decline in the market value of the
security. To complete the transaction, the Fund must borrow the security to
make delivery to the buyer. The Fund is obligated to replace the security
borrowed by purchasing it subsequently at the market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Fund, which would result in a loss or
gain, respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Fund's net assets. The Fund may not sell short
the securities of any single issuer listed on a national securities exchange
to the extent of more than 5% of the value of the Fund's net assets. The Fund
may not make a short sale which results in the Fund having sold short in the
aggregate more than 5% of the outstanding securities of any class of an
issuer.
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will more than 15% of the value
of the Fund's net assets be in deposits on short sales against the box.
Lending Portfolio Securities _ The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest or other distributions
payable on the loaned securities which affords the Fund an opportunity to
earn interest on the amount of the loan and on the loaned securities'
collateral. Loans of portfolio securities may not exceed 331\3% of the value
of the Fund's total assets, and the Fund will receive collateral consisting
of cash, U.S. Government securities or irrevocable letters of credit which
will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Such loans are terminable by
the Fund at any time upon specified notice. The Fund might experience risk of
loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Fund.
Leverage _ The Fund may borrow money for certain purposes. In
addition to borrowing for temporary or emergency purposes and in anticipation
of share redemptions, the Fund may borrow to facilitate trades in its
portfolio securities. This could occur, for example, when the Fund expects
settlement on its purchase of a security will occur within a shorter time
than settlement on its sale of a security. Borrowing exaggerates the effect
on net asset value of any increase or decrease in the market value of the
Fund's portfolio. Money borrowed will be limited to 331\3% of the value of
the Fund's total assets. These borrowings will be subject to interest costs
which may or may not be recovered by appreciation of the securities
purchased; in certain cases, interest costs may exceed the return received on
the securities purchased.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the Fund
of an underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Fund retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Fund repurchases the security at principal plus accrued
interest. Except for these transactions, the Fund's borrowings generally will
be unsecured.
Futures, Options and Other Derivative Instruments _ The Fund may
purchase and sell various financial instruments, known as "Derivatives",
including financial futures contracts (including interest rate, index and
foreign currency futures contracts), options (including options on
securities, indices, foreign currencies and futures contracts), forward
currency contracts, mortgage-related securities, asset-backed securities, and
interest rate, equity index and currency swaps, caps, collars and floors. The
Derivatives the Fund may use may be based on indices of U.S. or foreign
equity or debt securities. These Derivatives may be used, for example, to
preserve a return or spread,
[Page 26]
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.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities. The Fund intends to use futures contracts
and options only for hedging purposes.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
The use of Derivatives 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 Derivatives involved in the transaction; (2)
possible lack of a liquid secondary market for any particular Derivative at a
particular time; (3) the need for additional portfolio management skills and
techniques; (4) losses due to unanticipated market price movements and
changes in liquidity; (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.
Although the Fund will not be a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
("CFTC") which limit the extent to which the Fund can invest in such
Derivatives. The Fund may invest in futures contracts and options with
respect thereto or options on foreign currencies traded on an exchange
regulated by the CFTC for bona fide hedging purposes without limit. However,
the Fund may not invest in such contracts and options for other purposes if th
e aggregate initial margin and premiums required to establish those positions
(excluding the amount by which options are "in-the-money") will 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.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Fund may write
(i.e, sell) covered call and put option contracts to the extent of 20% of the
value of its net assets at the time such option contracts are written. When
required by the SEC, the Fund will set aside permissible liquid assets in a
segregated account to cover its obligations relating to its transactions in
Derivatives. To maintain this required cover, the Fund may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
The Fund's ability to use Derivatives 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 Derivative
Instruments and the risks relating thereto.
New financial products and risk management techniques continue to be
developed. The Fund may use these instruments and techniques to the extent
consistent with its investment objective and polices, and regulatory
requirements applicable to investment companies.
Forward Commitments _ The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward commitment
or when-issued security are fixed when the Fund enters into the commitment,
but the Fund does not make payment until it receives delivery from the
counterparty. The Fund will commit to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell these
securities before the settlement date if it is deemed advisable. A segregated
account of the Fund consisting of permissible liquid assets at least equal at
all times to the amount of the commitments will be established and maintained
at the Fund's custodian bank.
Illiquid Securities _ The Fund may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, certain mortgage-backed
securities, securities involved in swap, cap, collar and floor transactions,
and
[Page 27]
certain privately negotiated, non-exchange traded options and securities used
to cover such options. As to these securities, the Fund is subject to a risk
that should the Fund desire to sell them when a ready buyer is not available
at a price the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.
Certain Portfolio Securities
High Yield-Lower Rated Securities _ Securities rated Ba by Moody's
are judged to have speculative elements; their future cannot be considered as
well assured and often the protection of interest and principal payments may
be very moderate. Securities rated BB by S&P, Fitch or Duff are regarded as
having predominantly speculative characteristics and, while such obligations
have less near-term vulnerability to default than other speculative grade
debt, they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. Securities rated below these
levels are regarded as having greater speculative elements. Such securities,
though high yielding, are characterized by great risk. See "Appendix" in the
SAI for a general description of securities ratings.
These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely the
market for such securities and may have an adverse impact on the value of
such securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. Ratings
are relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, Dreyfus also will
evaluate these securities and the ability of the issuers of such securities
to pay interest and principal. The Fund's ability to achieve its investment
objective may be more dependent on the credit analysis undertaken by Dreyfus
than might be the case for a fund that invested in higher rated securities.
The actual distribution of the Fund's corporate bond investments by
ratings on any given date will vary.
Convertible Securities _ Convertible securities may be converted at
either a stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
non-convertible securities.
Participation Interests _ The Fund may invest in corporate
obligations, denominated in U.S. dollars or foreign currencies, that are
originated, negotiated and structured by a syndicate of lenders
("Co-Lenders") consisting of commercial banks, thrift institutions, insurance
companies, finance companies or other financial institutions one or more of
which administers the security on behalf of the syndicate (the "Agent Bank").
Co-Lenders may sell such securities to third parties called "Participants."
The Fund may invest in such securities either by participating as a Co-Lender
at origination or by acquiring an interest in the security from a Co-Lender
or a Participant (collectively, "participation interests"). Co-Lenders and
Participants interposed between the Fund and the corporate borrower (the
"Borrower"), together with Agent Banks, are referred to herein as
"Intermediate Participants." The Fund also may purchase a participation
interest in a portion of the rights of an Intermediate Participant. The Fund
will not act as an Agent Bank, guarantor, sole negotiator or sole structuror
with respect to securities that are the subject of a participation interest.
A participation interest gives the Fund an undivided interest in the security
in the proportion that the Fund's participation interest bears to the total
principal amount of the security. These instruments may have fixed, floating
or variable rates of interest. For certain participation interests, the Fund
will have the right to demand payment, on not more than seven days' notice,
for all or any part of the Fund's participation interest in the security,
plus accrued interest. As to these instruments, the Fund intends to exercise
its right to demand payment only upon a default under the terms of the
security, as needed to provide liquidity to meet redemptions, or to maintain
or improve the quality of its investment portfolio. The Fund will not invest
more than 15% of the value of its net assets in participation interests
maturing in more than seven days that do not have this demand feature, and in
other securities that are illiquid.
Mortgage-Related Securities _ Mortgage-related securities are a form
of Derivative collateralized by pools of mortgages. The mortgage-related
securities which may be purchased include those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in interest rates and those with interest rates that
change inversely to changes in interest rates, as well as stripped
mortgage-backed securities. Stripped mortgage-backed securities usually are
structured with two classes that receive different proportions of interest
and principal distributions on a pool of mortgage-backed securities or whole
loans. A common type of stripped mortgage-backed security will have one class
receiving some of the interest and most of the principal from the mortgage
collateral, while the other class will receive most of the interest and the
remainder of the principal.
[Page 28]
Although certain mortgage-related securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not secured. If a mortgage-related security is purchased at a
premium, all or part of the premium may be lost if there is a decline in the
market value of the security, whether resulting from changes in interest
rates or prepayments on the underlying mortgage collateral.
As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest
rates. However, although the value of a mortgage-related security may decline
when interest rates rise, the converse is not necessarily true, since in
periods of declining interest rates the mortgages underlying the security are
more likely to be prepaid. For this and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages, and, therefore, it is not possible to predict
accurately the security's return to the Fund. Moreover, with respect to
stripped mortgage-backed securities, if the underlying mortgage securities
experience greater than anticipated prepayments of principal, the Fund may
fail to fully recoup its initial investment even if the securities are rated
in the highest rating category by a nationally recognized statistical rating
organization.
The mortgage-related securities in which the Fund may invest also
include multi-class pass-through certificates secured principally by mortgage
loans on commercial properties. These mortgage-related securities are
structured similarly to mortgage-related securities secured by pools of
residential mortgages. Commercial lending, however, generally is viewed as
exposing the lender to a greater risk of loss than one- to four-family
residential lending. Commercial lending, for example, typically involves large
r loans to single borrowers or groups of related borrowers than residential
one- to four-family mortgage loans. In addition, the repayment of loans
secured by income producing properties typically is dependent upon the
successful operation of the related real estate project and the cash flow
generated therefrom. Consequently, adverse changes in economic conditions and
circumstances are more likely to have an adverse impact on mortgage-related
securities secured by loans on commercial properties than on those secured by
loans on residential properties.
During periods of rapidly rising interest rates, prepayments of
mortgage-backed securities may occur at slower than expected rates. Slower
prepayments effectively may change a mortgage-backed security that was
considered short- or intermediate-term at the time of purchase into a
long-term security. The values of long-term securities generally fluctuate
more widely in response to changes in interest rates than short- or
intermediate-term securities. Were the prepayments on a Fund's
mortgage-backed securities to decrease broadly, the Fund's effective average
duration, and thus sensitivity to increase rate fluctuations, would increase.
Therefore, depending on the circumstances, such an increase could result in
an effective average duration of more than 3.5 years.
Asset-Backed Securities _ Asset-backed securities are a form of
Derivative. The securitization techniques used for asset-backed securities
are similar to those used for mortgage-related securities. The collateral for
these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. The Fund may
invest in these and other types of asset-backed securities that may be
developed in the future.
Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities may provide the
Fund with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available
to support payments on these securities.
Senior-Subordinated Securities _ Mortgage-related and asset-backed
securities may be structured in multiple classes with one or more classes
subordinate to other classes as to payments of cash flow from, principal of
and/or interest on the underlying assets. In such a "senior/subordinated"
structure, defaults on the underlying assets are borne first by the holders
of the subordinated class or classes. The Fund may invest in such
subordinated securities, which typically entail greater credit risk but
provide higher yields.
Municipal Obligations _ Municipal obligations are debt obligations
issued by states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities. Municipal
obligations bear fixed, floating or variable rates of interest. Certain
municipal obligations are subject to redemption at a date earlier than their
stated maturity pursuant to call options, which may be separated from the
related municipal obligations and purchased and sold separately. The Fund
also may acquire call options on specific municipal obligations. The Fund
generally would purchase these call options to protect the Fund from the
issuer of the related municipal obligation redeeming, or other holder of the
call option from calling away, the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than,
the yields available on other permissible Fund investments. Dividends
received by shareholders on Fund shares which are attributable to interest
income received by the Fund from municipal obligations generally will be
subject to Federal income tax. The Fund may invest in municipal obligations,
[Page 29]
the ratings of which correspond with the ratings of other permissible
Fund investments. The Fund currently intends to invest no more than 25% of
its assets in municipal obligations. However, this percentage may be varied
from time to time without shareholder approval.
Zero Coupon Securities _ The Fund may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. Zero coupon securities also are issued by
corporations and financial institutions which constitute a proportionate
ownership of the issuer's pool of underlying U.S. Treasury securities. A zero
coupon security pays no interest to its holder during its life and is sold at
a discount to its face value at maturity. The market prices of zero coupon
securities generally are more volatile than the market prices of securities
that pay interest periodically and are likely to respond to a greater degree
to changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
Foreign Government Obligations; Securities of Supranational Entities
_ The Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by Dreyfus to be of comparable quality
to the other obligations in which the Fund may invest. Such securities also
include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Money Market Instruments _ The Fund may invest in the following types
of money market instruments.
U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
Repurchase Agreements. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
Bank Obligations. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund _ Investment Considerations and Risks _
Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs, having 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 commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's,
A-1
[Page 30]
by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated at least A3 by Moody's or A-
by S&P, Fitch or Duff, or (c) if unrated, determined by Dreyfus to be of
comparable quality to those rated obligations which may be purchased by the
Fund.
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 31]
[Application Page 1 here]
[Page 32]
[Application Page 2 here]
[Page 33]
[This Page Intentionally Left Blank]
[Page 34]
[This Page Intentionally Left Blank]
[Page 35]
1997 Dreyfus Service Corporation 029p1297
[Page 36]
Dreyfus Premier
LIMITED TERM HIGH INCOME FUND
[lion logo]
Prospectus
December 1, 1997
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
DECEMBER 1, 1997
This Statement of Additional Information ("SAI"), which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of Dreyfus Premier Limited Term High Income Fund (the "Fund"),
dated December 1, 1997, as it may be revised from time to time. The Fund is
a separate, diversified portfolio of The Dreyfus/Laurel Funds Trust (the
"Company"), 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 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. and 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 Company B-16
Management Agreement B-22
Purchase of Shares B-23
Distribution and Service Plans B-24
Redemption of Shares B-26
Shareholder Services B-27
Determination of Net Asset Value B-31
Dividends, Other Distributions and Taxes B-32
Portfolio Transactions B-36
Performance Information B-37
Information About the Fund B-39
Transfer and Dividend Disbursing Agent, Custodian, Counsel and
Independent Auditors B-39
Appendix B-41
Financial Statements B-50
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Portfolio Securities
Repurchase Agreements. The Fund's custodian or sub-custodian will have
custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements are considered
by the staff of the Securities and Exchange Commission ("SEC") to be loans
by the Fund. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of $1 billion, or primary
government securities dealers reporting to the Federal Reserve Bank of New
York, with respect to securities of the type in which the Fund may invest,
and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that such instruments
generally will be traded, and there generally is no established secondary
market for these obligations, although they are redeemable at face value,
plus accrued interest, at any time. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements,
the Fund's right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies, and the Fund may invest in them only if at
the time of an investment the borrower meets the criteria set forth in the
Fund's Prospectus for other commercial paper issuers.
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 Company'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.
Convertible Securities. Convertible securities may be converted at
either a stated price or stated rate into underlying shares of common stock.
Although to a lesser extent than with fixed-income securities, the market
value of convertible securities tends to decline as interest rates increase
and, conversely, tends to increase as interest rates decline. In addition,
because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the
underlying common stock. A unique feature of convertible securities is that
as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the
value of the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less
risk than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.
Warrants. A warrant is an instrument issued by a corporation which
gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.
The Fund may invest up to 5% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Fund that are sold in
units with, or attached to, other securities.
Common Stock. From time to time, the Fund may hold common stock sold
in units with, or attached to, debt securities purchased by the Fund. The
Fund also may hold common stock received upon the conversion of convertible
securities.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
marketable, the Fund will endeavor, to the extent practicable, to obtain the
right to registration at the expense of the issuer. Generally, there will
be a lapse of time between the Fund's decision to sell any such security and
the registration of the security permitting sale. During any such period,
the price of the securities will be subject to market fluctuations.
However, where a substantial market of qualified institutional buyers has
developed for certain unregistered securities purchased by the Fund pursuant
to Rule 144A under the Securities Act of 1933, as amended, the Fund intends
to treat such securities as liquid securities in accordance with procedures
approved by the Company's Board. Because it is not possible to predict with
assurance how the market for specific restricted securities sold pursuant to
Rule 144A will develop, the Company's Board has directed Dreyfus to monitor
carefully the Fund's investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to Rule
144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in its investment portfolio during such
period.
Participation Interests. The Fund may invest in short-term corporate
obligations denominated in U.S. and foreign currencies that are originated,
negotiated and structured by a syndicate of lenders ("Co-Lenders")
consisting of commercial banks or other institutions, one or more of which
administers the security on behalf of the syndicate (the "Agent Bank"). Co-
Lenders may sell such securities to third parties called "Participants."
The Fund may invest in such securities either by participating as a Co-
Lender at origination or by acquiring an interest in the security from a Co-
Lender or a Participant (collectively, "participation interests"). Co-
Lenders and Participants interposed between the Fund and the corporate
borrower (the "Borrower"), together with Agent Banks, are referred herein as
"Intermediate Participants." The Fund also may purchase a participation
interest in a portion of the rights of an Intermediate Participant, which
would not establish any direct relationship between the Fund and the
Borrower. In such cases, the Fund would be required to rely on the
Intermediate Participant that sold the participation interest not only for
the enforcement of the Fund's rights against the Borrower but also for the
receipt and processing of payments due to the Fund under the security.
Because it may be necessary to assert through an Intermediate Participant
such rights as may exist against the Borrower, in the event the Borrower
fails to pay principal and interest when due, the Fund may be subject to
delays, expenses and risks that are greater than those that would be
involved if the Fund would enforce its rights directly against the Borrower.
Moreover, under the terms of a participation interest, the Fund may be
regarded as a creditor of the Intermediate Participant (rather than of the
Borrower), so that the Fund may also be subject to the risk that the
Intermediate Participant may become insolvent. Similar risks may arise with
respect to the Agent Bank if, for example, assets held by the Agent Bank for
the benefit of the Fund were determined by the appropriate regulatory
authority or court to be subject to the claims of the Agent Bank's
creditors. In such case, the Fund might incur certain costs and delays in
realizing payment in connection with the participation interest or suffer a
loss of principal and/or interest. Further, in the event of the bankruptcy
or insolvency of the Borrower, the obligation of the Borrower to repay the
loan may be subject to certain defenses that can be asserted by such
Borrower as a result of improper conduct by the Agent Bank or Intermediate
Participant.
Municipal Obligations. Municipal obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Industrial development bonds, in most cases,
are revenue bonds that generally do not carry the pledge of the credit of
the issuing municipality, but generally are guaranteed by the corporate
entity on whose behalf they are issued. Notes are short-term instruments
which are obligations of the issuing municipalities or agencies and are sold
in anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or
equipment issued by municipalities.
Mortgage-Related Securities. The Fund may invest in various mortgage-
related securities, as described in the Prospectus.
Mortgage backed securities may 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.
Certificates of the Government National Mortgage Association ("GNMA")
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 ("HUD"), 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.
The Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") are Government sponsored corporations
owned by private stockholders. Each is subject to general regulation by an
office within HUD. FNMA and FHLMC purchase residential mortgages from a
list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks, credit unions and mortgage bankers. Pass-through
securities issued by FNMA and FHLMC are guaranteed by FNMA or FHLMC as to
payment of principal and interest.
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. 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.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers
also create mortgage backed securities in which the 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 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 Fund will, consistent
with its investment objective and policies, consider making investments in
such new types of securities.
Other Asset-Backed Securities. 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.
Management Policies
Portfolio Maturity. Under normal market conditions, the effective
average portfolio maturity of the Fund is expected to be four years or less.
For purposes of calculating effective average portfolio maturity, a security
that is subject to redemption at the option of the issuer on a particular
date (the "call date") which is prior to the security's stated maturity may
be deemed to mature on the call date rather than on its stated maturity
date. The call date of a security will be used to calculate effective
average portfolio maturity when Dreyfus reasonably anticipates, based upon
information available to it, that the issuer will exercise its right to
redeem the security. Dreyfus may base its conclusion on such factors as the
interest rate paid on the security compared to prevailing market rates, the
amount of cash available to the issuer of the security, events affecting the
issuer of the security, and other factors that may compel or make it
advantageous for the issuer to redeem a security prior to its stated
maturity.
Leverage. For borrowings for investment purposes, the Investment
Company Act of 1940, as amended (the "1940 Act"), requires the Fund to
maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of its
portfolio securities within three days to reduce the amount of its
borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Fund also may be required to maintain minimum average balances in
connection with such borrowing or pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. The SEC views reverse repurchase
transactions as collateralized borrowings by the Fund. To the extent the
Fund enters into a reverse repurchase agreement, the Fund will maintain in a
segregated custodial account permissible liquid assets at least equal to the
aggregate amount of its reverse repurchase obligations, plus accrued
interest, in certain cases, in accordance with releases promulgated by the
SEC.
Short-Selling. Until the Fund closes its short position or replaces
the borrowed security, it will: (a) maintain a segregated account,
containing permissible liquid assets, at a level such that the amount
deposited in the account plus the amount deposited with the broker as
collateral always equals the current value of the security sold short; or
(b) otherwise cover its short position.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned. The SEC currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the 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 loan, as well as any dividends, interest or other
distributions payable 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) while voting rights on the loaned securities may pass
to the borrower, the Company's Board must terminate the loan and regain the
right to vote the securities if a material event adversely affecting the
investment occurs.
Derivatives. The Fund may invest in certain Derivatives (as defined in
the Prospectus) for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-the-
counter Derivative bears the risk that the counterparty will default.
Accordingly, Dreyfus will consider the creditworthiness of counterparties to
over-the-counter Derivatives in the same manner as it would review the
credit quality of a security to be purchased by the Fund. Over-the-counter
Derivatives are less liquid than exchange-traded Derivatives since the other
party to the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for it.
Futures Transactions. The Fund may enter into futures contracts in
U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited. Foreign markets may offer advantages such as trading opportunities
or arbitrage possibilities not available in the United States. Foreign
markets, however, may have greater risk potential than domestic markets.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits that the Fund might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not. Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the
Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also depends on the ability of
Dreyfus to predict correctly movements in the direction of the relevant
market and to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if the Fund uses futures to hedge against the possibility of a decline in
the market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the SEC, the Fund
may be required to segregate cash or high quality money market instruments
in connection with its futures transactions in an amount generally equal to
the value of the underlying futures position exposure. The segregation of
such assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
The Fund may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price. The Fund may
also purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.
Interest Rate Swaps. Interest rate swaps involve the exchange by the
Fund with another party of their respective commitments to pay or receive
interest (for example, an exchange of floating rate payments for fixed-rate
payments). The exchange commitments can involve payments to be made in the
same currency or in different currencies. The use of interest rate swaps is
a highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio security
transactions. If Dreyfus is incorrect in its forecasts of market values,
interest rates and other applicable factors, the investment performance of
the Fund would diminish compared with what it would have been if these
investment techniques were not used. Moreover, even if Dreyfus is correct
in its forecasts, there is a risk that the swap position may correlate
imperfectly with the price of the asset or liability being hedged. There is
no limit on the amount of interest rate swap transactions that may be
entered into by the Fund. These transactions do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk
of loss with respect to interest rate swaps is limited to the net amount of
interest payments that the Fund is contractually obligated to make. If the
other party to an interest rate swap defaults, the Fund's risk of loss
consists of the net amount of interest payments that the Fund contractually
is entitled to receive.
Credit Derivatives. The Fund may engage in credit derivative
transactions. There are two broad categories of credit derivatives:
default price risk derivatives and market spread derivatives. Default price
risk derivatives are linked to the price of reference securities or loans
after a default by the issuer or borrower, respectively. Market spread
derivatives are based on the risk that changes in market factors, such as
credit spreads, can cause a decline in the value of a security, loan or
index. There are three basic transactional forms for credit derivatives:
swaps, options and structured instruments. The use of credit derivatives is
a highly specialized activity which involves strategies and risks different
from those associated with ordinary portfolio security transactions. If
Dreyfus is incorrect in its forecasts of default risks, market spreads or
other applicable factors, the investment performance of the Fund would
diminish compared with what it would have been if these techniques were not
used. Moreover, even if Dreyfus is correct in its forecasts, there is a
risk that a credit derivative position may correlate imperfectly with the
price of the asset or liability being hedged. There is no limit on the
amount of credit derivative transactions that may be entered into by the
Fund. The Fund's risk of loss in a credit derivative transaction varies with
the form of the transaction. For example, if the Fund purchases a default
option on a security, and if no default occurs with respect to the security,
the Fund's loss is limited to the premium it paid for the default option.
In contrast, if there is a default by the grantor of a default option, the
Fund's loss will include both the premium that it paid for the option and
the decline in value of the underlying security that the default option
hedged.
Options--In General. The Fund may purchase and write (i.e., sell) call
or put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security or securities at the exercise price at any time
during the option period, or at a specific date. Conversely, a put option
gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the exercise price
at any time during the option period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written
by the Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. The Fund
receives a premium from writing covered call or put options which it retains
whether or not the option is exercised.
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,
at times have rendered certain of the clearing facilities 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 or it delivers the underlying security upon
exercise or it otherwise covers its position.
The Fund may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying
currency at a price which is expected to be lower or higher than the spot
price of the currency at the time the option is exercised or expires. The
Fund also may purchase cash-settled options on equity index swaps and
interest rate swaps, respectively, in pursuit of its investment objective.
Equity index swaps involve the exchange by the Fund with another party of
cash flows based upon the performance of an index or a portion of an index
of securities which usually includes dividends. A cash-settled option on a
swap gives the purchaser the right, but not the obligation, in return for
the premium paid, to receive an amount of cash equal to the value of the
underlying swap as of the exercise date. These options typically are
purchased in privately negotiated transactions from financial institutions,
including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of
Dreyfus to predict correctly movements in the prices of individual stocks,
the stock market generally, foreign currencies, or interest rates. To the
extent such predictions are incorrect, the Fund may incur losses.
Future Developments. The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or SAI.
Forward Commitments. The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivables on a forward commitment
or when-issued security are fixed when the Fund enters into the commitment,
but the Fund does not make payment until it receives delivery from the
counterparty. The Fund will commit to purchase such securities only with
the intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable. A
segregated account of the Fund consisting of permissible liquid assets at
least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest
rates rise) based upon the public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may expose
the Fund to risks because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued basis can
involve the additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a forward commitment or when-
issued basis when the Fund is fully or almost fully invested may result in
greater potential fluctuation in the value of the Fund's net assets and its
net asset value per share.
Investment Considerations and Risks
Lower Rated Securities. The Fund is permitted to invest in securities
rated Ba or lower by Moody's Investors Service, Inc. ("Moody's") or BB or
lower by Standard & Poor's Ratings Group ("S&P"), Fitch Investors Service,
L.P. ("Fitch") and Duff & Phelps Credit Rating Co. ("Duff" and with Moody's,
S&P and Fitch, the "Rating Agencies"). The Fund is permitted to invest in
securities assigned ratings as low as the lowest ratings assigned by the
Rating Agencies. Such securities, though higher yielding, are characterized
by risk. See "Description of the Fund--Investment Considerations and Risks-
- -High Yield-Lower Rated Securities" in the Fund's Prospectus for a
discussion of certain risks and the "Appendix" for a general description of
the Rating Agencies' ratings. Although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these securities. The Fund will rely on the judgment,
analysis and experience of Dreyfus in evaluating the creditworthiness of an
issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by the Rating
Agencies to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with the higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
not have sufficient revenues to meet their interest payment obligations.
The issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, forecasts, or the
unavailability of additional financing. The risk of loss because of default
by the issuer is significantly greater for the holders of these securities
because such securities generally are unsecured and often are subordinated
to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns.
It is likely that an economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any person concerning the acquisition of such
securities, and Dreyfus will review carefully the credit and other
characteristics pertinent to such new issues.
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 determines it to be in the best interest
of the Fund and its shareholders. In making that determination, the
Company's Board will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiency. Although the Fund believes that the Board 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.
Investment Restrictions
Fundamental. The Fund has adopted the following restrictions as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares. The Fund may not:
1. Purchase any securities which would cause 25% or more 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.)
2. Borrow money or issue senior securities as defined in the 1940
Act, except that (a) the Fund may borrow money in an amount not exceeding one-
third of the Fund's total assets at the time of such borrowing, and (b)
the Fund may issue multiple classes of shares. The purchase or sale of
options, forward contacts, futures contracts, including those relating to
indices, and options on futures contracts or indices 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 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
the 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 the 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
options, forward contracts, and futures contracts, including those related
to indices, and options on futures contracts or indices.
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
fundamental investment objective, policies, and limitations as the Fund.
Non-fundamental. The 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 Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with maturities
in excess of seven days, and other securities which are not readily
marketable. For purposes of this limitation, illiquid securities shall not
include 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.
2. The Fund will 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.
3. The Fund will not purchase securities on margin, but the Fund may
make margin deposits in connection with transactions in options, forward
contracts, futures contracts, and options on futures contracts.
4. The Fund will not sell securities short, or purchase, sell or
write puts, calls or combinations thereof, except as described in the Fund's
Prospectus and this SAI.
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.
MANAGEMENT OF THE COMPANY
Principal Shareholders
As of November 7, 1997, the following company owned beneficially 5% or
more for the outstanding Class B shares of the Fund: MLPF&S for the Sole
Benefit of Its Customers, Attention: Fund Administration, 4800 Deer Lake
Drive, Jacksonville, Fl 32246-6484; 47% record.
As of November 7, 1997, the following company owned beneficially 5% or
more of the outstanding Class C shares of the Fund: MLPF&S for the Sole
Benefit of Its Customers, Attention: Fund Administration, 4800 Deer Lake
Drive, Jacksonville, Fl 32246-6484; 54% record.
As of November 7, 1997, the following company owned beneficially 5% or
more of the outstanding Class R shares of the Fund: MBCIC, c/o Mellon Bank,
Attention: Michael Botsford, 919 N. Market St., Wilmington, DE 19801-3023;
97% 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 of the Company
The Company has a Board composed of eleven Trustees which supervises
the Fund'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 Company and their present
and principal occupations during the past five years. Each Trustee who is
an "interested person" of the Company (as defined in the 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 Company, the
"Dreyfus/Laurel Funds").
Trustees of the Company
o+RUTH MARIE ADAMS. Trustee of the Company; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 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 Company; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 80 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO, Trustee of the Company. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. He is also Chairman of the Board of Noel
Group, Inc., a venture capital company, and Staffing Resources, Inc., a
temporary placement agency. Mr. DiMartino also serves as a Director of
the Muscular Dystrophy Association, HealthPlan Services Corporation, a
provider of marketing, administrative and risk management services to
health and other benefit programs, Carlyle Industries, Inc. (formerly
Belding Heminway, Inc.), a button purchaser and distributor, and Curtis
Industries, Inc., a national distributor of security products,
chemicals and automotive and other hardware. Mr. DiMartino is also a
Board member of 152 other funds in the Dreyfus Family of Funds. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio
and Bank Portfolio. For more than five years prior to January 1995, he
was President, a director and, until August 24, 1994, Chief Operating
Officer 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. Age:
54 years old. Address: 200 Park Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Trustee of the Company; Chairman, Howes Leather
Company, Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance
Company; Director, Barrett Resources, Inc.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio. Age: 63 years old. Address: 40 Norfolk
Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Company; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 69 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Company; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; Director, National Picture
Frame Corporation; former Chairman of the Board and Director, Rexene
Corporation; Chairman of the Board and Director, Tetra Corporation 1991-
1993; Director, Medalist Corporation 1992-1993. From November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Institutional Investment Portfolio. Age: 76 years old.
Address: Way Hallow Road and Woodland Road, Sewickley, Pennsylvania
15143.
o+KENNETH A. HIMMEL. Trustee of the Company; Former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio.
Age: 51 years old. Address: Himmel and Company, Inc., 399 Boylston
Street, 11th Floor, Massachusetts 02116.
o*ARCH S. JEFFERY. Trustee of the Company; Financial Consultant. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 80 years old. Address: 1817 Foxcroft Lane, Unit 306, Allison
Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Trustee of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc.; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 50 years old. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
o+JOHN J. SCIULLO. Trustee of the Company; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; from November 1975 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 66 years old. Address: 321
Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Company; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director,
Harvard/Pilgrim Community Health Plan, Inc.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio; Director, Massachusetts Electric Company;
Director, the Hymans Foundation, Inc., prior to February, 1993; Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 48 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
________________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Company
#MARIE E. CONNOLLY. President and Treasurer of the Company. President,
Chief Executive Officer, Chief Compliance Officer and a director of the
Distributor and Funds Distributor, Inc., the ultimate parent of which
is Boston Institutional Group, Inc. Age: 40 years old.
#DOUGLAS C. CONROY. Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. From December 1991 to March 1993, he was employed as a
Fund Accountant at TBC. Age: 28 years old.
#RICHARD W. INGRAM. Vice President and Assistant Treasurer of the Company.
Executive Vice President of the Distributor and Funds Distributor, Inc.
From March 1994 to November 1995, he was Vice President and Division
Manager for First Data Investor Services Group. From 1989 to 1994, he
was Vice President, Assistant Treasurer and Tax Director-Mutual Funds
of TBC. Age: 42 years old.
#ELIZABETH A. KEELEY. Vice President and Assistant Secretary of the
Company. Vice President of the Distributor and Funds Distributor, Inc.
She has been employed by the Distributor since 1995. Age: 28 years
old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Company.
Vice President of the Distributor and Funds Distributor, Inc. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for TBC. Age: 33 years old.
#MICHAEL S. PETRUCELLI. Vice President and Assistant Treasurer of the
Company. Senior Vice President of Funds Distributor, Inc. From
December 1989 through November 1996, he was employed by GE Investment
Services where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and
as Director of the GE Investment Services. Age: 36 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the
Company. Senior Vice President, Treasurer and Chief Financial Officer
of the Distributor and Funds Distributor, Inc. From July 1988 to
August 1994, he was employed by TBC where he held various management
positions in the Corporate Finance and Treasury areas. Age: 35 years
old.
____________________________
# Officer also serves as an officer for other investment companies
advised by Dreyfus, including The Dreyfus/Laurel Funds, Inc. and The
Dreyfus/Laurel Tax-Free Municipal Funds.
The address of each officer of the Company is 200 Park Avenue, New
York, New York 10166.
The officers and Trustees of the Company as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of November 7,
1997.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Company for serving
as an officer or Trustee of the Company. In addition, no officer or
employee of Dreyfus (or of any parent, subsidiary or affiliate thereof)
serves as an officer or Trustee of the Company. The Dreyfus/Laurel Funds
pay each Trustee/Director who is not an "interested person" of the Company
(as defined in the 1940 Act) $27,000 per annum (and an additional $25,000
for the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel
Funds). In addition, the Dreyfus/Laurel Funds pay each Trustee/Director who
is not an "interested person" of the Company (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 Company (as
defined in the 1940 Act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1996, the aggregate amount of
fees and expenses received by each current Trustee of the Company and all
other Funds in the Dreyfus Family of Funds for which such person is a Board
member were as follows:
Total Compensation
From the Company
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From Company# Member****
Ruth Marie Adams $10,833.33 $31,500
Francis P. Brennan* 19,098 70,000
Joseph S. DiMartino** none 517,075***
James M. Fitzgibbons 10,833.33 31,500
J. Tomlinson Fort** none none
Arthur L. Goeschel 11,500 32,500
Kenneth A. Himmel 10,250 30,750
Arch S. Jeffery** none none
Stephen J. Lockwood 11,500 31,500
John J. Sciullo 11,500 32,500
Roslyn M. Watson 11,166.67 32,500
_________________________
# Amounts required to be paid by the Company 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 $16,473.54 for the Company.
* Compensation of Francis P. Brennan includes $25,000 paid by the
Dreyfus/Laurel Funds to be the Chairman of the Board. Effective May 1,
1996, the retainer was reduced from $75,000 to $25,000 annually.
** For the fiscal year ended December 31, 1996, Joseph S. DiMartino, J.
Tomlinson Fort and Arch S. Jeffery were paid directly by Dreyfus for serving
as Board members of the Company and the funds in the Dreyfus/Laurel Funds.
For the fiscal year ended December 31, 1996, 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 Company were
$11,500, $11,500 and $11,500, respectively, and for serving as a Board
member of all funds in the Dreyfus/Laurel Funds (including the Company) were
$32,500, $32,500 and $32,500, respectively. In addition, Dreyfus reimbursed
Messrs. DiMartino, Fort and Jeffery a total of $4,895.49 for expenses
attributable to the Company's Board meetings which is not included in the
$16,473.54 amount noted above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the fiscal year ended December 31, 1996.
****The Dreyfus Family of Funds consists of 152 mutual funds.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
Management Agreement. Dreyfus serves as investment manager for the
Fund pursuant to an Investment Management Agreement with the Company dated
April 4, 1994, transferred to Dreyfus as of October 17, 1994 ("Management
Agreement"). 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 (as defined in the
1940 Act) of the Company and either a majority of all Trustees or a majority
(as defined in the 1940 Act) of the shareholders of the Fund approve its
continuance. The Management Agreement was approved with respect to the Fund
on April 24, 1997. The Company may terminate the Management Agreement 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 Company. The Management Agreement will
terminate immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, 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; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice President-
Corporate Communications; Mary Beth Leibig, Vice President-Human Resources;
Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Andrew
S. Wasser, Vice President-Information Systems; William V. Healey, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Frank V. Cahouet and
Richard F. Syron, directors.
The Fund's portfolio managers are Roger King and Kevin McClintock.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy 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 Premier Family of
Funds, funds in the Dreyfus Family of Funds and for certain other investment
companies.
Sales Loads -- Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an individual
and/or spouse purchasing securities for his, her or their own account or for
the account of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single fiduciary
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Internal
Revenue Code of 1986, as amended (the "Code")) although more than one
beneficiary is involved; or a group of accounts established by or on behalf
of the employees of an employer or affiliated employers pursuant to an
employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k) and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that it
is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means which
result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares of the Fund aggregating less than $50,000 subject to the schedule
of sales charges set forth in the Fund's Prospectus at a price based upon
the initial offering price of $12.50:
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 Public $13.09
TeleTransfer Privilege. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day 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. To qualify to use the
TeleTransfer Privilege, the initial payment for purchase of Fund shares must
be drawn on, and redemption proceeds paid to, the same bank and account as
are designated on the Account Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and signature-
guaranteed. See "Redemption of Shares - TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
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 net asset value
of the shares purchased and securities exchanged. Securities accepted by
the Fund will be valued in the same manner as the Fund values its assets.
Any interest earned on the securities following their delivery to the Fund
and prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securities
become the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call 1-800-544-4611.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plan (Class
A Plan and Class B and C Plans)."
Class A, Class B and Class C shares are subject to annual fees for
distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "Rule")
regulating the circumstances under which investment companies such as the
Company may, directly or indirectly, bear the expenses of distributing their
shares. The Rule defines distribution expenses to include expenditures for
"any activity which is primarily intended to result in the sale of fund
shares." The Rule, among other things, provides that an investment company
may bear such expenses only pursuant to a plan adopted in accordance with
the Rule.
Distribution Plan--Class A Shares. The Company has adopted a
Distribution Plan pursuant to the Rule with respect to the Class A shares of
the Fund ("Class A Plan"), whereby Class A shares of the 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 Company'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 the Fund may bear for
distribution pursuant to the Class A Plan without approval of the 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" (as defined in the 1940 Act) of the Company or
the Distributor 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 was so approved by the Trustees at a meeting held on
January 31, 1997, and its applicability to the Fund was approved on April
24, 1997. The Class A 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 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 Class 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 Company'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
Company'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.
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 Class
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 so approved by the Trustees at a
meeting held on January 31, 1997, and the applicability of each Plan to the
Fund was approved on April 24, 1997. 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 Class C shares.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege - Class A. The Fund provides Redemption
Checks ("Checks") to investors in Class A shares automatically upon opening
an account, unless such investors specifically refuse the Check Redemption
Privilege by checking the applicable "No" box on the Account Application.
Checks will be sent only to the registered owner(s) of the account and only
to the address of record. The Check Redemption Privilege may be established
for an existing account by a separate signed Shareholder Services Form. The
Account Application or Shareholder Services Form must be manually signed by
the registered owner(s). Checks are drawn on the investor's Fund account
and may be made payable to the order of any person in an amount of $500 or
more. When a Check is presented to the Transfer Agent for payment, the
Transfer Agent, as the investor's agent, will cause the Fund to redeem a
sufficient number of full and fractional Class A shares in the investor's
account to cover the amount of the Check. Dividends are earned until the
Check clears. After clearance, a copy of the Check will be returned to the
investor. Investors generally will be subject to the same rules and
regulations that apply to checking accounts, although election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient funds.
Checks should not be used to close an account.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected 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 Shares--TeleTransfer Privilege."
Share 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 owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" 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.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. In the case of requests
for redemptions in excess of such amount, the Company's Board reserves the
right to make payments in whole or in part in securities (which may include non-
marketable 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 such event, the securities would
be valued in the same manner as the Fund's portfolio is valued. If the
recipient sold such securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the NYSE is closed
(other than customary weekend and holiday closings), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the SEC so that disposal of the Fund's investments
or determination of its net asset value is not reasonably practicable, or
(c) for such other periods as the SEC by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such funds purchased
by exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges into shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without a
sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends
or other distributions of any such funds (collectively referred to
herein as "Purchased Shares") may be exchanged for shares of other
funds sold with a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the Purchased Shares
were acquired), without giving effect to any reduced loads, the
difference will be deducted.
E. Shares of funds subject to a contingent deferred sales charge ("CDSC")
that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods, if any,
will be deemed to have been held since the date the shares being
exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Agent must
notify the Transfer Agent of the investor's prior ownership of shares with a
sales load and the investor's 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 request an exchange, an investor or an investor's Agent acting on
the investor's behalf must give exchange instructions to the Transfer Agent
in writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent
to act on telephonic exchange instructions (including over the Dreyfus
Touchr automated telephone system) 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. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. For Dreyfus-
sponsored self-employed individual retirement plans (so called "Keogh
Plans") and individual retirement accounts ("IRAs"), including IRAs, set up
under a Simplified Employee Pension Plan ("SEP-IRAs") with only one
participant, the minimum initial investment is $750. To exchange shares
held in corporate plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at least
$2,500 invested among shares of the same Class of the funds in the Dreyfus
Premier Family of Funds or the Dreyfus Family of Funds. To exchange shares
held in personal retirement plans, the shares exchanged must have a current
value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares of the same
Class of certain other funds in the Dreyfus 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 an 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 IRAs and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the 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 1-800-554-4611. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchange service or the
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 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.
Class C shares, Class A shares to which a CDSC applies, and, unless certain
conditions described in the Prospectus are satisfied, Class B shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest
automatically dividends or dividends and other distributions, if any, from
the Fund in shares of the same Class of certain other funds in the Dreyfus
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. 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 a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, 401(k) Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum for subsequent purchases. The
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs
and 403(b)(7) Plans with only one participant, is ordinarily $750, with no
minimum for subsequent purchases. Individuals who open an IRA also may open
a non-working spousal IRA with a minimum investment of $250.
Each 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 Shares."
Valuation of Portfolio Securities. Substantially all of the Fund's fixed-
income investments (excluding short-term investments) are valued each business
day by one or more independent pricing services (the "Service")
approved by the Board. Securities valued by the Service for which quoted
bid prices in the judgment of the Service are readily available and are
representative of the bid side of the market 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 valued by
the Service 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. Short-term investments are not
valued by the Service and are valued at the mean price or yield equivalent
for such securities or for securities of comparable maturity, quality and
type as obtained from market makers. Other investments that are not valued
by the Service are valued at the last sales price for securities traded
primarily on an exchange or the national securities market or otherwise at
the average of the most recent bid and asked prices. Bid price is used when
no asked price is available. Any assets or liabilities initially expressed
in terms of foreign currency will be translated into U.S. dollars at the
midpoint of the New York interbank market spot exchange rate as quoted on
the day of such translation by the Federal Reserve Bank of New York or, if
no such rate is quoted on such date, at the exchange rate previously quoted
by the Federal Reserve Bank of New York or at such other quoted market
exchange rate as may be determined to be appropriate by Dreyfus. Expenses
and fees, including the management fee (reduced by the expense limitation,
if any), are accrued daily and taken into account for the purpose of
determining the net asset value of the Fund's shares.
Restricted securities, as well as securities or other assets for which
recent market quotations are not readily available or in the case of fixed
income securities (excluding short-term investments), which are not valued
by the Service, are valued at fair value as determined in good faith by the
Board. The Board will review the method of valuation on a current basis.
In making their good faith valuation of restricted securities, the Board
members generally will take the following factors into consideration:
restricted securities which are, or are convertible into, securities of the
same class of securities for which a public market exists usually will be
valued at market value less the same percentage discount at which purchased.
This discount will be revised periodically by the Board if it believes that
the discount 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.
New York Stock Exchange Closings. The holidays (as observed) on which
the NYSE is currently scheduled to be closed are: New Year's Day, Dr.
Martin Luther King, Jr. 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.
General. To qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund -which is treated as a separate corporation
for federal tax purposes--(1) must distribute to its shareholders each year
at least 90% of its investment company taxable income (generally consisting
of net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) ("Distribution Requirement"), (2)
must derive at least 90% of its annual gross income from specified sources
("Income Requirement"), (3) through the end of the Fund's 1997 taxable year,
the Fund must derive less than 30% of its annual gross income from gain on
the sale or disposition of any of the following that are held for less than
three months -- (i) securities, (ii) non-foreign-currency options and
futures and (iii) foreign currencies (or foreign currency options, futures
and forward contracts) that are not directly related to the Fund's principal
business of investing in securities (or options and futures with respect
thereto) ("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements.
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 has received a
capital gain distribution with respect to those shares, any loss incurred on
the sale of those shares will be treated as a long-term capital loss to the
extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in 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.
Investment by the Fund in securities issued or acquired at a discount,
or providing for deferred interest or for payment of interest in the form of
additional obligations 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 accrue a portion of the discount (or deemed
discount) at which the securities were issued each year and to distribute
such income in order to maintain its qualification as a regulated investment
company. In such case, the Fund may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that
would reduce the yield and/or return 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.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own,
directly, indirectly, or constructively, at least 10% of that voting power)
as to which the Fund is a U.S. shareholder-- 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 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 the PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), 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 QEFs annual ordinary earnings and net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) -- which likely would have to be distributed by the Fund to satisfy
the Distribution Requirement and avoid imposition of the 4% excise tax
mentioned in the Prospectus under "Dividends, Other distributions and Taxes"
- -- even if those earnings and gains were not received by the Fund from the
QEF. In most instances its will be very difficult, if not impossible, to
make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC. "Marking-to-
market," in this context, means including in ordinary income each taxable
year the excess, if any, of the fair market value of a PFIC's stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not
capital, loss) the excess, if any, of its adjusted basis in PFIC stock over
the fair market value thereof as of the taxable year-end, but only to the
extent of any net mark-to-market gains with respect to that stock included
by the Fund for prior taxable years. The Fund's adjusted basis in each
PFIC's stock with respect to which it makes this election will be adjusted
to reflect the amounts of income included and deductions taken under the
election. Regulations proposed in 1992 would provide a similar election
with respect to the stock of certain PFICs.
Foreign Currency and Hedging Transactions. Gains from the sale or
other disposition of foreign currencies (except certain gains therefrom 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.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain and loss. However, a portion of the gains or
losses from the disposition of foreign currencies and certain foreign
currency denominated securities (including debt instruments, certain
financial forward and futures 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 and from engaging in "conversion transactions"
that would otherwise be treated as capital gain may be treated as ordinary
income. "Conversion transactions" are defined to include certain option and
straddle investments will be treated as ordinary income. Moreover, all or a
portion of the gain realized from engaging in "conversion transactions that
would otherwise be treated as capital gain" 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
on the exercise or lapse of, or closing transactions respecting, certain
futures and forward contracts ("Section 1256 Contracts") may be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.
In addition, any such contracts 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. In addition,
any Section 1256 Contracts 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
of the Fund characterized in the manner described above. It is not entirely
clear, as of the date of this SAI, whether the 60% portion of that is
treated as long-term capital gain will qualify for the reduced maximum tax
rates on net capital gain enacted by the Tax Act -- 20% (10% for taxpayers
in the 15% marginal tax bracket) on capital assets held for more than 18
months -- instead of the 28% maximum rate in effect before that legislation,
which now applies to gain on capital assets held for more than one year but
not more than 18 months, although technical corrections legislation passed
by the House of Representatives would treat such 60% portion as qualifying
therefor.
Offsetting positions held by the Fund involving certain futures or
forward contracts may constitute "straddles," which 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 a result, all or a portion of any 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
futures or forward contracts or options transactions, such straddles would
be characterized as "mixed straddles" if the futures or 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.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally will apply if the Fund either (1) holds an appreciated
position (including a futures or forward contract, short sale, or option)
with respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale,
futures or forward contract, or offsetting notional principal contract
(collectively, a "Contract") respecting the same or substantially identical
property or (2) holds an appreciated financial position that is a Contract
and then acquires property that is the same as, or substantially identical
to, the underlying property. In each instance, with certain exceptions, the
Fund generally will be taxed as if the appreciated financial position were
sold at its fair market value on the date the Fund enters into the financial
position or acquires the property, respectively. Transactions that are
identified hedging or straddle transactions under other provisions of the
Code can be subject to the constructive sale provisions.
State and Local Taxes. Depending upon the extent of the 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
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. Dividend
distributed to a foreign shareholder whose ownership of Fund shares 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, 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 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
Dreyfus assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in the best
judgment of Dreyfus and in a manner deemed fair and reasonable to
shareholders. The primary consideration is prompt execution of orders at
the most favorable net price. Subject to this consideration, the brokers
selected will include those that supplement the research facilities of
Dreyfus with statistical data, investment information, economic facts and
opinions. Information so received is in addition to and not in lieu of
services required to be performed by Dreyfus and the fees payable to Dreyfus
are not reduced as a consequence of the receipt of such supplemental
information. Such information may be useful to Dreyfus in serving both the
Fund and other funds which it advises and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to Dreyfus in carrying out its obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds advised or
administered by Dreyfus being engaged simultaneously in the purchase or sale
of the same security. Certain of the Fund's transactions in securities of
foreign issuers may not benefit from the negotiated commission rates
available to the Fund for transactions in securities of domestic issuers.
When transactions are executed in the over-the-counter market, the Fund will
deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable. Foreign exchange transactions are made
with banks or institutions in the interbank market at prices reflecting a
mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year as well as within a year.
It is anticipated that in any fiscal year the turnover rate of the Fund may
approach 200%. In periods in which extraordinary market conditions prevail,
Dreyfus will not be deterred from changing the Fund's investment strategy as
rapidly as needed, in which case higher turnover rates can be anticipated
which would result in greater brokerage expenses. In addition, to the
extent the Fund realizes short-term gains as a result of more portfolio
transactions, such gain would be taxable to shareholders (other than tax-
exempt shareholders) at ordinary income tax rates. The overall
reasonableness of brokerage commissions paid is evaluated by Dreyfus based
upon its knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable services.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's current yield for the 30-day period ended September 30, 1997
was 8.95%, 8.79%, 8.55% and 9.67% 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 Fund's average annual total returns for the 0.33 year period ended
September 30, 1997 for Class A, Class B, Class C and Class R shares were
(0.85%), 0.67%, 10.08% and 14.53%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value per share
(maximum offering price in the case of Class A) 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 average
annual total return figures calculated in accordance with such formula
assumes 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.
The Fund's total return for Class A for the period June 2, 1997
(inception date of Class A shares) to September 30, 1997 was (0.28%).
Without giving effect to the applicable front - end sales load, the total
return for Class A was 4.42% for this period. The Fund's total return for
Class B and Class C shares for the period from June 2, 1997 (inception date
of Class B and Class C shares) to September 30, 1997 was 0.22% and 3.22%,
respectively. Without giving effect to the applicable CDSC, the total
return for Class B and Class C shares for this period was 4.22% and 4.22%,
respectively. The Fund's total return for Class R shares for the period
from June 2, 1997 (inception date of Class R shares) to September 30, 1997
was 4.58%.
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.
From time to time, advertising materials for the Fund may include (i)
biographical information relating to its portfolio manager, including honors
or awards received, and may refer to or include commentary by the Fund's
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; (ii) information concerning retirement and
investing for retirement, including statistical data or general discussions
about the growth and development of Dreyfus Retirement Services (in terms of
new customers, assets under management, market share, etc.) and its presence
in the defined contribution plan market; (iii) the approximate number of then-
current Fund shareholders; (iv) Lipper or Morningstar ratings and
related analysis supporting the ratings; and (v) discussions of the risk and
reward potential of the high yield securities markets and its comparative
performance in the overall securities markets.
From time to time, the Company may compare the Fund's performance
against inflation with the performance of other instruments against
inflation, such as short-term Treasury Bills (which are direct obligations
of the U.S. Government), bonds, stocks, and FDIC-insured bank money market
accounts.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
The Fund is currently one of three portfolios of the Company. Fund shares
have no preemptive, subscription or conversion rights and are freely
transferable. Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Company.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Company and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Company 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 the
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 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 will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Company, Dreyfus Transfer, Inc. 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, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month, and is reimbursed for certain out-
of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's
investments. Under a custody agreement with the Company, Mellon Bank holds
the Fund's portfolio securities and keeps all necessary accounts and
records. 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. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this SAI.
KPMG Peat Marwick LLP, was appointed by the Trustees to serve as the
Fund's independent auditors for the period ending December 31, 1997,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with SEC
filings and (3) review of the annual federal income tax return filed on
behalf of the Fund.
APPENDIX
Description of S&P, Moody's, Fitch and Duff ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. 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 highest 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 obligations 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
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default
and are dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within
the major rating categories, except in the AAA (Prime Grade) category.
Commercial Paper Rating
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
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 (+)
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.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
B
Issues carrying this designation are regarded as having only
speculative capacity for timely payment.
C
This designation is assigned to short-term obligations with doubtful
capacity for payment.
D
Issues carrying this designation are in default, and payment of
interest and/or repayment of principal is in arrears.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are 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 generally are
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, therefore, 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 present 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 show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will 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 alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirements for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Issuers (or related supporting institutions) rated Not Prime do not
fall within any of the Prime rating categories.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
F-3
Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate;
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-S
Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic
conditions.
D
Default. Issues assigned this rating are in actual or imminent payment
default.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection factors
but still considered sufficient for prudent investment. There may be
considerable variability in risk for bonds in this category during economic
cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal. Protection factors are
narrow and risk can be substantial with unfavorable economic or industry
conditions and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except AAA)
to indicate the relative position of a credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded
as having good certainty of timely payment, good access to capital markets
and sound liquidity factors and company fundamentals. Risk factors are
small. Paper rated Duff 3 is regarded as having satisfactory liquidity and
other protection factors. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected. Paper rated Duff 4 is
regarded as having speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation. Paper rated
Duff 5 is in default. The issuer has failed to meet scheduled principal
and/or interest payments.
<TABLE>
<CAPTION>
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Bonds and Notes-102.3% Amount Value
------- -------
<S> <C> <C> <C>
Aircraft & Aerospace-9.2% AM General,
Ser. B, Sr. Notes, 127\8%, 2002...... $ 2,500,000 $ 2,712,500
Aerovias de Mexico S.A.:
Deb., 93\4%, 2000.................... 1,500,000 1,506,750
Deb., 93\4%, 2000.................... 3,000,000 (a) 3,013,500
Fairchild,
Sub. Deb., 12%, 2001................. 1,000,000 1,020,000
Rocal, Ltd.,
Collateralized Global Medium Term Notes
(Gtd. by Embraer-Empresa Brasileira de Aeronautica,
S.A.), 101\4%, 1998.......................... 3,570,000 (a) 3,596,775
Talley Manufacturing and Technology,
Sr. Notes, 103\4%, 2003.............. 1,500,000 1,586,250
-------
13,435,775
-------
Broadcasting-1.9% Azteca Holdings S.A.,
Sr. Notes, 11%, 2002....................... 500,000 (a) 528,750
Busse Broadcasting,
Sr. Secured Notes, 115\8%, 2000...... 1,125,000 1,206,562
Pegasus Media & Communications,
Sr. Sub. Notes, Ser. B, 121\2%, 2005. 500,000 557,500
Univision Network Holding, L.P.,
Sub. Notes, 7%, 2002................. 500,000 531,250
-------
2,824,062
-------
Building Materials-.5% Emcor Group,
Notes, Ser. C, 11%, 2001............. 186,830 197,106
Nortek,
Sr. Sub. Notes, 97\8%, 2004.......... 500,000 516,875
-------
713,981
-------
Cable Television-17.0% Adelphia Communications:
Deb., 117\8%, 2004................... 1,265,000 1,385,175
Sr. Notes, 91\4%, 2002............... 3,000,000 (a) 3,030,000
CCA Holdings,
Sr. Sub. Notes, Zero Coupon, 1999.... 7,462,723 5,440,000
EchoStar Satellite Broadcast:
Gtd. Sr. Discount Notes, Zero Coupon, 2000 2,750,000 (b) 2,282,500
Gtd. Notes, 121\2%, 2002............. 1,500,000 (a) 1,661,250
Falcon Holding Group, L.P.,
Sr. Sub Notes, Ser. B, 11%, 2003..... 1,582,500 1,634,631
Marcus Cable, L.P.,
Sr. Deb., 117\8%, 2005............... 1,500,000 1,638,750
Marcus Cable Operating,
Gtd. Sr. Sub. Discount Notes, Zero Coupon, 1999 2,000,000 (c) 1,815,000
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
------- -------
Cable Television (continued) United International Holdings, Sr. Discount Notes:
Ser. B , Zero Coupon, 1999........... $ 3,600,000 $ 2,956,500
Zero Coupon, 1999.................... 3,395,000 2,788,144
Zero Coupon, 1999 (Units)............ 100,000 (d) 80,750
-------
24,712,700
-------
Casinos-3.3% Griffin Gaming and Entertainment,
First Mortgage Notes, 9.27%, 2000.... 1,000,000 977,077
Majestic Star Casino, LLC,
Sr. Exchange Secured Notes, 123\4%, 2003 3,500,000 3,876,250
-------
4,853,327
-------
Chemicals-3.9% Harris Chemical,
Sr. Sub. Notes, 103\4%, 2003.................. 3,500,000 3,631,250
NL Industries,
Sr. Secured Discount Notes, Zero Coupon, 1998 2,000,000 (e) 1,977,500
-------
5,608,750
-------
Consumer-6.6% Coleman Escrow:
Sr. Secured First Priority Discount Notes,
Zero Coupon, 2001..................... 4,500,000 (a) 3,082,500
Sr. Secured Second Priority Discount Notes,
Zero Coupon, 2001..................... 2,000,000 (a) 1,215,000
Hosiery Corp. of America,
Sr. Sub. Exchange Notes, 133\4%, 2002 1,000,000 1,085,000
Revlon Worldwide,
Sr. Secured Discount Notes, Zero Coupon, 2001 5,750,000 4,183,125
-------
9,565,625
-------
Energy-1.4% Clark R & M Holdings,
Sr. Secured Notes, Ser. A, Zero Coupon, 2000..... 2,500,000 1,978,125
-------
Entertainment-2.6% Premier Parks,
Sr. Notes, Ser. A, 12%, 2003......... 1,500,000 1,680,000
Six Flags Theme Parks,
Sr. Sub. Notes, Zero Coupon, 1998.... 2,000,000 (f) 2,095,000
-------
3,775,000
-------
Financial-1.4% Commercial Loan Funding Trust I,
Floating Rate Sub. Notes, Cl. D1, 10%, 2005............ 1,500,000 (g) 1,500,000
Imperial Credit Capital Trust I,
Remarketed Par Securities, Ser. A, 101\4 %, 2002....... 500,000 (a) 515,405
-------
2,015,405
-------
Foods and Beverages-3.9% American Rice,
First Mortgage, 13%, 2002............ 1,000,000 1,025,000
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
------- -------
Foods and Beverages (continued) Envirodyne Industries,
Sr. Notes, 101\4%, 2001.............. $ 2,500,000 $ 2,518,750
PM Holdings,
Sub. Discount Deb., Zero Coupon, 2000........ 500,000 (h) 395,000
RC/Arbys,
Gtd. Sr. Notes, 93\4%, 2000.......... 1,235,000 1,256,612
Texas Bottling Group,
Sr. Sub Notes, 9%, 2003.............. 500,000 515,000
-------
5,710,362
-------
Forest Products-1.5% Maxxam Group Holdings,
Sr. Secured Notes, 12%, 2003......... 2,000,000 2,170,000
-------
Gaming-.8% Coast Hotels and Casinos,
First Mortgage Notes, 13%, 2002...... 1,000,000 1,132,500
-------
Homebuilding-1.8% Oriole Homes,
Sr. Notes, 121\2%, 2003.............. 2,850,000 2,664,750
-------
Industrial-4.4% Associated Materials,
Sr. Sub. Notes, 111\2%, 2003......... 1,000,000 1,067,500
Chatwins Group,
Sr. Exchange Notes, 13%, 2003........ 922,000 977,320
Plastic Specialties & Technology,
Sr. Notes, 111\4%, 2003.............. 3,500,000 3,806,250
Vicap S.A. de C.V.,
Gtd. Sr. Notes, 101\4%, 2002......... 500,000 (a) 533,750
-------
6,384,820
-------
Paper and Paper Related- 5.6% Gaylord Container,
Sr. Sub. Discount Deb., 123\4%, 2005. 500,000 548,750
Repap New Brunswick,
Sr. Notes, 91\16%, 2000.............. 5,000,000 (g) 4,950,000
Stone Container :
Sr. Notes, 97\8%, 2001............... 1,000,000 1,021,250
Sr. Notes, 121\4%, 2002.............. 1,000,000 1,037,500
Sr. Sub. Notes, 11%, 1999............ 500,000 521,250
-------
8,078,750
-------
Retail-4.1% Ann Taylor,
Sub. Notes, 83\4%, 2000.............. 500,000 498,750
Discovery Zone,
Sr. Secured Notes, 131\2%, 2002 (Units) 750,000 (a,d) 804,375
Duane Reade Holding:
Sr. Notes, 12%, 2002................. 2,500,000 2,620,312
Sub. Notes, Zero Coupon, 1999........ 2,500,000 (i) 2,000,000
-------
5,923,437
-------
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
------- -------
Shipping-2.3% Moran Transportation,
First Preferred Ship Mortgage Notes,
113\4%, 2004......................... $ 2,535,000 $ 2,858,213
Stena AB,
Sr. Notes, 101\2%, 2005.............. 500,000 550,000
-------
3,408,213
-------
Steel-5.5%................. EES Coke Battery,
Sr. Secured Notes, Ser. B., 9.382%, 2007 200,000 (a) 208,000
Earle M. Jorgensen,
Sr. Notes, 103\4%, 2000.............. 500,000 512,500
NS Group,
Sr. Notes, 131\2%, 2003.............. 1,000,000 1,165,000
Republic Engineered Steels,
First Mortgage Notes, 97\8%, 2001.... 3,142,000 3,055,595
Russel Metals,
Sr. Notes, 101\4%, 2000.............. 3,000,000 3,142,500
-------
8,083,595
-------
Supermarkets-1.4% Pathmark Stores,
Sub. Notes, 115\8%, 2002............. 2,000,000 2,040,000
-------
Technology-3.2% Unisys, Sr. Notes:
12%, 2003............................ 2,750,000 3,093,750
105\8%, 1999......................... 1,545,000 1,602,938
-------
4,696,688
-------
Telecommunications-3.1% Call-Net Enterprises,
Sr. Discount Notes, Zero Coupon, 1999 1,000,000 (j) 905,000
Dial Call Communications,
Sr. Discount Notes, Zero Coupon, 1999 (Units) 2,000,000 (d,k) 1,877,500
NEXTEL Communications,
Sr. Redeemable Discount Notes, Zero Coupon, 1998..... 1,750,000 (l) 1,704,063
-------
4,486,563
-------
Textiles-6.9% Sassco Fashion,
Notes, 123\4%, 2004.................. 4,200,000 4,431,000
Texfi Industries,
Sr. Sub. Deb., 83\4%, 1999........... 5,100,000 5,023,500
Willcox & Gibbs,
Sr. Notes, Ser. B, 121\4%, 2003...... 600,000 603,000
-------
10,057,500
-------
Transportation-10.0% Atlantic Coast Airlines,
Gtd. Pass Through Ctfs., Ser. 1997-1D, 7.97%, 2000.... 3,500,000 (a) 3,500,000
CHC Helicopter,
Sr. Sub. Notes, 111\2%, 2002 (Units). 1,500,000 (d) 1,608,750
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
------- -------
Transportation (continued) Central Transport Rental Finance,
Secured Notes, 91\2%, 2003........... $ 4,500,000 $ 4,803,750
ValuJet,
Sr. Notes, 101\4%, 2001.............. 5,025,000 4,673,250
-------
14,585,750
-------
TOTAL BONDS AND NOTES
(cost $148,191,037)................. $148,905,678
=======
Convertible Bonds and Notes-3.0%
Energy-.8%.................. Kelly Oil & Gas,
Sub. Notes, 77\8 %, 1999............. $ 1,227,000 $ 1,190,190
-------
Foreign-.4% Scandinavian Broadcasting System SA,
Sub. Deb., 71\4%, 2005............... 500,000 515,000
-------
Restaurants-.4% Boston Chicken,
Liquid Yield Option Notes, Zero Coupon, 2015........... 2,860,000 (m) 611,325
-------
Retail-1.4% Rite Aid,
Sub. Notes, 51\4 %, 2002............. 2,000,000 (a) 2,032,500
-------
TOTAL CONVERTIBLE BONDS AND NOTES
(cost $4,356,742)................... $ 4,349,015
=======
TOTAL INVESTMENTS (cost $152,547,779)....................................... 105.3% $153,254,693
==== =======
LIABILITIES, LESS CASH AND RECEIVABLES ..................................... (5.3)% $ (7,729,204)
==== =======
NET ASSETS.................................................................. 100.0% $145,525,489
==== =======
Notes to Statement of Investments:
(a)Securities 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 September 30,
1997, these securities amounted to $23,721,805 or 16.3% of net assets.
(b)Zero coupon until 3/15/2000, date on which a stated coupon rate of 131\8%
becomes effective; the stated maturity date is 3/15/2004.
(c)Zero coupon until 8/1/1999, date on which a stated coupon rate of 131\2%
becomes effective; the stated maturity date is 8/1/2004.
(d)With warrants to purchase Common Stock.
(e)Zero coupon until 10/15/1998, date on which a stated coupon rate of 13%
becomes effective; the stated maturity date is 10/15/2005.
(f)Zero coupon until 6/15/1998, date on which a stated coupon rate of 121\4%
becomes effective; the stated maturity date is 6/15/2005.
(g)Variable rate security-interest rate subject to periodic change.
(h)Zero coupon until 9/1/2000, date on which a stated coupon rate of 111\2%
becomes effective; the stated maturity date is 9/1/2005.
(i)Zero coupon until 9/15/1999, date on which a stated coupon rate of 15%
becomes effective; the stated maturity date is 9/15/2004.
(j)Zero coupon until 12/1/1999, date on which a stated coupon rate of 131\4%
becomes effective; the stated maturity date is 12/1/2004.
(k)Zero coupon until 4/15/1999, date on which a stated coupon rate of 121\4%
becomes effective; the stated maturity date is 4/15/2004.
(l)Zero coupon until 9/1/1998, date on which a stated coupon rate of 111\2%
becomes effective; the stated maturity date is 9/1/2003.
(m)Security can be put at holders' option on various dates.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997 (UNAUDITED)
Cost Value
-------- --------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $152,547,779 $153,254,693
Cash....................................... 1,671,228
Receivable for shares of Beneficial Interest subscribed 5,983,858
Interest receivable........................ 3,148,512
Receivable for investment securities sold.. 1,065,104
Other assets............................... 13,811
--------
165,137,206
--------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 109,443
Due to Distributor......................... 36,063
Payable for investment securities purchased 7,729,909
Payable for shares of Beneficial Interest redeemed 5,889,965
Bank loan payable-Note 4................... 5,832,000
Interest payable-Note 4.................... 14,337
--------
19,611,717
--------
NET ASSETS.................................................................. $145,525,489
========
REPRESENTED BY: Paid-in capital............................ $144,769,742
Accumulated undistributed investment income-net73,590
Accumulated net realized gain (loss) on investments (24,757)
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 706,914
--------
NET ASSETS.................................................................. $145,525,489
========
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
--------------------------------
Class A Class B Class C Class R
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Assets................................. $22,369,159 $89,185,533 $33,844,950 $125,847
Shares Outstanding......................... 1,768,106 7,050,845 2,674,338 9,961
NET ASSET VALUE PER SHARE.................. $12.65 $12.65 $12.66 $12.63
==== ==== ==== ====
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF OPERATIONS
FROM MAY 30, 1997 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1997
(UNAUDITED)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest................................... $2,254,885
Cash dividends............................. 666
------
Total Income......................... $2,255,551
EXPENSES: Management fee-Note 2(a)................... 159,433
Distribution and service fees-Note 2(b).... 141,762
Interest expense-Note 4.................... 14,337
------
Total Expenses....................... 315,532
------
INVESTMENT INCOME-NET....................................................... 1,940,019
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $ (24,757)
Net unrealized appreciation (depreciation) on investments 706,914
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 682,157
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,622,176
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 30, 1997 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1997
(UNAUDITED)
<S> <C>
OPERATIONS:
Investment income-net....................................................................... $ 1,940,019
Net realized gain (loss) on investments..................................................... (24,757)
Net unrealized appreciation (depreciation) on investments................................... 706,914
-------
Net Increase (Decrease) in Net Assets Resulting from Operations......................... 2,622,176
-------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares............................................................................ (513,346)
Class B shares............................................................................ (949,377)
Class C shares............................................................................ (387,064)
Class R shares............................................................................ (16,642)
-------
Total Dividends......................................................................... (1,866,429)
-------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares............................................................................ 31,316,732
Class B shares............................................................................ 89,444,261
Class C shares............................................................................ 34,486,584
Class R shares............................................................................ 503,000
Dividends reinvested:
Class A shares............................................................................ 331,652
Class B shares............................................................................ 312,402
Class C shares............................................................................ 157,389
Class R shares............................................................................ 16,642
Cost of shares redeemed:
Class A shares............................................................................ (9,443,953)
Class B shares............................................................................ (1,003,911)
Class C shares............................................................................ (951,056)
Class R shares............................................................................ (400,000)
-------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions................. 144,769,742
-------
Total Increase (Decrease) in Net Assets............................................... 145,525,489
NET ASSETS:
Beginning of Period......................................................................... ----
-------
End of Period............................................................................... $145,525,489
=======
Undistributed investment income-net........................................................... $ 73,590
-------
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MAY 30, 1997 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1997
(UNAUDITED)
Shares
------
CAPITAL SHARE TRANSACTIONS:
Class A
----
Shares sold................................................................................. 2,491,531
Shares issued for dividends reinvested...................................................... 26,331
Shares redeemed............................................................................. (749,756)
------
Net Increase (Decrease) in Shares Outstanding............ 1,768,106
======
Class B
----
Shares sold................................................................................. 7,105,575
Shares issued for dividends reinvested...................................................... 24,757
Shares redeemed............................................................................. (79,487)
------
Net Increase (Decrease) in Shares Outstanding............ 7,050,845
======
Class C
----
Shares sold................................................................................. 2,737,112
Shares issued for dividends reinvested...................................................... 12,470
Shares redeemed............................................................................. (75,244)
------
Net Increase (Decrease) in Shares Outstanding............ 2,674,338
======
Class R
----
Shares sold................................................................................. 40,237
Shares issued for dividends reinvested...................................................... 1,320
Shares redeemed............................................................................. (31,596)
------
Net Increase (Decrease) in Shares Outstanding............ 9,961
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
Please refer to pages 4, 5, 6 and 7 of the Prospectus.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-Significant Accounting Policies:
Dreyfus Premier Limited Term High Income Fund (the "Fund") is a series of
The Dreyfus/Laurel Funds Trust (the "Trust") which is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering three
series including the Fund. The Fund's investment objective is to provide high
current income. The Dreyfus Corporation ("Manager") serves as the Fund's
investment manager. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
shares of Beneficial Interest in the following classes of shares: Class A,
Class B, Class C and Class R. 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 and bear a distribution fee, while Class B and Class C shares
are subject to a contingent deferred sales charge ("CDSC") and a distribution
and 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 or service fees. 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 and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses),
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.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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
direction 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. Investments denominated in foreign currencies are translated into U.S.
dollars at the prevailing rates of exchange.
(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) 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, if any, it is the policy of the Fund not to
distribute such gain.
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(d) Federal income taxes: It is the policy of the Fund 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 .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, commitment fees,
Rule 12b-1 distribution fees and expenses, service fees, 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). Each trustee receives $27,000 per year, $1,000
for each Board meeting attended and $750 for each Audit Committee meeting
attended and is reimbursed for travel and out-of-pocket expenses. The
Chairman of the Board receives an additional annual fee of $25,000 per year.
These fees pertain to the following funds: The Dreyfus/Laurel Funds, Inc.,
The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds
Trust. These fees and expenses are allocated to each series based on net
assets. 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 the Manager, are in fact paid directly by the
Manager to the non-interested Trustees.
(b) Distribution and service plan: The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the 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% and
.75% of the value of the average daily net assets of Class B and Class C
shares, respectively. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under 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 distribution or service fee. During the period ended
September 30, 1997, the distribution fee for Class A, Class B and Class C
shares were $13,908, $54,723 and $34,327, respectively. During the period
ended September 30, 1997, the service fee for Class B and Class C shares were
$27,362 and $11,442, 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 Trust and who have no direct
or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
NOTE 3-Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended September 30, 1997,
amounted to $157,162,142 and $8,836,110, respectively.
At September 30, 1997, accumulated net unrealized appreciation on
investments was $706,914, consisting of $1,402,027 gross unrealized
appreciation and $695,113 gross unrealized depreciation.
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
At September 30, 1997, the cost of investments for Federal income tax
purposes was substantially the same as the cost for
financial reporting purposes (see the Statement of Investments).
NOTE 4-Bank Line of Credit:
The Fund may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other
Dreyfus-managed funds in a $100 million unsecured line of credit primarily to
be utilized for temporary or emergency purposes, including the financing of
redemptions. Interest is charged to the Fund at rates which are related to
the Federal Funds rates in effect at the time of borrowings. Outstanding
borrowings under both agreements on September 30, 1997 amounted to $5,832,000.
The average daily amount of borrowings outstanding under both agreements
during the period ended September 30, 1997 was approximately $684,000, with
related weighted average annualized interest rate of 6.17%. The maximum
amount borrowed at any time during the period ended September 30, 1997 was
$6,910,000.
FINANCIAL REPORTS
Dreyfus Premier Limited Term High Income Fund
Statement of Assets and Liabilities May 30, 1997
Value
ASSETS Cash $ 10,500,000
NET ASSETS Represents by paid-in capital $ 10,500,000
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
Net Assets $9,000,000 $500,000 $500,000 $500,000
Shares Outstanding 720,000 40,000 40,000 40,000
NET ASSET VALUE PER SHARE $12.50 $12.50 $12.50 $12.50
NOTES TO FINANCIAL STATEMENTS
Dreyfus Premier Limited Term High Income Fund (the "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's investment objective is to
provide high current income. The Dreyfus Corporation ("Manager")
serves as the Fund's investment manager. The Manager is a direct
subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares. The Fund is authorized to issue
an unlimited number of shares of Beneficial Interest in the
following classes of shares: Class A, Class B, Class C and Class
R. 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 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 or service fees. 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 and service fees and voting rights on matters
affecting a single class.
Independent Auditors' Report
The Board of Trustees and Shareholder
The Dreyfus/Laurel Funds Trust:
We have audited the accompanying statement of assets and
liabilities of Dreyfus Premier Limited Term High Income Fund of The
Dreyfus/Laurel Funds Trust as of May 30, 1997 (in organization).
This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
statement of assets and liabilities is free of material
misstatement. An audit of a statement of assets and liabilities
includes examining, on a test basis, evidence supporting the
amounts and disclosures in that statement of assets and
liabilities. An audit of a statement of assets and liabilities
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audit of the statement of assets and liabilities provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to
above presents fairly, in all material respects, the financial
position of Dreyfus Premier Limited Term High Income Fund of The
Dreyfus/Laurel Funds Trust as of May 30, 1997, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
May 30, 1997
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
To be filed by amendment.
(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.
1(f) Amendment No. 5 to Registrant's Second Amended
and Restated Agreement and Declaration. Incorporated by
reference to Post-Effective Amendment No. 105 filed on
June 2, 1997.
1(g) Amendment No. 6 to Registrant's Second Amended
and Restated Agreement and Declaration. Incorporated by
reference to Post-Effective Amendment No. 105.
2(a) Amended and Restated By-Laws. Incorporated by reference to
Post-Effective Amendment No. 75.
2(b) Amendment No. 1 to Amended and Restated By-Laws. To be
filed by amendment.
3 Not Applicable.
4 Specimen security. Filed herewith.
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) Amended Exhibit A to Investment Management Agreement
between the Registrant and Mellon Bank, N.A. Incorporated
by reference to Post-Effective Amendment No. 102 filed on
April 23, 1997.
5(c) 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.
6(a) 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.
6(b) Amended Exhibit A to Distribution Agreement between the
Registrant and Premier Mutual Fund Services, Inc.
Incorporated by reference to Post-Effective Amendment No.
102.
7 Not Applicable.
8 Custody Agreement between the Registrant and Mellon Bank,
N.A., dated April 4, 1994, as amended November 1, 1995.
Incorporated by reference to Post-Effective Amendment No.
102.
9 Transfer Agency Agreement between the Registrant and
Dreyfus Transfer, Inc., dated November 21, 1995.
Incorporated by reference to Post-Effective Amendment No.
102.
10 Opinion of counsel is incorporated by reference to
the Registration Statement and to Post-Effective Amendment
No. 93 filed on December 13, 1994 and Post Effective
Amendment No. 105. Updating opinion and consent of
counsel to be filed by amendment.
11 Not Applicable.
12 Not Applicable.
13 Not Applicable.
14 Not Applicable.
15(a) Restated Distribution Plan (relating to Investor Shares,
Class A Shares and Institutional Shares). Filed herewith.
15(b) Distribution Plan (relating to Class B Shares and Class C
Shares of Dreyfus Premier Core Value Fund and Dreyfus
Premier Managed Income Fund). Filed herewith.
15(c) Distribution Plan (relating to Class B Shares
and Class C Shares of Dreyfus Premier Limited Term High
Income Fund). Incorporated by reference to Post-Effective
Amendment No. 105.
15(d) Service Plan relating to Class B Shares and
Class C Shares. Filed herewith.
16 Schedule of computation of performance information.
Incorporated by reference to Post-Effective Amendment No.
76.
18 Rule 18f-3 Plans, as revised. Incorporated by reference to
Post-Effective Amendment No. 100. Revised Rule 18f-3 Plans
to be filed by Amendment.
25(a) Powers of Attorney of the Trustees dated July
31, 1996. Filed herewith.
25(b) Power of Attorney of Marie E. Connolly dated September 25,
1997. Filed herewith.
Item 25. Persons Controlled By or Under Common Control with
Registrant
Not Applicable.
Item 26. Number of Holders of Securities
Title of Class Class A Class B Class C Class R
Dreyfus Premier 871 2,890 895 2
Limited Term High
Income Fund
Item 27. Indemnification
Under a provision of the Registrant's Second Amended and Restated
Agreement and Declaration of Trust (the "Declaration of Trust"), any past or
present Trustee or officer of the Registrant is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him/her in connection with any action, suit or proceeding to
which he/she may be a party or otherwise involved by reason of his/her being
or having been a Trustee or officer of the Registrant.
This provision does not authorize indemnification against any
liability to the Registrant or its shareholders to which such Trustee or
officer would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his/her duties. Moreover,
this provision does not authorize indemnification where such Trustee or
officer is finally adjudicated not to have acted in good faith in the
reasonable belief that his/her actions were in or not opposed to the best
interests of the Registrant. Expenses may be paid by the Registrant in
advance of the final disposition of any action, suit or proceeding upon
receipt of an undertaking by such Trustee or officer to repay such expenses
to the Registrant if it is ultimately determined that indemnification of
such expenses is not authorized under the Declaration of Trust.
Item 28. 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:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
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
W. KEITH SMITH Chairman and Chief Executive Officer:
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***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director 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
and a Director Officer:
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:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
World Balanced Fund++++;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
RICHARD F. SYRON Chairman of the Board and
Director Chief Executive Officer:
American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
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 America Fund+++;
World Balanced Fund++++;
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 Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
WILLIAM V. HEALEY President:
Assistant Secretary The Truepenny Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
Secretary and Director:
Dreyfus Partnership Management Inc.*;
Director:
The Dreyfus Trust Company++;
Assistant Secretary:
Dreyfus Service Corporation*;
Dreyfus Investment Advisors, Inc.*;
Assistant Clerk:
Dreyfus Insurance Agency of
Massachusetts, Inc.+++++
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** 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 69, Route `d'Esch, L-
1470 Luxembourg.
++++ The address of the business so indicated is 69, Route `d'Esch, L-
2953 Luxembourg.
+++++ The address of the business so indicated is 53 State Street,
Boston, Massachusetts 02103.
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 Funds, 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 Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
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 MidCap Index Fund
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 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Premier California Municipal Bond Fund
63) Dreyfus Premier Equity Funds, Inc.
64) Dreyfus Premier International Growth Fund, Inc.
65) Dreyfus Premier GNMA Fund
66) Dreyfus Premier Worldwide Growth Fund, Inc.
67) Dreyfus Premier Insured Municipal Bond Fund
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Fund
72) Dreyfus Index Funds, Inc.
73) Dreyfus Short-Intermediate Government Fund
74) Dreyfus Short-Intermediate Municipal Bond Fund
75) The Dreyfus Socially Responsible Growth Fund, Inc.
76) Dreyfus Stock Index Fund, Inc.
77) Dreyfus Tax Exempt Cash Management
78) The Dreyfus Third Century Fund, Inc.
79) Dreyfus Treasury Cash Management
80) Dreyfus Treasury Prime Cash Management
81) Dreyfus Variable Investment Fund
82) Dreyfus Worldwide Dollar Money Market Fund, Inc.
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
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 Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice Vice President
President, Treasurer and and Assistant
Chief Financial Officer Treasurer
Richard W. Ingram Executive Vice President Vice President
and Assistant
Treasurer
Elizabeth A. Keeley++ Vice President Vice President
and Assistant
Secretary
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, 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. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
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.
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment,
using financial statements, which need not be certified, within four to six
months from the effective date of Registrant's 1933 Act Registration
Statement, so long as such filing is required by the Rules promulgated by
the Securities and Exchange Commission at such time.
(c) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon request and
without charge.
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 Secretary 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 December, 1997.
THE DREYFUS/LAUREL FUNDS TRUST
BY: /s/Marie E. Connolly*
______________________________________
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
Signatures Title Date
________________________ ________________________ ______
/s/Marie E. Connolly* President, Treasurer 12/01/97
- ---------------------------
Marie E. Connolly
/s/Francis P. Brennan* Trustee, 12/01/97
- --------------------------- Chairman of the Board
Francis P. Brennan
/s/Ruth Marie Adams* Trustee 12/01/97
- ---------------------------
Ruth Marie Adams
/s/Joseph S. DiMartino* Trustee 12/01/97
- ---------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 12/01/97
- ---------------------------
James M. Fitzgibbons
/s/Kenneth A. Himmel* Trustee 12/01/97
- ---------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 12/01/97
- ---------------------------
Stephen J. Lockwood
/s/Roslyn M. Watson* Trustee 12/01/97
- ---------------------------
Roslyn M. Watson
/s/J. Tomlinson Fort* Trustee 12/01/97
- ---------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 12/01/97
- ---------------------------
Arthur L. Goeschel
/s/Arch S. Jeffery* Trustee 12/01/97
- ---------------------------
Arch S. Jeffery
/s/John Sciullo* Trustee 12/01/97
- ---------------------------
John Sciullo
*By: /s/ Elizabeth Keeley
Elizabeth Keeley,
Attorney-in-Fact
Independent Auditor's Consent
To the Shareholders and Board of Trustees
The Dreyfus/Laurel Funds Trust
We consent to the use of our report dated May 30, 1997 with respect to
Dreyfus Premier Limited Term High Income Fund of The Dreyfus/Laurel Funds
Trust and to the reference to our firm under the heading "Transfer and
Dividend Disbursing Agent, Custodian, Counsel and Independent Auditors" in
the Statement of Additional Information.
KPMG Peat Marwick LLP
New York, New York
November 20, 1997
