File No. 811-524
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 108 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 108 [ 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
Mark N. Jacobs
General Counsel
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 May 1, 1998 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.
----
Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940, Registrant's Rule 24f-2 Notice for fiscal
year ended December 31, 1997 was filed on March 25, 1998.
DREYFUS PREMIER CORE VALUE FUND
Class A, B, C, R and Institutional Shares
DREYFUS PREMIER MANAGED INCOME FUND
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
________________________________________________________
Items in
Part A of Prospectus
Form N-1A Caption Caption
________ _______ __________
1 Cover Page Cover Page
Expense Summary
2 Synopsis Expense Summary
3 Condensed Financial Financial Highlights
Information
4 General Description of Investment Objective and
Registrant Policies; Further Information
About The Fund
5 Management of the Fund Further Information About
The Funds; Management
5(a) Management's Discussion Management's Discussion
of Fund's Performance of Fund's Performance
6 Capital Stock and Cover Page; Investor
Other Securities Line; Distribution; Taxes;
7 Purchase of Securities Expense Summary;
Being Offered Alternative
Purchase Methods; Special
Shareholder Services; How to
invest in The Dreyfus/Laurel
Funds; Distribution and Service
Plans; How to Exchange your
Investment From One Fund to
Another;
8 Redemption or How to Redeem Shares
Repurchase
9 Pending Legal N.A.
Proceedings
DREYFUS PREMIER CORE VALUE FUND
Class A, B, C, R and Institutional Shares
DREYFUS PREMIER MANAGED INCOME FUND
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
________________________________________________________
Items in
Part C of
Form N-1A
_________
22 Calculation of Performance Data
Performance Data
23 Financial Statements Financial Statements
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-15
31 Management Services C-15
32 Undertakings C-15
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PROSPECTUS MAY 1, 1998
DREYFUS PREMIER CORE VALUE FUND
- ----------------------------------------------------------------------------
DREYFUS PREMIER CORE VALUE FUND (THE "FUND"), FORMERLY CALLED DREYFUS
CORE VALUE FUND, IS A SEPARATE, DIVERSIFIED PORTFOLIO OF THE DREYFUS/LAUREL
FUNDS TRUST, AN OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN
AS A MUTUAL FUND. THE FUND SEEKS LONG-TERM GROWTH OF CAPITAL, WITH CURRENT
INCOME AS A SECONDARY OBJECTIVE, PRIMARILY THROUGH EQUITY INVESTMENTS, SUCH
AS COMMON STOCKS AND SECURITIES CONVERTIBLE INTO COMMON STOCK.
BY THIS PROSPECTUS, THE FUND IS OFFERING FOUR CLASSES OF SHARES _
CLASS A, CLASS B, CLASS C AND CLASS R _ WHICH ARE DESCRIBED HEREIN. SEE
"ALTERNATIVE PURCHASE METHODS."
EACH CLASS OF SHARES MAY BE PURCHASED OR REDEEMED 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 MAY 1, 1998, 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................................................. 4
FINANCIAL HIGHLIGHTS............................................ 5
ALTERNATIVE PURCHASE METHODS.................................... 6
DESCRIPTION OF THE FUND......................................... 7
MANAGEMENT OF THE FUND.......................................... 10
HOW TO BUY SHARES............................................... 11
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
[Page 2]
[This Page Intentionally Left Blank]
[Page 3]
<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) 5.75% None None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.................................... .90% .90% .90% .90%
12b-1 Fee(1)...................................... .25% 1.00% 1.00% None
Other Expenses(2) ................................ .00% .00% .00% .00%
_____ _____ _____ _____
Total Fund Operating Expenses..................... 1.15% 1.90% 1.90% .90%
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) except where noted, redemption
at the end of each time period:
1 Year................................... $ 69 $19/$59** $19/$29** $ 9
3 Years.................................. $ 92 $60/$90** $60 $ 29
5 Years.................................. $117 $103/$123** $103 $ 50
10 Years................................. $189 $185*** $222 $111
</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.
*** Assumes conversion of Class B shares to Class A shares approximately six
years after the date of purchase and, therefore, reflects Class A expenses
for years seven through ten.
(1) See "Distribution Plans (Class A Plan and Class B and C Plans)" for a
description of the Fund's Distribution Plans and Service Plan for Class A,
Class B and Class C shares.
(2) Does not include fees and expenses of the non-interested Directors. 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 future expenses and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, the Funds'
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 for Class B and Class C shares are based on applicable amounts for
Class A and Class R shares for the Fund's last 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 Class A, Class B, or Class C shares for various
services provided in connection with a client's account. These fees would be
in addition to any amounts received by an Agent under its Selling Agreement
("Agreement") with the Distributor. The Agreement requires each Agent to
disclose to its clients any compensation payable to such Agent by the
Distributor and any other compensation payable by the clients for various
services provided in connection with their accounts.
[Page 4]
Financial Highlights
The tables below are based upon a single Class A or Class R share
outstanding throughout each fiscal year or period and should be read in
conjunction with the financial statements, related notes and report of
independent auditors that appear in the Fund's Annual Report dated December
31, 1997 and that are incorporated by reference in the SAI. The financial
statements included in the Fund's Annual Report for the year ended December
31, 1997 have been audited by KPMG Peat Marwick LLP, independent auditors.
Further information about, and management's discussion of, the Fund's
performance is contained in the Fund's Annual Report, which may be obtained
without charge by writing to the address or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS PREMIER CORE VALUE FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.(1)
Year Year Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
PER SHARE DATA: 12/31/97 12/31/96 12/31/95 12/31/94### 12/31/93## 12/31/92 12/31/91 12/31/90## 12/31/89 12/31/88
________ ________ ________ _________ _______ ________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period. $30.40 $30.13 $24.56 $27.80 $25.46 $27.40 $23.20 $27.49 $28.65 $26.07
________ ________ ________ ________ _______ _______ _______ _______ ______ ______
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. 0.22 0.31 0.41 0.42 0.31 0.36 0.39 0.55 0.87 0.54
Net realized and
unrealized gain
(loss) on investments 6.98 6.03 8.24 (0.29) 3.86 0.70 4.88 (4.23) 6.12 4.51
________ ________ ________ ________ _______ _______ _______ _______ ______ ______
Total from investment
operations.......... 7.20 6.34 8.65 0.13 4.17 1.06 5.27 (3.68) 6.99 5.05
________ ________ ________ ________ _______ _______ _______ _______ ______ ______
DISTRIBUTIONS:
Dividends from net
investment income... (0.24) (0.30) (0.45) (0.40) (0.30) (0.36) (0.50) (0.55) (0.55) (0.59)
Distributions from
net realized
gain on investments (7.25) (5.77) (2.63) (2.97) (1.53) (2.64) (0.57) (0.06) (7.60) (1.88)
________ ________ ________ ________ _______ _______ _______ _______ ______ ______
Total Distributions... (7.49) (6.07) (3.08) (3.37) (1.83) (3.00) (1.07) (0.61) (8.15) (2.47)
________ ________ ________ ________ _______ _______ _______ _______ ______ ______
Net asset value,
end of period $30.11 $30.40 $30.13 $24.56 $27.80 $25.46 $27.40 $23.20 $27.49 $28.65
======== ====== ====== ====== ====== ====== ======= ======= ======= ======
TOTAL RETURN.......... 25.21% 21.44% 35.56% 0.38% 16.51% 4.03% 22.87% (13.44)% 24.96% 19.54%
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's).......... $585,624 $486,816 $401,674 $317,868 $349,813 $423,286 $508,971 $474,998 $640,116 $542,510
Ratio of expenses to average
net assets.......... 1.14% 1.13% 1.13% 1.11% 1.15% 1.22% 1.20% 1.26% 1.23% 1.31%
Ratio of net
investment income
to average net assets 0.64% 0.96% 1.43% 1.47% 1.13% 1.33% 1.61% 1.96% 2.75% 2.14%
Decrease reflected in
above expense
ratios due to
undertakings
by Dreyfus.......... 0.01% 0.02% 0.02% 0.01% 0.01% -- -- -- -- --
Portfolio turnover rate 92.99% 88.46% 54.42% 73% 75% 66% 157% 180% 111% 24%
Average commission
rate paid* $0.0478 $0.0522 -- -- -- -- -- -- -- --
</TABLE>
(1) On February 1, 1993, the Fund began offering Institutional Class shares.
Shares outstanding prior to February 1, 1993 were
redesignated as Retail Class shares. Effective April 4, 1994, the Retail
shares were redesignated as Investor shares. Effective January 16, 1998,
Investor shares were redesignated Class A shares.
Total return represents aggregate total return for the periods indicated.
# Without the voluntary waiver of fees and/or reimbursement of expenses
by the investment adviser and/or investment manager,
net investment income for the years ended December 31, 1994 and 1993 would
have been $0.42 and $0.31, respectively.
## Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share
data for this year because the use of the undistributed method did not accord
with results of operations.
### Prior to April 4, 1994,The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through
October 16, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's investment
manager.
* For fiscal years beginning January 1, 1996, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
[Page 5]
<TABLE>
<CAPTION>
DREYFUS PREMIER CORE VALUE FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- -------------
PER SHARE DATA: 1997 1996 1995 1994*#
_____ _____ _____ _______
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................................... $30.46 $30.18 $24.56 $28.45
_____ _____ _____ _______
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................... 0.33 0.36 0.62 0.29
Net realized and unrealized gain (loss)
on investments....................................................... 6.90 6.08 8.16 (0.83)
_____ _____ _____ _______
Total from investment operations........................................ 7.23 6.44 8.78 (0.54)
DISTRIBUTIONS:
Dividends from net investment income.................................... (0.33) (0.39) (0.53) (0.38)
Distributions from net realized gain on
investments........................................................... (7.25) (5.77) (2.63) (2.97)
_____ _____ _____ _______
Total Distributions..................................................... (7.58) (6.16) (3.16) (3.35)
_____ _____ _____ _______
Net asset value, end of period.......................................... $30.11 $30.46 $30.18 $24.56
====== ======= ====== =======
TOTAL RETURN............................................................ 24.54% 21.74% 36.05% (2.31)%**
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets, end of period (in 000's).................................... $867 $11,618 $185 $1,070
Ratio of expenses to average net assets................................. 0.89% 0.88%(5) 0.88% 0.35%**
Ratio of net investment income to average
net assets............................................................ 0.89% 1.23% 1.93% 0.70%**
Decrease reflected in above expense
ratios due to undertakings by Dreyfus................................. 0.01% 0.02% 0.02% 0.01%**
Portfolio turnover rate................................................. 92.99% 88.46% 54.42% 73.00%
Average commission rate paid***......................................... $.0478 $.0522 __ __
</TABLE>
* On August 4, 1994, the Fund commenced selling Trust shares.
Effective October 17, 1994, the Trust shares were redesignated
as Class R shares. Effective August 15, 1997, Class R shares were
redesignated as Restricted shares. Effective January 16, 1998, Restricted
shares were redesignated as Class R shares.
** Not annualized.
*** For fiscal years beginning January 1, 1996, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
Total return represents aggregate total return for the periods
indicated.
# From April 4, 1994 through October 16, 1994, Mellon Bank served as the
Fund's investment manager. Effective October 17, 1994, Dreyfus began serving
as the Fund's investment manager.
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. All Fund shares are sold on
a continuous basis.
Class A, Class B and Class C shares are sold primarily to clients of
Agents that have entered into Agreements with the Distributor. Class A shares
of the Fund were formerly called Investor shares.
Class A shares are sold at net asset value per share plus a maximum
initial sales charge of 5.75% 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 _
[Page 6]
Contingent Deferred Sales Charge _ Class B 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 B. See "Distribution Plans - Distribution 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 togeth
er with other Class B shares, in the proportion that a shareholder's Class B
shares converting to Class A shares bears to the total Class B shares not
acquired through the reinvestment of dividends and other distributions.
Class C shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class C shares are subject to a 1% CDSC,
which is assessed only if you redeem Class C shares within one year of 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 primarily to bank trust departments and other financial
service providers (including Mellon Bank and its affiliates) ("Banks") acting
on behalf of customers having a qualified trust or investment account or
relationship at such institution, or to customers who have received and hold
shares of the Fund distributed to them by virtue of such an account or
relationship. Class R shares of the Fund were formerly called Restricted
shares.
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 fees, service fees and CDSC, if any, on Class B
or Class C shares would be less than the accumulated distribution fees 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 on Class
A shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution and service fees on Class B or Class C shares may
exceed the accumulated distribution fees 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 ser
vice 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.
In addition to Class A, Class B, Class C and Class R shares, the Fund
offers Institutional shares to those shareholders who have held shares of a
predecessor class of the Fund since April 4, 1994. Institutional shares are
offered (only to existing shareholders of that class) through a separate
prospectus, a copy of which is available free of charge by calling
1-800-645-6561. Institutional shares are subject to different expenses, which
may cause their performance to differ from that of the Fund's other classes.
Description of the Fund
Investment Objective
The Fund is a diversified fund that seeks long-term growth of
capital, with current income as a secondary objective, primarily through
equity investments, such as common stocks and securities convertible into
common stocks.
Management Policies
Securities are selected for the Fund based on a quantitative and
qualitative study of trends in industries and companies, earning power,
growth features and other investment criteria. Major emphasis is placed on
industries and issuers that are considered by Dreyfus to have characteristics
that reflect attractive valuations as compared to the stock market as a
whole, such as a low price to earnings ratio, a low ratio of market price to
book value and better
[Page 7]
than average cash flows. Dreyfus also focuses on other "value"
oriented investment criteria. In general, the Fund's investments are broadly
diversified over a number of industries and, as a matter of operating policy,
the Fund will not invest more than 25% of its total assets in any one
industry.
Up to 20% of the Fund's total assets may be invested in foreign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in fixed
income securities of companies that are close to entering, or already in,
reorganization proceedings. These obligations will likely be rated below the
four highest ratings of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Rating Service, a division of McGraw-Hill Companies, Inc.
("S&P"). See "Certain Portfolio Securities_Low-Rated and Comparable Unrated
Securities." In addition, the Fund may write covered put and call options on
its portfolio securities, and purchase and write put and call options on
stock indexes. The Fund may also lend its portfolio securities. These
techniques are discussed below under "Investment Techniques."
The Fund may reduce the proportion of its investments in equity
securities and temporarily invest its assets in fixed-income securities and
in U.S. Government Securities and other high-grade, short-term money market
instruments, including repurchase agreements with respect to such
instruments, when, in the opinion of Dreyfus, a defensive posture is
warranted. To this extent, the Fund may not achieve its investment objective.
Investment Techniques
In connection with its investment objectives and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. From time to time, the Fund may lend portfolio
securities to brokers, dealers and other financial organizations. Such loans
will not exceed 331\3% of the Fund's total assets, taken at value. Loans of
portfolio securities by the Fund will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities.
COVERED OPTION WRITING. From time to time, the Fund may write covered
put and call options on portfolio securities and may purchase put and call
options on securities. The Fund could realize fees (referred to as
"premiums") for granting the rights evidenced by the options. However, in
return for the premium, the Fund forfeits the right to any appreciation in
the value of the underlying security while the option is outstanding. A put
option embodies the right of its purchaser to compel the writer of the option
to purchase from the option holder an underlying security at the specified
price at any time during the option period. In contrast, a call option
embodies the right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified price at any
time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may
suffer a loss equal to the difference between the price at which the Fund is
required to purchase the underlying security and its market value at the time
of the option exercise, less the premium received for writing the option.
Upon the exercise of a call option written by the Fund, the Fund may suffer a
loss equal to the excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or to
have the present right to acquire the underlying security for as long as it
remains obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account, cash,
U.S. Government Securities or other high grade debt obligations having a
value at least equal to the exercise price of the underlying securities or
(b) continue to own the equivalent number of puts of the same "series" (that
is, puts on the same underlying security having the same exercise prices and
expiration dates as those written by the Fund), or an equivalent number of
puts of the same "class" (that is, puts on the same underlying security) with
exercise prices greater than those it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
The Fund may engage in a closing purchase transaction to realize a
profit or limit a loss, to prevent an underlying security from being called
or put or, in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the security
prior to the outstanding option's expiration). To effect a closing purchase
transaction, the Fund would purchase, prior to the holder's exercise of an
option that the Fund has written, an option of the same series as that on
which the Fund desires to terminate its obligation. The obligation of the
Fund under an option that it has written would be terminated by a closing
purchase transaction, but the Fund would not be deemed to own an option as a
result of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to do
so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists on
a national securities exchange or in the over-the-counter market.
[Page 8]
Certain Portfolio Securities
FOREIGN SECURITIES. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the return on
such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but that can
be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Trustees or by Dreyfus pursuant to guidelines established by the Board of
Trustees. The Board or Dreyfus will consider availability of reliable price
information and other relevant information in making such determinations.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors, such as
the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be
pursuant to registration or an exemption therefrom. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities from the Fund
or other holders.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-rated
securities") will likely have some quality and protective characteristics
that, in the judgment of the rating organization, are outweighed by large unce
rtainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay
interest and to repay principal in accordance with the terms of the
obligation. While the market values of low-rated securities tend to react
less to fluctuations in interest rate levels than the market values of
higher-rated securities, the market values of certain low-rated securities
tend to be more sensitive to individual corporate developments and changes in
economic conditions than higher-rated securities. In addition, low-rated
securities generally present a higher degree of credit risk. Issuers of
low-rated securities are often highly leveraged and may not have more
traditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss
due to default by such issuers is significantly greater because low-rated
securities are generally unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional expenses
to the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence of
limited markets for low-rated securities may diminish the Fund's ability to
obtain accurate market quotations for purposes of valuing such securities and
calculating its net asset value. Further information regarding security
ratings is contained in the SAI.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed
put and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") and the New York Stock Exchange
[Page 9]
Composite Index.) Options on stock indexes are similar to options on
securities. However, because options on stock indexes do not involve the
delivery of an underlying security, the option represents the holder's right
to obtain from the writer in cash a fixed multiple of the amount by which the
exercise price exceeds (in the case of a put) or is less than (in the case of
a call) the closing value of the underlying index on the exercise date.
The advisability of using stock index options to hedge against the
risk of market-wide movements will depend on the extent of diversification of
the Fund's stock instruments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed above.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objectives and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders of the other investment company, its pro rata portion of
the other investment company's expenses, including advisory fees. These
expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for long-term growth of capital and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio
turnover rate of 100% would occur, for example, if all the securities held by
the Fund were replaced once in a period of one year. A higher rate of
portfolio turnover involves correspondingly greater brokerage commissions and
other expenses that must be borne directly by the Fund and, thus, indirectly
by its shareholders. In addition, a high rate of portfolio turnover may
result in the realization of larger amounts of short-term capital gains that,
when distributed to the Fund's shareholders; are taxable to them as ordinary
income. Nevertheless, securities transactions for the Fund will be based only
upon investment considerations and will not be limited by any other
considerations when Dreyfus deems it appropriate to make changes in the
Fund's assets.
Risk Factors
As with any equity fund, the value of your investment in the Fund may
fluctuate in response to movements in the stock market as a whole. In
addition, the ability of the Fund to invest in foreign securities, illiquid
securities and low-rated and unrated debt securities, and to purchase and
sell certain instruments (including writing certain options), may increase
the Fund's investment risks and opportunities. See "Certain Portfolio
Securities" and "Investment Techniques-Covered Option Writing" above and
"Investment Objectives and Management Policies" in the SAI.
Year 2000 Risks. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by Dreyfus and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." Dreyfus is taking steps to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain assurances that
comparable steps are being taken by the Fund's other major service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund.
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 objectives, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objectives, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
Management of the Fund
INVESTMENT MANAGER _ Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1998, Dreyfus managed or administered
approximately $100 billion in assets for approximately 1.7 million investor
accounts nationwide.
[Page 10]
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 objectives, policies and restrictions.
The Fund is managed by a committee of portfolio managers of Dreyfus
and no person is primarily responsible for making recommendations to the
committee. This committee also comprises the Equity Policy Group of The
Boston Company Asset Management, Inc. which is an indirect wholly-owned
subsidiary of Mellon.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the 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 $305 billion in
assets as of December 31, 1997, including approximately $104 billion in
proprietary mutual fund assets. As of December 31, 1997, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $1.532 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 .90 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 return to investors. For the fiscal year
ended December 31, 1997, the Fund paid Dreyfus 0.89% of its average daily net
assets in investment management fees, less fees and expenses of the
non-interested Trustees (including counsel fees) (net of fees waived).
For the fiscal year ended December 31, 1997, total operating expenses
(excluding Rule 12b-1 fees) (net of fees waived) of the Fund were 0.89% of
the average daily net assets of each of Class A and Class R shares. Class B
and Class C shares had not commenced operations as of December 31, 1997.
In addition, Class A, Class B and Class 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 commissions are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objectives, polices
and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.,
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
[Page 11]
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. In addition, holders of Investor shares of
the Fund as of January 15, 1998 may continue to purchase Class A shares of
the Fund at net asset value per share. Subsequent purchases may be sent
directly to the Transfer Agent or your Agent.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. In
addition, holders of Restricted shares of the Fund as of January 15, 1998 may
continue to purchase Class R shares of the Fund whether or not they would
otherwise be eligible to do so. Class R shares may be purchased for a
retirement plan only by a custodian, trustee, investment manager or other
entity authorized to act on behalf of such a plan. Institutions effecting
transactions in Class R shares for the accounts of their clients may charge
their clients direct fees in connection with such transactions.
When purchasing Fund shares, you must specify which Class is being
purchased. 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. The minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7)
Plans with only one participant and $500 for Dreyfus-sponsored Education
IRAs, with no minimum on subsequent purchases. 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 ("Code") imposes
various limitations on the amount that may be contributed annually to certain
qualified or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and certain other deferred compensation
plans, whether established by corporations, partnerships, non-profit entities
or state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
You may purchase Fund shares by check or wire, or through the
TeleTransfer Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments which are mailed should be sent
to Dreyfus Premier Core Value 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 #044210/Dreyfus Premier Core Value 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 identification 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 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.
[Page 12]
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark, Dreyfus Payroll Savings Plan 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 "4010" for Class A
shares, "4720" for Class B shares, "4730" for Class C shares, and "4440" for
Class R shares.
The Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Premier Family of Funds or 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"). Shares of funds in the Dreyfus Premier
Family of Funds or the Dreyfus Family of Funds then held by Eligible Benefit
Plans will be aggregated to determine the fee payable. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE PER SHARE ("NAV") _ An investment portfolio's NAV refers to
the worth of one share. The NAV for shares of each Class of the Fund is
computed by dividing the value of the net assets attributable to each Class
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 as of the close of trading on the floor of the New
York Stock Exchange ("NYSE") (normally 4:00 p.m., New York time) on each day
that the NYSE is open for business. Orders received in proper form by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund before the close of trading on the floor of the NYSE are effective on,
and will receive the price determined on, that day. Orders received after
such close of trading are effective on, and receive the share price
determined on, the next business day.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the NYSE on 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 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
cancelled 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, except for shareholders beneficially owning Investor shares
of the Fund on January 15, 1998, a sales load as shown below:
[Page 13]
<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...................................... 5.75 6.10 5.00
$50,000 to less than $100,000.......................... 4.50 4.70 3.75
$100,000 to less than $250,000......................... 3.50 3.60 2.75
$250,000 to less than $500,000......................... 2.50 2.60 2.25
$500,000 to less than $1,000,000....................... 2.00 2.00 1.75
$1,000,000 or more..................................... -0- -0- -0-
</TABLE>
Holders of Investor shares of the Fund as of January 15, 1998 may
continue to purchase Class A shares of the Fund at NAV.
However, investments by such holders in OTHER funds advised by Dreyfus will
be subject to any applicable front-end sales load.
Omnibus accounts will be eligible to purchase Class A shares without a
front-end sales load only on behalf of their customers who held Investor
shares of the Fund through such omnibus account on January 15, 1998.
There is no initial sale 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 of purchase, a CDSC of 1.00%
will be assessed 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 are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified
retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at the
time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible
Benefit Plan and all or a portion of such plan's assets were invested in
funds in the Dreyfus Premier Family of Funds or 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 described 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 669 of the Code).
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its own expense, may
provide additional promotional incentives to dealers that sell shares of
funds
[Page 14]
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. Dealers
receive a larger percentage of the sales load from the Distributor than they
receive for selling most other funds.
CLASS B SHARES _ The public offering price for Class B shares is the NAV of
that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares as
described under "How to Redeem 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 shares 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 shares of
an Eligible Fund having a current value of $20,000, the sales load applicable
to the subsequent purchase would be reduced to 4.50% of the offering price.
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 that 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 TEL
ETRANSFER 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
You 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 (as described
under "Dividend Options") 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
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-554-4611.
[Page 15]
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
previously 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, Wire Redemption Privilege, Telephone 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 other distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your Agent must
notify the Distributor. Any such qualification is subject to confirmation of
your holdings through a check of appropriate records. See "Shareholder
Services" in the SAI. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee in
accordance with 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 that 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 Core Value Fund, P.O. Box 6587, Providence,
Rhode Island 02940-6587. The Fund may charge a service fee for the use of
this Privilege. No such fee currently is contemplated. The exchange of shares
of one fund for shares of another is treated for Federal income tax purposes
as a sale of the shares given in exchange by the shareholder, and therefore,
an exchanging shareholder may realize, or an exchange on behalf of a
retirement plan that is not tax exempt may result in, a taxable gain or loss.
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.
[Page 16]
Dreyfus-AUTOMATIC Asset BuilderRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. 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 Core Value Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Dividend Options
Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares
of the same Class of another fund in the 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 Core
Value Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a
new fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dividend Sweep. The Fund may modify or terminate
these privileges at any time or charge a service fee. No such fee currently
is contemplated. Shares held under Keogh Plans, IRAs or other retirement
plans are not eligible for Dividend Sweep.
Government Direct Deposit Privilege
Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. You should
consider whether Direct Deposit of your entire payment into a fund with
fluctuating NAV, such as the Fund, may be appropriate for you. To enroll in
Government Direct 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.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-554-4611. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, your Agent, Dreyfus, the Fund, the Transfer Agent or any other
person, to arrange for transactions under the Dreyfus Payroll Savings Plan.
The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated. Shares held under Keogh
Plans, IRAs or other retirement plans are not eligible for this Privilege.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. 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.
[Page 17]
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 the shareholder, 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.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non
working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs),
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, available 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 o
f 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 by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, 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 BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A
WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION
[Page 18]
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF
YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER
ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE
FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT
TO THE TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER
PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME
ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if 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 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.
For purposes of determining the applicable CDSC payable with respect
to redemption of Class B shares of the Fund where such shares were acquired
through exchange of Class B shares of another fund advised by Dreyfus, the
year since purchase payment was made is based on the date of purchase of the
original Class B shares of the fund exchanged.
CONTINGENT DEFERRED SALES CHARGE _ CLASS C SHARES. A CDSC of 1% 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.
[Page 19]
WAIVER OF CDSC _ The CDSC applicable to Class B and Class C shares (and to
certain Class A shares), will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) distributions following retirement under a 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 Telephone Redemption Privilege,
which is granted automatically unless you specifically refuse it by checking
the applicable "No" box on the Account Application. The Telephone Redemption
Privilege may be established for an existing account by a separate signed
Shareholder Services Form or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611. You also may redeem
shares through the Wire Redemption Privilege or the TeleTransfer Privilege if
you have checked the appropriate box and supplied the necessary information
on the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. If you are a client of a Selected Dealer, you may redeem Fund
shares through the Selected Dealer. Other redemption procedures may be in
effect for clients of certain Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or terminate any redemption
privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated. Shares held under Keogh Plans, IRAs, or
other retirement plans, and shares for which certificates have been issued,
are not eligible for the Wire Redemption, Telephone Redemption or TeleTransfer
Privilege.
The Telephone Redemption Privilege or telephone exchange privilege
authorizes the Transfer Agent to act on telephone instructions (including
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 TeleTransfer 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
TeleTransfer 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 Core Value 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, nationa
l 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.
WIRE REDEMPTION PRIVILEGE _ You may request by wire, telephone or letter
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired within any
30-day period. You may telephone redemption requests by calling 1-800-554-4611
or, if calling from overseas, 516-794-5452. The Fund's SAI sets forth
instructions for transmitting redemption requests by wire.
[Page 20]
TELEPHONE REDEMPTION PRIVILEGE _ You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-554-4611 or, if calling from overseas, 516-794-5452. The Telephone
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 so designated. Redemption proceeds
will be on deposit in your account at an ACH member bank ordinarily two days
after receipt of the redemption request. Holders of jointly registered Fund
or bank accounts may redeem through the TELETRANSFER Privilege for transfer
to their bank account only up to $250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of shares by calling 1-800-554-4611 or, if calling
from overseas, 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 Fund Exchanges. 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 rein
vested. The Reinvestment Privilege may be exercised only once.
Additional Information About Purchases, Exchanges and Redemptions
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
permanently terminate the availability of Fund Exchanges, or reject in whole
or part any purchase or exchange request, with respect to such investor's
account.
Such investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of 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 objectives
and policies or could otherwise be adversely affected or if the Fund receives
or anticipates receiving simultaneous orders that may significantly affect
the Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If
an exchange request is refused, the Fund will take no other action with
respect to the shares until it receives further instructions from the
investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if
the amount of the redemption request otherwise would be disruptive to
efficient portfolio management or would adversely affect the Fund. The Fund's
policy on excessive trading applies to investors who invest in the Fund
directly or through financial intermediaries, but does not apply to the
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to non-IRA retirement plan accounts.
[Page 21]
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 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.
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 Class C shares are
subject to a Distribution Plan and a Service Plan, each adopted pursuant to
Rule 12b-1. 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. Potential investors should read this
Prospectus in light of the terms governing Agreements with their Agents. The
fees payable under the Distribution and Service Plans are payable without
regard to actual expenses incurred. The Fund and the Distributor may suspend
or reduce payments under the Distribution and Service Plans 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 voluntarily agree to reduce the maximum fees payable under
the Plans. See the SAI for more details on the Distribution and Service
Plans.
DISTRIBUTION PLAN _ CLASS A SHARES _ 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.
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 .75 of 1% of the value of the average daily net
assets of Class B and Class C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for the
provision of certain services to the holders of Class B and 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 Class C shares. The Distributor may pay one or more Agents for
services with respect to these Classes of 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.
Dividends, Other Distributions and Taxes
The Fund declares and pays dividends from its net investment income,
if any, four times yearly, and distributes its net realized capital gains, if
any, once a year, but it may make distributions on a more frequent basis to
comply with the distribution requirements of the Code, in all events in a
manner consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends and other distributions paid by each Class are calculated at the
same time and in the same manner and will be in the same amount, except that
the expenses attributable solely to a particular Class of shares are borne
exclusively by that Class. Class B and Class C shares will receive lower per
share dividends than Class A shares, which will in turn receive lower per
share dividends than Class R shares, because of the higher expenses borne by
the relevant Classes. See "Expense Summary."
Investors other than qualified retirement plans may choose whether to
receive dividends and other distributions in cash, to receive dividends in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
as a "regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders. Such
qualification will relieve the
[Page 22]
Fund of any liability for Federal income tax to the extent its
earnings and realized gains are distributed to its shareholders in accordance
with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds (collectively, "dividend distributions"), paid by the Fund are
taxable to U.S. shareholders, including certain non-qualified retirement
plans, as ordinary income to the extent of the Fund's earnings and profits,
whether received in cash or reinvested in additional Fund shares. Distribution
s from net capital gain (the excess of net long-term capital gain over net
short-term capital loss) will be taxable to such shareholders as long-term
capital gains regardless of how long the shareholders have held their Fund
shares and whether such distributions are received in cash or reinvested in
additional Fund shares. Dividends and other distributions also may be subject
to state and local taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the 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.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account that will include information as to dividends and distributions
from net capital gain, if any, paid during the year. The annual tax notice
and periodic account summaries you receive designate the portions of capital
gain distributions that are subject to (1) the 20% maximum rate of tax (10%
for investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief
Act of 1997 ("Tax Act"), which applies to non-corporate taxpayers' net
capital gain on securities and other capital assets held for more than 18
months, and (2) the 28% maximum tax rate, applicable to such gain on capital
assets held for more than one year and up to 18 months (which, prior to
enactment of the Tax Act, applied to all such gain on capital assets held for
more than one year).
The Code provides for the "carryover" of some or all of the sales
load imposed on Class A shares if (1) a shareholder redeems those shares or
exchanges those shares for shares of another fund advised or administered by
Dreyfus within 90 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 these cases, the amount of the sales load charged on the purchase of 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 shares acquired 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 will be subject to a
20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized,
paid to an individual or certain other non-corporate shareholders if such
shareholder fails to certify that the TIN furnished to the Fund is correct.
Backup withholding at that rate also is required from dividends and capital
gain distributions payable to such a shareholder if (1) that shareholder
fails to certify that he or she has not received notice from the IRS of being
subject to backup withholding as a result of a failure properly to report
taxable dividend or interest income on a Federal income tax return or (2) the
IRS notifies the Fund to institute backup withholding because the IRS
determines that the shareholder's TIN is incorrect or that the shareholder
has failed properly to report such income.
[Page 23]
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 may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
Performance Information
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of 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 Class 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.
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.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the maximum public offering price per share of such Class on the last day of
that period. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Class of shares with bank deposits, savings
accounts, and similar investment alternatives which often provides an
agreed-upon or guaranteed fixed yield for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. 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.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, the Russell 1000, S&P 500, the Consumer Price Index, the Dow Jones
Industrial Average, Lehman Brothers indexes, and CDA Technologies indexes.
Performance rankings as reported in CHANGING TIMES, BUSINESS WEEK,
INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL, IBC/DONOGHUE'S MONEY FUND
REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR
MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE, BARRON'S and
similar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its shares' total returns and yields in
advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total return for periods
other than those required to be shown or cumulative performance data. The
Fund may advertise a quotation of yield or other similar quotation
demonstrating the income earned or distributions made by the Fund.
General Information
The Company was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel
[Page 24]
Funds Trust, and then changed its name to The Dreyfus/Laurel Funds
Trust on October 17, 1994. The Company is registered with the SEC under the
1940 Act, as a management investment company. The Company's Agreement and
Declaration of Trust permits the Board of Trustees to create an unlimited
number of investment portfolios (each a "fund") without shareholder approval.
The Fund's shares are classified into five Classes_Class A, Class B, Class C,
Class R, and Institutional shares. The Company may in the future seek to
achieve the Fund's investment objectives by investing all of the Fund's net
investable assets in another investment company having the same investment
objectives 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 shareholders of the
affected fund or Class are entitled to vote, each as a separate class. Only
holders of shares of a class to which a matter pertaining to a Distribution
and/or Service Plan relates will be entitled to vote on matters submitted to
shareholders relating to such matter.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Trustee from office and
for any other purpose. Company shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Company's outstanding voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and 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.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
[Page 25]
[Application p1 here]
[Page 26]
[Application p2 here]
[Page 27]
Copy Rights 1998 Dreyfus Service Corporation 312/712p0598
[Page 28]
- -----------------------------------------------------------------------------
PROSPECTUS MAY 1, 1998
DREYFUS PREMIER CORE VALUE FUND
- -----------------------------------------------------------------------------
DREYFUS PREMIER CORE VALUE FUND (THE "FUND"), FORMERLY CALLED DREYFUS
CORE VALUE FUND, IS A SEPARATE, DIVERSIFIED PORTFOLIO OF THE DREYFUS/LAUREL
FUNDS TRUST, AN OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN
AS A MUTUAL FUND. THE FUND SEEKS LONG-TERM GROWTH OF CAPITAL, WITH CURRENT
INCOME AS A SECONDARY OBJECTIVE, PRIMARILY THROUGH EQUITY INVESTMENTS, SUCH
AS COMMON STOCKS AND SECURITIES CONVERTIBLE INTO COMMON STOCK.
BY THIS PROSPECTUS, THE FUND IS OFFERING INSTITUTIONAL SHARES.
INSTITUTIONAL SHARES ARE SOLD WITHOUT A SALES LOAD. INSTITUTIONAL
SHARES ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
SHARES OF THE FUND MAY BE PURCHASED OR REDEEMED BY TELEPHONE USING
THE DREYFUS TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read carefully before you
invest and retained for future reference.
THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1998, 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 1-800-654-6561.
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
Description of the Fund............................................... 5
Management of the Fund................................................ 8
How to Buy Shares..................................................... 9
Shareholder Services.................................................. 10
How to Redeem Shares.................................................. 12
Additional Information About Purchases, Exchanges
and Redemptions .................................................. 14
Distribution Plan..................................................... 14
Dividends, Other Distributions and Taxes.............................. 15
Performance Information............................................... 16
General Information................................................... 17
[Page 2]
<TABLE>
<CAPTION>
Expense Summary
SHAREHOLDER TRANSACTION EXPENSES INSTITUTIONAL SHARES
____________________
<S> <C>
Maximum Sales Load Imposed on Purchases................................ None
Maximum Sales Load Imposed on Reinvestments............................ None
Deferred Sales Load.................................................... None
Redemption Fee......................................................... None
Exchange Fee .......................................................... None
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee......................................................... 0.90%
12b-1 Fee (1).......................................................... 0.15%
Other Expenses (2)..................................................... 0.00%
_______
Total Fund Operating Expenses.......................................... 1.05%
EXAMPLE:
You would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
1 Year............................................................ $ 11
3 Years .......................................................... $ 33
5 Years .......................................................... $ 58
10 Years.......................................................... $128
</TABLE>
(1) See "Distribution Plan" for a description of the Fund's Distribution
Plan for the Institutional shares.
(2) Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is
contractually required to reduce its management fee in an amount equal to the
Fund's allocable portion of such fees and expenses, which are estimated to be
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 future expenses and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, the Funds'
actual performance will vary and may result in an actual return greater or
less than 5%.
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Long-term investors in Institutional shares could pay more in 12b-1
fees than the economic equivalent of paying the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. The information in the foregoing
table does not reflect any fee waivers or expense reimbursements that may be
in effect. Certain banks, securities dealers and brokers 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 Plan"
The Company understands that Agents may charge fees to their clients
who are owners of Fund 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
The table below is based upon a single Institutional share
outstanding throughout each fiscal year or period and should be read in
conjunction with the financial statements, related notes and report of
independent auditors that appear in the Fund's Annual Report dated December
31, 1997 and that are incorporated by reference in the SAI. The financial
statements included in the Fund's Annual Report for the year ended December
31, 1997 have been audited by KPMG Peat Marwick LLP, independent auditors.
Further information about, and management's discussion of, the Fund's
performance is contained in the Fund's Annual Report, which may be obtained
without charge by writing to the address or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS PREMIER CORE VALUE FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
Year Year Year Year Period
Ended Ended Ended Ended Ended
12/31/97 12/31/96 12/31/95 12/31/94# 12/31/93
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value, beginning of period................ $30.38 $30.12 $24.56 $27.80 $25.96
------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... 0.26 0.36 0.47 0.47 0.32
Net realized and unrealized gain
(loss) on investments......................... 6.98 6.01 8.20 (0.31) 3.38
------- ------- ------- ------- -------
Total from investment operations................ 7.24 6.37 8.67 0.16 3.70
------- ------- ------- ------- -------
Less distributions:
Distributions from investment
income........................................ (0.27) (0.34) (0.48) (0.43) (0.33)
Distributions from net realized
gain on investments........................... (7.25) (5.77) (2.63) (2.97) (1.53)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS............................. (7.52) (6.11) (3.11) (3.40) (1.86)
------- ------- ------- ------- -------
Net asset value, end of period...................... $30.10 $30.38 $30.12 $24.56 $27.80
======= ======= ======= ======= ========
Total return........................................ 25.34% 21.57% 35.60% 0.49% 14.38%**
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............ $80,427 $71,894 $75,607 $59,435 $79,656
Ratio of expenses to
average net assets............................ 1.03% 1.03% 1.03% 1.02% 0.95%**
Ratio of net investment income to
average net assets............................ 0.74% 1.07% 1.53% 1.57% 1.13%**
Decrease reflected in above expense ratios due to
undertakings by Dreyfus......................... 0.01% 0.02% 0.02% 0.01% __
Portfolio turnover rate............................. 92.99% 88.46% 54.42% 73.00% 75.00%
Average commission rate paid##...................... $.0478 $.0522 __ __ __
</TABLE>
* The Fund commenced selling Institutional shares on February 1, 1993.
** Not Annualized
Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per
share data for this year because the use of the undistributed method did not
accord with results of operations.
# Prior to April 4, 1994, the Boston Company Advisors, Inc. served as
the Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the Fund's investment manager. Effective October 17,
1994, Dreyfus began serving as the Fund's investment manager.
## For fiscal years beginning January 1, 1996, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of investment securities.
[Page 4
Description of the Fund
Investment Objective
The Fund is a diversified fund that seeks long-term growth of
capital, with current income as a secondary objective, primarily through
equity investments, such as common stocks and securities convertible into
common stocks.
Management Policies
Securities are selected for the Fund based on a quantitative and
qualitative study of trends in industries and companies, earning power,
growth features and other investment criteria. Major emphasis is placed on
industries and issuers that are considered by Dreyfus to have characteristics
that reflect attractive valuations as compared to the stock market as a whole
such as a low price to earnings ratio, a low ratio of market price to book
value and better than average cash flows. Dreyfus also focuses on other
"value" oriented investment criteria. In general, the Fund's investments are
broadly diversified over a number of industries and, as a matter of operating
policy, the Fund will not invest more than 25% of its total assets in any one
industry.
Up to 20% of the Fund's total assets may be invested in foreign
securities. Such investments will be made principally in foreign equity
securities. The Fund may invest up to 5% of its total net assets in fixed
income securities of companies that are close to entering, or already in,
reorganization proceedings. These obligations will likely be rated below the
four highest ratings of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Rating Service, a division of McGraw-Hill Companies, Inc.
("S&P"). See "Certain Portfolio Securities_Low-Rated and Comparable Unrated
Securities." In addition, the Fund may write covered put and call options on
its portfolio securities, and purchase and write put and call options on
stock indexes. The Fund may also lend its portfolio securities. These
techniques are discussed below under "Investment Techniques."
The Fund may reduce the proportion of its investments in equity
securities and temporarily invest its assets in fixed-income securities and
in U.S. Government Securities and other high-grade, short-term money market
instruments, including repurchase agreements with respect to such
instruments, when, in the opinion of Dreyfus, a defensive posture is
warranted. To this extent, the Fund may not achieve its investment objective.
Investment Techniques
In connection with its investment objectives and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. From time to time, the Fund may lend portfolio
securities to brokers, dealers and other financial organizations. Such loans
will not exceed 331\3% of the Fund's total assets, taken at value. Loans of
portfolio securities by the Fund will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities.
COVERED OPTION WRITING. From time to time, the Fund may write covered
put and call options on portfolio securities and may purchase put and call
options on securities. The Fund could realize fees (referred to as
"premiums") for granting the rights evidenced by the options. However, in
return for the premium, the Fund forfeits the right to any appreciation in
the value of the underlying security while the option is outstanding. A put
option embodies the right of its purchaser to compel the writer of the option
to purchase from the option holder an underlying security at the specified
price at any time during the option period. In contrast, a call option
embodies the right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified price at any
time during the option period.
Upon the exercise of a put option written by the Fund, the Fund may
suffer a loss equal to the difference between the price at which the Fund is
required to purchase the underlying security and its market value at the time
of the option exercise, less the premium received for writing the option.
Upon the exercise of a call option written by the Fund, the Fund may suffer a
loss equal to the excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.
Whenever the Fund writes a call option it will continue to own or to
have the present right to acquire the underlying security for as long as it
remains obligated as the writer of the option. To support its obligation to
purchase the underlying security if a put option is exercised, the Fund will
either (a) deposit with the Fund's custodian in a segregated account, cash,
U.S. Government Securities or other high grade debt obligations having a
value at least equal to the exercise price of the underlying securities or
(b) continue to own the equivalent number of puts of the same "series" (that
is, puts on the same underlying security having the same exercise prices and
expiration dates as those written by the Fund), or an equivalent number of
puts of the same "class" (that is, puts on the same underlying security) with
exercise prices greater than those it has written (or, if the exercise prices
of the puts it holds are less than the exercise prices of those it has
written, it will deposit the difference with the Fund's custodian in a
segregated account).
[Page 5]
The Fund may engage in a closing purchase transaction to realize a
profit or limit a loss, to prevent an underlying security from being called
or put or, in the case of a call option, to unfreeze an underlying security
(thereby permitting its sale or the writing of a new option on the security
prior to the outstanding option's expiration). To effect a closing purchase
transaction, the Fund would purchase, prior to the holder's exercise of an
option that the Fund has written, an option of the same series as that on
which the Fund desires to terminate its obligation. The obligation of the
Fund under an option that it has written would be terminated by a closing
purchase transaction, but the Fund would not be deemed to own an option as a
result of the transaction. There can be no assurance that the Fund will be
able to effect closing purchase transactions at a time when it wishes to do
so. To facilitate closing purchase transactions, however, the Fund will
ordinarily write options only if a secondary market for the options exists on
a national securities exchange or in the over-the-counter market.
Certain Portfolio Securities
FOREIGN SECURITIES. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the return on
such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but that can
be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Trustees or by Dreyfus pursuant to guidelines established by the Board of
Trustees. The Board or Dreyfus will consider availability of reliable price
information and other relevant information in making such determinations.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors, such as
the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be
pursuant to registration or an exemption therefrom. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities from the Fund
or other holders.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-rated
securities") will likely have some quality and protective characteristics
that, in the judgment of the rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions; and are
predominantly speculative with respect to the issuer's capacity to pay
interest and to repay principal in accordance with the terms of the
obligation. While the market values of low-rated securities tend to react
less to fluctuations in interest rate levels than the market values of
higher-rated securities, the market values of certain low-rated securities
tend to be more sensitive to individual corporate developments and changes in
economic conditions than higher-rated securities. In addition, low-rated
securities generally present a higher degree of credit risk. Issuers of
low-rated securities are often highly leveraged and may not have more
traditional methods of financing available to them so that their ability to
service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss
due to default by such issuers is significantly greater because low-rated
securities are generally unsecured and frequently are subordinated to the
prior payment of senior indebtedness. The Fund may incur additional expenses
to the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence of
limited markets for low-rated securities may
[Page 6]
diminish the Fund's ability to obtain accurate market quotations for
purposes of valuing such securities and calculating its net asset value.
Further information regarding security ratings is contained in the SAI.
STOCK INDEX OPTIONS. The Fund may purchase and write exchange-listed
put and call options on stock indexes to hedge against risks of market-wide
price movements. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the
index. (Examples of well-known stock indexes are the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") and the New York Stock Exchange
Composite Index.) Options on stock indexes are similar to options on
securities. However, because options on stock indexes do not involve the
delivery of an underlying security, the option represents the holder's right
to obtain from the writer in cash a fixed multiple of the amount by which the
exercise price exceeds (in the case of a put) or is less than (in the case of
a call) the closing value of the underlying index on the exercise date.
The advisability of using stock index options to hedge against the
risk of market-wide movements will depend on the extent of diversification of
the Fund's stock instruments and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed above.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objectives and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for long-term growth of capital and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio
turnover rate of 100% would occur, for example, if all the securities held by
the Fund were replaced once in a period of one year. A higher rate of
portfolio turnover involves correspondingly greater brokerage commissions and
other expenses that must be borne directly by the Fund and, thus, indirectly
by its shareholders. In addition, a high rate of portfolio turnover may
result in the realization of larger amounts of short-term capital gains that,
when distributed to the Fund's shareholders; are taxable to them as ordinary
income. Nevertheless, securities transactions for the Fund will be based only
upon investment considerations and will not be limited by any other
considerations when Dreyfus deems it appropriate to make changes in the
Fund's assets.
Risk Factors
As with any equity fund, the value of your investment in the Fund may
fluctuate in response to movements in the stock market as a whole. In
addition, the ability of the Fund to invest in foreign securities, illiquid
securities and low-rated and unrated debt securities, and to purchase and
sell certain instruments (including writing certain options), may increase
the Fund's investment risks and opportunities. See "Certain Portfolio
Securities" and "Investment Techniques_Covered Option Writing" above and
"Investment Objectives and Management Policies" in the SAI.
Year 2000 Risks. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by Dreyfus and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." Dreyfus is taking steps to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain assurances that
comparable steps are being taken by the Fund's other major service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund.
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 objectives, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objectives, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
[Page 7]
Management of the Fund
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1998, Dreyfus managed or administered
approximately $100 billion in assets for more than 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 objectives, policies and restrictions.
The Fund is managed by a committee of portfolio managers of Dreyfus
and no person is primarily responsible for making recommendations to the
committee. This committee also comprises the Equity Policy Group of The
Boston Company Asset Management, Inc. which is an indirect wholly-owned
subsidiary of Mellon.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the 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 $305 billion in
assets as of December 31, 1997, including approximately $104 billion in
proprietary mutual fund assets. As of December 31, 1997, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $1.532 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 .90 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 return to investors. For the fiscal year
ended December 31, 1997, the Fund paid Dreyfus 0.89% of its average daily net
assets in investment management fees, less fees and expenses of the
non-interested Trustees (including counsel fees) (net of fees waived).
For the fiscal year ended December 31, 1997, total operating expenses
(excluding Rule 12b-1 fees) (net of fees waived) of the Fund were 0.89% of
the average daily net assets of the Institutional shares.
In addition, Institutional shares are subject to certain Rule 12b-1
distribution and shareholder servicing fees. See "Distribution Plan."
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The 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 commissions are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objectives, polices
and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
DISTRIBUTOR. The Fund's distributor is Premier Mutual Fund Services,
Inc., 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.
[Page 8]
How to Buy Shares
GENERAL _ By this Prospectus, the Fund is offering Institutional shares.
Institutional shares are offered to those customers of certain financial
planners and investment advisers who held shares of a predecessor class of
the Fund on April 4, 1994.
The Fund offers four additional classes of shares through a separate
prospectus, a copy of which is available free of charge by calling
1-800-554-4611. These other share classes are subject to different expenses,
which may cause their performance to differ from that of Institutional
shares.
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.
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 Plan. 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. 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 ("Code") imposes
various limitations on the amount that may be contributed annually to certain
qualified or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and certain other deferred compensation
plans, whether established by corporations, partnerships, non-profit entities
or state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
Shares may be purchased by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments which are mailed should be sent
to Dreyfus Premier Core Value 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 #044121/Dreyfus Premier Core Value Fund, Institutional Class,
for purchase of Fund shares in your name. The wire must include your Fund
account number (for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), account registration and dealer number, if
applicable, and must indicate the class of shares being purchased. If your
initial purchase of Fund shares is by wire, please call 1-800-645-6561 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 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, Dreyfus Payroll Savings Plan 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 "4020".
The Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the
[Page 9]
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
Premier Family of Funds or 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"). Shares of funds in the Dreyfus Premier
Family of Funds or the Dreyfus Family of Funds then held by Eligible Benefit
Plans will be aggregated to determine the fee payable. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE PER SHARE ("NAV") _ An investment portfolio's NAV refers to
the worth of one share. The NAV for Institutional shares of the Fund is
computed by dividing the value of the net assets attributable to
Institutional shares by the number of Institutional shares outstanding.
Institutional shares 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 as of the close of trading on the floor of the New
York Stock Exchange ("NYSE") (normally 4:00 p.m., New York time) on each day
that the NYSE is open for business. Orders received in proper form by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund before the close of trading on the floor of the NYSE are effective on,
and will receive the price determined on, that day. Orders received after
such close of trading are effective on, and receive the share price
determined on, the next business day.
The public offering price for Institutional shares is their NAV.
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum $500
and maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the 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 that is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-645-6561or, 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
You may purchase, in exchange for Institutional shares of the Fund,
shares of certain other eligible funds managed or administered by Dreyfus, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
To request an exchange, you or your Agent acting on your behalf, must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of personal
retirement plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the 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
[Page 10]
a separate signed Shareholder Services Form, available by calling
1-800-645-6561, or by oral request from any of the authorized signatories on
the account, by calling 1-800-645-6561. If you previously have established
the Telephone Exchange Privilege, you may telephone exchange instructions
(including over The Dreyfus TouchRegistration Mark automated telephone
system) by calling 1-800-645-6561. 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, Wire
Redemption Privilege, Telephone Redemption Privilege, Dreyfus 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 into funds sold with a sales
load. If you are exchanging 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 other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange your Agent must notify the Distributor.
Any such qualification is subject to confirmation of your holdings through a
check of appropriate records. See "Shareholder Services" in the SAI. No fees
currently are charged shareholders directly in connection with exchanges,
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal fee in accordance with 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 that 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
Institutional shares of the Fund, in shares of certain other funds in the
Dreyfus Family of Funds of which you are a shareholder. 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 shares into funds sold with
a sales load. The right to exercise this Privilege may be modified or
canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to
Dreyfus Premier Core Value Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. The Fund may charge a service fee for the use of this Privilege.
No such fee currently is contemplated. The exchange of shares of one fund for
shares of another is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder, and therefore, an exchanging
shareholder may realize, or an exchange on behalf of a retirement plan that
is not tax exempt may result in, a taxable gain or loss. For more information
concerning this Privilege and the funds in the Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
Dreyfus-AUTOMATIC Asset BuilderRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated.
To establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to Dreyfus Premier Core Value Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Dividend Options
Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Institutional
shares of the Fund in shares of certain other eligible 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
[Page 11]
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 1-800-645-6561. You may cancel
these privileges by mailing written notification to Dreyfus Premier Core
Value Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a
new fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dividend Sweep. The Fund may modify or terminate
these privileges at any time or charge a service fee. No such fee currently
is contemplated. Shares held under Keogh Plans, IRAs or other retirement
plans are not eligible for Dividend Sweep.
Government Direct Deposit Privilege
Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. You should
consider whether Direct Deposit of your entire payment into a fund with
fluctuating NAV, such as the Fund, may be appropriate for you. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a completed
Direct Deposit Sign-Up Form for each type of payment that you desire to
include in this Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your participation
in this Privilege. You may elect at any time to terminate your participation
by notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated. Shares held under Keogh Plans, IRAs or
other retirement plans are not eligible for this Privilege.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. 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 1-800-645-6561.
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 the shareholder, the Fund or the Transfer Agent. Shares
for which certificates have been issued may not be redeemed through the
Automatic Withdrawal Plan.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non
working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs),
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
How to Redeem 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 by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, 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
[Page 12]
class of shares being redeemed. If you fail to specify the class of shares to
be redeemed or if you own fewer shares of the class than specified to be
redeemed, the redemption request may be delayed until the Transfer Agent
receives further instructions from you or your Agent.
The Fund imposes no charges when Institutional shares are redeemed.
Agents may charge their clients a fee for effecting redemptions of
Institutional shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the
shares redeemed may be more or less than their original cost, depending upon
the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark AND SUBSEQUENTLY
SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR
PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET
BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION,
THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR
PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS
TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST
WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR
SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT
COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO
THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE
AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES _ You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it
by checking the appicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the
authorized signatories on the account by calling 1-800-645-6561. You also may
redeem shares through the Wire Redemption Privilege or 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. Other redemption procedures
may be in effect for clients of certain Agents and institutions. The Fund
makes available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or terminate any redemption
privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated. Shares held under Keogh Plans, IRAs, or
other retirement plans, and shares for which certificates have been issued,
are not eligible for the Wire Redemption, Telephone Redemption or Dreyfus
TeleTransfer Privilege.
The Telephone Redemption Privilege or telephone exchange privilege
authorizes 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 TeleTransfer 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
TeleTransfer 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 Core Value 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
[Page 13]
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.
WIRE REDEMPTION PRIVILEGE _ You may request by wire, telephone or letter
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired within any
30-day period. You may telephone redemption requests by calling 1-800-645-6561
or, if calling from overseas, 516-794-5452. The Fund's SAI sets forth
instructions for transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE _ You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. The Telephone
Redemption Privilege is granted automatically unless you refuse it.
DREYFUS TELETRANSFER PRIVILEGE _ You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus TELETRANSFER
Privilege for transfer to their bank account only up to $250,000 within any
30-day period.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a redemption of shares by calling 1-800-645-6561 or, if calling from
overseas, 516-794-5452.
Additional Information About Purchases, Exchanges and Redemptions
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
permanently terminate the availability of Fund Exchanges, or reject in whole
or part any purchase or exchange request, with respect to such investor's
account.
Such investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of 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 objectives
and policies or could otherwise be adversely affected or if the Fund receives
or anticipates receiving simultaneous orders that may significantly affect
the Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If
an exchange request is refused, the Fund will take no other action with
respect to the shares until it receives further instructions from the
investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if
the amount of the redemption request otherwise would be disruptive to
efficient portfolio management or would adversely affect the Fund. The Fund's
policy on excessive trading applies to investors who invest in the Fund
directly or through financial intermediaries, but does not apply to the
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to 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 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.
Distribution Plan
Institutional shares are subject to a Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Institutional shares of the Fund bear some of the cost of selling those
shares under the Plan. The Plan allows the Fund to spend annually up to 0.15%
of its average daily net assets attributable to Institutional
[Page 14]
shares to compensate Dreyfus Service Corporation, an affiliate of
Dreyfus, for shareholder servicing activities and the Distributor for
shareholder servicing activities and for activities or expenses primarily
intended to result in the sale of Institutional shares of the Fund. The fees
payable under the Distribution Plan are payable without regard to actual
expenses incurred. The Plan allows the Distributor to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Agreements with the Distributor. Under the Agreements, the
Agents are obligated to provide distribution related services with regard to
the Fund and/or shareholder services to the Agent's clients that own
Institutional shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. From time to time, the Agents, the
Distributor and the Fund may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents.
Dividends, Other Distributions and Taxes
The Fund declares and pays dividends from its net investment income,
if any, four times yearly, and distributes its net realized capital gains, if
any, once a year, but it may make distributions on a more frequent basis to
comply with the distribution requirements of the Code, in all events in a
manner consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends and other distributions paid by each class are calculated at the
same time and in the same manner and will be in the same amount, except that
the expenses attributable solely to a particular class are borne exclusively
by that class. See "Expense Summary."
Investors other than qualified retirement plans may choose whether to
receive dividends and other distributions in cash, to receive dividends in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment
as a "regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders. Such
qualification will relieve the Fund of any liability for Federal income tax
to the extent its earnings and realized gains are distributed to its
shareholders in accordance with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds (collectively, "dividend distributions"), paid by the Fund are
taxable to U.S. shareholders, including certain non-qualified retirement
plans, as ordinary income to the extent of the Fund's earnings and profits,
whether received in cash or reinvested in additional Fund shares. Distributions
from net capital gain (the excess of net long-term capital gain over net
short-term capital loss) will be taxable to such shareholders as long-term
capital gains regardless of how long the shareholders have held their Fund
shares and whether such distributions are received in cash or reinvested in
additional Fund shares. Dividends and other distributions also may be subject
to state and local taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the 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.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account that will include information as to dividends and distributions
from net capital gain, if any, paid during the year. The annual tax notice
and periodic account summaries you receive designate the portions of capital
gain distributions that are subject to (1) the 20% maximum rate of tax (10%
for investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief
Act of 1997 ("Tax Act"), which applies to non-corporate taxpayers' net
capital gain on securities and other capital assets held for more than 18
months, and (2) the 28% maximum tax rate, applicable to such gain on capital
assets held for more than one year and up to 18 months (which, prior to
enactment of the Tax Act, applied to all such gain on capital assets held for
more than one year).
Dividends and other distributions paid by the Fund to qualified
retirement plans ordinarily will not be subject to taxation until the
proceeds are distributed from the retirement plans. The Fund will not report
to the IRS distributions paid to such plans. Generally, distributions from
qualified retirement plans, except those representing returns of non-
[Page 15]
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 will be subject to a
20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized,
paid to an individual or certain other non-corporate shareholders if such
shareholder fails to certify that the TIN furnished to the Fund is correct.
Backup withholding at that rate also is required from dividends and capital
gain distributions payable to such a shareholder if (1) that shareholder
fails to certify that he or she has not received notice from the IRS of being
subject to backup withholding as a result of a failure properly to report
taxable dividend or interest income on a Federal income tax return or (2) the
IRS notifies the Fund to institute backup withholding because the IRS
determines that the shareholder's TIN is incorrect or that the shareholder
has failed properly to report such income.
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 may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
Performance Information
For purposes of advertising, performance for Institutional shares may
be calculated on the basis of average annual total return and/or total
return. These total return figures reflect changes in the price of shares and
assume that any income dividends and/or capital gains distributions made by
the Fund during the measuring period were reinvested in shares of the same
class. These figures also take into account any applicable distribution and
servicing fees. Performance for each class will be calculated separately. As
a result, at any given time, the performance of Institutional shares should
be expected to differ from that of other classes 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 at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return.
The Fund may also advertise the yield on Institutional shares. The
Fund's yield is calculated by dividing a class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the NAV of such class on the last day of that period. Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in a class of
shares with bank deposits, savings accounts, and similar investment
alternatives which often provides an agreed-upon or guaranteed fixed yield
for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. 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.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, S&P 500, the Consumer Price Index, and the Dow Jones Industrial
Average.
[Page 16]
Performance rankings as reported in CHANGING TIMES, BUSINESS WEEK,
INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL, MUTUAL FUND FORECASTER, NO
LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND
WORLD REPORT, FORBES, FORTUNE, BARRON'S; and similar publications may also be
used in comparing the Fund's performance. Furthermore, the Fund may quote its
shares' total returns and yields in advertisements or in shareholder reports.
The Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
General Information
The Company was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel Funds
Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on October
17, 1994. The Company is registered with the SEC under the 1940 Act, as a
management investment company. The Company's Agreement and Declaration of
Trust permits the Board of Trustees to create an unlimited number of
investment portfolios (each a "fund") without shareholder approval. The
Fund's shares are classified into five Classes_Class A, Class B, Class C,
Class R, and Institutional shares. The Company may in the future seek to
achieve the Fund's investment objectives by investing all of the Fund's net
investable assets in another investment company having the same investment
objectives 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 shareholders of the
affected fund or class are entitled to vote, each as a separate class. Only
holders of shares of a class to which a matter pertaining to a Distribution
and/or Service Plan relates will be entitled to vote on matters submitted to
shareholders relating to such matter.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Trustee from office and
for any other purpose. Company shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Company's outstanding voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
[Page 17]
[Application p1 here]
[Page 18]
[Application p2 here]
[Page 19]
Copy Rights 1998 Dreyfus Service Corporation 392p0598
[Page 20]
_______________________________________________________________________________
PROSPECTUS May 1, 1998
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 ("SAI"), dated May 1, 1998,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated herein by reference. 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).................................... .13% .14% .14% .11%
_____ _____ _____ _____
Total Fund Operating Expenses........................ 1.08% 1.59% 1.84% .81%
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............................................... $56 $56/$16** $29/$19** $ 8
3 Years.............................................. $78 $80/$50** $58 $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. 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 Fund
Shares," "How to Redeem Fund Shares" and "Distribution Plans (Class A Plan
and Class B and C Plans)."
The Company understands that Agents may charge fees to their clients
who are owners of the Fund's 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
The tables below are based upon a single Class A, Class B, Class C
and Class R share outstanding throughout each fiscal year or period and
should be read in conjunction with the financial statements, related notes
and report of independent auditors that appear in the Fund's Annual Report
dated December 31, 1997, and that are incorporated by reference in the SAI.
The financial statements included in the Fund's Annual Report dated December
31, 1997 have been audited by KPMG Peat Marwick LLP, independent auditors.
Further information about, and management's discussion of, the Fund's
performance is contained in the Fund's Annual Report which may be obtained
without charge by writing to the address or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
Dreyfus Premier Limited High Income Fund
For a Class A share outstanding throughout the period.
Class A Shares
Period Ended
December 31, 1997*
__________________
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.71
Net realized and unrealized gain (loss)
on investments............................................................................. (.04)
______
Total from Investment Operations........................................................... 0.67
______
Distributions:
Dividends from investment income_net....................................................... (0.71)
______
Net asset value, end of period............................................................. $12.46
======
TOTAL INVESTMENT RETURN (1).................................................................. 9.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (1)................................................ 1.08%
Ratio of net investment income
to average net assets (1).................................................................. 9.34%
Portfolio Turnover Rate (2)................................................................ 28.83%
Net Assets, end of period (000's Omitted).................................................. $65,705
* For the period from May 30, 1997 (commencement of operations of Class A
shares) through December 31, 1997.
(1) Annualized.
(2) Not Annualized.
[Page 4]
Financial Highlights (continued)
Dreyfus Premier Limited Term High Income Fund
For a Class B share outstanding throughout the period.
Class B Shares
Period Ended
December 31, 1997*
__________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.66
Net realized and unrealized gain (loss)
on investments............................................................................. (.04)
______
Total from Investment Operations........................................................... 0.62
______
Distributions:
Dividends from investment income_net....................................................... (0.66)
______
Net asset value, end of period............................................................. $12.46
======
TOTAL INVESTMENT RETURN (1).................................................................. 8.57%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (1)................................................ 1.59%
Ratio of net investment income
to average net assets (1).................................................................. 8.73%
Portfolio Turnover Rate (2)................................................................ 28.83%
Net Assets, end of period (000's Omitted).................................................. $198,057
* For the period from May 30, 1997 (commencement of operations of Class B
shares) through December 31, 1997.
(1) Annualized.
(2) Not Annualized.
[Page 5]
Financial Highlights (continued)
Dreyfus Premier Limited Term High Income Fund
For a Class C share outstanding throughout the period.
Class C
Shares Period
Ended December
31, 1997*
__________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.65
Net realized and unrealized gain (loss)
on investments............................................................................. (.03)
______
Total from Investment Operations........................................................... 0.62
______
Distributions:
Dividends from investment income_net....................................................... (0.65)
______
Net asset value, end of period............................................................. $12.47
======
TOTAL INVESTMENT RETURN (1).................................................................. 8.47%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (1)................................................ 1.84%
Ratio of net investment income
to average net assets (1).................................................................. 8.54%
Portfolio Turnover Rate (2)................................................................ 28.83%
Net Assets, end of period (000's Omitted).................................................. $67,057
* For the period from May 30, 1997 (commencement of operations of Class C
shares) through December 31, 1997.
(1) Annualized.
(2) Not Annualized.
[Page 6]
Financial Highlights (continued)
Dreyfus Premier Limited Term High Income Fund
For a Class R share outstanding throughout the period.
Class R Shares
Period Ended
December 31, 1997*
__________________
PER SHARE DATA:
Net asset value, beginning of period....................................................... $12.50
______
Investment Operations:
Investment income_net...................................................................... 0.81
Net realized and unrealized gain (loss)
on investments............................................................................. (0.14)
______
Total from Investment Operations........................................................... 0.67
______
Distributions:
Dividends from investment income_net....................................................... (0.72)
______
Net asset value, end of period............................................................. $12.45
======
TOTAL INVESTMENT RETURN (1).................................................................. 9.26%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (1)................................................ 0.81%
Ratio of net investment income
to average net assets (1).................................................................. 10.08%
Portfolio Turnover Rate (2)................................................................ 28.83%
Net Assets, end of period (000's Omitted).................................................. $127
* For the period from May 30, 1997 (commencement of operations of Class R
shares) through December 31, 1997.
(1) Annualized.
(2) Not Annualized.
DEBT OUTSTANDING (ALL CLASSES)
Period Ended
PER SHARE DATA: December 31, 1997
__________________
Amount of debt outstanding at end of year (in thousands)........................ $0
Average amount of debt outstanding throughout year (in thousands)............... $1,833
Average number of shares outstanding throughout year (in thousands)............. 11,145
Average amount of debt per share throughout year................................ $ .16
</TABLE>
[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, Class B and Class
C shares are sold primarily to clients of Agents that have entered into
Agreements with the Distributor.
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
shares will cause such Class of shares to have a higher expense ratio and to
pay lower dividends than Class A shares. 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 shares will cause such Class of
shares to have a higher expense ratio and to pay lower dividends than Class A
shares.
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.
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 fees, service fees and CDSC, if any, on Class B
or Class C shares would be less than the accumulated distribution fees 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 fees 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
convertible 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
and limitations on the use or removal of funds or other assets of the Fund,
including withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the yield on such securities.
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."
Borrowing. The Fund may borrow money for certain purposes. See
"Appendix _ Investment Techniques _ Leverage" and "Investment Objective and
Management Policies _ Management Policies _ Leverage" in the SAI.
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
[Page 10]
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.
YEAR 2000 RISKS. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by Dreyfus and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." Dreyfus is taking steps to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain assurances that
comparable steps are being taken by the Fund's other major service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund.
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
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 March 31, 1998, Dreyfus managed or administered
approximately $100 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 and most
recently, Director of High Yield Research at Citibank Securities, Inc. The
Fund's other portfolio manager is 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 $305 billion in
assets as of December 31, 1997, including approximately $104 billion in
proprietary mutual fund assets. As of December 31, 1997, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $1.532 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.
[Page 11]
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.
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_Mellon Bank,
located at One Mellon Bank Center, Pittsburgh, PA 15258, is the Fund's
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"). Premier Mutual Fund
Services, Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
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 effecting transactions in Fund shares for
the accounts of their clients may charge their clients direct fees in
connection with such transactions.
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. The minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7)
Plans with only one participant and $500 for Dreyfus-sponsored Education
IRAs, with no minimum on subsequent purchases. 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 annually to certain
qualified employee benefit plans or certain other programs, including
pension, profit-sharing and certain other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not directly
affect the amount that may be invested in the Fund by a Retirement Plan.
Participants and plan sponsors should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or through the
TeleTransfer Privilege described below. Checks should be made payable to "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
[Page 12]
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 identification 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 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 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Premier Family of Funds or 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"). Shares of Funds in the Dreyfus Premier
Family or the Dreyfus Family of Funds then held by Eligible Benefit Plans
will be aggregated to determine the fee payable. The Distributor reserves the
right to cease paying these fees at any time. The Distributor will pay such
fees from its own funds, other than amounts received from the Fund, including
past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE PER SHARE ("NAV") _ An investment portfolio's NAV refers to
the worth of one share. The NAV for shares of each Class of the Fund is
computed by dividing the value of net assets attributable to each Class 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 as of the close of trading on the floor of the New
York Stock Exchange ("NYSE") (normally 4:00 p.m., New York time) on each day
that the NYSE is open for business. For purposes of determining NAV,
[Page 13]
options and futures contracts will be valued 15 minutes after the close of
trading on the floor of the NYSE. Orders received in proper form by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund before the close of trading on the floor of the NYSE are effective on,
and will receive the price determined on, that day. 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 share price determined on, the next business day.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the NYSE on 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 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
Benefit Plan and all or a portion of such plan's assets were invested in funds
in the Dreyfus Premier Family of Funds, the Dreyfus Family of Funds 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
[Page 14]
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 described 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 664 of the Code).
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its 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
[Page 15]
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 (as described
under "Dividend Options") 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
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 that 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
[Page 16]
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. 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 that
is not tax exempt may result in, a taxable gain or loss. 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 the bank account designated by you. 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 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. 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.
[Page 17]
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.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs, Rollover IRAs and Education IRAs)
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 by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, 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
[Page 18]
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 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 applicable to Class B and Class C shares
(and to certain Class A shares) will be waived in connection with (a)
redemptions made within one year after the death or disability, as defined in
Section 72(m)(7) of the Code, of the shareholder, (b) redemptions by
employees participating in Eligible Benefit Plans, (c) redemptions as a
result of a combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) distributions following retirement
under a retirement plan or upon attaining age 701\2 in the case
[Page 19]
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 of Directors determines to discontinue the waiver of the
CDSC, the disclosure in the Fund's Prospectus will be revised appropriately.
Any Fund shares subject to a CDSC which were purchased prior to the
termination of such waiver will have the CDSC waived as provided in the
Fund's Prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you
must notify the Transfer Agent or your Agent must notify the Distributor. Any
such qualification is subject to confirmation of your entitlement.
Procedures _ You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, through the 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 Fund shares through the Selected
Dealer. Other redemption procedures may be in effect for clients of certain
Agents and institutions. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address, and
may limit the amount involved or the number of such requests. The Fund may
modify or terminate any redemption privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs, or other retirement plans, and shares
for which certificates have been issued, are not eligible for the Check
Redemption or TELETRANSFER Privilege.
You may redeem Fund 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 TELETRANSFER 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
TELETRANSFER 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
[Page 20]
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. 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
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
permanently terminate the availability of Fund Exchanges, or reject in whole
or part any purchase or exchange request, with respect to such investor's
account. Such investors also may be barred from purchasing other funds in the
Dreyfus Family of Funds. Generally, an investor who makes more than four
exchanges out of 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.
[Page 21]
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.
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. The Fund and the Distributor may suspend
or reduce payments under the Distribution and Service Plans at any time, and
payments are subject to the continuation of the Fund's Plans 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 Plans. See the SAI for more details on the Distribution and Service
Plans.
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.
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 may pay one or more
Agents for services with respect to these Classes of 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.
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 of
shares will be borne exclusively
[Page 22]
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.
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 are 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 the Fund's net capital gain (the excess of net long-term capital gain
over net short-term capital loss) 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 state and local
taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the 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.
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. The annual tax notice and
periodic account summaries you receive designate the portions of capital gain
distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act
of 1997 ("Tax Act"), which applies to non-corporate taxpayers' net capital
gain on securities and other capital assets held for more than 18 months, and
(2) the 28% maximum tax rate, applicable to such gain on capital assets held
for more than one year and up to 18 months (which, prior to enactment of the
Tax Act, applied to all such gain on capital assets held for more than one
year).
The Code provides for the "carryover" of some or all of the sales
load imposed on Class A shares if (1) an investor redeems those shares or
exchanges those shares for shares of another fund advised or administered by
Dreyfus within 91 days of purchase and (2) in the case of a redemption,
acquires other Fund Class A shares through exercise of the Reinvestment
Privilege or, in the case of an exchange, such other fund reduces or
eliminates its otherwise applicable sales load for the purpose of the
exchange. In this case, the amount of the sales load charged the investor for
the original Class A shares, up to the amount of the reduction of the sales
load pursuant to the Reinvestment Privilege or on the exchange, as the case
may be, is not included in the basis of such shares for purposes of computing
gain or loss on the redemption or the exchange, and instead is added to the
basis of the Fund shares received pursuant to the Reinvestment Privilege or
the exchange.
Dividends and other distributions paid by the Fund to qualified
Retirement Plans ordinarily will not be subject to taxation until the
proceeds are distributed from the Retirement Plans. The Fund will not report
to the IRS distributions paid to such plans. Generally, distributions from
qualified Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 591\2, generally will
be subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the year
in which the participant reaches age 701\2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian
of such a Retirement Plan will be responsible for reporting distributions
from such plans to the IRS. Moreover, certain contributions to a qualified
Retirement Plan in excess of the amounts permitted by law may be subject to
an excise tax. If a distributee of an "eligible rollover distribution" from a
qualified Retirement Plan does not elect to have the eligible rollover
distribution paid directly from the plan to an eligible retirement plan in a
"direct rollover," the eligible rollover distribution will be subject to a
20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and any redemption
proceeds, regardless of the extent to which gain or loss may be realized,
paid to an individual or certain other non-corporate shareholder if such
shareholder fails to certify that the TIN furnished to the Fund is correct.
Backup withholding at that rate also is required from dividends and capital
gain distributions payable to such a shareholder if (1) that shareholder
fails to certify that he or she has not received notice from the IRS of being
subject to backup withholding as a result of a failure properly to report
taxable dividend or interest income on a
[Page 23]
Federal income tax return or (2) the IRS notifies the Fund to institute
backup withholding because the IRS determined that the shareholder's TIN is
incorrect or that the shareholder has failed properly to report such income.
A TIN is either the Social Security number, 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 may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
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
[Page 24]
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 Fund's shares are classified into four Classes _ Class A, Class
B, Class C and Class R. 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.
Each share (regardless of Class) has one vote. All shares of all
funds (and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or 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
the 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
[Page 27]
after notice, certain mortgage-backed securities, securities involved in
swap, cap, collar and floor transactions, and 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 average distribution of investments of the Dreyfus Premier
Limited Term High Income Fund in corporate bonds by ratings for the fiscal
year ended December 31, 1997, calculated monthly on a dollar weighted basis,
was as follows:
<TABLE>
<CAPTION>
MOODY'S OR S&P, FITCH OR DUFF PERCENTAGE
______ __________________ ___________
<S> <C> <C>
Aaa AAA 0.8%
Aa AA 0.0%
A A 0.0%
BB BBB 0.3%
B BB 5.7%
B B 70.8%
Caa CCC 7.7%
Ca CC 0.0%
C C 0.0%
NR NR 11.9%*
_____
97.2%**
=====
</TABLE>
The actual distribution of the Fund's corporate bond investments by
ratings on any given date will vary, and the distribution of the Fund's
investments by ratings as set forth above should not be considered as
representative of the Fund's future portfolio composition.
* These unrated securities 11.9% have been determined by The Dreyfus
Corporation to be of comparable quality to securities rated:B (7.0%), CCC
(3.8%), convertible bonds_B (.3%) and convertible bonds_CCC (.8%).
**The Fund also owns preferred stock_B (.1%), preferred stock_CCC (.4%),
convertible bonds_BBB (.1%) and convertible bonds_B (1.8%). Approximately
(.4%) of the Fund's assets were invested in cash or cash equivalents.
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
[Page 28]
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. 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
larger 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.
[Page 29]
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,
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.
[Page 30]
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 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]
Copy Rights 1998 Dreyfus Service Corporation 029p0598
DREYFUS PREMIER
LIMITED TERM HIGH INCOME FUND
PROSPECTUS
May 1, 1998
______________________________________________________________________________
PROSPECTUS May 1, 1998
Dreyfus Premier Managed Income Fund
______________________________________________________________________________
Dreyfus Premier Managed Income Fund (the "Fund"), formerly called the
"Premier Managed Income Fund," is a separate, diversified portfolio of The
Dreyfus/Laurel Funds Trust, an open-end management investment company (the
"Company"), known as a mutual fund. The Fund seeks high current income
consistent with what is believed to be prudent risk of capital. The Fund
invests primarily in investment-grade corporate and U.S. Government
obligations and in obligations having remaining maturities of 10 years or
less.
By this Prospectus, the Fund is offering four Classes of shares _
Class A, Class B, Class C and Class R _ which are described herein. See
"Alternative Purchase Methods."
Each Class of shares may be purchased or redeemed 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 ("SAI") dated May 1, 1998,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated herein by reference. 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.
All mutual fund shares involve certain investment risks, including the
possible loss of principal.
The fees to which the Fund is subject are summarized in the "Expense
Summary" section of the Fund's Prospectus. The Fund pays an affiliate of
Mellon Bank, N.A. ("Mellon Bank") to be its investment manager. Mellon Bank
or an affiliate may be paid for performing other services for the Fund, such
as custodian, transfer agent or fund accountant services. The Fund is
distributed by Premier Mutual Fund Services, Inc. (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
Page
Expense Summary................................................. 4
Financial Highlights............................................ 5
Alternative Purchase Methods.................................... 8
Description of the Fund......................................... 9
Management of the Fund.......................................... 14
How to Buy Fund Shares.......................................... 15
Shareholder Services............................................ 19
How to Redeem Fund Shares....................................... 21
Additional Information About Purchases, Exchanges and Redemptions 24
Distribution Plans (Class A Plan and Class B and C Plans)....... 24
Dividends, Other Distributions and Taxes........................ 25
Performance Information......................................... 27
General Information............................................. 27
Appendix........................................................ 29
[Page 2]
[This Page Intentionally Left Blank]
[Page 3]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Expense Summary
Shareholder Transaction Expenses CLASS A CLASS B CLASS C CLASS R
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... 4.50% None None None
Maximum Deferred Sales Charge Imposed
on Redemptions (as a percentage of
the amount subject to charge)................ None* 4.00% 1.00% None
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.............................. 0.70% 0.70% 0.70% 0.70%
12b-1 Fee1.................................. 0.25% 1.00% 1.00% None
Other Expenses2............................. 0.00% 0.00% 0.00% 0.00%
_____ _____ _____ _____
Total Fund Operating Expenses............... 0.95% 1.70% 1.70% 0.70%
Example
You would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual
return and (2) except where noted,
redemption at the end of each time period:
1 YEAR...................................... $ 54 $59/$173 $27/$173 $ 7
3 YEARS..................................... $ 74 $84/$543 $54 $22
5 YEARS..................................... $ 95 $116/923 $93 $39
10 YEARS.................................... $157 $164** $202 $87
</TABLE>
* A contingent deferred sales charge of 1.00% 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 Fund Shares_Class
A Shares."
** Assumes conversion of Class B shares to Class A shares approximately six
years after the date of purchase and, therefore, reflects Class A expenses
for years seven through ten.
1 See "Distribution Plans (Class A Plan and Class B and C Plans)" for a
description of the Fund's Distribution Plans and Service Plan for Class A, B
and C shares.
2 Does not include fees and expenses of the non-interested Trustees (including
counsel). The investment manager is contractually required to reduce its
management fee in an amount equal to the Fund's allocable portion of such fees
and expenses, which are estimated to be less than .01% of the Fund's net
assets. (See "Management of the Fund.")
3 Assuming no redemption of shares.
______________________________________________________________________________
The amounts listed in the example should not be considered as representative
of future expenses and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, the Fund's
actual performance will vary and may result in an actual return greater or
less than 5%.
______________________________________________________________________________
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. 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, B or C shares could pay more in 12b-1 fees
than the economic equivalent of paying the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc. ("NASD"). Certain banks, securities brokers and
dealers ("Securities Dealers") or other financial institutions (including
Mellon Bank and its affiliates) (collectively "Agents") may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Fund," "How to
Buy Fund Shares," "How to Redeem Fund Shares" and "Distribution Plans (Class
A Plan and Class B and C Plans)."
The Company understands that Agents (including Mellon Bank and its
affiliates) may charge fees to their clients who are owners of Fund 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 4]
Financial Highlights
The tables below are based upon a single Class A, Class B, Class C
and Class R share outstanding throughout each year or period and should be
read in conjunction with the financial statements, related notes and report
of independent auditors that appear in the Fund's Annual Report dated
December 31, 1997, and that are incorporated by reference in the SAI. The
financial statements included in the Fund's Annual Report dated December 31,
1997 have been audited by KPMG Peat Marwick LLP, independent auditors.
Further information about, and management's discussion of, the Fund's
performance is included in the Fund's Annual Report which may be obtained
without charge by writing to the address or calling the number set forth on
the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS PREMIER MANAGED INCOME FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
Year Year Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
Per Share Data: 12/31/97 12/31/96 12/31/95 12/31/94** 12/31/93# 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
________ ________ ________ _________ ________ ________ _______ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year........... $10.73 $11.08 $10.12 $11.38 $11.45 $11.41 $10.55 $11.12 $11.43 $11.29
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Investment Operations: 0.73 0.69 0.75 0.69 0.78 0.87 0.86 0.93 0.98 1.01
Net realized and
unrealized gain/(loss)
on investments.............. 0.27 (0.35) 0.96 (1.26) 0.83 0.10 0.86 (0.47) (0.36) 0.09
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total from investment
operations........ 1.00 0.34 1.71 (0.57) 1.61 0.97 1.72 0.46 0.62 1.10
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Distributions:
Distributions from net
investment income........... (0.72) (0.69) (0.75) (0.69) (0.75) (0.87) (0.86) (1.03) (0.93) (0.96)
Distributions in excess of
net investment income....... _ _ _ _ _ (0.06) _ _ _ _
Distributions from net
realized gains.... _ _ _ _ (0.57) _ _ _ _ _
Distributions in excess of net
realized gains on investments.. _ _ _ _ (0.36) _ _ _ _ _
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total Distributions......... (0.72) (0.69) (0.75) (0.69) (1.68) (0.93) (0.86) (1.03) (0.93) (0.96)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net Asset Value, end of year.. $11.01 $10.73 $11.08 $10.12 $11.38 $11.45 $11.41 $10.55 $11.12 $11.43
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return............ 9.80% 3.42% 17.32% (5.14)% 14.54% 8.77% 17.03% 4.40% 5.56% 10.05%
Ratios/Supplemental data:
Net assets, end of year
(in 000's)..... $72,878 $77,305 $80,782 $79,548 $58,052 $98,207 $84,203 $71,132 $83,912 $65,105
Ratio of expenses to
average net assets.......... 0.95% 0.95% 0.95% 0.98% 1.14% 1.02% 1.13% 1.19% 1.15% 1.14%
Ratio of net income to
average net assets.......... 6.74% 6.48% 7.08% 6.32% 6.55% 7.58% 7.91% 8.65% 8.76% 8.81%
Portfolio turnover rate..... 244.44% 251.66% 236.10% 270% 333% 216% 119% 183% 142% 139%
</TABLE>
* On February 1, 1993, existing shares of the Fund were designated the
Retail Class, and the Fund began offering the Institutional Class and the
Investment Class of shares. Effective April 4, 1994, the Retail and
Institutional Classes were reclassified as a single class of shares known
as Investor shares. On October 17, 1994, the Investor shares were
redesignated Class A shares. The amounts shown for the year ended December
31, 1994, were calculated using the performance of a Retail Share
outstanding from January 1, 1994, to April 3, 1994, and the performance of
an Investor (now Class A) Share outstanding from April 4, 1994 to December
31, 1994. The Financial Highlights for the year ended December 31, 1993
and prior years are based upon a Retail Share outstanding.
** Prior to April 4, 1994, The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the Fund's investment manager. Effective October 17,
1994, Dreyfus began serving as the Fund's investment manager.
Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charge.
Without the voluntary reimbursement of expenses and/or waiver of fees by
the investment adviser and/or transfer agent and/or distributor, the
ratio of expenses to average net assets for the years ended December 31,
1994 and 1993 would have been 0.99% and 1.27%, respectively.
# Per share amounts have been calculated using the average share method,
which more appropriately presents the per share data for this year since
the use of the undistributed method did not accord with results of
operations.
[Page 5]
Financial Highlights (Continued)
<TABLE>
<CAPTION>
DREYFUS PREMIER MANAGED INCOME FUND
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95(1)
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Per Share Data:
Net Asset Value, beginning of period............................................ $10.73 $11.08 $10.12
______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net......................................................... 0.65 0.61 0.67
Net realized and unrealized gain on investments............................... 0.27 (0.35) 0.96
______ ______ ______
Total from investment operations.............................................. 0.92 0.26 1.63
______ ______ ______
DISTRIBUTIONS:
Dividends from investment income-net............................................ (0.64) (0.61) (0.67)
______ ______ ______
TOTAL DISTRIBUTIONS............................................................. (0.64) (0.61) (0.67)
______ ______ ______
Net Asset Value, end of period.................................................. $11.01 $10.73 $11.08
====== ====== ======
TOTAL INVESTMENT RETURN(2)...................................................... 8.97% 2.54% 16.55%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....................................... 1.70% 1.70% 1.69%
Ratio of net investment income to average net assets.......................... 5.98% 5.77% 6.41%
Portfolio turnover rate....................................................... 244.44% 251.66% 236.10%
Net Assets, end of period (in 000's).......................................... $6,896 $4,973 $2,236
__________________________________________________________________________________________________________________________________
(1) The Fund commenced offering Class B shares on December 19, 1994.
Financial highlights for the period ended December 31, 1994 for Class B shares
are not presented because no shares had been issued to the public as of that
date.
(2) Exclusive of Sales Load.
[Page 6]
Financial Highlights (Continued)
DREYFUS PREMIER MANAGED INCOME FUND
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95(1)
__________________________________________________________________________________________________________________________________
Per Share Data:
Net Asset Value, beginning of period............................................ $10.73 $11.08 $10.12
______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net......................................................... 0.64 0.61 0.67
Net realized and unrealized gain on investments............................... 0.29 (0.35) 0.96
______ ______ ______
Total from investment operations.............................................. 0.93 0.26 1.63
______ ______ ______
DISTRIBUTIONS:
Dividends from investment income-net............................................ (0.64) (0.61) (0.67)
______ ______ ______
TOTAL DISTRIBUTIONS............................................................. (0.64) (0.61) (0.67)
______ ______ ______
Net Asset Value, end of period.................................................. $11.02 $10.73 $11.08
====== ====== ======
TOTAL INVESTMENT RETURN(2)...................................................... 8.96% 2.49% 16.54%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....................................... 1.70% 1.68% 1.66%
Ratio of net investment income to average net assets.......................... 5.95% 5.69% 6.03%
Portfolio turnover rate....................................................... 244.44% 251.66% 236.10%
Net Assets, end of period (in 000's).......................................... $1,007 $420 $67
__________________________________________________________________________________________________________________________________
(1) The Fund commenced offering Class C shares on December 19, 1994.
Financial highlights for the period ended December 31, 1994 for Class C shares
are not presented because no shares had been issued to the public as of that
date.
(2) Exclusive of Sales Load.
</TABLE>
[Page 7]
Financial Highlights (Continued)
<TABLE>
<CAPTION>
DREYFUS PREMIER MANAGED INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94** 12/31/93*##
<S> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value, beginning of period................ $10.73 $11.08 $10.12 $11.38 $11.62
______ ______ ______ ______ ______
Investment operations:
Net investment income............................. 0.76 0.72 0.78 0.72# 0.74#
Net Realized and unrealized gain/(loss)
on investments................................... 0.27 (0.35) 0.96 (1.26) 0.67
______ ______ ______ ______ ______
Total from investment operations.................. 1.03 0.37 1.74 (0.54) 1.41
______ ______ ______ ______ ______
Distributions:
Dividends from net investment income................ (0.75) (0.72) (0.78) (0.72) (0.71)
Distributions from net realized gains
on investments.................................... _ _ _ _ (0.61)
Distributions in excess of net realized gains
on investments.................................... _ _ _ _ (0.33)
______ ______ ______ ______ ______
Total Distributions................................. (0.75) (0.72) (0.78) (0.72) (1.65)
______ ______ ______ ______ ______
Net Asset Value, end of period...................... $11.01 $10.73 $11.08 $10.12 $11.38
====== ====== ====== ====== ======
Total Return........................................ 9.97% 3.58% 17.71% (4.88)% 12.59%(1)
Ratios/Supplemental data:
Net Assets, end of period (in 000's).............. $11,031 $12,567 $11,532 $9,588 $1,338(1)
Ratio of operating expenses to
average net assets................................ 0.70% 0.70% 0.70% 0.71% 0.83%(1)
Ratio of net investment income to
average net assets................................ 6.99% 6.74% 7.31% 6.59% 6.86%(1)
Portfolio turnover rate............................. 244.44% 251.66% 236.10% 270% 333%***
__________________________________________________________________________________________________________________________________
</TABLE>
* On February 1, 1993, the Fund commenced selling Investment Class shares.
Effective April 4, 1994, the Investment Class was redesignated as the
Trust Shares. On October 17, 1994, the Trust Shares were redesignated
Class R shares.
** Prior to April 4, 1994, The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank served as the Fund's investment manager. Effective October
17, 1994, Dreyfus began serving as the Fund's investment manager.
*** Not annualized.
Without the voluntary reimbursement of expenses and/or waiver of fees
by the investment adviser and transfer agent, the ratio of expenses to
average net assets would have been 0.72% and 0.87% for the year ended
December 31, 1994 and the period ended December 31, 1993, respectively.
# Net investment income before voluntary waiver of fees and/or
reimbursement of expenses by the investment adviser for the year ended
December 31, 1994 was $0.71. Net investment income before waiver of fees
and/or reimbursement of expenses by the investment adviser, transfer
agent and distributor for the period ended December 31, 1993 was $0.74.
## Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this
period since the use of the undistributed net investment income method
did not accord with results of operations.
(1) Annualized.
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. All Fund shares are sold on
a continuous basis.
Class A, Class B and Class C shares are sold primarily to clients of
Agents that have entered into Agreements with the Distributor.
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.
[Page 8]
See "How to Buy Fund Shares _ Class A Shares." These shares
are subject to an annual 12b-1 fee at the rate of 0.25 of 1% of the value of
the average daily net assets of Class A. See "Distribution Plan _ Class A
shares."
Class B shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class B shares are subject to a maximum
4% contingent deferred sales charge ("CDSC"), which is assessed only if you
redeem Class B shares within six years of purchase. See "How to Buy Fund
Shares _ Class B Shares" and "How to Redeem Fund Shares _ Contingent
Deferred Sales Charge _ Class B Shares." These shares also are subject to an
annual distribution fee at the rate of 0.75 of 1%, and an annual service fee
at the rate of 0.25 of 1%, of the value of the average daily net assets of
Class B. See "Distribution and Service Plans _ Class B and C 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 exchanges of Class B shares of another fund advised
by Dreyfus, the date of purchase of the original Class B shares of the fund
exchanged), Class B shares automatically will convert to Class A shares,
based on the relative net asset values for shares of each such Class, and
will no longer be subject to the service plan fee of 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 other
distributions.
Class C shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class C shares are subject to a 1% CDSC,
which is assessed only if you redeem Class C shares within one year of
purchase. See "How to Redeem Fund Shares _ Class C Shares." These shares
also are subject to an annual distribution fee at the rate of 0.75 of 1%, and
an annual service fee at the rate of 0.25 of 1%, of the value of the average
daily net assets of Class C. See "Distribution and Service Plans _ Class B
and C." The distribution 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 primarily to bank trust departments and other financial
service providers (including Mellon Bank and its affiliates) ("Banks") acting
on behalf of customers having a qualified trust or investment account or
relationship at such institution, or to customers who have received and hold
shares of the Fund distributed to them by virtue of such an account or
relationship.
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 fees and CDSC, if any, on Class B
or Class C shares would be less than the accumulated distribution fees 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 shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution and service fees on Class B or Class C shares may
exceed the accumulated distribution fees 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.
Description of the Fund
Investment Objective
The Fund is a diversified fund that seeks high current income
consistent with what is believed to be prudent risk of capital. The Fund
invests primarily in investment-grade corporate and U.S. Government
obligations and in obligations having remaining maturities of 10 years or
less. The Fund seeks to achieve this objective by investing in U.S.
Government and agency securities, mortgage-backed securities and their
derivatives, debt securities of corporations including convertible and
convertible preferred issues, asset-backed securities, tax-exempt securities,
foreign issues including Yankee bonds, Eurobonds and non-U.S. dollar
securities, money market instruments, private placements, Rule 144A
securities and derivative securities. There is no assurance that the Fund
will achieve its objective.
[Page 9]
Management Policies
Under normal market conditions, (1) at least 65% of the Fund's total
assets will be invested in U.S. Government Securities and in investment-grade
corporate debt obligations rated within the four highest ratings of Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's ("S&P") or in
unrated obligations of comparable quality; and (2) at least 65% of the Fund's
total assets will be invested in debt obligations having remaining maturities
of 10 years or less. It should be noted that obligations rated in the lowest
of the top four ratings (Baa by Moody's or BBB by S&P) are considered to have
some speculative characteristics. Unrated securities will be considered of
investment-grade if deemed by Dreyfus to be comparable in quality to
instruments so rated, or if other outstanding obligations of the issuers of
such securities are rated Baa/BBB or better. A discussion of the Moody's and
S&P rating categories is contained in Appendix B in the SAI.
The Fund may also invest up to 35% of its total assets in obligations
rated below the four highest ratings of Moody's or S&P, with no minimum
rating required. Such securities, which are considered to have speculative
characteristics, include securities rated in the lowest rating categories of
Moody's or S&P (commonly known as "junk bonds") which are extremely
speculative and may be in default with respect to payment of principal or
interest.
The Fund may also invest up to 35% of its total assets in
fixed-income obligations having remaining maturities longer than 10 years, up
to 25% of its total assets in convertible debt obligations and preferred
stocks, and up to 20% of its total assets in securities of foreign issuers,
including foreign governments. The Fund will not invest in common stocks, and
any common stocks received through conversion of convertible debt obligations
will be sold in an orderly manner. Changes in interest rates will affect the
value of the Fund's portfolio investments.
When, in the opinion of Dreyfus, a "defensive" investment posture is
warranted, the Fund is permitted to invest temporarily and without limitation
in high-grade, short-term money market instruments, consisting exclusively of
U.S. Government Securities, bank certificates of deposit and time deposits,
bankers' acceptances, prime commercial paper, and high-grade, short-term
corporate securities and repurchase agreements with respect to these
instruments. To this extent, the Fund may not achieve its investment
objective.
Bank certificates of deposit and bankers' acceptances in which the
Fund may invest are limited to U.S. dollar-denominated instruments of
domestic banks, including their branches located outside the United States
and of domestic branches of foreign banks. In addition, the Fund may invest
in U.S. dollar-denominated, non-negotiable time deposits issued by foreign
branches of domestic banks and London branches of foreign banks; and
negotiable certificates of deposit issued by London branches of foreign banks.
The foregoing investments may be made provided that the bank has capital,
surplus and undivided profits (as of the date of its most recently published
annual financial statements) in excess of $100 million as of the date of
investment. Investments in obligations of foreign branches of domestic banks,
foreign banks, and domestic branches of foreign banks involve risks that are
different from investments in securities of domestic banks.
U.S. Government Securities in which the Fund may invest include
obligations backed by the full faith and credit of the United States or
issued or guaranteed as to both principal and interest by the U.S. Government
or its agencies or instrumentalities. In addition to direct obligations of
the U.S. Treasury, securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage
Association ("GNMA"), General Services Administration and Maritime
Administration carry the full faith and credit of the United States. Other
agencies obligations in which the Fund may invest include those issued by the
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Banks and Student Loan Marketing
Association.
The Fund is permitted to enter into repurchase agreements with
respect to U.S. Government Securities, to purchase portfolio securities on a
when-issued basis, to purchase or sell portfolio securities for delayed
delivery, and to lend its portfolio securities. In addition, the Fund may
invest up to 25% of its total assets in securities representing interests in
pools of assets such as mortgage loans, motor vehicle installment purchase
obligations and credit card receivables ("Asset Backed Securities"), which
include classes of obligations collateralized by mortgage loans or mortgage
pass-through certificates ("collateralized mortgage obligations"). Investment
in the Fund should not be considered a complete investment program.
Investors should be aware that even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest rates
and, therefore, are subject to the risk of market price fluctuations. The
values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. The Fund's net
asset value generally will not be stable and should fluctuate based upon
changes in the value of the Fund's portfolio securities. Securities in which
the Fund will invest may earn a higher level of current income than certain
shorter-term or higher quality securities which generally have greater
liquidity, less market risk and less fluctuations in market value.
[Page 10]
Investment Techniques
In connection with its investment objective and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
LENDING OF PORTFOLIO SECURITIES. From time to time, the Fund may lend
portfolio securities to brokers, dealers and other financial organizations.
Such loans will not exceed 331\3% of the Fund's total assets, taken at value.
Loans of portfolio securities by the Fund will be collateralized by cash,
letters of credit or securities issued or guaranteed by the U.S. Government
or its agencies, which will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure
advantageous prices or yields, the Fund may purchase U.S. Government
Securities on a when-issued basis or may purchase or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by
the Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the marketplace, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transaction. The Fund will establish
a segregated account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount at least equal at all times to the
amounts of its when-issued and delayed delivery commitments.
Certain Portfolio Securities
ASSET-BACKED SECURITIES_GENERAL. The Fund may invest in Asset-Backed
Securities arising through the grouping by governmental, government-related
and private organizations of loans, receivables and other assets originated
by various lenders. Interests in pools of these assets differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal paid at maturity or specified call
dates. Instead, Asset-Backed Securities provide periodic payments which
generally consist of both interest and principal payments. The estimated life
of an Asset-Backed Security varies with the prepayment experience with
respect to the underlying debt instruments. The rate of such prepayments, and
hence the life of an Asset-Backed Security, will be primarily a function of
current market interest rates, although other economic and demographic
factors may be involved. For example, falling interest rates generally result
in an increase in the rate of prepayments of mortgage loans while rising
interest rates generally decrease the rate of prepayments. An acceleration in
prepayments in response to sharply falling interest rates will shorten the
security's average maturity and limit the potential appreciation in the
security's value relative to a conventional debt security. Consequently,
Asset-Backed Securities are not as effective in locking in high long-term
yields as certain other forms of debt securities. Conversely, in periods of
sharply rising rates, prepayments generally slow, increasing the security's
average life and its potential for price depreciation.
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated at the time of purchase at least A-1 by S&P, Prime-1 by
Moody's, F-1 by Fitch Investors Service LLP, Duff 1 by Duff & Phelps Rating
Co., or A1 by IBCA, Inc.
ECDS, ETDS AND YANKEE CDS. The Fund may invest in EuroCertificates of
Deposit ("ECDs"), EuroTime Deposits ("ETDs"), Yankee CDs, and Eurodollar
bonds and notes. ECDs are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks. ETDs are U.S. dollar-denominated
time deposits in a foreign branch of a U.S. bank or a foreign bank. Yankee
CDs are certificates of deposit issued by a U.S. branch of a foreign bank
denominated in U.S. dollars and held in the United States. Eurodollar bonds
and notes are obligations which pay principal and interest in U.S. dollars
held in banks outside the United States, primarily in Europe. ECDs, ETDs,
Yankee CDs and Eurodollar Bonds and notes are subject to different risks than
are the obligations of domestic issuers. See ("Foreign Securities.")
FOREIGN SECURITIES. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign
[Page 11]
issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the yield on
such securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale.) The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but that can
be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Section 4(2) paper is restricted as to
disposition under the federal securities laws, and generally is sold to
institutional investors (such as the Fund) that agree that they are purchasing
the paper for investment and not with a view to public distribution. Any
resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers.
Determinations as to the liquidity of investments in Section 4(2) paper and
Rule 144A securities will be made by the Board of Trustees or by Dreyfus. The
Board will consider availability of reliable price information and other
relevant information in making such determinations. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to
be liquid, that investment will be included within the percentage limitation
on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and it
is not possible to predict how this market will mature. Investing in Rule
144A securities could have the effect of increasing the level of Fund
illiquidity to the extent that qualified buyers become, for a time,
uninterested in purchasing these securities.
LOW-RATED AND COMPARABLE UNRATED SECURITIES. Low-rated and comparable
unrated securities (collectively referred to in this discussion as
"low-rated" securities) will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are
outweighed by large uncertainties or major risk exposures to adverse
conditions. Low-rated securities are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. While the market values of low-rated
securities tend to react less to fluctuations in interest rate levels than
the market values of higher-rated securities, the market values of certain
low-rated securities tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-rated securities.
In addition, low-rated securities generally present a higher degree of credit
risk. Issuers of low-rated securities are often highly leveraged and may not
have more traditional methods of financing available to them so that their
ability to service their debt obligations during an economic downturn or
during sustained periods of rising interest rates may be impaired. The risk
of loss due to default by such issuers is significantly greater because
low-rated securities generally are unsecured and frequently are subordinated
to the prior payment of senior indebtedness. The Fund may incur additional
expenses to the extent that it is required to seek recovery upon a default in
the payment of principal or interest on its portfolio holdings. The existence
of limited markets for low-rated securities may diminish the Fund's ability
to obtain accurate market quotations for purposes of valuing such securities
and calculating its net asset value. Securities rated B by Moody's are
judged to lack characteristics of desirable investment; assurance of interest
and principal payments or of maintenance or other terms over any long period
may be small. Securities rated B by S&Pare judged currently to have capacity
to meet interest and principal payments, but adverse business, financial or
economic conditions will likely impair capacity or willingness to make such
payments. Securities rated Caa by Moody's are judged to be of poor standing
and may be in default or reflect present elements of danger with respect to
principal or interest. Securities rated CCC by S&Phave a currently
identifiable vulnerability to default, and are dependent upon favorable
business, financial and economic conditions to meet timely payment of
interest and principal. Securities rated Ca by Moody's are judged to be
speculative in a high degree, often being in default or having other marked
short-comings. Securities rated CC by S&Ptypically are subordinated to senior
debt which is assigned an actual or implied CCC rating.
Securities rated C by S&Ptypically are subordinated to senior debt
which is assigned an actual or implied CCC- rating and may be used to cover
situations where a bankruptcy petition has been filed, but debt service
payments are continued.
MORTGAGE-BACKED SECURITIES. The mortgage-backed securities in which
the Fund will invest represent pools of mortgage loans assembled for sale to
investors by various governmental agencies and government-related
organizations, such as GNMA, FNMA and FHLMC, as well as by private issuers
such as commercial banks, savings institutions,
[Page 12]
mortgage bankers and private mortgage insurance companies.
Mortgage-backed securities provide a monthly payment consisting of interest
and principal payments. Additional payment may be made out of unscheduled
repayments of principal resulting from the sale of the underlying residential
property, refinancing or foreclosure, net of fees or costs that may be
incurred. Prepayments of principal on mortgage-backed securities may tend to
increase due to refinancing of mortgages as interest rates decline. Prompt
payment of principal and interest on GNMA mortgage pass-through certificates
is backed by the full faith and credit of the United States. FNMA guaranteed
mortgage pass-through certificates and FHLMC participation certificates are
solely the obligations of those entities but are supported by the
discretionary authority of the U.S. Government to purchase the agencies'
obligations. Mortgage pools created by private organizations generally offer
a higher rate of interest than governmental and government-related pools
because there are no direct or indirect guarantees of payments in the former
pools. Timely payment of interest and principal in these pools, however, may
be supported by various forms of private insurance or guarantees, including
individual loan, title, pool and hazard insurance. There can be no assurance
that the private insurers can meet their obligations under the policies.
Collateralized mortgage obligations ("CMOs") are a type of bond
secured by an underlying pool of mortgages or mortgage pass-through
certificates that are structured to direct payments on underlying collateral
to different series or classes of the obligations. CMO classes may be
specially structured in a manner that provides any of a wide variety of
investment characteristics, such as yield, effective maturity and interest
rate sensitivity. CMO structuring is accomplished by in effect stripping out
portions of the cash flows (comprised of principal and interest payments) on
the underlying mortgage assets and prioritizing the payments of those cash
flows. In the most extreme case, one class will be a "principal-only" (PO)
security, the holder of which receives the principal payments made by the
underlying mortgage-backed security, while the holder of the "interest-only"
(IO) security receives interest payments from the same underlying security.
CMOs may be structured in other ways that, based on mathematical modeling or
similar techniques, is expected to provide certain results. As market
conditions change, however, and particularly during periods of rapid or
unanticipated changes in market interest rates, the attractiveness of a CMO
class, and the ability of a structure to provide the anticipated investment
characteristics, may be significantly reduced. Such changes can result in
volatility in the market value, and in some instances reduced liquidity, of
the CMO class.
Inverse floaters are instruments whose interest rates bear an inverse
relationship to the interest rate of another security or the value of an
index. Changes in the interest rate on the other security or index inversely
affect the residual interest rate paid on the inverse floater, with the
result that the inverse floater's price will be considerably more volatile
than that of a fixed-rate bond. For example, an issuer may decide to issue
two variable rate instruments instead of a single long-term, fixed-rate bond.
The interest rate on one instrument reflects short-term interest rates, while
the interest rate on the other instrument (the inverse floater) reflects the
approximate rate the issuer would have paid on a fixed-rate bond, multiplied
by two, minus the interest rate paid on the short-term instrument. The market
for inverse floaters is relatively new.
To the extent that the Fund purchases mortgage-related securities at
a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of
the Fund's principal investment to the extent of the premium paid. The yield
of a Fund that invests in mortgage-related securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.
NON-MORTGAGE BACKED SECURITIES. The Fund may also invest in
non-mortgage backed securities including interests in pools of receivables,
such as motor vehicle installment purchase obligations and credit card
receivables. Such securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in the
underlying pools of assets. Such securities may also be debt instruments,
which are also known as collateralized obligations and are generally issued
as the debt of a special purpose entity organized solely for the purpose of
owning such assets and issuing such debt. Non-mortgage backed securities are
not issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; however, the payment of principal and interest on such
obligations may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution (such as a
bank or insurance company) unaffiliated with the issuers of such securities.
Non-mortgage backed securities will be purchased by the Fund only when such
securities are readily marketable and generally will have remaining estimated
lives at the time of purchase of 5 years or less.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agreement involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed under "Certain Portfolio Securities _ Illiquid
Securities."
[Page 13]
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and are
permissible under the Investment Company Act of 1940, as amended (the "1940
Act"). As a shareholder of another investment company, the Fund would bear,
along with other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in
addition to the advisory and other expenses that the Fund bears directly in
connection with its own operations.
LIMITING INVESTMENT RISKS _ The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority of
the Fund's outstanding shares. The SAI describes all of the Fund's
fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
PORTFOLIO TURNOVER _ While securities are purchased for the Fund on the
basis of potential for high current income and not for short-term trading
profits, the Fund's turnover rate may exceed 100%. A portfolio turnover rate
of 100% would occur, for example, if all the securities held by the Fund were
replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses
that must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result in the
realization of larger amounts of short-term and/or long-term capital gains
that, when distributed to the Fund's shareholders, are taxable to them at the
then current rate. Nevertheless, securities transactions for the Fund will be
based only upon investment considerations and will not be limited by any
other considerations when Dreyfus deems it appropriate to make changes in the
Fund's assets.
YEAR 2000 RISKS _ Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by Dreyfus and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." Dreyfus is taking steps to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain assurances that
comparable steps are being taken by the Fund's other major service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund.
Management of the Fund
INVESTMENT MANAGER _ Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1998, Dreyfus managed or administered
approximately $100 billion in assets for approximately 1.7 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises
and assists in the overall management of the Fund's affairs under an
Investment Management Agreement with the Fund, subject to the overall
authority of the Company's Board of Trustees in accordance with Massachusetts
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As the Fund's investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies and
restrictions.
The Fund is managed by Arthur J. MacBride, III. Mr. MacBride is an
officer of The Boston Company Asset Management, Inc. He has been employed by
Dreyfus as a portfolio manager of the Fund since October 17, 1994. Prior to
joining The Boston Company in 1988, Mr. MacBride was a Principal and the
National Sales Manager at Manufacturers Hanover Securities Corporation, where
he was responsible for the sale of all fixed income securities. Previously,
he did corporate finance/underwriting work in both the U.S. and Europe. In
London and Toronto, he worked extensively on the Eurobond Market (coupon and
currency swaps). He is a graduate from Franklin and Marshall College and
holds an MBA from Fordham University.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $305 billion in assets as of
December 31, 1997, including approximately
[Page 14]
$104 billion in mutual fund assets. As of December 31, 1997,
Mellon, through various subsidiaries, provided non-investment services, such
as custodial or administration services, for more than $1.532 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 0.70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, fees and expenses of the
non-interested Trustees (including counsel fees) Rule 12b-1 fees (if
applicable) and extraordinary expenses. In order to compensate Dreyfus for
paying virtually all of the Fund's expenses, the Fund's investment management
fee is higher than the investment advisory fees paid by most investment
companies. Most, if not all, such companies also pay for additional
non-investment advisory expenses that are not paid by such companies'
investment advisers. Although Dreyfus does not pay 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. For the fiscal year ended December 31, 1997, the
Fund paid Dreyfus 0.70% of its average daily net assets in investment
management fees.
For the fiscal year ended December 31, 1997, total operating expenses
(excluding Rule 12b-1 fees) of each Class of the Fund were 0.70% of the
average daily net assets of each Class.
In addition, Class A, B and C shares may be subject to certain
distribution and shareholder servicing fees. See "Distribution Plans (Class A
Plan and Class B and C Plans)."
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Fund's distributor may use part or all of such
payments to pay Agents in respect of these services.
In allocating brokerage transactions, Dreyfus seeks to obtain the
best execution of orders at the most favorable net price. Subject to this
determination, Dreyfus may consider, among other things, the receipt of
research services and/or the sale of shares of the Fund or other funds
managed, advised or administrated by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the SAI.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective,
policies and restrictions, the Fund may invest in securities of companies
with which Mellon Bank has a lending relationship.
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.,
located at 60 State Street, Boston, Massachusetts 02109. The Distributor's
ultimate parent company 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, PA 15258, is the Fund's custodian.
How to Buy Fund Shares
GENERAL _ Class A shares, Class B shares and Class C shares may be purchased
only by clients of Agents, except that full-time or part-time employees or
directors of Dreyfus or any of its affiliates or subsidiaries, Board members
of a fund advised by Dreyfus, including members of the Company's Board, or
the spouse or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor. Subsequent purchases may be sent directly
to the Transfer Agent or your Agent.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. In
addition, holders of Class R shares of the Fund who have held their shares
since April 4, 1994, may continue to purchase Class R shares of the Fund,
whether or not they otherwise would be eligible to do so. Class R shares may
be purchased for a retirement plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such plan.
When purchasing Fund shares, you must specify which Class is being
purchased. Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order. Agents effecting transactions in Fund shares for
the accounts of their clients may charge their clients direct fees in
connection with such transactions.
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
[Page 15]
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. The minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7)
Plans with only one participant and $500 for Dreyfus-sponsored Education
IRAs, with no minimum on subsequent purchases. The initial investment must be
accompanied by the Fund's Account Application. The Fund reserves the right to
offer Fund shares without regard to minimum purchase requirements to
employees participating in certain qualified or non-qualified employee
benefit plans or other programs where contributions or account information
can be transmitted in a manner and form acceptable to the Fund. The Fund
reserves the right to vary further the initial and subsequent investment
minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amounts that may be contributed annually to
certain qualified employee benefit plans or other programs, including
pension, profit-sharing and certain other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a retirement
plan. Participants and plan sponsors should consult their tax advisers for
details.
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments which are mailed should be sent to
Dreyfus Premier Managed 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 Managed Income Fund and applicable
Class for purchase of Fund shares in your name.
The wire must indicate which Class of shares is being purchased and
it must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, you should call 1-800-554-4611 after completing your
wire payment to obtain your Fund account number. Please include your Fund
account number on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only on U.S.
banks. A charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH system to Boston Safe Deposit and Trust Company with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "4370" for Class
A Shares, "4380" for Class B Shares, "4390" for Class C Shares and "4400" for
Class R Shares.
The Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Premier Family of Funds or 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"). Shares of the funds in the Dreyfus
Premier Family of Funds or the Dreyfus Family of Funds then held by Eligible
Benefit Plans will be aggregated to determine the fee payable. 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
[Page 16]
this requirement. Failure to furnish a certified TIN to the Fund
could subject you to a $50 penalty imposed by the Internal Revenue Service
(the "IRS").
NET ASSET VALUE PER SHARE ("NAV"). An investment portfolio's NAV
refers to the worth of one share. The NAV for shares of each Class of the
Fund is computed by dividing the value of the net assets attributable to each
Class 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 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 as of the close of trading on the floor of the New
York Stock Exchange ("NYSE") (normally 4:00 p.m., New York time) on each day
that the NYSE is open for business. Orders received in proper form by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund before the close of trading on the floor of the NYSE are effective on,
and will receive the price determined on, that day. 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 share price determined on, the next business day.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee by the close of its business day (normally
5:15 p.m., New York time) will be based on the public offering price per
share determined as of the close of trading on the floor of the NYSE on that
day. Otherwise, the orders will be based on the next determined public
offering price. It is the 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 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
cancelled and the institution could be held liable for resulting fees and/or
losses.
CLASS A SHARES. The public offering price of Class A shares is the
NAV per share of that class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
______________________________________
As a % of As a % of Dealers' Reallowance
Offering Pric Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
______________________ ______________ ______________ __________________
<S> <C> <C> <C>
Less than $50,000...................................... 4.50 4.70 4.25
$50,000 to less than $100,000.......................... 4.00 4.20 3.75
$100,000 to less than $250,000......................... 3.00 3.10 2.75
$250,000 to less than $500,000......................... 2.50 2.60 2.25
$500,000 to less than $1,000,000....................... 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more of
Class A shares. However, if you purchase Class A shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem all
or a portion of those shares within one year of 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 Fund's Prospectus
entitled "How to Redeem Fund Shares _ Contingent Deferred Sales Charge _
Class B Shares" (other than the amount of the CDSC and its time periods) and
"How to Redeem Fund Shares _ Waiver of CDSC" are applicable to the Class A
shares subject to a CDSC. Letter of Intent and Right of Accumulation apply to
such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of
other financial institutions which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage related or clearing arrangement with an NASD member firm or
financial institution with respect to the sale of such shares) may purchase
Class A shares for themselves directly or pursuant to an employee benefit
plan or other program, or for their spouses or minor children, at NAV,
provided that they have furnished the Distributor with such information as it
may request from time to time in order to verify eligibility for this
privilege. This privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time employees are
eligible to purchase Class A shares at NAV. In addition, Class A shares are
offered at NAV to full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Company's Board, or the spouse
or minor child of any of the foregoing.
[Page 17]
Class A shares will be offered at NAV without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also may be
purchased (including by exchange) at NAV without a sales load for
Dreyfus-sponsored IRA "Rollover Accounts" with the distribution proceeds from
a qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided
that, at the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible
Benefit Plan and all or a portion of such plan's assets were invested in funds
in the Dreyfus Premier Family of Funds or 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.
Holders of Class A accounts of the Fund as of December 19, 1994 may
continue to purchase Class A shares of the Fund at NAV. However, investments
by such holders in other funds advised by Dreyfus will be subject to the
applicable front-end sales load.
Class A shares may be purchased at NAV through certain broker-dealers
and other financial institutions which have entered into an agreement with
the Distributor, which includes a requirement that such shares be sold for
the benefit of clients participating in a "wrap account" or a similar program
under which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with
the proceeds from the redemption of shares of a registered open-end
management investment company not managed by Dreyfus or its affiliates. The
purchase of Class A shares of the Fund must be made within 60 days of such
redemption and the shareholder must have either (i) paid an initial sales
charge or a CDSC or (ii) been obligated to pay at any time during the holding
period, but did not actually pay on redemption, a deferred sales charge with
respect to such redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or instrumentality thereof, (iii) a charitable
organization (as described 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 664 of the Code).
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its expense, may provide
additional promotional incentives to dealers that sell shares of funds
advised by Dreyfus which are sold with a sales load, such as Class A shares.
In some instances, those incentives may be offered only to certain dealers
who have sold or may sell significant amounts of shares. Dealers receive a
larger percentage of the sales load from the Distributor than they receive
for selling most other funds.
CLASS B SHARES _ The public offering price for Class B shares is the NAV of
that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares as
described under "How to Redeem Fund Shares." The Distributor compensates
certain Agents for selling Class B shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution fee,
in part, are used to defray these expenses.
CLASS C SHARES _ The public offering price for Class C shares is the NAV of
that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on redemptions of Class C shares made within the
first year of purchase. See "Class B Shares" above and "How to Redeem Fund
Shares."
Class R Shares _ The public offering price for Class R shares is the NAV of
that Class.
Right of Accumulation _ Class A Shares _ Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the 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 previously purchased
and still hold Class A shares of the Fund, or shares of any other Eligible
Fund or combination thereof, with an aggregate current market value of
$40,000 and subsequently purchase Class A shares of the Fund or shares of an
Eligible Fund having a current value of $20,000, the sales load applicable to
the subsequent purchase would be reduced to 4.00% of the offering price. All
present holdings of Eligible Funds may be combined to determine the current
offering price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or
your Agent must notify the Distributor if orders are made by wire, or the
Transfer Agent if orders are made by mail. The reduced sales load is subject
to confirmation of your holdings through a check of appropriate records.
TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum $500 and
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
a filed Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a domestic
[Page 18]
financial institution which is an ACH member may be so designated. The
Fund may modify or terminate this privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER purchase of Fund shares by calling 1-800-554-4611 or, if calling
from overseas, 516-794-5452.
Shareholder Services
The services and privileges described under this heading may not be
available to clients of certain Agents, and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
Fund Exchanges
You may purchase, in exchange for shares of a Class, shares of the
same class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-554-4611 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
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 relevant "No" box on the
Account Application, indicating that you specifically refuse this privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, 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 previously 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 or, if calling from overseas, 516-794-5452. See "How to Redeem
Fund Shares _ Procedures." Upon an exchange, the following shareholder
services and privileges, as applicable and where available, will be
automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, TELETRANSFER Privilege and the dividends and
distributions payment option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges of Class A shares into funds
sold with a sales load. No CDSC will be imposed on Class B or C shares at the
time of an exchange; however, Class B or C shares acquired through an
exchange will be subject to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B or
C shares will be calculated from the date of the initial purchase of the
Class B or C shares exchanged, as the case may be. If you are exchanging
Class A shares into a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load, if the shares of the fund from which you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from shares
purchased with a sales load, or (c) acquired through reinvestment of
dividends or other distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your Agent must
notify the Distributor. Any such qualification is subject to confirmation of
your holdings through a check of appropriate records. See "Shareholder
Services" in the SAI. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the SEC. The Fund reserves the right to
reject any exchange request in whole or in part. The availability of Fund
Exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a retirement plan that 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 currently an investor. WITH RESPECT TO CLASS R SHARES HELD BY
RETIREMENT PLANS, EXCHANGES PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE
[Page 19]
MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The
amount you designate, which can be expressed either in terms of a specific
dollar or share amount ($100 minimum), will be exchanged automatically on the
first and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current NAV; however, a sales
load may be charged with respect to exchanges of Class A shares into funds
sold with a sales load. No CDSC will be imposed on Class B or C shares at the
time of an exchange; however, Class B or C shares acquired through an
exchange will be subject to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B or
C shares will be calculated from the date of the initial purchase of the Class
B or C shares exchanged, as the case may be. See "Shareholder Services" in
the SAI. The right to exercise this Privilege may be modified or canceled by
the Fund or the Transfer Agent. You may modify or cancel your exercise of
this Privilege at any time by mailing written notification to Dreyfus Premier
Managed Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The
Fund may charge a service fee for the use of this privilege. No such fee
currently is contemplated. The exchange of shares of one fund for shares of
another is treated for Federal income tax purposes as a sale of the shares
given in exchange and, therefore, an exchanging shareholder may realize, or
an exchange on behalf of a retirement plan that is not tax exempt may result
in, a taxable gain or loss. 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 the bank account designated by you. 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 Managed Income Fund, P.O.
Box 6587, Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Dividend Options
Dividend Sweep enables you to invest automatically dividends or
dividends and other capital gain distributions, if any, paid by 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. Shares of the other fund will be purchased at the then-current
NAV; however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund that
charges a sales load, you may qualify for share prices which do not include
the sales load or which reflect a reduced sales load. If you are investing in
a fund or class that charges a CDSC, the shares purchased will be subject on
redemption to the CDSC, if any, applicable to the purchased shares. See
"Shareholder Services" in the SAI. Dividend ACH permits you to transfer
electronically 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 Managed
Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a
new fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these Privileges is effective three business
days following receipt. These Privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dividend Sweep. The Fund may modify or terminate
these Privileges at any time or charge a service fee. No such fee currently
is contemplated. Shares held under Keogh Plans, IRAs or other retirement
plans are not eligible for Dividend Sweep.
Government Direct Deposit Privilege
Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. You should
consider whether Direct Deposit of your entire payment into a fund with
fluctuating NAV, such as the Fund, is appropriate for you. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a completed
Direct Deposit Sign-Up Form for each type of payment that you desire to
include in this privilege. The appropriate form may be obtained by calling
1-800-554-4611. 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.
[Page 20]
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 the shareholder, 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.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs, Rollover IRAs and Education IRAs),
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 of the Fund
held in escrow to realize the difference. Signing a Letter of Intent does not
bind you to purchase, or the Fund to sell, the full amount indicated at the
sales load in effect at the time of signing, but you must complete the
intended purchase to obtain the reduced sales load. At the time you purchase
Class A shares, you must indicate your intention to do so under a Letter of
Intent.
How to Redeem Fund Shares
General
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, 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 or other institutions 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.
[Page 21]
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 BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A
WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS
WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE
CHECK, TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES PURSUANT TO THE TELETRANSFER PRIVILEGE FOR A PERIOD
OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE
CHECK, THE TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER
AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY
IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST.
PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL
ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS
OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
Contingent Deferred Sales Charge_Class B Shares _ A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current NAV of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares of
the Fund held by you at the time of redemption. No CDSC will be imposed to
the extent that the NAV of the Class B shares redeemed does not exceed (i)
the current NAV of Class B shares acquired through reinvestment of dividends
or capital gain distributions, plus (ii) increases in the NAV of your Class B
shares above the dollar amount of all your payments for the purchase of Class
B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be
applied to the then-current NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge
will depend on the number of years from the time you purchased the Class B
shares until the time of redemption of such shares. Solely for purposes of
determining the number of years from the time of any payment for the purchase
of Class B shares, all payments during a month will be aggregated and deemed
to have been made on the first day of the month. The following table sets
forth the rates of the CDSC:
<TABLE>
<CAPTION>
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
__________ ______________________
<S> <C>
First............................................................................ 4.00
Second........................................................................... 4.00
Third............................................................................ 3.00
Fourth........................................................................... 3.00
Fifth............................................................................ 2.00
Sixth............................................................................ 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV of Class B shares above the
total amount of payments for the purchase of Class B shares made during the
preceding six years; then of amounts representing the cost of shares
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time within
the applicable six-year period.
For example, assume an investor purchased 100 shares at $10 share for
a cost of $1,000. Subsequently, the shareholder acquired five additional
shares through dividend reinvestment. During the second year after the
purchase the investor decided to redeem $500 of his or her investment.
Assuming at the time of the redemption the NAV had appreciated to $12 per
share, the value of the investor's shares would be $1,260 (105 shares at $12
per share). The CDSC would not be applied to the value of the reinvested
dividend shares and the amount which represents appreciation ($260).
Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would be
charged at a rate of 4% (the applicable rate in the second year after
purchase) for a total CDSC of $9.60.
For purposes of determining the applicable CDSC payable with respect
to redemption of Class B shares of the Fund where such shares were acquired
through exchange of Class B shares of another fund advised by Dreyfus, the
year since purchase payment was made is based on the date of purchase of the
original Class B shares of the fund exchanged.
[Page 22]
CONTINGENT DEFERRED SALES CHARGE_CLASS C SHARES _ A CDSC of 1.00% payable
to the Distributor is imposed on any redemption of Class C shares within one
year of the date of purchase. The basis for calculating the payment of any
such CDSC will be the method used in calculating the CDSC for Class B shares.
See "Contingent Deferred Sales Charge_Class B Shares" above.
WAIVER OF CDSC _ The CDSC applicable to Class B and Class C shares (and to
certain Class A shares) will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) distributions following retirement under a retirement
plan or upon attaining age 70 1\2 in the case of an IRA or Keogh plan or
custodial account pursuant to Section 403(b) of the Code, and (e) redemptions
pursuant to the Automatic Withdrawal Plan, as described under "Shareholder
Services _ Automatic Withdrawal Plan" above. If the Company's Board of
Trustees determines to discontinue the waiver of the CDSC, the disclosure in
the Fund's Prospectus will be revised appropriately. Any Fund shares subject
to a CDSC which were purchased prior to the termination of such waiver will
have the CDSC waived as provided in the Fund's Prospectus at the time of the
purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you
must notify the Transfer Agent or your Agent must notify the Distributor. Any
such qualification is subject to confirmation of your entitlement.
PROCEDURES _ You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or 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, through the
TeleTransfer Privilege. If you are a client of a Selected Dealer, you may
redeem Fund shares through the Selected Dealer. Other redemption procedures
may be in effect for clients of certain Agents and institutions. The Fund
makes available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or terminate any redemption
privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated. Shares held under Keogh Plans, IRAs, or
other retirement plans, and shares for which certificates have been issued,
are not eligible for the TeleTransfer Privilege.
You may redeem Fund 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 TELETRANSFER redemption or an exchange of Fund shares. In such
cases, you should consider using the other redemption procedures described
herein. Use of these other redemption procedures may result in your
redemption request being processed at a later time than it would have been if
TELETRANSFER redemption had been used. During the delay, the Fund's NAV may
fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you may redeem
your shares by written request mailed to Dreyfus Premier Managed Income Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption requests must
be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards
and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. For more information with respect to signature-guarantees,
please call 1-800-554-4611.
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
TELETRANSFER PRIVILEGE. You may 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 so designated. Redemption proceeds will be on
deposit in your account at an ACH member bank ordinarily two days after
receipt of the redemption request. Holders of jointly registered Fund
[Page 23]
or bank accounts may redeem through the TELETRANSFER Privilege for transfer
to their bank account only up to $250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of Fund shares by calling 1-800-554-4611 or, if
calling from overseas, 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 Fund Shares" for a discussion of
additional conditions or fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected Dealers
with which it has sales agreements for the repurchase of shares held by
shareholders. Repurchase orders received by dealers by the close of trading
on the floor of the NYSE on any business day and transmitted to the
Distributor or its designee prior to the close of its business day (normally
5:15 p.m., New York time) are effected at the price determined as of the
close of trading on the floor of the NYSE on that day. Otherwise, the shares
will be redeemed at the next determined NAV. It is the responsibility of the
Selected Dealer to transmit orders on a timely basis. The Selected Dealer may
charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
Reinvestment Privilege. 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 Fund Exchanges. Upon
reinstatement, 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
B shares reinvested. The Reinvestment Privilege may be exercised only once.
Additional Information About Purchases, Exchanges and Redemptions
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
permanently terminate the availability of Fund exchanges, or reject in whole
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 an active 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 participants in
employer-sponsored retirement plans.
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 NAV but
the purchase order would be effective only at the NAV next determined after
the fund being purchased receives the proceeds of the redemption, which may
result in the purchase being delayed.
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
[Page 24]
12b-1. 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.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents.
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 Distribution and
Service Plans.
DISTRIBUTION PLAN _ CLASS A SHARES _ The Class A shares of the Fund
bear some of the cost of selling those shares under the Distribution Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of its
average daily net assets attributable to Class A shares to compensate Dreyfus
Service Corporation, an affiliate of Dreyfus, for shareholder servicing
activities and the Distributor for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Class A
shares of the Fund. The Plan allows the Distributor to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Agreements with the Distributor. Under the Agreements, the
Agents are obligated to provide distribution related services with regard to
the Fund and/or shareholder services to the Agent's clients that own Class A
shares of the Fund.
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 C shares at an aggregate
annual rate of .75 of 1% of the value of the average daily net assets of
Class B and C. Under a Service Plan adopted pursuant to Rule 12b-1, the Fund
pays Dreyfus Service Corporation or the Distributor for the provision of
certain services to the holders of Class B and C shares a fee at the annual
rate of .25 of 1% of the value of the average daily net assets of Class B and
C. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and providing services
related to the maintenance of such shareholder accounts. With regard to such
services, each Agent is required to disclose to its clients any compensation
payable to it by the Fund and any other compensation payable by their clients
in connection with the investment of their assets in Class B and C shares.
The Distributor may pay one or more Agents in respect of distribution and
other services for these Classes of shares. The Distributor determines the
amounts, if any, to be paid to Agents under the Distribution and Service
Plans and the basis on which such payments are made.
Dividends, Other Distributions and Taxes
The Fund declares daily and pays dividends monthly from its net
investment income, if any, and distributes net realized capital gains, if
any, once a year, but it may make distributions on a more frequent basis to
comply with the distribution requirements of the Code, in all events in a
manner consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Shares purchased on a day on which the Fund calculates its NAV will begin to
accrue dividends on that day, and redemption orders effected on any
particular day will receive dividends declared only through the business day
prior to the day of redemption. Dividends paid by each Class are calculated
at the same time and in the same manner and are in the same amount, except
that the expenses attributable solely to a particular Class are borne
exclusively by that Class. Class B and C shares will receive lower per share
dividends than Class A shares which will receive lower per share dividends
than Class R shares, because of the higher expenses borne by the relevant
Class. See "Expense Summary."
Investors other than qualified Retirement Plans may choose whether to
receive dividends and other distributions in cash to receive distributions in
cash and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified Retirement Plans are
reinvested automatically in additional Fund shares atNAV.
It is expected that the Fund will continue to qualify for treatment
as a "regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders. Such
qualification will relieve the Fund of any liability for Federal income tax
to the extent its earnings are distributed to its shareholders in accordance
with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds (collectively, "dividend distributions"), paid by the Fund are
taxable to U.S. shareholders, including certain non-qualified Retirement
Plans, as ordinary income to the extent of the Fund's earnings and profits
whether received in cash or reinvested in Fund shares. Distributions from the
Fund's net capital gain (the excess of net
[Page 25]
long-term capital gain over short-term capital loss) will be taxable
to such shareholders as long-term capital gains, regardless of how long the
shareholders have held their Fund shares and whether such distributions are
received in cash or reinvested in additional Fund shares. Dividends and other
distributions also may be subject to state and local taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of 30%,
unless the non-resident foreign investor claims the benefit of a lower rate
specified in a tax treaty. Capital gain distributions paid by the Fund to a
non-resident foreign investor, as well as the proceeds of any redemptions by
such an investor, regardless of the extent to which gain or loss may be
realized, generally are not subject to U.S. withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and capital gain
distributions, if any, paid during the year. The annual tax notice and
periodic account summaries you receive designate the portions of capital gain
distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act
of 1997 ("Tax Act"), which applies to non-corporate taxpayers' net capital
gain on securities and other capital assets held for more than 18 months, and
(2) the 28% maximum tax rate, applicable to such gain on capital assets held
for more than one year and up to 18 months (which, prior to enactment of the
Tax Act, applied to all such gain on capital assets held for more than one
year).
The Code provides for the "carryover" of some or all of the sales
load imposed on Class A shares if (1) an investor redeems those shares or
exchanges those shares for shares of another fund advised or administered by
Dreyfus within 91 days of purchase and (2) in the case of a redemption,
acquires other Fund Class A shares through exercise of the Reinvestment
Privilege or, in the case of an exchange, such other fund reduces or
eliminates its otherwise applicable sales load for the purpose of the
exchange. In this case, the amount of the sales load charged the investor for
the original Class A shares, up to the amount of the reduction of the sales
load pursuant to the Reinvestment Privilege or on the exchange, as the case
may be, is not included in the basis of such shares for purposes of computing
gain or loss on the redemption or the exchange, and instead is added to the
basis of the fund shares received pursuant to the Reinvestment Privilege or
the exchange.
Dividends and other distributions paid by the Fund to qualified
Retirement Plans ordinarily will not be subject to taxation until the
proceeds are distributed from the Retirement Plans. The Fund will not report
to the IRS distributions paid to such plans. Generally, distributions from
qualified Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 591\2, generally will
be subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the year
in which the participant reaches age 701\2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian
of such a Retirement Plan will be responsible for reporting distributions
from such plans to the IRS. Moreover, certain contributions to a qualified
Retirement Plan in excess of the amounts permitted by law may be subject to
an excise tax. If a distributee of an "eligible rollover distribution" from a
qualified Retirement Plan does not elect to have the eligible rollover
distribution paid directly from the Plan to an eligible retirement plan in a
"direct rollover," the eligible rollover distribution will be subject to a
20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and any redemption
proceeds, regardless of the extent to which gain or loss may be realized,
paid to an individual or certain other non-corporate shareholder if such
shareholder fails to certify that the TIN furnished to the Fund is correct.
Backup withholding at that rate also is required from dividends and capital
gain distributions payable to such a shareholder if (1) that shareholder
fails to certify that he or she has not received notice from the IRS of being
subject to backup withholding as a result of a failure properly to report
taxable dividend or interest income on a Federal income tax return or (2) the
IRS notifies the Fund to institute backup withholding because the IRS
determined that the shareholder's TIN is incorrect or that the shareholder
has failed properly to report such income.
A TIN is either the Social Security number, 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 may be subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax advisers regarding specific questions as
to Federal, state or local taxes.
[Page 26]
Performance Information
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gain distributions made by
the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable distribution and
shareholder servicing fees. As a result, at any given time, the performance
of Class B and C should be expected to be lower than that of Class A and the
performance of Class A, B and C should be expected to be lower than that of
Class R. Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial
payment of $1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of dividends and
other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period.
Advertisements of the Fund's performance will include the Fund's average
annual total return for one, five and ten year periods, or for shorter
periods depending upon the length of time during which the Fund has operated.
Computations of average annual total return for periods of less than one year
represent an annualization of the Fund's actual total return for the
applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the NAV (or
maximum offering price in the case of Class A shares) at the beginning of the
period. Advertisements may include the percentage rate of total return or may
include the value of a hypothetical investment at the end of the period which
assumes the application of the percentage rate of total return. Total return
also may be calculated by using the NAV at the beginning of the period
instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC at
the end of the period for Class B or C shares. Calculations based on the NAV
do not reflect the deduction of the sales load on the Fund's Class A shares,
which, if reflected, would reduce the performance quoted.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the NAV (or maximum public offering price in the case of Class A shares) per
Class of such share on the last day of that period. Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in a Class of
shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed-upon or guaranteed fixed yield for
a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings and the Lehman Government/Corporate Index. Performance rankings as
reported in Changing Times, Business Week, Institutional Investor, The Wall
Street Journal, IBC/Donoghue's Money Fund Report, Mutual Fund Forecaster, No
Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and
World Report, Forbes, Fortune, Barron's and similar publications may also be
used in comparing the Fund's performance. Furthermore, the Fund may quote its
shares' total returns and yields in advertisements or in shareholder reports.
The Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
General Information
The Company was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel Funds
Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on October
17, 1994. The Company is registered with the SEC as an open-end management
investment company, commonly known as a mutual fund. The 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 Fund's shares are classified into four Classes_Class A, Class B, Class C
and Class R. 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
[Page 27]
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 shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Class A, B or C shares, as the case may be, will be entitled to
vote on matters submitted to shareholders pertaining to Distribution or
Service Plans relating to that Class.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Trustee from office and
for any other purpose. Company shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Company's outstanding shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard Uniondale, New York 11556-0144.
[Page 28]
Appendix
RATINGS_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 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 Caa by Moody's are of poor standing
and may be in default or there may be present elements of danger with respect
to principal or interest. S&P typically assign a CCC rating to debt which has
a current identifiable vulnerability to default and is dependent upon
favorable business, financial and economic conditions to meet timely payments
of interest and repayment of principal. Such securities, though high
yielding, are characterized by great risk. See "Appendix" in the SAI for a
general description of securities ratings.
The ratings of Moody's and S&P 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 Dreyfus' credit analysis than might be the case for a fund
that invested in higher rated securities.
The average distribution of investments of the Dreyfus Premier
Managed Income Fund in corporate bonds by ratings for the fiscal year ended
December 31, 1997, calculated monthly on a dollar weighted basis, was as
follows:
<TABLE>
<CAPTION>
MOODY'S OR S&P, FITCH OR DUFF PERCENTAGE
______ ___________________ ____________
<S> <C> <C>
Aaa AAA 46.8%
Aa AA 3.8%
A A 14.8%
Baa BBB 10.4%
Ba BB 10.2%
B B 17.3%
Caa CCC 0.2%
Ca CC 0.0%
C C 0.0%
NR NR 0.5%*
______
104.0%**
======
</TABLE>
The actual distribution of the Fund's corporate bond investments by
ratings on any given date will vary, and the distribution of the Fund's
investments by ratings as set forth above should not be considered as
representative of the Fund's future portfolio composition.
* These unrated securities .5% have been determined by The Dreyfus
Corporation to be of comparable quality to securities rated:AAA (.4%) and B
(.1%).
** The Fund also owns convertible bonds_BB (.4%). Approximately (4.4%) of the
Fund's assets were represented by liabilities in excess of cash.
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 29]
[Application Page 1 here]
[Page 30]
[Application Page 2 here]
[Page 31]
Copy Rights 1998 Dreyfus Service Corporation 349p0598
_____________________________________________________________________________
DREYFUS PREMIER CORE VALUE FUND
CLASS A, CLASS B, CLASS C, CLASS R AND INSTITUTIONAL SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1998
______________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
describing the Class A, Class B, Class C and Class R shares of the Dreyfus
Premier Core Value Fund (formerly, the Dreyfus Core Value Fund) (the "Fund")
and the current Prospectus describing the Institutional shares of the Fund,
each dated May 1, 1998, as they may be revised from time to time. The Fund
is a separate, diversified portfolio of The Dreyfus/Laurel Funds Trust (the
"Trust"), an open-end management investment company known as a mutual fund.
To obtain a copy of a Fund Prospectus, please write to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or call the following
numbers:
Call Toll Free 1-800-554-4611 for Class A,B,C, or R shares,
or 1-800-645-6561 for Institutional shares
In New York City -- Call 1-718-895-1206
Outside the U.S. and outside of Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies B-2
Management of the Fund B-16
Management Arrangements B-22
Purchase of Fund Shares B-23
Distribution and Service Plans B-25
Redemption of Shares B-27
Shareholder Services B-29
Determination of Net Asset Value B-32
Dividends, Other Distributions and Taxes B-33
Portfolio Transactions B-37
Performance Information B-39
Information About the Fund B-41
Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors B-42
Financial Statements B-43
Appendix B-44
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectuses entitled "Description of the
Fund."
Portfolio Securities
Foreign Securities. The Fund may invest in securities of foreign
issuers, including investments in obligations of foreign branches of
domestic banks and domestic branches of foreign banks. Investment in
foreign securities presents certain risks, including those resulting from
fluctuations in currency exchange rates, reevaluation of currencies, future
political and economic developments and the possible imposition of currency
exchange blockages or other foreign governmental laws or restrictions,
reduced availability of public information concerning issuers and the fact
that foreign issuers are not generally subject to uniform accounting,
auditing and financial reporting standards or to other regulatory practices
and requirements comparable to those applicable to domestic issuers.
Moreover, securities of many foreign issuers may be less liquid and their
prices more volatile than those of securities of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is
the possibility of expropriation, confiscatory taxation and limitations on
the use or removal of funds or other assets of the Fund including
withholding dividends.
U.S. Government Securities. The Fund may invest in U.S. Government
Securities that are direct obligations of the U.S. Treasury, or that are
issued by agencies and instrumentalities of the U.S. Government and
supported by the full faith and credit of the U.S. Government. These
include Treasury notes, bills and bonds and securities issued by the
Government National Mortgage Association ("GNMA"), the Federal Housing
Administration, the Department of Housing and Urban Development, the Export-
Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration.
The Fund may also invest in U.S. Government Securities that are not
supported by the full faith and credit of the U.S. Government. These
include securities issued by Fannie Mae, Freddie Mac, Federal Home Loan
Banks, Tennessee Valley Authority, Student Loan Marketing Association and
District of Columbia Armory Board. Because the U.S. Government is not
obligated by law to provide support to an instrumentality it sponsors, the
Fund will invest in obligations issued by such an instrumentality only when
Dreyfus determines that the credit risk with respect to the instrumentality
does not make its securities unsuitable for investment by the Fund.
GNMA certificates represent ownership interests in a pool of mortgages
issued by a mortgage banker or other mortgagee. Distributions on GNMA
certificates include principal and interest components. GNMA, a corporate
instrumentality of the U.S. Department of Housing and Urban Development,
guarantees timely payment of principal and interest on GNMA certificates;
this guarantee is deemed a general obligation of the United States, backed
by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans Administration.
The mortgages have maximum maturities of 40 years. Government statistics
indicate, however, that the average life of the underlying mortgages is
shorter, due to scheduled amortization and unscheduled repayments
(attributable to voluntary prepayments or foreclosures).
Fannie Mae and Freddie Mac are Government-sponsored corporations owned
entirely by private stockholders. Each is subject to general regulation by
an office of the Department of Housing and Urban Development. FNMA and
FHLMC purchase residential mortgages from a list of approved seller/services
which include state and federally-chartered savings and loan associations,
mutual savings banks, commercial banks and credit unions and mortgage
bankers. Pass-through securities issued by FNMA and FHLMC are guaranteed by
those entities as to payment of principal and interest.
Bank Obligations. The Fund is permitted to invest in high-quality, short-
term money market instruments. The Fund may invest temporarily, and without
limitation in bank certificates of deposit, time deposits, and
bankers' acceptances when, in Dreyfus' opinion, a "defensive" investment
posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable obligations
of commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international transactions.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members
of the Federal Reserve System and to be insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state
law are supervised and examined by state banking authorities but are members
of the Federal Reserve System only if they elect to join. In addition, all
banks whose certificates of deposit may be purchased by the Trust are
insured by the FDIC and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of governmental
regulations, domestic branches of foreign banks are, among other things,
generally required to maintain specified levels of reserves, and are subject
to other supervision and regulations designed to promote financial
soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would be
the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the Trust
may be subject to the risks associated with the holdings of such property
overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about a
domestic bank. The Trust will carefully consider these factors in making
such investments.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities. The effect a recession might have on such securities is
not known. Any such recession, however, could severely disrupt the market
for such securities and adversely affect the value of such securities. Any
such economic downturn also could adversely affect the ability of the
issuers of such securities to repay principal and pay interest thereon.
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Ratings Service, a division of McGraw-Hill Companies,
Inc. ("S&P") generally represent the opinions of those organizations as to
the quality of the securities that they rate. Such ratings, however, are
relative and subjective, are not absolute standards of quality and do not
evaluate the market risk of the securities. Although Dreyfus uses these
ratings as a criterion for the selection of securities for the Fund, Dreyfus
also relies on its independent analysis to evaluate potential investments
for the Fund. The Fund's achievement of its investment objective may be more
dependent on Dreyfus' credit analysis of low-rated and unrated securities
than would be the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. In addition, it is possible that an NRSRO might
not timely change its ratings of a particular issue to reflect subsequent
events. None of these events will require the sale of the securities by the
Fund, although Dreyfus will consider these events in determining whether the
Fund should continue to hold the securities. To the extent that the ratings
given by an NRSRO for securities may change as a result of changes in the
rating systems or due to a corporate reorganization of the NRSRO, the Fund
will attempt to use comparable ratings as standards for its investments in
accordance with the investment objectives and policies of the Fund.
The Fund intends to invest in these securities when their issuers will
be close to, or already have entered, reorganization proceedings. As a
result, it is expected that at or shortly after the time of acquisition by
the Fund, these securities will have ceased to meet their interest payment
obligations, and accordingly would trade in much the same manner as an
equity security. Consequently, the Fund intends to make such investments on
the basis of potential appreciation in the price of these securities, rather
than any expectation of realizing income.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government Securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with other
brokers or dealers that meet the credit guidelines of the Board of Trustees.
In a repurchase agreement, the Fund buys a security from a seller that has
agreed to repurchase the same security at a mutually agreed upon date and
price. The Fund's resale price will be in excess of the purchase price,
reflecting an agreed upon interest rate. This interest rate is effective for
the period of time the Fund is invested in the agreement and is not related
to the coupon rate on the underlying security. Repurchase agreements may
also be viewed as a fully collateralized loan of money by the Fund to the
seller. The period of these repurchase agreements will usually be short,
from overnight to one week, and at no time will the Fund invest in
repurchase agreements for more than one year. The Fund will always require
that it receive as collateral securities whose market value including
accrued interest is, and during the entire term of the agreement remains, at
least equal to 100% of the dollar amount invested by the Fund in each
agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of
the custodian. If the seller defaults, the Fund might incur a loss if the
value of the collateral securing the repurchase agreement declines and might
incur disposition costs in connection with liquidating the collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller
of a security which is the subject of a repurchase agreement, realization
upon the collateral by the Fund may be delayed or limited. The Fund seeks to
minimize the risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligors under repurchase agreements, in accordance
with the credit guidelines of the Trust's Board of Trustees.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors who agree that
they are purchasing the paper for an investment and not with a view to
public distribution. Any resale by the purchaser must be pursuant to
registration or exemption therefrom. Section 4(2) paper is normally resold
to other investors through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. Pursuant to guidelines established by the Trust's Board of
Trustees, Dreyfus may determine that Section 4(2) paper is liquid for the
purposes of complying with the Fund's investment restriction relating to
investments in illiquid securities.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Derivative Instruments. The Fund may purchase and sell various
financial instruments ("Derivative Instruments"), such as options on U.S.
and foreign securities or indices of such securities. The index Derivative
Instruments the Fund may use may be based on indices of U.S. or foreign
equity securities. These Derivative Instruments may be used, for example,
to preserve a return or spread or to facilitate or substitute for the sale
or purchase of securities.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose price
is expected to move in the opposite direction of the price of the investment
being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is sometimes
referred to as an anticipatory hedge. In an anticipatory hedge transaction,
the Fund does not own a corresponding security and, therefore, the
transaction does not relate to a security the Fund owns. Rather, it relates
to a security that the Fund intends to acquire. If the Fund does not
complete the hedge by purchasing the security it anticipated purchasing, the
effect on the Fund's portfolio is the same as if the transaction were
entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that
the Fund owns or intends to acquire. Derivative Instruments on indices, in
contrast, generally are used to attempt to hedge against price movements in
market sectors in which the Fund has invested or expects to invest.
The use of Derivative Instruments is subject to applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures Trading
Commission ("CFTC") and various state regulatory authorities. In addition,
the Fund's ability to use Derivative Instruments will be limited by tax
considerations. See "Dividends, Other Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional opportunities
in connection with other Derivative Instruments. These new opportunities
may become available as Dreyfus develops new techniques, as regulatory
authorities broaden the range of permitted transactions and as new
techniques are developed. Dreyfus may utilize these opportunities to the
extent that they are consistent with the Fund's investment objective, and
permitted by the Fund's investment policies and applicable regulatory
authorities.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability to predict movements of the overall securities and interest
rate markets, which requires different skills than predicting changes in the
prices of individual securities. There can be no assurance that any
particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in value
of the hedged investment, the hedge would not be fully successful. Such a
lack of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which Derivative Instruments are traded. The effectiveness of
hedges using Derivative Instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
securities being hedged.
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts
available will not match the Fund's current or anticipated investments
exactly. The Fund may invest in options contracts based on securities with
different issuers, maturities, or other characteristics from the securities
in which it typically invests, which involves a risk that the options
position will not track the performance of the Fund's other investments.
Options prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments match the Fund's investments
well. Options are affected by such factors as current and anticipated short-
term interest rates, changes in volatility of the underlying instrument, and
the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from
differing levels of demand in the options markets and the securities
markets, from structural differences in how options and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. The Fund may purchase or sell options contracts with a greater or
lesser value than the securities it wishes to hedge or intends to purchase
in order to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in all
cases. If price changes in the Fund's options positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected a
decline in the price of a security in the Fund's portfolio, and the price of
that security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the Derivative Instrument.
Moreover, if the price of the Derivative Instrument declined by more than
the increase in the price of the security, the Fund could suffer a loss. In
either such case, the Fund would have been in a better position had it not
attempted to hedge at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Derivative Instruments involving obligations to third
parties (i.e., Derivative Instruments other than purchased options). If the
Fund were unable to close out its positions in such Derivative Instruments,
it might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. These requirements
might impair the Fund's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time.
The Fund's ability to close out a position in a Derivative Instrument prior
to expiration or maturity depends on the existence of a liquid secondary
market or, in the absence of such a market, the ability and willingness of
the other party to the transaction ("counterparty") to enter into a
transaction closing out the position. Therefore, there is no assurance that
any position can be closed out at a time and price that is favorable to the
Fund.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The Fund
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, futures or options, or (2)
cash and short-term liquid debt securities with a value sufficient at all
times to cover its potential obligations to the extent not covered as
provided in (1) above. The Fund will comply with SEC guidelines regarding
cover for Derivative Instruments and will, if the guidelines so require, set
aside cash, U.S. Government Securities or other liquid, high-grade debt
securities in a segregated account with its custodian in the prescribed
amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities except that all
settlements are in cash and gain or loss depends on changes in the index in
question rather than on price movements in individual securities.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent
of the premium received for writing the option. However, if the investment
appreciates to a price higher than the exercise price of the call option, it
can be expected that the option will be exercised and the Fund will be
obligated to sell the investment at less than its market value.
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the investment
depreciates to a price lower than the exercise price of the put option, it
can be expected that the put option will be exercised and the Fund will be
obligated to purchase the investment at more than its market value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the underlying
investment and general market conditions. Options that expire unexercised
have no value.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and over-the-
counter ("OTC") options. Exchange-traded options in the United States are
issued by a clearing organization that, in effect, guarantees completion of
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty (usually a securities dealer
or a bank) with no clearing organization guarantee. Thus, when the Fund
purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of such
transaction, the sum of (i) the market value of outstanding OTC options
purchased by the Fund, (ii) the market value of the underlying securities
covered by outstanding OTC call options written by the Fund, and (iii) the
market value of all other assets of the Fund that are illiquid or are not
otherwise readily marketable, would exceed 15% of the net assets of the
Fund, taken at market value. However, if an OTC option is sold by the Fund
to a primary U.S. Government Securities dealer recognized by the Federal
Reserve Bank of New York and the Fund has the unconditional contractual
right to repurchase such OTC option from the dealer at a predetermined
price, then the Fund will treat as illiquid such amount of the underlying
securities as is equal to the repurchase price less the amount by which the
option is "in-the-money" (the difference between the current market value of
the underlying securities and the option's strike price). The repurchase
price with primary dealers is typically a formula price that is generally
based on a multiple of the premium received for the option plus the amount
by which the option is "in-the-money."
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the counterparty, or by a transaction in the secondary market
if any such market exists. Although the Fund will enter into OTC options
only with major dealers in unlisted options, there is no assurance that the
Fund will in fact be able to close out an OTC option position at a favorable
price prior to expiration. In the event of insolvency of the counterparty,
the Fund might be unable to close out an OTC option position at any time
prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call option
on the same security with a lower strike price.
Foreign Currency Strategies - Special Considerations. The Fund may use
Derivative Instruments on foreign currencies to hedge against movements in
the values of the foreign currencies in which the Fund's securities are
denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of particular
currency when no Derivative Instruments on that currency are available or
such Derivative Instruments are more expensive than certain other Derivative
Instruments. In such cases, the Fund may hedge against price movements in
that currency by entering into transactions using Derivative Instruments on
another currency or a basket of currencies, the values of which Dreyfus
believes will have a high degree of positive correlation to the value of the
currency being hedged. The risk that movements in the price of the
Derivative Instrument will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged by
having to deal in the odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices
that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large transactions
in the interbank market and thus might not reflect odd-lot transactions
where rates might be less favorable. The interbank market in foreign
currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and the
price. Forward contracts are used as a hedge against future movements in
foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund may
purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Fund intends to acquire. Forward
contracts may also serve as short hedges -- for example, the Fund may sell a
forward contract to lock in the U.S. dollar equivalent of the proceeds from
the anticipated sale of a security denominated in a foreign currency or from
anticipated dividend or interest payments denominated in a foreign currency.
Dreyfus may seek to hedge against changes in the value of a particular
currency by using forward contracts on another foreign currency or basket of
currencies, the value of which Dreyfus believes will bear a positive
correlation to the value of the currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are
usually entered into a principal basis, no fees or commissions are involved.
When the Fund enters into a forward contract, it relies on the counterparty
to make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of
any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets generally
do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by negotiating
directly with the counterparty. Thus, there can be no assurance that the
Fund will in fact be able to close out a forward contract at a favorable
price prior to maturity. In addition, in the event of insolvency of the
counterparty, the Fund might be unable to close out a forward contract at
any time prior to maturity. In either event, the Fund would continue to be
subject to market risk with respect to the position, and would continue to
be required to maintain a position in the securities or currencies that are
the subject of the hedge or to maintain cash or securities in a segregated
account.
The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value
of such securities measured in the foreign currency will change after the
forward contract has been established. Thus, the Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.
Lending of Portfolio Securities. The Fund may lend securities from its
portfolio to brokers, dealers and other financial organizations. Such loans,
if and when made, may not exceed 33 1/3% of the Fund's total assets, taken
at value. The Fund may not lend portfolio securities to its affiliates
without specific authorization from the SEC. Loans of portfolio securities
by the Fund will be collateralized by cash, letters of credit or securities
issued or guaranteed by the U.S. Government or its agencies which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. From time to time, the Fund may
return a part of the interest earned from the investment of collateral
received for securities loaned to the borrower and/or a third party, which
is unaffiliated with the Fund and which is acting as a "finder."
By lending portfolio securities, the Fund can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or by obtaining
yield in the form of interest paid by the borrower when U.S. Government
Securities are used as collateral. Requirements of the SEC, which may be
subject to future modifications, currently provide that the following
conditions must be met whenever portfolio securities are loaned: (1) the
Fund must receive at least 100% cash collateral or equivalent securities
from the borrower; (2) the borrower must increase such collateral whenever
the market value of the loaned securities rises above the level of such
collateral; (3) the Fund must be able to terminate the loan at any time; (4)
the Fund must receive reasonable interest on the loaned securities and any
increase in market value; (5) the Fund may pay only reasonable custodian
fees in connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower; however, if a material event adversely
affecting the investment occurs, the Trustees must terminate the loan and
regain the right to vote the securities. The risks in lending portfolio
securities, as well as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will be made to firms deemed by Dreyfus to be of
good standing and will not be made unless, in the judgment of Dreyfus, the
consideration to be earned from such loans would justify the risk.
Master/Feeder Option. The Trust may in the future seek to achieve the
Fund's investment objectives by investing all of the Fund's assets in
another investment company having the same investment objectives and
substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment. Such investment would be made
only if the Trustees determine it to be in the best interest of the Fund and
its shareholders. In making that determination, the Trustees will consider,
among other things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the Fund
believes that the Trustees will not approve an arrangement that is likely to
result in higher costs, no assurance is given that costs will be materially
reduced if this option is implemented.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy; or (b) more than 50%
of the outstanding shares of the Fund, whichever is less. The Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be invested
in the securities of one or more issuers conducting their principal
activities in the same industry. (For purposes of this limitation, U.S.
Government securities, and state or municipal governments and their
political subdivisions are not considered members of any industry. In
addition, this limitation does not apply to investments in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S.
banks).
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") except that (a)
the Fund may borrow money in an amount not exceeding one-third of the Fund's
total assets at the time of such borrowings, and (b) the Fund may issue
multiple classes of shares. The purchase or sale of futures contracts and
related options shall not be considered to involve the borrowing of money or
issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than one-
third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts and other
similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures contracts
and options are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options shall not constitute purchasing securities on
margin.
3. The Fund shall not purchase oil, gas or mineral leases (the Fund
may, however, purchase and sell the securities of companies engaging in the
exploration, development, production, refining, transportation, and
marketing of oil, gas, or minerals.)
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Trustees of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such
issuer, together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have
been in operation for less than three years, if by reason thereof, the value
of the Fund's investment in securities would exceed 5% of the Fund's total
assets. For purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as the issuer
of a security.
6. The Fund will invest no more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with maturities
in excess of seven days and other securities which are not readily
marketable. For purposes of this limitation, illiquid securities shall not
include Section 4(2) paper and securities which may be resold under Rule
144A under the Securities Act of 1933, provided that the Board of Trustees,
or its delegate, determines that such securities are liquid based upon the
trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the Fund's assets
would be invested in warrants that are not listed on the New York or
American Stock Exchange (for purposes of this undertaking, warrants acquired
by the Fund in units or attached to securities will be deemed to have no
value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total assets
except that: (a) this limitation shall not apply to standby commitments, and
(b) this limitation shall not apply to the Fund's transactions in futures
contracts and options.
As an operating policy, the Fund will not invest more than 25% of the
value of the Fund's total assets, at the time of such purchase, in domestic
banks, including U.S. branches of foreign banks and foreign branches of U.S.
banks. The Board of Trustees may change this operating policy without
shareholder approval. Notice will be given to shareholders if this policy
is changed by the Board of Trustees.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in such percentage resulting from a change in the
values of assets will not constitute a violation of such restriction, except
as otherwise required by the 1940 Act.
MANAGEMENT OF THE FUND
Principal Shareholders
The following shareholders owned of record 5% or more of the
outstanding Class B shares of the Fund at April 1, 1998: MLPF&S for the Sole
Benefit of Its Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246, 25%
record; Dreyfus Investment Services Corporation, 2 Mellon Bank Center,
Pittsburgh, PA 15259, 12% record; Painwebber for the Benefit of Robert and
Mildred Gill, 2031 Broyhill Lane, Pensacola, FL 32526, 6% record; Key
Clearing Corporation, 4900 Tiedeman Road, Brooklyn, OH 44144, 10% record.
The following shareholder(s) owned of record 5% or more of the
outstanding Class C shares of the Fund at April 1, 1998: BT Alex Brown
Incorporated, P.O. Box 1346, Baltimore, MD 21203, 79% record; Piper Jaffray,
Attn. Andrea Postier, 222 So. 9th Street, Minneapolis, MN 55402, 10% record;
Piper Jaffray, Attn.: Kam Postier, 222 So. 9th Street, Minneapolis, MN
55402, 9% record.
There were no shareholder(s) who owned 5% or more of the outstanding
Class A, Class R and Institutional shares of the Fund at April 1, 1998.
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, and in providing services to the Fund as custodian, as well as
Dreyfus' investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that the activities
contemplated under these arrangements are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of
such future statutes and regulations, could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services for its
customers and/or the Fund. If Mellon Bank or Dreyfus were prohibited from
serving the Fund in any of its present capacities, the Board of Trustees
would seek an alternative provider(s) of such services.
Trustees and Officers of the Trust
The Trust has a Board composed of twelve Trustees which supervises the
Trust's investment activities and reviews contractual arrangements with
companies that provide the Fund with services. The following lists the
Trustees and officers and their positions with the Trust and their present
and principal occupations during the past five years. Each Trustee who is an
"interested person" of the Trust as defined in the 1940 Act is indicated by
an asterisk. Each of the Trustees also serves as a Trustee of The
Dreyfus/Laurel Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds").
Trustees of the Trust
o+RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 years old. Address: 80 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Trustees and Assistant
Treasurer of the Trust; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 81 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO, Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. He is also Chairman of
the Board of 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, Noel Group, Inc., a venture capital company, Carlyle
Industries, Inc. (formerly Belding Heminway Company, Inc.), a button
packager 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. 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 Trust; 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 Trust; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 70 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; former Chairman of the Board
and Director, Rexene Corporation; Chairman of the Board and Director,
Tetra Technology 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 Trust; 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., 625 Madison
Avenue, New York, New York 10022.
o*ARCH S. JEFFERY. Trustee of the Trust; 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 Trust; 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 Trust; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. From 1980 till present, Member of
Advisory Committee of Decedents Estates Laws of Penna. Age: 66 years
old. Address: 321 Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.,
Director, American Express Centurion Bank; Director, Harvard/Pilgrim
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
Hyams 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.
o+BENAREE PRATT WILEY. Trustee of the Trust; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African-Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 51 years old. Address: 334 Boylston
Street, Suite 400, Boston, MA.
________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Trust
#MARIE E. CONNOLLY. President and Treasurer of the Trust. 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 Trust.
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 Trust.
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.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of the
Distributor and Funds Distributor, Inc. From April 1994 to July 1996,
he was Assistant Counsel at Forum Financial Group. From October 1992
to March 1994, he was employed by Putnam Investments in legal and
compliance capacities. Age: 33 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Vice President and Assistant Secretary of Funds Distributor, Inc. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust Company. Age: 25 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Trust. 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, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and Director of
Strategic Client Initiatives of Funds Distributor, Inc. From December
1989 to November 1996, he was employed with GE Investments where he
held various financial, business development and compliance positions.
He also served as Treasurer of the GE Funds and as Director of GE
Investment Services. Age: 36 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the Trust.
Senior Vice President, Treasurer, Chief Financial Officer and a
director of the Distributor and Funds Distributor, Inc. From 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.
#ELBA VASQUEZ. Vice President and Assistant Secretary of the Trust.
Assistant Vice President of Funds Distributor, Inc. From March 1990 to
May 1996, she was employed by U.S. Trust Company of New York, where she
held various sales and marketing positions. Age: 36 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 Trust as a group owned
beneficially less than 1% of the total shares of the Fund outstanding as of
April 1, 1998.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) $27,000 per annum (and an additional $25,000 for the
Chairman of the Board of Trustees/Directors of the Dreyfus/Laurel Funds).
In addition, the Dreyfus/Laurel Funds pay each Trustee/Director who is not
an "interested person" of the Trust (as defined in the 1940 Act) $1,000 per
joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1997, the aggregate amount of fees
and expenses received by each current Trustee (with the exception of Ms. Wiley
who was not a Trustee of the Trust as of December 31, 1997) from the Trust 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 Trust
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From The Trust# Member****
Ruth Marie Adams $10,333 $ 31,000
Francis P. Brennan* 20,167 60,500
Joseph S. DiMartino** none 641,534***
James M. Fitzgibbons 9,917 29,750
J. Tomlinson Fort** none none
Arthur L. Goeschel 12,167 36,500
Kenneth A. Himmel 11,500 34,400
Arch S. Jeffery** none none
Stephen J. Lockwood 11,833 35,500
John J. Sciullo 12,167 36,500
Roslyn M. Watson 12,167 36,500
_________________________
# Amounts required to be paid by the Trust directly to the non-interested
Trustees, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested
Trustees. Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $14,011.68 for the Trust.
* Compensation of Francis P. Brennan includes $25,000 paid by the Dreyfus/Laurel
Funds to be the Chairman of the Board.
**For the fiscal year ended December 31, 1997, Joseph S. DiMartino, J. Tomlinson
Fort and Arch S. Jeffery were paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the
fiscal year ended December 31, 1997, the aggregate amount of fees and expenses
received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from
Dreyfus for serving as a Board member of the Trust were $11,500, $13,195.26
and $12,805.55, respectively, and for serving as a Board member of all funds
in the Dreyfus/Laurel Funds (including the Trust) were $34,500, $37,500 and
$36,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $4,401 for expenses attributable to the Trust's
Board meetings which is not included in the $14,011.68 amount in note # above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the fiscal year ended December 31, 1997.
***The Dreyfus Family of Funds consists of 152 mutual funds.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectuses entitled "Management of the
Fund."
Management Agreement. Dreyfus serves as the investment manager for the
Fund pursuant to an Investment Management Agreement with the Trust dated
April 4, 1994 (the "Management Agreement"), transferred to Dreyfus as of
October 17, 1994. Pursuant to the Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As investment manager, Dreyfus manages the Fund by making investment
decisions based on the Fund's investment objectives, policies and
restrictions. The Management Agreement is subject to review and approval at
least annually by the Board of Trustees.
The Management Agreement will continue from year to year provided that
a majority of the Trustees who are not interested persons of the Trust and
either a majority of all Trustees or a majority of the shareholders of the
Fund approve its continuance. The Management Agreement was last approved by
the Board of Trustees on January 28, 1998 to continue until April 4, 1999.
The Trustees 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 sixty days' written notice to
Dreyfus. Dreyfus may terminate the Management Agreement upon written sixty
(60) days' notice to the Trustees. The Management Agreement will terminate
immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus: 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; Ronald P. O'Hanley III,
Vice Chairman; J. David Officer, Vice Chairman; 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.
For the last three fiscal years, the Fund has had the following
expenses:
For the Fiscal Year Ended December 31,
1997(1) 1996(2) 1995(3)
Advisory and/or $5,794,335 $4,489,878 $3,796,468
Management Fee
________________
1. For the fiscal year ended December 31, 1997, the management fee payable
by the Fund amounted to $5,842,985, which amount was reduced by $48,650
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $5,794,335 for fiscal 1997.
2. For the fiscal year ended December 31, 1996, the management fee payable
by the Fund amounted to $4,593,348, which amount was reduced by $103,470
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $4,489,878 for fiscal 1996.
3. For the fiscal year ended December 31, 1995, the management fee payable
by the Fund amounted to $3,863,417, which amount was reduced by $66,949
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $3,796,468 for fiscal 1995.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectuses 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.
Holders of Investor shares of the Fund as of January 15, 1998 may
continue to purchase Class A shares of the Fund at NAV.
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 relating to Class A
shares at a price based upon the offering price of the Fund's Class A
(Investor) shares at the close of business on December 31, 1997:
Net Asset Value per share $ 30.11
Per Share Sales Charge - 5.75% of offering price
(6.10% of net asset value per share) $ 1.84
Per Share Offering Price to Public $ 31.95
Dreyfus Step Program. Holders of the Fund's Investor shares prior to
January 16, 1998 who had enrolled in the Dreyfus Step Program may continue
to purchase shares of the same class (currently designated Class A shares)
without regard to the Fund's minimum initial investment requirements through
Dreyfus-Automatic Asset Builderr, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. Participation in this Program
may be terminated by the shareholder at any time by discontinuing
participation in Dreyfus-Automatic Asset Builder, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be, as
provided under the terms of such Privilege(s).The Fund reserves the right to
redeem your account if you have terminated your participation in the Program
and your account's net asset value is $500 or less. See "How to Redeem
Shares" in the Fund's Prospectus relating to Class A shares. The Fund may
modify or terminate this Program at any time. The Dreyfus Step Program is
not available to open new accounts in any Class of the Fund.
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 that Dreyfus Transfer, Inc., the Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock Exchange
("NYSE") are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day the
Transfer Agent and the NYSE are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the NYSE is not open for
business), will be credited to the shareholder's Fund account on the second
bank business day following such purchase order. 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
objectives, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis for the exchange will depend upon the relative net asset
value ("NAV") of the shares purchased and securities exchanged. Securities
accepted by the Fund will be valued in the same manner as the Fund values
its assets. Any interest earned on the securities following their delivery
to the Fund and prior to the exchange will be considered in valuing the
securities. All interest, dividends, subscription or other rights attached
to the securities become the property of the Fund, along with the securities.
For further information about "in-kind" purchases, call 1-800-554-4611.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Prospectus for the Fund's Class A, Class B, Class C
and Class R shares entitled "Distribution Plans (Class A Plan and Class B
and Class C Plans)," and the section in the Prospectus for the Fund's
Institutional shares entitled "Distribution Plan."
Class A, Class B, Class C, and Institutional shares are subject to
annual fees for distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act ("Rule") regulating
the circumstances under which investment companies such as the Trust may,
directly or indirectly, bear the expenses of distributing their shares. The
Rule defines distribution expenses to include expenditures for "any activity
which is primarily intended to result in the sale of fund shares." The
Rule, among other things, provides that an investment company may bear such
expenses only pursuant to a plan adopted in accordance with the Rule.
Distribution Plan - Class A and Institutional Shares. With respect to
the Class A and Institutional shares of the Fund, the Trust has adopted a
Distribution Plan ("Plan"), pursuant to which the Distributor may enter into
agreements with Agents pursuant to that Class Plan. Under the Plan, the
Fund may spend annually up to 0.25% of the average of its net assets
attributable to the Class A shares, and up to 0.15% of the average of its
net assets attributable to the Institutional shares, for costs and expenses
incurred in connection with the distribution of, and shareholder servicing
with respect to, shares of those respective Classes.
The Plan provides that a report of the amounts expended under the Plan,
and the purposes for which such expenditures were incurred, must be made to
the Trustees for their review at least quarterly. In addition, the Plan
provides that it may not be amended to increase materially the costs which
the Fund may bear for distribution pursuant to the Plan without approval of
the Fund's shareholders, and that other material amendments of the Plan
must be approved by the vote of a majority of the Trustees and of the
Trustees who are not "interested persons" of the Trust (as defined in the
1940 Act) and who do not have any direct or indirect financial interest in
the operation of the Plan, cast in person at a meeting called for the
purpose of considering such amendments. The Plan is subject to annual
approval by the entire Board of Trustees and by the Trustees who are neither
interested persons nor have any direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called for the
purpose of voting on the Plan. The Plan was so approved at a meeting of the
Board of Trustees held on January 28, 1998. The Plan is terminable, as to
the Fund's Class of shares, at any time by vote of a majority of the
Trustees who are not interested persons and have no direct or indirect
financial interest in the operation of the Plan or by vote of the holders of
a majority of the outstanding shares of such class of the Fund.
Distribution and Service Plans -- Class B and Class C Shares. In
addition to the above described current Plan for Class A and Institutional
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 28, 1998. 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.
For the fiscal year ended December 31, 1997, the Fund paid $116,487,
$73,965 of which was paid to the Distributor and $42,522 of which was paid
to Dreyfus Service Corporation attributable to its Class A shares (formerly
called Investor shares) and $1,394,437, of which $17,642 was paid to the
Distributor and $1,376,795 of which was paid to Dreyfus Service Corporation
attributable to its Institutional shares, pursuant to the Plan applicable to
those shares.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectuses entitled "How to Redeem Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone, or letter
redemption instructions from any person representing himself or herself to
be the investor, or a representative of the investor's Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to this Privilege on the next
business day after receipt if the Transfer Agent receives the redemption
request in proper form. Redemption proceeds will be transferred by Federal
Reserve wire only to the commercial bank account specified by the investor
on the Account Application or Shareholder Services Form. Redemption
proceeds, if wired, must be in the amount of $1,000 or more and will be
wired to the investor's account at the bank of record designated in the
investor's file at the Transfer Agent, if the investor's bank is a member of
the Federal Reserve System, or to a correspondent bank if the investor's
bank is not a member. Fees ordinarily are imposed by such bank and usually
are borne by the investor. Immediate notification by the correspondent bank
to the investor's bank is necessary to avoid a delay in crediting the funds
to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
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 holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification.
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."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. In the case of
requests for redemptions in excess of such amount, the Board of Trustees
reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges 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 Prospectuses entitled "Shareholder Services."
Fund Exchanges. Institutional shares of the Fund may be exchanged for
shares of certain other funds managed or administered by Dreyfus. Class A,
Class B, Class C, and Class R shares may be exchanged for shares of the
respective Class of certain other funds advised or administered by Dreyfus.
Shares 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 or the
investor's agent must notify the Transfer Agent of the investor's prior
ownership of shares with a sales load and the account number.
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 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.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for shares of the fund into which the exchange is being made. The
minimum initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs"), and
rollover IRAs), and 403(b)(7) Plans with only one participant, and $500 for
Dreyfus-sponsored Education IRAs. 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 a personal
retirement plan account, the shares exchanged must have a current value of
at least $100.
Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege permits
an investor to purchase, in exchange for Institutional shares of the Fund,
shares of certain other funds managed or administered by Dreyfus and, in
exchange for Class A, Class B, Class C, and Class R shares of the Fund,
shares of the respective Class of certain other funds advised or
administered by Dreyfus. This Privilege is available only for existing
accounts. With respect to Class R shares held by a Retirement Plan,
exchanges may be made only between the investor's Retirement Plan account in
one fund and such investor's Retirement Plan account in another fund.
Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if the
investor's account falls below the amount designated to be exchanged under
this Privilege. In this case, an investor's account will fall to zero
unless additional investments are made in excess of the designated amount
prior to the next Auto-Exchange transaction. Shares held under IRA and
other retirement plans are eligible for this Privilege. Exchanges of IRA
shares may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and 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 their dividends or dividends and other distributions, if any,
from Institutional shares of the Fund in shares of certain other funds in
the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds of which
the investor is a shareholder, and dividends or dividends and other
distributions, if any, from Class A, Class B, Class C or Class R shares of
the Fund in shares of the respective 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 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 (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 other
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 Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and profit-
sharing plans, including a 401(k) Salary Reduction Plan. In addition, the Fund
makes available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for non-
working spouse, Roth IRAs, SEP-IRAs, Education IRAs, and IRA "Rollover
Accounts") and 403(b)(7) Plans. Plan support services are also 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 which acts as custodian may charge a fee for Keogh Plans,
403(b)(7) Plans or IRAs, 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 which acts as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs, with more than one participant, is
$1,000, with no minimum on subsequent purchases. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs,
and rollover IRAs) and 403(b)(7) Plans with only one participant and $500
for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases.
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 Fund Shares."
Restricted securities, as well as securities or other assets for which
market quotations are not readily available or, in the case of fixed-income
securities (excluding short-term investments), that are not valued by the
independent pricing service utilized by the Fund, 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, 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
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"), and (3) 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 or her investment. Such a dividend or
other distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, if a
shareholder sells shares of the Fund held for six months or less and
receives a capital gain distribution with respect to those shares, any loss
incurred on the sale of those shares will be treated as a long-term capital
loss to the extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the year
in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash
or reinvested in additional Fund shares, may be eligible for the dividends-
received deduction allowed to corporations. The eligible portion may not
exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
alternative minimum tax.
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. If more
than 50% of the value of the Fund's total assets at the close of its taxable
year consists of securities of foreign corporations, it will be eligible to,
and may, file an election ("Election") with the Internal Revenue Service
that would enable its shareholders, in effect, to receive the benefit of the
foreign tax credit with respect to any foreign income taxes paid by it.
Pursuant to the Election, the Fund would treat those taxes as dividends paid
to its shareholders and each shareholder would be required to (1) include in
gross income, and treat as paid by him or her, his or her proportionate
share of those taxes, (2) treat his or her share of those taxes and of any
dividend paid by the Fund that represents income from foreign or U.S.
possession sources as his or her own income from those sources and (3)
either deduct the taxes deemed paid by him or her in computing his or her
taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his or her federal income tax.
No deduction for foreign taxes may be claimed by a shareholder who does not
itemize deductions. Generally, a credit for foreign taxes may not exceed
portion of the shareholder's federal income tax attributable to his total
foreign source taxable income; however, pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for
married persons filing jointly) of creditable foreign taxes included on
Forms 1099 and all of whose foreign source income is "qualified passive
income" may elect each year to be exempt from the extremely complicated
foreign tax credit limitation and will be able to claim a foreign tax credit
without having to file the detailed Form 1116 that otherwise is required..
The Fund will report to its shareholders shortly after each taxable year
their respective shares of its income from sources within foreign countries
and U.S. possessions and foreign taxes it paid if it makes the Election.
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 a 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 QEF's 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 gain were not received by the Fund
from the QEF. In most instances it 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 and
losses from the disposition of foreign currencies and certain foreign-currency-
denominated instruments (including debt instruments and financial forward and
futures contracts and options) 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 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.
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
options, 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 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 to 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 options,
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 to the extent
noted above, 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 options, futures or forward contract transactions,
such straddles would be characterized as "mixed straddles" if the
transactions comprising a part of such straddles were governed by Section
1256. The Fund may make one or more elections with respect to mixed
straddles; depending on which election is made, if any, the results to the
Fund may differ. If no election is made, then to the extent the straddle
and conversion transactions rules apply to positions established by the
Fund, losses realized by the Fund will be deferred to the extent of
unrealized gain in the offsetting position. Moreover, as a result of the
straddle rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gains may
be treated as short-term capital gains or ordinary income.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) could, under special tax rules, affect
the amount and timing of distributions to shareholders by causing the Fund
to recognize income prior to the receipt of cash payments. For example, the
Fund could be required to take into gross income annually a portion of the
discount (or deemed discount) at which the securities were issued and could
need to distribute such income to satisfy the Distribution Requirement and
to avoid the excise tax (the "Excise Tax"). In such case, the Fund may have
to dispose of securities it might otherwise have continued to hold in order
to generate cash to satisfy these requirements.
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. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the
foreign shareholder generally will be subject to U.S. federal withholding
tax of 30% (or lower treaty rate). Capital gains realized by foreign
shareholders on the sale of Fund shares and distributions to them of net
capital gain 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 Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that shareholder
on the disposition of the Fund shares will be subject to U.S. federal income
tax at the graduated rates applicable to U.S. citizens and domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with the Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. The Fund will
pay a spread or commissions in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. In selecting
brokers or dealers, Dreyfus will consider various relevant factors,
including, but not limited to, the size and type of the transaction; the
nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial
condition of the broker-dealer; the broker-dealer's execution services
rendered on a continuing basis; and the reasonableness of any spreads (or
commissions, if any). Any spread, commission, fee or other remuneration paid
to an affiliated broker-dealer is paid pursuant to the Trust's procedures
adopted in accordance with Rule 17e-1 under the 1940 Act. Dreyfus may use
research services of and place brokerage transactions with broker-dealers,
affiliated with it or Mellon Bank if the commissions are reasonable, fair
and comparable to commissions charged by non-affiliated brokerage firms for
similar services.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligation to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities; however,
it enables these organizations to avoid the additional expenses which might
otherwise be incurred if these organizations were to attempt to develop
comparable information through their own staffs.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated
in accordance with a formula considered by Dreyfus to be equitable to each
account. In some cases this system could have a detrimental effect on the
price or volume of the investment instrument as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. While
the Trustees will continue to review simultaneous transactions, it is their
present opinion that the desirability of retaining Dreyfus as investment
manager to the Fund outweighs any disadvantages that may be said to exist
from exposure to simultaneous transactions.
Total brokerage commissions paid for the fiscal years ended December
31, 1997, 1996 and 1995 were $1,638,246, $1,391,532 and $331,739,
respectively. The brokerage concession on transactions for the fiscal year
ending December 31, 1995 were $20,100.
Portfolio Turnover. While the Fund does not intend to trade in
securities for short-term profits, the Fund will not consider portfolio
turnover rate a limiting factor in making investment decisions. While it is
not possible to predict the rate of frequency of portfolio transactions
(i.e., portfolio turnover rate) with any certainty, at the present time it
is anticipated that the portfolio turnover rate for the Fund will generally
not exceed 100%. Higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. In addition, to the
extent the Fund realizes short-term gains as a result of more portfolio
transactions, such gains would be taxable to shareholders at ordinary income
tax rates. The portfolio turnover rates for the fiscal years ended December
31, 1997 and 1996 for the Fund were 92.99% and 88.46%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectuses entitled "Performance
Information."
Average annual total return (expressed as a percentage) for the Class A
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1997
1 Year 5 Years 10 Years
Class A Shares
(With Sales Load) 18.01% 17.83% 14.14%
The foregoing chart assumes deduction of the maximum sales load from
the hypothetical initial investment at the time of purchase although no
sales load was applicable to Class A shares or its predecessor class until
January 16, 1998.
Average annual total return (expressed as a percentage) for the
Institutional shares of the Fund for each or the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1997
1 Year 5 Years 10 Years Inception
Institutional Shares 25.34% -- -- 19.26%
(2/1/93)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return (expressed as a percentage) for the Class R
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the Periods Ended December 31, 1997
1 Year 5 Years 10 Years Inception
Class R Shares 25.54% -- -- 23.10%
(8/4/94)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and other distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. The average
annual total return figures for a Class calculated in accordance with such
formula assume that, in the case of Class A, the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or, in the case of Class B or Class C, the maximum applicable CDSC has been
paid upon redemption at the end of the period.
The Fund's total return for Class A shares (formerly called Investor
shares), Class R shares (formerly called Restricted shares), and
Institutional shares for the period February 6, 1947, August 4, 1994 and
February 1, 1993 to December 31, 1997 were 20,962.40%, 103.14% and 137.50%,
respectively (assuming, in the case of Class A shares, deduction of the
maximum sales load from the hypothetical initial investment at the time of
purchase, although no sales load was applicable to Class A shares or its
predecessor class until January 16, 1998). Without giving effect to the
applicable front-end sales load, the total return for Class A was 22,246.96%
for this period. Total return is calculated by subtracting the amount of
the 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 Class 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.
No performance information is provided for the Fund's Class B and Class
C shares which were offered beginning on January 16, 1998.
The Fund may compare the performance of its shares to that of other
mutual funds, relevant indices or rankings prepared by independent services
or other financial or industry publications that monitor mutual fund
performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No
Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and
World Report, Forbes, Fortune, Barron's, Financial Planning, Financial
Planning on Wall Street, Certified Financial Planner Today, Investment
Advisor, Kiplinger's, Smart Money and similar publications may also be used
in comparing the Fund's performance. Furthermore, the Fund may quote its
yields in advertisements or in shareholder reports.
From time to time, the Fund's advertising materials may refer to
Lipper, Morningstar, or Value Line rankings or ratings, and the related
analyses supporting such rankings or ratings.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share, when issued and paid for in accordance with the terms
of the offering, is fully paid. Fund shares are without par value, have no
preemptive or subscription rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
of its shareholders.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust; and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or a Trustee. The Agreement and Declaration
of Trust provides for indemnification from Fund property for all losses and
expenses of any shareholder held personally liable for the obligations of
the Fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
Trust itself would be unable to meet its obligations, a possibility which
Dreyfus believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder of the Fund will be entitled to reimbursements from
the general assets of the Fund. The Trustees intend to conduct the
operations of the Fund in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund.
The Fund is currently one of three portfolios authorized by the Trust's
Board of Trustees.
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 Trust's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Trust, 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 Trust 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, has passed upon the legality of the shares
offered by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick, LLP, 345 Park Avenue, New York, New York 10154 was
appointed by the Trustees to serve as the Fund's independent auditors for
the year ending December 31, 1998, 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.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1997,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements included in the Annual
Report, and the Independent Auditors' Report thereon contained therein, and
related notes, are incorporated herein by reference.
APPENDIX
DESCRIPTION OF STANDARD & POOR'S, MOODY'S, FITCH AND DUFF RATINGS
Standard & Poor's (S&P)
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
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 Ratings
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 strong.
Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
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 some time 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 charac
teristics and in fact have speculative characteristics as well.
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 Ratings
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.
Fitch Investors Services, L.P. ("Fitch")
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+'.
Duff & Phelps Inc. ("Duff")
Commercial Paper Ratings
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.
IBCA Limited/IBCA Inc. ("IBCA")
Commercial Paper Ratings
Short-term obligations, including commercial paper, rated A-1+ by IBCA
are obligations supported by the highest capacity for timely repayment.
Obligations rated A-1 have a strong capacity for timely repayment.
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1998
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 May 1, 1998, as it may be revised from time to time. The Fund is a
separate, diversified portfolio of The Dreyfus/Laurel Funds Trust (the
"Trust"), an open-end management investment trust, known as a mutual fund.
To obtain a copy of the Fund's Prospectus, please write to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call 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 Trust B-16
Management Agreement B-22
Purchase of Shares B-23
Distribution and Service Plans B-25
Redemption of Shares B-26
Shareholder Services B-28
Determination of Net Asset Value B-31
Dividends, Other Distributions and Taxes B-32
Portfolio Transactions B-37
Performance Information B-38
Information About the Fund B-39
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-40
Financial Statements B-41
Appendix B-42
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 Trust's Board of Trustees, Dreyfus may determine that
Section 4(2) paper is liquid for the purposes of complying with the Fund's
investment restriction relating to investments in illiquid securities.
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 Trust'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 Trust'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 Trust
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 Trust'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 Trust 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 Trust 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 Trust's Board determines it to be in the best interest of the
Fund and its shareholders. In making that determination, the Trust'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 Trust 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 TRUST
Principal Shareholders
As of April 1, 1998, the following shareholders owned beneficially 5%
or more of the outstanding Class A shares of the Fund: Investor Fiduciary
Trust Co., 801 Pennsylvania Avenue, Kansas City, MO 64105-1307, 25% record;
MLPF&S for the Sole Benefit of its Customers, 4800 Deer Lake Drive,
Jacksonville, FL 32246-6484, 19% record; Advanced Clearing, P.O. Box 2226,
Omaha, NE 68103-2226, 5% record.
As of April 1, 1998, the following shareholder owned beneficially 5% or
more for the outstanding Class B shares of the Fund: MLPF&S for the Sole
Benefit of its Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246-6484,
47% record.
As of April 1, 1998, the following shareholder owned beneficially 5% or
more of the outstanding Class C shares of the Fund: MLPF&S for the Sole
Benefit of its Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246-6484,
55% record.
As of April 1, 1998, the following shareholder owned beneficially 5% or
more of the outstanding Class R shares of the Fund: MBCIC, c/o Mellon Bank,
Attn. Michael Botsford, 919 N. Market Street, 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 Trust
The Trust has a Board composed of twelve 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 Trust and their present
and principal occupations during the past five years. Each Trustee who is
an "interested person" of the Trust (as defined in the 1940 Act) is
indicated by an asterisk(*). Each of the Trustees also serves as a Trustee
of The Dreyfus/Laurel Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds").
Trustees of the Trust
o+RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 years old. Address: 80 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Trustees and Assistant
Treasurer of the Trust; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 81 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO. Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. He is also Chairman of
the Board of 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; Noel Group, Inc., a venture capital Trust; Carlyle
Industries, Inc. (formerly Belding Heminway Trust, Inc.), a button
packager 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. 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 Trust; Lumber Mutual Insurance Trust;
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 Trust; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 70 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; former Chairman of the Board
and Director, Rexene Corporation; Chairman of the Board and Director,
Tetra Technology 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 Hollow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; former Director, The Boston
Trust, Inc. ("TBC") and Boston Safe Deposit and Trust; 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., 625 Madison Avenue, New York, New
York 10022.
o*ARCH S. JEFFERY. Trustee of the Trust; 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 Trust; President and CEO, LDG
Management Trust 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 Trust; Dean Emeritus and Professor of Law,
Duquesne University Law School; Director, Urban Redevelopment Authority
of Pittsburgh; from November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Institutional
Investment Portfolio. From 1980 till present Member of Advisory
Committee of Decedents Estates Laws of Pennsylvania. Age: 66 years
old. Address: 321 Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.,
Director, American Express Centurion Bank; Director, Harvard/Pilgrim
Community Health Plan, Inc.; from November 1995 to January 1997,
Director, Access Capital Strategic Community Investment Fund, Inc. -
Bank Portfolio; Director, Massachusetts Electric Trust; Director, the
Hyams Foundation, Inc., prior to February, 1993;
Real Estate Development Project Manager and Vice President, The Gunwyn
Trust. Age: 48 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
o+BENAREE PRATT WILEY. Trustee of the Trust; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African-Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 51 years old. Address: 334 Boylston
Street, Suite 400, Boston, MA.
________________________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Trust
#MARIE E. CONNOLLY. President and Treasurer of the Trust. 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 Trust.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust. 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 Trust.
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.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. and the Distributor. From April 1994 to July 1996,
he was Assistant Counsel at Forum Financial Group. From October 1992
to March 1994, he was employed by Putnam Investments in legal and
compliance capacities. Age: 33 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Vice President and Assistant Secretary of Funds Distributor, Inc. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust. Age: 25 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Trust. 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, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and director of
Strategic Client Initiatives of Funds Distributor, Inc. From December
1989 to November 1996, he was employed with GE Investments where he
held various financial, business development and compliance positions.
He also served as Treasurer of the GE Funds and as Director of GE
Investment Services. Age: 36 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the Trust.
Senior Vice President, Treasurer, Chief Financial Officer and a
director of the Distributor and Funds Distributor, Inc. From 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.
#ELBA VASQUEZ. Vice President and Assistant Secretary of the Trust.
Assistant Vice President of Funds Distributor, Inc. From March 1990 to
May 1996, where she was employed by U.S. Trust of New York where she
held various sales and marketing positions. Age: 36 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 Trust is 200 Park Avenue, New York,
New York 10166.
The officers and Trustees of the Trust as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of April 1,
1998.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) $27,000 per annum (and an additional $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 Trust (as defined in the 1940 Act) $1,000 per
joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1997, the aggregate amount of
fees and expenses received by each current Trustee (with the exception of
Ms. Wiley who was not a Trustee of the Trust as of December 31, 1997) from
the Trust 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 Trust
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From The Trust# Member****
Ruth Marie Adams $10,333 $ 31,000
Francis P. Brennan* 20,167 60,500
Joseph S. DiMartino** none 641,534***
James M. Fitzgibbons 9,917 29,750
J. Tomlinson Fort** none none
Arthur L. Goeschel 12,167 36,500
Kenneth A. Himmel 11,500 34,500
Arch S. Jeffery** none none
Stephen J. Lockwood 11,833 35,500
John J. Sciullo 12,167 36,500
Roslyn M. Watson 12,167 36,500
_________________________
# Amounts required to be paid by the Trust directly to the non-interested
Trustees, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested
Trustees. Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $14,011.68 for the Trust.
* Compensation of Francis P. Brennan includes $25,000 paid by the Dreyfus/Laurel
Funds to be the Chairman of the Board.
**For the fiscal year ended December 31, 1997, Joseph S. DiMartino, J. Tomlinson
Fort and Arch S. Jeffery were paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the
fiscal year ended December 31, 1997, the aggregate amount of fees and expenses
received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from
Dreyfus for serving as a Board member of the Trust were $11,500, $13,195.26
and $12,805.55, respectively, and for serving as a Board member of all funds
in the Dreyfus/Laurel Funds (including the Trust) were $34,500, $37,500 and
$36,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $4,401 for expenses attributable to the Trust's
Board meetings which is not included in the $14,011.68 amount in note # above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the fiscal year ended December 31, 1997.
****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 Trust dated
April 4, 1994, transferred to Dreyfus as of October 17, 1994 (the
"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 Trust 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 last approved by the Board of
Trustees on January 28, 1998 to continue until April 4, 1999. The Trust 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
Trust. 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; Ronald P. O'Hanley III,
Vice Chairman; J. David Officer, Vice Chairman; 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.
For the period from May 30, 1997 (the date the Fund commenced
operations) to December 31, 1997, the Fund paid Dreyfus a management fee of
$595,072.
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.
For the period from May 30, 1997 (the date the Fund commenced
operations) to December 31, 1997, the Distributor retained no sales loads on
the Fund's Class A shares. For the same period, the Distributor retained
$35,540 from the CDSC on Class B shares. For the same period, the
Distributor retained $10,967 from the CDSC on Class C shares.
Sales Loads -- Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an individual
and/or spouse purchasing securities for his, her or their own account or for
the account of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single fiduciary
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Internal
Revenue Code of 1986, as amended (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 trust 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 net asset value of the Fund's Class A shares at the close of business on
December 31, 1997:
Net Asset Value per share $12.46
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 $13.05
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 1-800-554-4611.
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
Trust may, directly or indirectly, bear the expenses of distributing their
shares. The Rule defines distribution expenses to include expenditures for
"any activity which is primarily intended to result in the sale of fund
shares." The Rule, among other things, provides that an investment trust
may bear such expenses only pursuant to a plan adopted in accordance with
the Rule.
Distribution Plan--Class A Shares. The Trust has adopted a
Distribution Plan pursuant to the Rule with respect to the Class A shares of
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 Trust's Trustees for their review at least
quarterly. In addition, the Class A Plan provides that it may not be
amended to increase materially the costs which 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 Trust of
Dreyfus 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 28, 1998. 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 Trust's Board of
Trustees has also adopted a Distribution Plan pursuant to the Rule with
respect to Class B and Class C shares (the "Distribution Plan"). The
Trust's Board of Trustees believes that there is a reasonable likelihood
that the Distribution and Service Plans (the "Plans") will benefit the Fund
and the holders of Class B and Class C shares.
For the period from May 30, 1997 (the date the Fund commenced
operations) to December 31, 1997, the distribution and service fees paid by
the Fund were:
Class A Class B Class C
Dreyfus Premier Limited Term High $37,821 $231,723 $132,491
Income Fund
Distribution Plan Fee
Service Plan Fee -- $115,861 $ 44,164
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 28, 1998. 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 Trust'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. The minimum
initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs), and
rollover IRAs), and 403(b)(7) Plans with only one participant, and $500 for
Dreyfus-sponsored Education IRAs. 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 a personal
retirement plan account, the shares exchanged must have a current value of
at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares of the same
Class of another fund 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 their dividends or dividends and capital gain 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 regular IRAs, spousal IRAs for a non-
working spouse, Roth IRAs, SEP-IRAs, Education IRAs and rollover IRAs) and
403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, 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 is $750 for Dreyfus-sponsored Keogh Plans, IRAs,
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum or subsequent
purchases.
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, and fixed income
securities (excluding short-term investments) that 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 Trust" 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 trust
("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 trust 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") and (3) 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
trust. 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 with respect to 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 trust 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.
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 themselves.
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. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the
foreign shareholder 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.
For the period from May 30, 1997 (the date the Fund commenced
operations) to December 31, 1997, the Fund did not pay any brokerage
commissions.
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.
The Fund's portfolio turnover rate for the period from May 30, 1997
(the date the Fund commenced operations) to December 31, 1997 was 28.83%.
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 December 31, 1997
was 8.63%, 8.53%, 8.28% and 9.34% 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 of shares, as follows: the amount of the Fund's
expenses with respect to such Class of shares 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 of shares 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 shares or
the net asset value per share in the case of Class B, Class C and Class R
shares 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 0.58 year period ended
December 31, 1997 for Class A, Class B, Class C and Class R shares were
1.09%, 1.83%, 6.96% and 9.56%, 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 shares, 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 shares the maximum applicable CDSC has been paid upon
redemption at the end of the period.
The Fund's total return for Class A shares for the period June 2, 1997
(inception date of Class A shares) to December 31, 1997 was (0.63%).
Without giving effect to the applicable front - end sales load, the total
return for Class A shares was 5.38% 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 December 31, 1997 was
1.06% and 3.98%, respectively. Without giving effect to the applicable
CDSC, the total return for Class B and Class C shares for this period was
5.04% and 4.98%, respectively. The Fund's total return for Class R shares
for the period from June 2, 1997 (inception date of Class R shares) to
December 31, 1997 was 5.44%. Total return is calculated by subtracting the
amount of a Fund's net asset value (maximum offering price in the case of
Class A shares) per share at the beginning of a stated period from the net
asset value (maximum offering price in the case of Class A shares) 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 shares) per share at the beginning of the
period. Total return also may be calculated based on the net asset value
per share at the beginning of the period instead of the maximum offering
price per share at the beginning of the period for 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; and (iv) 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 Fund's advertising materials may refer to
Lipper, Morningstar, or Value Line Rankings or ratings, and the related
analyses supporting such rankings or ratings.
From time to time, the Fund may compare its 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.
Fund shares have no preemptive, subscription or conversion rights and are
freely transferable. The Fund is one of three portfolios of the Trust.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or a Trustee. The Agreement and Declaration of
Trust provides for indemnification from Fund property for all losses and
expenses of any shareholder held personally liable for the obligations of
the Fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a possibility which
Dreyfus believes is remote. Upon payment of any liability incurred by 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.
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 Fund transfer and dividend
disbursing agent. Under a transfer agency agreement with the Trust, 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 Fund 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 Trust, 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, 345 Park Avenue, New York, NY, 10154, was
appointed by the Trustees to serve as the Fund's independent auditors for
the year ending December 31, 1998, 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.
FINANCIAL STATEMENTS
The financial statements for the fiscal period ended December 31, 1997,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this SAI. The
financial statements included in the Annual Report, and the Independent
Auditors' Report thereon contained therein, and related notes, are
incorporated herein by reference.
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 trust
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
trust 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 trust 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 trust 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.
______________________________________________________________________________
DREYFUS PREMIER MANAGED INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1998
______________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
the Dreyfus Premier Managed Income Fund (formerly, the Premier Managed
Income Fund) (the "Fund"), dated May 1, 1998, as it may be revised from time
to time. The Fund is a separate, diversified portfolio of The
Dreyfus/Laurel Funds Trust (formerly, The Laurel Funds Trust), an open-end
management investment company (the "Trust"), known as a mutual fund. To
obtain a copy of 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 outside of Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies B-2
Management of the Fund B-12
Management Arrangements B-19
Purchase of Fund Shares B-20
Distribution and Service Plans B-22
Redemption of Fund Shares B-23
Shareholder Services B-24
Determination of Net Asset Value B-28
Dividends, Other Distributions and Taxes B-28
Portfolio Transactions B-33
Performance Information B-34
Information About the Fund B-37
Transfer and Dividend Disbursing Agent, Custodian
Counsel and Independent Auditors B-37
Financial Statements B-38
Appendix A B-39
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Description of the
Fund."
Portfolio Securities
Currency Transactions. The Fund may engage in currency exchange
transactions as a means of managing certain risks associated with purchasing
and selling securities denominated in foreign securities. Generally, the
currency exchange transactions of the Fund will be conducted on a spot
(i.e., cash) basis at the spot rate for purchasing or selling currency
prevailing in the currency exchange market. This rate under normal market
conditions differs from the prevailing exchange rate in an amount generally
less than 0.1% due to the cost of converting from one currency to another.
The Fund also may deal in forward exchanges between currencies of the
different countries in which it invests as a hedge against possible
variations in the exchange rates between these currencies. This is
accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the
contract.
Dealings in forward currency exchanges by the Fund are limited to hedging
involving either specific transactions or aggregate portfolio positions.
Transaction hedging is the purchase or sale of foreign currency with respect
to specific receivables or payables of a Fund generally arising in
connection with the purchase or sale of its portfolio securities. Position
hedging is the sale of foreign currency with respect to portfolio security
positions denominated or quoted in such currency. The Fund will not
speculate in forward currency exchanges. The Fund may position hedge with
respect to a particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities held in its
portfolio denominated or quoted in or currently convertible into that
particular currency. If the Fund enters into a position hedging transaction,
its custodian or sub-custodian bank will place cash or readily marketable
securities in a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of such
forward contract. If the value of the securities placed in the segregated
account declines, additional cash or securities will be placed in the
account so that the value of the account will equal the amount of the Fund's
commitment with respect to such contracts. The Fund will not attempt to
hedge all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Dreyfus. The
Fund will not enter into a position hedging commitment if, as a result
thereof, the Fund would have more than 15% of the value of its total assets
committed to such contracts. The Fund will not enter into a forward contract
with a term of more than one year.
It may not be possible for the Fund to hedge against a devaluation that
is so generally anticipated that the Fund is not able to contract to sell
the currency at a price above the devaluation level it anticipates. The cost
to the Fund of engaging in currency transactions varies with such factors as
the currency involved, the length of the contract period and the market
conditions then prevailing. Since transactions in currency exchanges are
usually conducted on a principal basis, no fees or commissions are involved.
At or before the maturity of a forward contract, the Fund may either sell
a portfolio security and make delivery of the currency, or it may retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract with the same currency trader obligating it to
purchase, on the same maturity date, the same amount of the currency. If the
Fund retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss (as described below) to the extent
that there has been movement in forward contract prices. If the Fund engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the currency. Should forward prices decline during the
period between the Fund's entering into a forward contract for the sale of a
currency and the date it enters into an offsetting contract for the purchase
of the currency, the Fund will realize a gain to the extent the price of the
currency it has agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the Fund will suffer a
loss to the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.
The use of forward currency contracts by the Fund will be limited to the
transactions described above. The Fund is not required to enter into such
transactions with regard to its portfolio securities, regardless of currency
denomination, and will not do so unless deemed appropriate by Dreyfus. The
use of forward currency contracts does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of
exchange which can be achieved at some future point in time. In addition,
although forward currency contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of the currency increase.
Because the Fund invests in foreign securities, the Fund will hold from
time to time various foreign currencies pending its investment in foreign
securities or conversion into U.S. dollars. Although the Fund values its
assets daily in terms of U.S. dollars, it does not convert its holdings of
foreign currencies into U.S. dollars on a daily basis. When converting
foreign currencies to U.S. dollars, the Fund may incur costs of currency
conversion. A foreign exchange dealer does not charge a fee for conversion,
but it does realize a profit based on the difference, which is known as the
spread, between the prices at which the dealer is buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
U.S. Government Securities. The Fund may invest in U.S. Government
Securities that are direct obligations of the U.S. Treasury, or that are
issued by agencies and instrumentalities of the U.S. Government and
supported by the full faith and credit of the U.S. Government. These include
Treasury notes, bills and bonds and securities issued by the Government
National Mortgage Association ("GNMA"), the Federal Housing Administration,
the Department of Housing and Urban Development, the Export-Import Bank, the
Farmers Home Administration, the General Services Administration, the
Maritime Administration and the Small Business Administration.
The Fund may also invest in U.S. Government Securities that are not
supported by the full faith and credit of the U.S. Government. These include
securities issued by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home Loan Banks,
Tennessee Valley Authority, Student Loan Marketing Association and District
of Columbia Armory Board. Because the U.S. Government is not obligated by
law to provide support to an instrumentality it sponsors, the Fund will
invest in obligations issued by such an instrumentality only when Dreyfus
determines that the credit risk with respect to the instrumentality does not
make its securities unsuitable for investment by the Fund.
GNMA certificates represent ownership interests in a pool of mortgages
issued by a mortgage banker or other mortgagee. Distributions on GNMA
certificates include principal and interest components. GNMA, a corporate
instrumentality of the U.S. Department of Housing and Urban Development,
guarantees timely payment of principal and interest on GNMA certificates;
this guarantee is deemed a general obligation of the United States, backed
by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is insured
by the Federal Housing Administration or the Farmers Home Administration, or
is insured or guaranteed by the Veterans Administration. The mortgages have
maximum maturities of 40 years. Government statistics indicate, however,
that the average life of the underlying mortgages is shorter, due to
scheduled amortization and unscheduled prepayments (attributable to
voluntary prepayments or foreclosures). GNMA has introduced a pass-through
security backed by adjustable-rate mortgages. The securities will bear
interest at a rate which will be adjusted annually. The prepayment
experience of the mortgages underlying these securities may vary from that
for fixed-rate mortgages.
FNMA and FHLMC are Government sponsored corporations owned by private
stockholders. Each is subject to general regulation by an office of the
Department of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA and FHLMC are guaranteed by those entities as to
payment of principal and interest.
Bank Obligations. The Fund is permitted to invest in high-quality,
short-term money market instruments. The Fund may invest temporarily, and
without limitation, in such instruments when, in Dreyfus' opinion, a
"defensive" investment posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable obligations of
commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international transactions.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members
of the Federal Reserve System and to be insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state law
are supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. In addition, all
banks whose certificates of deposit may be purchased by the Trust are
insured by the FDIC and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of governmental
regulations, domestic branches of foreign banks are, among other things,
generally required to maintain specified levels of reserves, and are subject
to other supervision and regulations designed to promote financial
soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch or may be limited by the terms of a specific obligation and by
governmental regulations. Payment of interest and principal upon obligations
of foreign banks and foreign branches of domestic banks may be affected by
governmental action in the country of domicile of the branch (generally
referred to as sovereign risk). Examples of such action would be the
imposition of currency controls, interest limitations, seizure of assets, or
the declaration of a moratorium. Evidence of ownership of portfolio
securities may be held outside of the United States, and the Trust may be
subject to the risks associated with the holdings of such property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about a
domestic bank. The Trust will carefully consider these factors in making
such investments.
Mortgage Backed Securities. The Fund may invest in various mortgage
backed securities, as described in its Prospectus. Mortgage backed
securities represent an ownership interest in a pool of residential mortgage
loans. These securities are designed to provide monthly payments of interest
and principal to the investor. The mortgagor's monthly payments to his/her
lending institution are "passed-through" to an investor. Most issuers or
poolers provide guarantees of payments, regardless of whether or not the
mortgagor actually makes the payment. The guarantees made by issuers or
poolers are supported by various forms of credit, collateral, guarantees or
insurance, including individual loan, title, pool and hazard insurance
purchased by the issuer. There can be no assurance that the private issuers
or poolers can meet their obligations under the policies. Mortgage backed
securities issued by private issuers or poolers, whether or not such
securities are subject to guarantees, may entail greater risk than
securities directly or indirectly guaranteed by the U.S. Government.
Interests in pools of mortgage backed securities differ from other forms
of debt securities, which normally provide for periodic payment of interest
in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a "pass-
through" of the monthly payments made by the individual borrowers on
their residential mortgage loans, net of any fees paid. Additional payments
are caused by repayments resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or costs which
may be incurred. Some mortgage backed securities are described as "modified
pass-through." These securities entitle the holders to receive all interest
and principal payments owed on the mortgages in the pool, net of certain
fees, regardless of whether or not the mortgagors actually make the
payments. Collateralized Mortgage Obligations ("CMOs") are generally issued
as a series of different classes. An issue of CMOs tends to be backed by a
larger number of mortgages than GNMA, FNMA or FHLMC certificates, thus
allowing greater statistical prediction of prepayment characteristics.
Interest and principal payments on the mortgages underlying any series will
first be applied to meet the interest payment requirements of each class in
the series other than any class in respect of which interest accrues but is
not paid or any principal only class. Then, principal payments on the
underlying mortgages are generally applied to pay the principal amount of
the class that has the earliest maturity date. Once that class is retired,
the principal payments on the underlying mortgages are applied to the class
with the next earliest maturity date. This is repeated until all classes are
paid. Therefore, while each class of CMOs remains subject to prepayment as
the underlying mortgages prepay, structuring several classes of CMOs in the
stream of principal payments allows one to more closely estimate the period
of time when any one class is likely to be repaid. The Fund may invest in
mortgage backed securities issued by FHLMC and FNMA.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential mortgage loans,
including CMOs, in which the 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. Dreyfus intends to limit its purchases
of mortgage backed securities issued by certain private organizations and non-
mortgage backed securities to securities that are readily marketable at
the time of purchase.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities. Any recession could severely disrupt the market for
such securities and adversely affect the value of such securities. Any such
economic downturn also could adversely affect the ability of the issuers of
such securities to repay principal and pay interest thereon.
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Ratings Service, a division of McGraw-Hill Companies,
Inc. ("S&P") generally represent the opinions of those organizations as to
the quality of the securities that they rate. Such ratings, however, are
relative and subjective, are not absolute standards of quality and do not
evaluate the market risk of the securities. Although Dreyfus uses these
ratings as a criterion for the selection of securities for the Fund, Dreyfus
also relies on its independent analysis to evaluate potential investments
for the Fund. The Fund's achievement of its investment objective may be more
dependent on Dreyfus' credit analysis of low-rated and unrated securities
than would be the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities may cease
to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. In addition, it is possible that an NRSRO might not
timely change its ratings of a particular issue to reflect subsequent
events. None of these events will require the sale of the securities by the
Fund, although Dreyfus will consider these events in determining whether the
Fund should continue to hold the securities. To the extent that the ratings
given by an NRSRO for securities may change as a result of changes in the
rating systems or due to a corporate reorganization of the NRSRO, the Fund
will attempt to use comparable ratings as standards for its investments in
accordance with the investment objective and policies of the Fund.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government Securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with other
brokers or dealers that meet the credit guidelines of the Board of Trustees.
In a repurchase agreement, the Fund buys a security from a seller that has
agreed to repurchase the same security at a mutually agreed upon date and
price. The Fund's resale price will be in excess of the purchase price,
reflecting an agreed upon interest rate. This interest rate is effective
for the period of time the Fund is invested in the agreement and is not
related to the coupon rate on the underlying security. Repurchase
agreements may also be viewed as a fully collateralized loan of money by the
Fund to the seller. The period of these repurchase agreements will usually
be short, from overnight to one week, and at no time will the Fund invest in
repurchase agreements for more than one year. The Fund will always require
that it receive as collateral securities whose market value including
accrued interest is, and during the entire term of the agreement remains, at
least equal to 100% of the dollar amount invested by the Fund in the
agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of
the Fund's custodian. If the seller defaults, the Fund might incur a loss
if the value of the collateral securing the repurchase agreement declines
and might incur disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of a security which is the subject of a repurchase
agreement, realization upon the collateral by the Fund may be delayed or
limited. Dreyfus seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligors under
repurchase agreements, in accordance with the credit guidelines of the
Trust's Board of Trustees.
When-Issued Securities. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that
delivery and payment for the securities normally will take place
approximately 7 to 45 days after the date the buyer commits to purchase
them. The payment obligation and the interest rate that will be received on
securities purchased on a when-issued basis are each fixed at the time the
buyer enters into the commitment. The Fund will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities or dispose of the
commitment before the settlement date if it is deemed advisable as a matter
of investment strategy. Cash or marketable high-grade debt securities equal
to the amount of the above commitments will be segregated on the Fund's
records. For the purpose of determining the adequacy of these securities the
segregated securities will be valued at market. If the market value of such
securities declines, additional cash or securities will be segregated on the
Fund's records on a daily basis so that the market value of the account will
equal the amount of such commitments by the Fund.
Securities purchased on a when-issued basis and the securities held by
the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates --
i.e., they will appreciate in value when interest rates decline and decrease
in value when interest rates rise. Therefore, if in order to achieve higher
interest income the Fund remains substantially fully invested at the same
time that it has purchased securities on a "when-issued" basis, there will
be a greater possibility of fluctuation in the Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations carries
with it a greater potential for the realization of capital gains, which are
subject to federal income taxes.
Commercial Paper. 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 in an exempt
transaction. Section 4(2) paper is normally resold to other investors
through or with the assistance of the issuer or investment dealers who make
a market in Section 4(2) paper, thus providing liquidity. Pursuant to
guidelines established by the Trust's Board of Trustees, Dreyfus may
determine that Section 4(2) paper is liquid for the purposes of complying
with the Fund's investment restriction relating to investments in illiquid
securities.
Management Policies
The Fund engages, except as noted, in the following practice in
furtherance of its investment objective.
Loans of Fund Securities. The Fund has authority to lend its portfolio
securities provided (1) the loan is secured continuously by collateral
consisting of U.S. Government Securities or cash or cash equivalents
adjusted daily to make a market value at least equal to the current market
value of these securities loaned; (2) the Fund may at any time call the loan
and regain the securities loaned; (3) the Fund will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value
of securities loaned will not at any time exceed one-third of the total
assets of the Fund. In addition, it is anticipated that the Fund may share
with the borrower some of the income received on the collateral for the loan
or that it will be paid a premium for the loan. In determining whether to
lend securities, Dreyfus considers all relevant factors and circumstances
including the creditworthiness of the borrower.
Master/Feeder Option. The Trust may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially
the same investment policies and restrictions as those applicable to the
Fund. Shareholders of the Fund will be given at least 30 days' prior notice
of any such investment. Such investment would be made only if the Trustees
determine it to be in the best interest of the Fund and its shareholders.
In making that determination, the Trustees will consider, among other
things, the benefits to shareholders and/or the opportunity to reduce costs
and achieve operational efficiencies. Although the Fund believes that the
Trustees will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy; or (b) more than 50%
of the outstanding shares of the Fund, whichever is less. The Fund may not:
1. Purchase any securities which would cause 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. In addition, this
limitation does not apply to investments of domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") except that (a) 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 futures contracts and related
options shall not be considered to involve the borrowing of money or
issuance of senior securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such loans. For
purposes of this restriction debt instruments and repurchase agreements
shall not be treated as loans.
4. Underwrite securities issued by any other person, except to the extent
that the purchase of securities and the later disposition of such securities
in accordance with the Fund's investment program may be deemed an
underwriting.
5. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent 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. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contracts and other
similar instruments.
7. 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.
The Fund may, notwithstanding any other fundamental investment policy or
restriction, invest all of its investable assets in securities of a single open-
end management investment company with substantially the same
investment objective, policies, and restrictions as the Fund.
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 Trust will not purchase or retain the securities of any issuer if
the officers, directors or Trustees of the Trust, its advisers, or managers
owning beneficially more than one half of one percent of the securities of
each issuer together own beneficially more than five percent of such
securities.
2. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have
been in operation for less than three years, if by reason thereof the value
of the Fund's investment in securities would exceed 5% of the Fund's total
assets. For purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as the issuer
of a security.
3. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total assets
except that: (a) this restriction shall not apply to standby commitments,
and (b) this restriction shall not apply to the Fund's transactions in
futures contracts and options.
4. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York or American Stock
Exchange (for purposes of this restriction, warrants acquired by the Fund in
units or attached to securities will be deemed to have no value).
5. 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 restriction, illiquid securities shall not include
commercial paper issued pursuant to Section 4(2) of the Securities Act of
1933 and securities which may be resold under Rule 144A under the Securities
Act of 1933, provided that the Board of Trustees, or its delegate,
determines that such securities are liquid, based upon the trading markets
for the specific security.
6. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
7. The Fund will not purchase oil, gas or mineral leases (the Fund may,
however, purchase and sell the securities of companies engaged in the
exploration, development, production, refining, transporting and marketing
of oil, gas or minerals).
8. The Fund shall not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the securities
sold short, and provided that transactions in futures contracts and options
are not deemed to constitute selling securities short.
9. The Fund shall not purchase securities on margin, except that the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options shall not constitute purchasing securities on margin.
10. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
As an operating policy, the Fund will not invest more than 25% of the
value of its total assets, at the time of purchase, in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S. banks.
The Trust's Board of Trustees may change this policy without shareholder
approval. Notice will be given to shareholders if this policy is changed by
the Board.
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 FUND
Principal Shareholders
As of April 1, 1998, the following shareholder owned of record more than
5% of Class A shares of the Fund: Boston Safe Deposit and Trust Company,
One Cabot Road, Medford, MA 02155-5141, 6% record.
As of April 1, 1998, the following shareholder owned of record more than
5% of Class B shares of the Fund: MLPF&S for the Sole Benefit of its
Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246; 23% record
As of April 1, 1998, the following shareholders owned of record more than
5% of Class C shares of the Fund: MLPF&S for the Sole Benefit of its
Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246, 46% record; B.
Zaitz and Sons, Inc., P.O. Box 190, Highstown, NJ 08520-0190, 16% record;
U.S. Clearing Corporation, 26 Broadway, New York, NY 10004, 10% record;
Painwebber for the Benefit of Bernard and Josephine Zoeller, 201 Steamboat
Station, Southampton, PA 18966, 6% record.
As of April 1, 1998, the following shareholders owned of record more than
5% of Class R shares of the Fund: Boston Safe Deposit and Trust Company,
Attn. Lien Kennedy, One Cabot Road, Medford, MA 02155, 34% record; Boston
and Company, P.O. Box 3198, Pittsburgh, PA 15230, 26% record; Dreyfus Trust
Company for Managed Capital Corporation and Affiliated Co., 144 Glenn
Curtiss Blvd., Uniondale, NY 11553, 7% record; Dreyfus Trust Company,
Hologic 401(k) & Savings Plan, 144 Glenn Curtiss Boulevard, Uniondale, NY
11556, 6% record.
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging in
the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, 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 there arrangements are consistent with statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of
such future statutes and regulations, could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services for its
customers and/or the Fund. If Mellon Bank or Dreyfus were prohibited from
serving the Fund in any of its present capacities, the Board of Trustees
would seek an alternative provider(s) of such services.
Trustees and Officers of the Trust
The Trust has a Board composed of twelve Trustees which supervises the
Trust's investment activities and reviews contractual arrangements with
companies that provide the Fund with services. The following lists the
Trustees and officers and their positions with the Trust and their present
and principal occupations during the past five years. Each Trustee who is
an "interested person" of the Trust (as defined in the 1940 Act) is
indicated by an asterisk. Each of the Trustees also serves as a Trustee of
The Dreyfus/Laurel Tax-Free Municipal Funds and as a Director of The
Dreyfus/Laurel Funds, Inc. (collectively, with the Trust, the
"Dreyfus/Laurel Funds").
Trustees of the Trust
o+RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 years old. Address: 80 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Trustees and Assistant
Treasurer of the Trust; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 81 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DiMARTINO. Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino served as Chairman of the Board for various
funds in the Dreyfus Family of Funds. He is also Chairman of the Board
of 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; Noel Group, Inc., a venture capital company and Carlyle
Industries, Inc. (formerly, Belding Heminway Company, Inc.), a button
packager 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 1994, Chief Operating Officer of Dreyfus and Executive
Vice President and a director of Dreyfus Service Corporation, a wholly-
owned subsidiary of Dreyfus. From August 1994 until 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 Trust; Chairman, Howes Leather
Company, Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance
Company; Director, Barrett Resources, Inc.; 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 Trust; Partner, Reed, Smith, Shaw &
McClay (law firm); from November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio.
Age: 70 years old. Address: 204 Woodcock Drive, Pittsburgh,
Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Trust; 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 Technology
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 Trust; 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: 625 Madison Avenue, New York, New York
10022.
o*ARCH S. JEFFERY. Trustee of the Trust; 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 Trust; President and CEO, LDG Manage
ment 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 Trust; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. From 1980 till present, Member of
Advisory Committee of Decedents Estates Laws of Penna. Age: 66 years
old. Address: 321 Gross Street, Pittsburgh, Pennsylvania 15224
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures;
Director, American Express Centurion Bank; Director, 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
Hyams 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.
o+BENAREE PRATT WILEY. Trustee of the Trust; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African-Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 51 years old. Address: 334 Boylston
Street, Suite 400, Boston, MA.
_______________________
* "Interested person" of the Trust, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Trust
#MARIE E. CONNOLLY. President and Treasurer of the Trust. 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 Trust.
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 Trust.
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.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. and the Distributor. From April 1994 to July 1996,
he was Assistant Counsel at Forum Financial Group. From October 1992
to March 1994, he was employed by Putnam Investments in legal and
compliance capacities. Age: 33 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Vice President and Assistant Secretary of Funds Distributor, Inc. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust Company. Age: 25 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Trust. 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, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and director of
Strategic Client Initiatives of Funds Distributor, Inc. From December
1989 to November, 1996, he was employed with GE Investments where he
held various financial, business development and compliance positions.
He also served as Treasurer of the GE Funds and as Director of GE
Investment Services. Age: 36 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the Trust.
Senior Vice President, Treasurer, Chief Financial Officer and a
director of the Distributor and Funds Distributor, Inc. From 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.
#ELBA VASQUEZ. Vice President and Assistant Secretary of the Trust.
Assistant Vice President of Funds Distributor, Inc. From March 1990 to
May 1996, she was employed by U.S. Trust Company of New York. As an
officer of U.S. Trust, she held various sales and marketing positions
Age: 36 years old.
The address of each officer of the Trust is 200 Park Avenue, New York,
New York 10166.
________________
# 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 officers and Trustees of the Trust as a group owned beneficially less
than 1% of the total shares of the Fund outstanding as of April 1, 1998.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. The Dreyfus/Laurel Funds pay each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 Act), $27,000 per annum (and an additional $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 Trust (as defined in the 1940 Act), $1,000 per
joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Trustee/Director who is not an "interested person" of the Trust (as defined
in the 1940 act) for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1997, the aggregate amount of fees
and expenses received by each current Trustee of the Trust (with the
exception of Ms. Wiley who was not a Trustee of the Trust as of December 31,
1997) from the Trust 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 Trust
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From The Trust# Member****
Ruth Marie Adams $10,333 $ 31,000
Francis P. Brennan* 20,167 60,500
Joseph S. DiMartino** none 641,534***
James M. Fitzgibbons 9,917 29,750
J. Tomlinson Fort** none none
Arthur L. Goeschel 12,167 36,500
Kenneth A. Himmel 11,500 34,400
Arch S. Jeffery** none none
Stephen J. Lockwood 11,833 35,500
John J. Sciullo 12,167 36,500
Roslyn M. Watson 12,167 36,500
_________________________
# Amounts required to be paid by the Trust directly to the non-interested
Trustees, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-interested
Trustees. Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $14,011.68 for the Trust.
* Compensation of Francis P. Brennan includes $25,000 paid by the Dreyfus/Laurel
Funds to be the Chairman of the Board.
**For the fiscal year ended December 31, 1997, Joseph S. DiMartino, J. Tomlinson
Fort and Arch S. Jeffery were paid directly by Dreyfus for serving as Board
members of the Trust and the funds in the Dreyfus/Laurel Funds. For the
fiscal year ended December 31, 1997, the aggregate amount of fees and expenses
received by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from
Dreyfus for serving as a Board member of the Trust were $11,500, $13,195.26
and $12,805.55, respectively, and for serving as a Board member of all funds
in the Dreyfus/Laurel Funds (including the Trust) were $34,500, $37,500 and
$36,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $4,401 for expenses attributable to the Trust's
Board meetings which is not included in the $14,011.68 amount in note # above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the fiscal year ended December 31, 1997.
****The Dreyfus Family of Funds consists of 152 mutual funds.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
Management Agreement. Dreyfus serves as the investment manager for the
Fund pursuant to an Investment Management Agreement with the Trust dated
April 4, 1994 (the "Management Agreement"), transferred to Dreyfus as of
October 17, 1994. Pursuant to the Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As investment manager, Dreyfus manages the Fund by making investment
decisions based on the Fund's investment objective, policies and
restrictions. The Management Agreement is subject to review and approval at
least annually by the Board of Trustees.
The Management Agreement will continue from year to year provided that a
majority of the Trustees who are not interested persons of the Trust and
either a majority of all Trustees or a majority of the shareholders of the
Fund approve its continuance. The Management Agreement was last approved by
the Board of Trustees on January 28, 1998 to continue until April 4, 1999.
The Trust 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 Trust. 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; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman; 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; Mandell L. Berman, Burton C. Borgelt, Frank V. Cahouet, and
Richard F. Syron, directors.
As compensation for Dreyfus' services, the Fund pays a fee, based on its
total average daily net assets, that is computed daily and paid monthly.
The rates at which such fees are paid are described in the Prospectus.
Dreyfus may waive all or a portion of its fees payable by the Fund from time
to time.
The following table shows the fees paid by the Fund to Dreyfus, including
any fee waiver during the 1997, 1996 and 1995 fiscal years.
1997 1996 1995
Fee Fee Fee
Dreyfus Premier Managed
Income Fund $656,463 $653,857 $632,276
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Premier Family of
Funds, for funds in the Dreyfus Family of Funds and for certain other
investment companies.
For the fiscal year ended December 31, 1995, the Distributor retained
$2,566 from sales loads on the Fund's Class A shares. For the fiscal year
ended December 31, 1995, the Distributor retained $294 from the contingent
deferred sales charge ("CDSC") on Class B shares for the Fund. For the same
period, the Distributor retained no fees from the CDSC on Class C shares for
the Fund. For the fiscal year ended December 31, 1996, the Distributor
retained $32,647 from sales loads on the Fund's Class A shares. For the
same period, the Distributor retained $26,667 from the CDSC on Class B
shares. For the same period, the Distributor retained $1,219 from the CDSC
on Class C shares. For the fiscal year ended December, 31, 1997, the
Distributor retained no sales loads on the Fund's Class A shares. For the
same period, the Distributor retained $18,388 from the CDSC on Class B
shares. For the same period, the Distributor retained $756 from the CDSC on
Class C shares.
Sales Loads--Class A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual
and/or spouse purchasing securities for his, her or their own account or for
the account of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single fiduciary
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Internal
Revenue Code of 1986, as amended ("Code") although more than one beneficiary
is involved; or a group of accounts established by or on behalf of the
employees of an employer or affiliated employers pursuant to an employee
benefit plan or other program (including accounts established pursuant to
Sections 403(b), 408(k), and 457 of the Code); or an organized group which
has been in existence for more than six months, provided that it is not
organized for the purpose of buying redeemable securities of a registered
investment company and provided that the purchases are made through a
central administration or a single dealer, or by other means which result in
economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares aggregating less than $50,000 subject to the schedule of sales
charges set forth in the Fund's Prospectus at a price based upon the net
asset value of the Fund's Class A shares at the close of business on
December 31, 1997.
Net Asset Value per Share $11.01
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $0.51
Per Share Offering Price to
the Public $11.52
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange ("NYSE") are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 P.M., New York time, on any
business day the Transfer Agent and the NYSE are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the NYSE is
not open for business), will be credited to the shareholder's Fund account
on the second bank business day following such purchase order. 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 Fund Shares- TeleTransfer Privilege".
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
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 for the exchange will depend upon the relative NAV of the
shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securities
become the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call 1-800-554-4611.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distribution Plans
(Class A Plan and Class B and C Plans)."
Distribution Plan
The Securities and Exchange Commission ("SEC") has adopted Rule 12b-1
under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Trust may, directly or indirectly, bear the
expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Distribution Plan--Class A Shares. The Trust has adopted a Distribution
Plan pursuant to the Rule with respect to the Class A shares of 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 Trust's Trustees for their review at least quarterly.
In addition, the Class A Plan provides that it may not be amended to
increase materially the costs which 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" of the Trust (as defined in the 1940 Act) and who do
not have any direct or indirect financial interest in the operation of the
Class A Plan, cast in person at a meeting called for the purpose of
considering such amendments. The Class A Plan is subject to annual approval
by the entire Board of Trustees and by the Trustees who are neither
interested persons nor have any direct or indirect financial interest in the
operation of the Class A Plan, by vote cast in person at a meeting called
for the purpose of voting on the Class A Plan. The Plan was so approved at
a meeting of the Board of Trustees held on January 28, 1998. The Class A
Plan is terminable, as to the Fund's Class A shares, at any time by vote of
a majority of the Trustees who are not interested persons and have no direct
or indirect financial interest in the operation of the Class A Plan or by
vote of the holders of a majority of the outstanding shares of such class of
the Fund.
Distribution and Service Plans -- Class B and C Shares. In addition to
the above described current Class A Plan for Class A shares, the Board of
Trustees has adopted a Service Plan (the "Service Plan") under the Rule for
Class B and Class C shares, pursuant to which the Fund pays the Distributor
and Dreyfus Service Corporation for the provision of certain services to the
holders of Class B and Class C shares. The Trust's Board of Trustees has
also adopted a Distribution Plan pursuant to the Rule with respect to
Class B and Class C shares (the "Distribution Plan"). The Trust's Board of
Trustees believes that there is a reasonable likelihood that the
Distribution and Service Plans (the "Plans") will benefit the Fund and the
holders of Class B and Class C shares.
For the fiscal year ended December 31, 1997, the distribution and service
fees paid by the Fund were:
Class A Class B Class C
Dreyfus Premier Managed Distribution Plan Fee $185,099 $44,368 $5,807
Income Fund Service Plan Fee ___ $14,789 $1,936
Class R shares bear no distribution or service fees.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, each Plan provides that it may not
be amended to increase materially the cost which holders of Class B or C
shares may bear pursuant to the Plan without the approval of the holders of
such Classes and that other material amendments of the Plan must be approved
by the Board of Trustees and by the Trustees who are not interested persons
of the Fund and have no direct or indirect financial interest in the
operation of the Plan or in any agreements entered into in connection with
the Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. Each Plan is subject to annual approval by
such vote of the Trustees cast in person at a meeting called for the purpose
of voting on the Plan. Each Plan was last approved by the Trustees at a
meeting held on January 28, 1998. Each Plan may be terminated at any time
by vote of a majority of the Trustees who are not interested persons and
have no direct or indirect financial interest in the operation of the Plan
or in any agreements entered into in connection with the Plan or by vote of
the holders of a majority of Class B and C shares.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification. For
more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will
be effected as a TeleTransfer transaction through the Automated Clearing
House ("ACH") system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's account
at an ACH member bank ordinarily two business days after receipt of the
redemption request. See "Purchase of Fund Shares--TeleTransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record of the Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. In the case of
requests for redemption in excess of such amount, the Board of Trustees
reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the NYSE is closed
(other than customary weekend and holiday closings), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the SEC so that disposal of the Fund's investments
or determination of its net asset value is not reasonably practicable, or
(c) for such other periods as the SEC by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the same or a comparable class of certain other funds advised or
administered by Dreyfus. Shares of the same or comparable 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 CDSC that are exchanged for shares
of another fund will be subject to the higher applicable CDSC of
the two funds, and for purposes of calculating CDSC rates and
conversion periods, if any, will be deemed to have been held since
the date the shares being exchanged were initially purchased.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
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 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.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. The minimum
initial investment is generally $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs"), and
rollover IRAs) and 403(b)(7) Plans with only one participant, and $500 for
Dreyfus-sponsored Education IRAs. To exchange shares held in Corporate
Plans, 403(b)(7) Plans and IRAs set up under a Simplified Employee Pension
Plan ("SEP-IRAs") with more than one participant, the minimum initial
investment is generally $100 if the plan has at least $2,500 invested among
shares of the same Class of the Funds in the Dreyfus Family of Funds. To
exchange shares held in a personal retirement plan account, the shares
exchanged must have a current value of at least $100.
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
another fund 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 and such
investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above under
"Fund Exchanges." Enrollment in or modification or cancellation of this
privilege is effective three business days following notification by the
investor. An investor will be notified if the investor's account falls
below the amount designated to be exchanged under this privilege. In this
case, an investor's account will fall to zero unless additional investments
are made in excess of the designated amount prior to the next Dreyfus Auto-
Exchange transaction. Shares held under IRA and other retirement plans are
eligible for this privilege. Exchanges of IRA shares may be made between
IRA accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and Auto-Exchange Privilege are available to shareholders
resident in any state in which shares of the fund being acquired may legally
be sold. Shares may be exchanged only between accounts having identical
names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an investor
with a $5,000 minimum account to request withdrawal of a specified dollar
amount (minimum of $50) on either a monthly or quarterly basis. Withdrawal
payments are the proceeds from sales of Fund shares, not the yield on the
shares. If withdrawal payments exceed reinvested dividends and distribu
tions, 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.
Dividend Sweep. Dividend Sweep allows investors to invest automatically
their dividends or dividends and capital gain distributions, if any, from
the Fund in shares of the same Class of another fund in the Dreyfus 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 regular IRAs, spousal IRAs for a non-
working spouse, Roth IRAs, SEP-IRAs and rollover IRAs), and 403(b)(7) Plans.
Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs, with more than one participant, is
$1,000, with no minimum on subsequent purchases. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs, (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum on subsequent purchases.
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 Fund Shares."
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or that are not valued by the
independent pricing service utilized by the Fund, 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 generally will take the following factors
into consideration that restricted securities that 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, 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
taxable 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") and (3) 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 or her 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.
Foreign Taxes. Dividends and interest received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors. If more than 50% of the value of the Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, it
will be eligible to, and may, file an election ("Election") with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign or
U.S. possessions' income taxes paid by it. Pursuant to the election, the
Fund would treat those taxes as dividends paid to its shareholders and each
shareholder would be required to (1) include in gross income, and treat as
paid by him or her, his or her proportionate share of those taxes, (2) treat
his or her share of those taxes and of any dividend paid by the Fund that
represents income from foreign or U.S. possession sources as his or her own
income from those sources and (3) either deduct the taxes deemed paid by him
or her in computing his or her taxable income or, alternatively, use the
foregoing information in calculating the foreign tax credit against his or
her federal income tax. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Generally, a credit for
foreign taxes may not exceed the shareholder's federal income tax
attributable to his total foreign source taxable income. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes the Election.
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 a 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 QEF's 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" ("Excise Tax") even if those earnings and gain were not received by
the Fund from the QEF. In most instances it 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.
Foreign Currency, Futures, Forwards and Hedging Transactions. Gains from
the sale or other disposition of foreign currencies (except certain gains
that may be excluded by future regulations), and gains from options, futures
and forward contracts derived by the Fund with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income under the Income Requirement.
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 instruments (including debt instruments and financial forward,
futures and option contracts) may be treated as ordinary income or loss
under Section 988 of the Code. In addition, all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds
will be treated as ordinary income. Moreover, all or a portion of the gain
realized from engaging in "conversion transactions" that would be treated as
capital gain may be treated as income under Section 1258 of the Code.
"Conversion transactions" are defined to include certain forward, futures,
option and straddle transactions, transactions marketed or sold as producing
capital gains and other transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain futures, forward contracts ("Section 1256 Contracts") and
options transactions will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon
exercise or lapse of such contracts and options as well as from closing
transactions. In addition, any such contracts or options remaining
unexercised at the end of the Fund's taxable year will be treated as sold
for their then fair market value (a process known as "marking to market"),
resulting in additional gain or loss to the Fund characterized in the manner
described above.
As of the date of this SAI, whether the 60% portion will qualify for the
reduced maximum tax rates on net capital gain enacted by the Tax Relief Act
of 1997 ("Tax Act") -- 20% (10% for taxpayers in the 15% marginal tax
bracket) for gain recognized on capital assets held for more than 18 months
- -- instead of the 28% rate in effect before that legislation, which now
applies to gain recognized 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 late in 1997 would treat it as qualifying
therefor.
Offsetting positions held by the Fund involving certain contracts or
options 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 to the extent noted above, 1258
of the Code, which in certain circumstances override or modify Sections 1256
and 988. As such, all or a portion of any short-term or long-term capital
gain from certain straddle transactions may be recharacterized as ordinary
income. If the Fund were treated as entering into straddles by reason of
its engaging in certain forward contracts or options transactions, such
straddles would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such straddles were
governed by Section 1256. The Fund may make one or more elections with
respect to mixed straddles; depending on which election is made, if any,
the results to the Fund may differ. If no election is made, then to the
extent the straddle and conversion transactions rules apply to positions
established by the Fund, losses realized by the Fund will be deferred to the
extent of unrealized gain in the offsetting position. Moreover, as a result
of the straddle rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gains may
be treated as short-term capital gains or ordinary income.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) could, under special tax rules, affect
the amount and timing of distributions to shareholders by causing the Fund
to recognize income prior to the receipt of cash payments. For example, the
Fund could be required to take into gross income annually a portion of the
discount (or deemed discount) at which the securities were issued could need
and to distribute such income to satisfy the Distribution Requirement and to
avoid the excise tax (the "Excise Tax") referred in the Fund's Prospectus
under "Dividends, Other Distributions and Taxes." In such case, the Fund
may have to dispose of securities it might otherwise have continued to hold
in order to generate cash to satisfy these requirements.
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 advised
to consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal income
taxation of a shareholder who, as to the United States, is a non-resident
alien individual, a foreign trust or estate, a foreign corporation or a
foreign partnership (a "foreign shareholder") depends on whether the income
from the Fund is "effectively connected" with a U.S. trade or business
carried on by the shareholder, as discussed generally below. Special U.S.
federal income tax rules that differ from those described below may apply to
certain foreign persons who invest in the Fund, 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. Dividends
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 generally will be subject to a U.S. federal withholding tax of
30% (or lower treaty rate). Capital gains realized by foreign shareholders
on the sale of Fund shares and distributions to them of net capital gain the
excess of long-term capital gain 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 Fund shares is effectively connected with a U.S.
trade or business carried on by the 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
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with the Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. The Fund will
pay a spread or commissions in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. In selecting brokers
or dealers, Dreyfus will consider various relevant factors, including, but
not limited to, the size and type of the transaction; the nature and
character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any spreads (or commissions, if
any). Any spread, commission, fee or other remuneration paid to an
affiliated broker-dealer is paid pursuant to the Trust's procedures adopted
in accordance with Rule 17e-1 of the 1940 Act. Dreyfus may use research
services of and place brokerage transactions with broker-dealers affiliated
with it on Mellon Bank if the commissions are reasonable, fair and
comparable to commissions charged by non-affiliated brokerage firms for
similar services.
Brokers or dealers may be selected who provide brokerage and/or research
services to the Fund and/or other accounts over which Dreyfus or its
affiliates exercise investment discretion. Such services may include advice
concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligation to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities; however,
it enables these organizations to avoid the additional expenses which might
otherwise be incurred if these organizations were to attempt to develop
comparable information through their own staffs.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated
in accordance with a formula considered by Dreyfus to be equitable to each
account. In some cases this system could have a detrimental effect on the
price or volume of the investment instrument as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. While
the Trustees will continue to review simultaneous transactions, it is their
present opinion that the desirability of retaining Dreyfus as investment
manager to the Fund outweighs any disadvantages that may be said to exist
from exposure to simultaneous transactions.
For the fiscal years ended December 31, 1995, 1996 and 1997, the Fund did
not pay any brokerage commissions.
Portfolio Turnover. While the Fund does not intend to trade in
securities for short-term profits, the Fund will not consider portfolio
turnover rate a limiting factor in making investment decisions. While it is
not possible to predict the rate of frequency of portfolio transactions
(i.e., portfolio turnover rate) with any certainty, at the present time it
is anticipated that the portfolio turnover rate of the Fund is likely to
exceed 100%. Higher portfolio turnover rates can result in corresponding
increases in brokerage commissions. In addition, to the extent the Fund
realizes short-term gains as a result of more portfolio transactions, such
gains would be taxable to shareholders (other than tax-exempt shareholders)
at ordinary income tax rates.
The portfolio turnover rates for the fiscal years ended 1996 and 1997 for
the Fund were 251.66%% and 244.44%, respectively.
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 December 31, 1997
was 6.30%, 5.85%,5.85% and 6.84% 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 Class A shares for the 1, 5,
and 10 year periods ended December 31, 1997 were 4.81%, 6.69% and 7.88%,
respectively. The average annual total returns for Class B shares for the 1
year period ended December 31, 1997 and for the period December 19, 1994
(inception of Class B) through December 31, 1997 were 4.97% and 8.06%,
respectively. The average annual total returns for Class C shares for the 1
year period ended December 31, 1997 and for the period December 19, 1994
(inception of Class C) through December 31, 1997 were 7.96%, and 8.88%,
respectively. The average annual total returns for Class R shares for the 1
year period ended December 31, 1997 and for the period February 1, 1993
(inception of Class R) through December 31, 1997 were 9.97% and 7.65%,
respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and other distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. A Class' average
annual total return figures calculated in accordance with such formula
assume that in the case of Class A the maximum sales load has been deducted
from the hypothetical initial investment at the time of purchase or in the
case of Class B or C the maximum applicable CDSC has been paid upon
redemption at the end of the period.
Effective April 4, 1994, the Retail and Institutional Class of shares of
the Fund were reclassified as a single class of Shares known as "Investor
Shares" and the Investment Class of shares of the Fund was renamed as the
Fund's "Trust Shares." Effective October 17, 1994, the Fund redesignated the
Investor Shares as "Class A shares" and the Trust Shares as "Class R
shares." The following performance data for Class A shares is reflective of
the Fund's Retail Class of Shares' performance. In addition, the following
performance data for the Class R shares of the Fund reflects the Fund's
former Investment Shares and Trust Shares.
The Fund's total return for the period August 1, 1979 (commencement of
operations) to December 31, 1997 for Class A was 417.08%. Based on net
asset value per share, the total return for Class A was 441.41% for this
period. The Fund's total return for Class B and Class C for the period from
December 19, 1994 (inception date of Class B and Class C) through December
31, 1997 was 26.58% and 29.51%, respectively. Without giving effect to the
applicable CDSC, the total return for Class B and C was 29.58% and 29.51%,
respectively, for this period. The Fund's total return for the period
February 1, 1993 (inception date of Class R) through December 31, 1997 was
43.59%.
Total return is calculated by subtracting the amount of the 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.
The Fund may compare the performance of its shares to that of other
mutual funds, relevant indices or rankings prepared by independent services
or other financial or industry publications that monitor mutual fund
performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No
Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and
World Report, Forbes, Fortune, Barron's, Financial Planning, Financial
Planning on Wall Street, Certified Financial Planner Today, Investment
Advisor, Kiplinger's, Smart Money and similar publications may also be used
in comparing the Fund's performance. Furthermore, the Fund may quote its
yields in advertisements or in shareholder reports.
From time to time, advertising material for the Fund may including
biographical information relating to its portfolio manager and may refer to,
or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
Yield information is useful in reviewing the Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to
compare an investment in the Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that yield is a function of the kind and quality of the instruments
in the Fund's portfolio, portfolio maturity, operating expenses and market
conditions. The Fund's yields and total returns will also be affected if
Dreyfus waives its investment management fees.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share, when issued and paid for in accordance with the terms of
the offering, is fully paid and non-assessable. Fund shares are without par
value, have no preemptive or subscription rights, and are freely
transferable. The Fund is one of three portfolios of the Trust.
The Fund will send annual and semi-annual financial statements to all of
its shareholders.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts
or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed
by the Trust or a Trustee. The Agreement and Declaration of Trust provides
for indemnification from Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations, a possibility which Dreyfus
believes is remote. Upon payment of any liability incurred by the Fund, the
shareholder of the Fund 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.
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 Trust's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Trust, 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 Trust 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 Trust, 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, Second Floor,
Washington, D.C. 20036, has passed upon the legality of the shares offered
by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, NY 10154, was appointed
by the Trustees to serve as the Fund's independent auditors for the year
ending December 31, 1998, 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.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1997,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report are included in the Annual Report to
Shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements, included in the Annual
Report, and the Independent Auditors' Report thereon contained therein, and
related notes, are incorporated herein by reference.
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 trust
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
trust 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 trust 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 trust 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.
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights for each of the periods
indicated therein.
Included in Part B: The following financial statements
for the first year ended December 31, 1997 are incorporated by reference to
the Registrant's Semi-Annual Report to Shareholders filed on March 3, 1998.
- Reports of Independent Auditors.
- Portfolio of Investments.
- Statement of Assets and Liabilities.
- Statement of Operations.
- Statements of Changes in Net Assets.
- Notes to Financial Statements.
(b) Exhibits:
1(a) Second Amended and Restated Agreement and Declaration of
Trust. Incorporated by reference to Post-Effective
Amendment No. 87.
1(b) Amendment No. 1 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust filed on
February 7, 1994. Incorporated by reference to
Post-Effective Amendment No. 90.
1(c) Amendment No. 2 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust filed on
March 31, 1994. Incorporated by reference to
Post-Effective Amendment No. 90.
1(d) Amendment No. 3 to Registrant's Second Amended
and Restated Agreement and Declaration of Trust.
Incorporated by reference to Post-Effective Amendment No.
93 filed on December 13, 1994.
1(e) Amendment No. 4 to Registrant's Second Amended
and Restated Agreement and Declaration. Incorporated by
reference to Post-Effective Amendment No. 93.
2 Amended and Restated By-Laws. Incorporated by
reference to Post-Effective Amendment No. 75.
3 Not Applicable.
4 Specimen security. To be filed by Amendment.
5(a) Investment Management Agreement between the Registrant and
Mellon Bank, N.A., dated April 4, 1994. Incorporated by
reference to Post-Effective Amendment No. 90.
5(b) Assignment Agreement among the Registrant, Mellon Bank, N.A.
and The Dreyfus Corporation, dated as of October 17, 1994,
(relating to Investment Management Agreement
dated April 4, 1994). Incorporated by reference to
Post-Effective Amendment No. 93 filed on December 13, 1994.
6 Distribution Agreement between the Registrant and Premier
Mutual Fund Services, Inc., dated as of October 17, 1994.
Incorporated by reference to Post-Effective
Amendment No. 93 filed on December 13, 1994.
7 Not applicable.
8(a) Custody and Fund Accounting Agreement between the Registrant
and Mellon Bank, N.A., dated April 4, 1994. Incorporated by
reference to Post-Effective Amendment No. 102 filed on
April 23, 1997.
8(b) Amendment to Custody and Fund Accounting Agreement, dated
August 1, 1994. Incorporated by reference to Post-Effective
Amendment No. 93 filed on December 13, 1994.
9(a) Transfer Agent Agreement between the Registrant
and Boston Safe Deposit and Trust Company (currently known
as The Shareholder Services Group, Inc.) Incorporated by
reference to Post-Effective Amendment No. 102 filed on
April 23, 1997.
9(b) Supplement to Transfer Agent Agreement for the Registrant,
dated June 1, 1989. Incorporated by reference to Post-
Effective Amendment No. 78.
9(c) Supplement to Transfer Agent Agreement for the Registrant,
dated April 4, 1994. Incorporated by
reference to Post-Effective Amendment No. 93 filed on
December 13, 1994.
10 Opinion of counsel is incorporated by reference to the
Registration Statement and to Post-Effective Amendment No.
93 filed on December 13, 1994. Consent of counsel is filed
herewith.
11(a) Consent of KPMG Peat Marwick LLP is incorporated
by reference to Post-Effective Amendment No. 94.
11(b) Consent of Coopers & Lybrand LLP is incorporated
by reference to Post-Effective Amendment No. 94.
12 Not Applicable.
13 Not Applicable.
14 Not applicable.
15(a) Restated Distribution Plan (relating to Investor Shares and
Class A Shares). Incorporated by reference to Post-
Effective Amendment No. 93 filed on December 13, 1994.
15(b) Form of Distribution and Service Plans (relating
to Class B Shares and Class C Shares). Incorporated by
reference to Post-Effective Amendment No. 93 filed on
December 13, 1994.
16 Performance Information is incorporated by reference
to Post-Effective Amendment No. 76.
18 Registrant's Rule 18f-3 Plans, as revised are incorporated
by reference to Post-Effective Amendment No. 100.
Other Exhibits
--------------
(a) Powers of attorney of the Trustees and Officers dated April
5, 1995 are incorporated by reference to Post-Effective
Amendment No. 94.
Item 25. Persons Controlled By or Under Common Control with
Registrant
Not Applicable.
Item 26. Number of Holders of Securities
-------------------------------
Set forth below are the number of recordholders of
securities of each series of the Registrant as of
April 1, 1998:
Number of Record Holders
Class A Class B Class C Class R Institutional
Title of Class Shares Shares Shares Shares Shares
- -------------- ------- ------- ------- ------- -------------
Dreyfus Premier Core 18,529 50 4 70 1,773
Value Fund
Class A Class B Class C Class R
Shares Shares Shares Shares
------- ------- ------- -------
Dreyfus Premier Managed 4,057 365 21 57
Income Fund
Class A Class B Class C Class R
Shares Shares Shares Shares
------- ------- ------- -------
Dreyfus Premier Limited Term 1,667 6,826 2,162 2
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 Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.**;
Director:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit 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
J. DAVID OFFICER Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
Dreyfus Financial Services Corporation*****;
Dreyfus Investment Services Corporation*****;
Mellon Trust of Florida
2875 Northeast 191st Street
North Miami Beach, Florida 33180;
Mellon Preferred Capital Corporation****;
Boston Group Holdings, Inc.****;
Mellon Trust of New York
1301 Avenue of the Americas - 41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Executive Vice President:
Mellon Bank, N.A.***;
Vice Chairman and Director:
The Boston Company, Inc.****;
President and Director:
RECO, Inc.****;
The Boston Company Financial Services,
Inc.****;
Boston Safe Deposit and Trust Company****;
RONALD P. O'HANLEY Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
The Boston Company Asset Management, LLC****;
TBCAM Holding, Inc.****;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Floor
Boston, Massachusetts 02110;
Mellon Capital Management Corporation
595 Market Street, Suite #3000
San Francisco, California 94105;
Certus Asset Advisors Corporation
One Bush Street, Suite 450
San Francisco, California 94104;
Mellon-France Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.****;
Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP***;
Mellon Equity Associates, LLP***;
Trustee:
Laurel Capital Advisors, LLP***;
Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.***;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
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+++;
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 Dreyfus Transfer, Inc.
Fund 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 Union Trust Building,
501 Grant Street, Room 179, Pittsburgh, Pennsylvania 15259;
+ 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 Tax-Free Municipal Funds
36) Dreyfus LifeTime Portfolios, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus MidCap Index Fund
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus 100% U.S. Treasury Intermediate Term Fund
56) Dreyfus 100% U.S. Treasury Long Term Fund
57) Dreyfus 100% U.S. Treasury Money Market Fund
58) Dreyfus 100% U.S. Treasury Short Term Fund
59) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
60) Dreyfus Pennsylvania Municipal Money Market Fund
61) Dreyfus Premier California Municipal Bond Fund
62) Dreyfus Premier Equity Funds, Inc.
63) Dreyfus Premier Global Investing, Inc.
64) Dreyfus Premier GNMA Fund
65) Dreyfus Premier Growth Fund, Inc.
66) Dreyfus Premier Insured Municipal Bond Fund
67) Dreyfus Premier Municipal Bond Fund
68) Dreyfus Premier New York Municipal Bond Fund
69) Dreyfus Premier State Municipal Bond Fund
70) Dreyfus Premier Value Fund
71) Dreyfus S&P 500 Index Fund
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund, Inc.
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Fund, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Fund, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Richard W. Ingram Executive Vice President Vice President
and Assistant
Treasurer
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, PA 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.
(2) 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 Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 30th day of April, 1998.
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 04/30/98
- ---------------------------
Marie E. Connolly
/s/Francis P. Brennan* Trustee, 04/30/98
- --------------------------- Chairman of the Board
Francis P. Brennan
/s/Ruth Marie Adams* Trustee 04/30/98
- ---------------------------
Ruth Marie Adams
/s/Joseph S. DiMartino* Trustee 04/30/98
- ---------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 04/30/98
- ---------------------------
James M. Fitzgibbons
/s/Kenneth A. Himmel* Trustee 04/30/98
- ---------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 04/30/98
- ---------------------------
Stephen J. Lockwood
/s/Roslyn M. Watson* Trustee 04/30/98
- ---------------------------
Roslyn M. Watson
/s/J. Tomlinson Fort* Trustee 04/30/98
- ---------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 04/30/98
- ---------------------------
Arthur L. Goeschel
/s/Arch S. Jeffery* Trustee 04/30/98
- ---------------------------
Arch S. Jeffery
/s/John Sciullo* Trustee 04/30/98
- ---------------------------
John Sciullo
/s/Benaree Pratt Wiley* Trustee 04/30/98
- ---------------------------
Benaree Pratt Wiley
*By: Michael S. Petrucelli
---------------------------
Attorney-in-Fact
Independent Auditors' Consent
To the Shareholders and Board of Trustees
The Dreyfus/Laurel Funds Trust
We consent to the use of our reports dated February 18, 1998 with respect to
The Dreyfus/Laurel Funds Trust (comprised of Dreyfus Premier Core Value Fund
(formerly Dreyfus Core Value Fund), Dreyfus Premier Managed Income Fund and
the Dreyfus Premier Limited Term High Income Fund) incorporated by reference
in the Statements of Additional Information and to the references to our firm
under the headings "Financial Highlights" in the Prospectuses and "Transfer
and Dividend Disbursing Agent, Custodian Counsel and Independent Auditors" in
the Statements of Additional Information.
KPMG Peat Marwick LLP
New York, New York
April 20, 1998
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
