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. 110 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 110 [ 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, Esq.
The Dreyfus Corporation
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, 1999 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
----
Dreyfus Premier Core Value Fund
Investing in value stocks for long-term capital growth
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Premier Core Value Fund
--------------------------------
Ticker Symbols CLASS A: DCVIX
CLASS B: N/A
CLASS C: N/A
CLASS R: DTCRX
INSTITUTIONAL SHARES: DCVFX
Contents
The Fund
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
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Account Policies 6
Distributions and Taxes 8
Services for Fund Investors 9
Instructions for Regular Accounts 10
Instructions for IRAs 11
For More Information
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INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
GOAL/APPROACH
The fund seeks long-term capital growth as a primary objective, with current
income as a secondary objective. These objectives may be changed without
shareholder approval. To pursue its goals, the fund invests primarily in equity
securities of large-cap value companies. The fund's equity investments may
include common stocks and securities convertible into common stocks. The fund
invests mainly in the stocks of U.S. issuers; it limits its foreign stock
holdings to 20% of the value of its total assets.
In choosing stocks, the portfolio manager looks for value companies. The
portfolio manager uses a "bottom-up" approach focusing on three key factors:
(pound) VALUE: quantitative screens track traditional measures such as
price-to-earnings, price-to-book and price-to-sales ratios.
These ratios are analyzed and compared against the market.
(pound) SOUND BUSINESS FUNDAMENTALS: a company's balance sheet and income data
are examined to determine the company's financial history.
(pound) POSITIVE BUSINESS MOMENTUM: a company's earnings and forecast changes
are analyzed and sales and earnings trends are reviewed to determine
its financial condition.
The fund typically sells a stock when it is no longer considered a value
company, shows negative business momentum, appears less likely to benefit from
the current market and economic environment, shows deteriorating fundamentals or
falls short of the manager's expectations.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
<PAGE>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of your investment in the fund will go up
and down, which means that you could lose money.
Value stocks involve the risk that they may never reach what the manager
believes is their full market value, either because the market fails to
recognize the stock's intrinsic worth or the manager misgauged that worth. They
also may decline in price, even though in theory they are already underpriced.
Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the fund's performance may sometimes be lower or
higher than that of other types of funds (such as those emphasizing growth
stocks).
Foreign securities involve special risks such as changes in currency exchange
rates, a lack of adequate company information, political instability and
potentially less liquidity.
Under adverse market conditions, the fund could invest some or all of its assets
in money market securities. Although the fund would do this to avoid losses, it
could have the effect of reducing the benefit from any upswing in the market.
The fund may, at times, invest some assets in derivative securities, such as
options, to hedge the fund's portfolio and also to increase returns. The fund
may also invest in foreign currencies to hedge the fund's portfolio. When
employed, these practices may reduce returns or increase volatility.
Derivatives can be illiquid, and a small investment in certain derivatives could
have a potentially large impact on the fund's performance.
At times, the fund may engage in short-term trading, which could produce higher
brokerage costs and taxable distributions.
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table below shows how the performance of the fund's Class A shares has varied
from year to year. Sales loads are not reflected in that table; if they were,
returns would be less than those shown. The second table compares the
performance of Class A, Class R and Institutional shares over time to that of
the S&P 500((reg.tm)) Index, a widely recognized unmanaged index of stock
performance. These returns reflect any applicable sales loads. Both tables
assume the reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future. Since Class B and Class C
have less than one calendar year of performance, past performance information
for those classes is not included in this section of the prospectus. Performance
for Class B and Class C shares will vary from the performance of the fund's
other share classes due to differences in charges and expenses.
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<TABLE>
Year-by-year total return AS OF 12/31 EACH YEAR (%)
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
24.96 -13.44 22.87 4.03 16.51 0.38 35.56 21.44 25.21 7.06
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '97 +15.28%
WORST QUARTER: Q3 '90 -17.44%
</TABLE>
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Average annual total return AS OF 12/31/98
<TABLE>
<CAPTION>
Since
Inception date 1 Year 5 Years 10 Years inception
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<S> <C> <C> <C> <C> <C>
CLASS A (2/6/47) 0.89% 15.85% 12.89% --
CLASS R (8/4/94) 7.01% -- -- 19.25%
INSTITUTIONAL
SHARES (2/1/93) 7.17% 17.35% -- 17.12%
S&P 500 INDEX 28.60% 24.05% 19.19% 21.77%*
* BASED ON THE LIFE OF INSTITUTIONAL SHARES. FOR COMPARATIVE PURPOSES THE VALUE
OF THE INDEX ON 1/31/93 IS USED AS THE BEGINNING VALUE ON 2/1/93.
</TABLE>
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goals, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE 1>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
Fee table
<TABLE>
<CAPTION>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R SHARES
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<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
% OF OFFERING PRICE 5.75 NONE NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
% OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE NONE
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ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees .90 .90 .90 .90 .90
Rule 12b-1 fee .25 1.00 1.00 NONE .15
Other expenses .00 .00 .00 .00 .00
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TOTAL 1.15 1.90 1.90 .90 1.05
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
</TABLE>
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
CLASS A $685 $919 $1,172 $1,892
CLASS B
WITH REDEMPTION $593 $897 $1,226 $1,848**
WITHOUT REDEMPTION $193 $597 $1,026 $1,848**
CLASS C
WITH REDEMPTION $293 $597 $1,026 $2,222
WITHOUT REDEMPTION $193 $597 $1,026 $2,222
CLASS R $92 $287 $498 $1,108
INSTITUTIONAL SHARES $107 $334 $579 $1,283
** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
<PAGE 2>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $120 billion in over 160 mutual
fund portfolios. Dreyfus is the primary mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $389 billion of assets under management and $1.9 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
During the past fiscal year, the fund paid Dreyfus an investment advisory fee at
the annual rate of 0.90% of the fund's average daily net assets.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The fund is managed by Valerie J. Sill. Ms. Sill is a portfolio manager of
Dreyfus and Senior Vice President of The Boston Company Asset Management, Inc.
("TBCAM"), an affiliate of Dreyfus. She is also a member of the Equity Policy
Group of TBCAM. She previously served as director of equity research and as an
equity research analyst for TBCAM. She has been employed by Dreyfus as a
portfolio manager of the fund since February 1996.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: 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 from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
The Fund
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CLASS A 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 30.11 30.40 30.13 24.56 27.80
Investment operations: Investment income (loss) -- net .19 .22 .31 .41 .42
Net realized and unrealized gain (loss)
on investments 1.95 6.98 6.03 8.24 (.29)
Total from investment operations 2.14 7.20 6.34 8.65 .13
Distributions: Dividends from investment income -- net (.17) (.23) (.30) (.45) (.40)
Dividends in excess of investment income -- net -- (.01) -- -- --
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (2.99) (7.49) (6.07) (3.08) (3.37)
Net asset value, end of period 29.26 30.11 30.40 30.13 24.56
Total return (%)* 7.06 25.21 21.44 35.56 .38
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.15 1.14 1.13 1.13 1.11
Ratio of net investment income to average net assets (%) .61 .64 .96 1.43 1.47
Decrease reflected in above expense ratios due to actions by the manager (%) -- .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
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Net assets, end of period ($ x 1,000) 555,863 585,624 486,816 401,674 317,868
* EXCLUSIVE OF SALES CHARGE.
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
CLASS B 1998(1)
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<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) -- net (.02)
Net realized and unrealized gain (loss) on investments 3.00
Total from investment operations 2.98
Distributions: Dividends from investment income -- net (.01)
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%)(2) 10.24(3)
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.82(3)
Ratio of net investment income (loss) to average net assets (%) (.14)(3)
Portfolio turnover rate (%) 84.32(3)
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Net assets, end of period ($ x 1,000) 2,033
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1998.
(2) EXCLUSIVE OF SALES CHARGE.
(3) NOT ANNUALIZED.
</TABLE>
<PAGE 4>
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
CLASS C 1998(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) -- net (.02)
Net realized and unrealized gain (loss) on investments 3.00
Total from investment operations 2.98
Distributions: Dividends from investment income -- net (.01)
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%)(2) 10.24(3)
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.82(3)
Ratio of net investment income (loss) to average net assets (%) (.13)(3)
Portfolio turnover rate (%) 84.32(3)
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Net assets, end of period ($ x 1,000) 195
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1998.
(2) EXCLUSIVE OF SALES CHARGE.
(3) NOT ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997 1996 1995 1994(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 30.11 30.46 30.18 24.56 28.45
Investment operations: Investment income (loss) -- net .26 .33 .36 .62 .29
Net realized and unrealized gain (loss)
on investments 1.95 6.90 6.08 8.16 (.83)
Total from investment operations 2.21 7.23 6.44 8.78 (.54)
Distributions: Dividends from investment income -- net (.25) (.32) (.39) (.53) (.38)
Dividends in excess of investment income -- net -- (.01) -- -- --
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.07) (7.58) (6.16) (3.16) (3.35)
Net asset value, end of period 29.25 30.11 30.46 30.18 24.56
Total return (%) 7.01 25.54 21.74 36.05 (2.31)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .90 .89 .88 .88 .35(2)
Ratio of net investment income (loss) to average net assets (%) .82 .88 1.23 1.93 .70(2)
Decrease reflected in above expense ratios due to actions by
the manager (%) -- .01 .02 .02 .01(2)
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00(2)
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 842 867 11,618 185 1,070
(1) FROM AUGUST 4, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1994.
(2) NOT ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
INSTITUTIONAL SHARES 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 30.10 30.38 30.12 24.56 27.80
Investment operations: Investment income (loss) -- net .22 .26 .36 .47 .47
Net realized and unrealized gain (loss)
on investments 1.95 6.98 6.01 8.20 (.31)
Total from investment operations 2.17 7.24 6.37 8.67 .16
Distributions: Dividends from investment income -- net (.21) (.26) (.34) (.48) (.43)
Dividends in excess of investment income -- net -- (.01) -- -- --
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.03) (7.52) (6.11) (3.11) (3.40)
Net asset value, end of period 29.24 30.10 30.38 30.12 24.56
Total return (%) 7.17 25.34 21.57 35.60 .49
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.05 1.04 1.03 1.03 1.02
Ratio of net investment income (loss) to average net assets (%) .71 .74 1.07 1.53 1.57
Decrease reflected in above expense ratios due to actions by
the manager (%) -- .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 74,058 80,427 71,894 75,607 59,435
</TABLE>
The Fund
<PAGE 5>
Your Investment
ACCOUNT POLICIES
THE DREYFUS PREMIER FUNDS are designed primarily for people who are investing
through a third party, such as a bank, broker-dealer or financial adviser, or in
a 401(k) or other retirement plan. Third parties with whom you open a fund
account may impose policies, limitations and fees which are different from
those described here.
YOU WILL NEED TO CHOOSE A SHARE CLASS before making your initial investment. In
making your choice, you should weigh the impact of all potential costs over the
length of your investment, including sales charges and annual fees. For example,
in some cases, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but higher annual fees and a CDSC.
(pound) CLASS A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale of their shares,
want to take advantage of the reduced sales charges available on larger
investments and/or have a longer-term investment horizon.
(pound) CLASS B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a longer-term investment horizon.
(pound) CLASS C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a shorter-term investment horizon.
(pound) CLASS R shares are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
(pound) 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. This share class is
not available for new accounts.
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see if this may apply to you. Shareholders holding Class A shares
since January 15, 1998 are not subject to any front-end sales loads.
- --------------------------------------------------------------------------------
Sales charges
CLASS A -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- --------------------------------------------------------------------------------
Up to $49,999 5.75% 6.10%
$50,000 -- $99,999 4.50% 4.70%
$100,000 -- $249,999 3.50% 3.60%
$250,000 -- $499,999 2.50% 2.60%
$500,000 -- $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% contingent deferred sales charge may be charged on any shares sold
within one year of purchase (except shares bought through dividend reinvestment)
.
Class A shares also carry an annual rule 12b-1 fee of 0.25% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
Contingent deferred sales charge
Time since you bought as a % of your initial investment or
the shares you are selling your redemption (whichever is less)
- --------------------------------------------------------------------------------
Up to 2 years 4.00%
2 -- 4 years 3.00%
4 -- 5 years 2.00%
5 -- 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS C -- CHARGED WHEN YOU SELL SHARES
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES LOAD OR RULE 12B-1 FEES
- --------------------------------------------------------------------------------
INSTITUTIONAL SHARES -- NO SALES LOAD
Institutional shares carry an annual Rule 12b-1 fee of 0.15% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
Reduced Class A sales charge
LETTER OF INTENT: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
RIGHT OF ACCUMULATION: lets you add the value of any Class A, B or C shares in
this fund or any other Dreyfus Premier fund sold with a sales load that you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.
<PAGE 6>
Buying shares
THE NET ASSET VALUE (NAV) of each class is generally calculated as of the close
of trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the NAV next
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the fund's board.
ORDERS TO BUY AND SELL SHARES RECEIVED BY DEALERS by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day. Institutional shares are not available for new
accounts.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A shares are offered to the public at NAV plus a sales charge. Classes B, C, R
and Institutional shares are offered at NAV, but Classes B and C generally are
subject to higher annual operating expenses and a CDSC.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
TO KEEP YOUR CDSC AS LOW AS POSSIBLE, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject to
the lowest charge. The CDSC is based on the lesser of the original purchase cost
or the current market value of the shares being sold, and is not charged on
shares you acquired by reinvesting your dividends. There are certain instances
when you may qualify to have the CDSC waived. Consult your financial
representative or the SAI for details.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to eight business days or until it has collected payment.
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 7>
ACCOUNT POLICIES (CONTINUED)
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
(pound) refuse any purchase or exchange request that could adversely affect
the fund or its operations, including those from any individual or
group who, in the fund's view, is likely to engage in excessive
trading (usually defined as more than four exchanges out of the fund
within a calendar year)
(pound) refuse any purchase or exchange request in excess of 1% of the fund's
total assets
(pound) change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS quarterly dividends from its net
investment income and distributes any net capital gains it has realized once a
year. Each share class will generate a different dividend because each has
different expenses. Your distributions will be reinvested in additional shares
of the fund unless you instruct the fund otherwise. There are no fees or sales
charges on reinvestments.
FUND DIVIDENDS AND OTHER DISTRIBUTIONS ARE TAXABLE to most investors (unless
your investment is in an IRA or other tax-advantaged account). The tax status of
any distribution is the same regardless of how long you have been in the fund
and whether you reinvest your distributions or take them in cash. In general,
distributions are federally taxable as follows:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; and accounts opened through a financial
institution.
If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.
Taxes on transactions
Except for tax-advantaged accounts, any sale or exchange of fund shares may
generate a tax liability. Of course, withdrawals or distributions from
tax-deferred accounts are taxable when received.
The table above can provide a guide for potential tax liability when selling or
exchanging fund shares. "Short-term capital gains" applies to fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
<PAGE 8>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds. There will be no CDSC
on Class B shares, as long as the amounts withdrawn do not exceed 12% annually
of the account value at the time the shareholder elects to participate in the
plan.
Exchange privilege
YOU CAN EXCHANGE SHARES WORTH $500 OR MORE (no minimum for retirement accounts)
from one class of the fund into the same class of another Dreyfus Premier fund.
You can request your exchange by contacting your financial representative. Be
sure to read the current prospectus for any fund into which you are exchanging
before investing. Any new account established through an exchange will generally
have the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may be charged
a sales load when exchanging into any fund that has a higher one.
TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and following the instructions on
your application, or contact your financial representative.
Reinvestment privilege
UPON WRITTEN REQUEST, YOU CAN REINVEST up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price without
any sales charge. If you paid a CDSC, it will be credited back to your account.
This privilege may be used only once.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Your Investment
<PAGE 9>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587 Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Name of Fund P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to The Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044210 (Class A, B, C & R)
* DDA# 044121 (Institutional Class)
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044210 (Class A, B, C & R)
* DDA# 044121 (Institutional Class)
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4010" for
Class A, "4720" for Class B, "4730" for Class C, "4440" for Class R, or "4020"
for Institutional Class.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 7).
Mail your request to: The Dreyfus Family of Funds P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE 10>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044210 (Class A, B, C & R)
* DDA# 044121 (Institutional Class)
* the fund name
* the share class * your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4010" for
Class A, "4720" for Class B, "4730" for Class C, "4440" for Class R, or "4020"
for Institutional Class.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 7).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
Your Investment
<PAGE 11>
NOTES
<PAGE>
[Application p 1 here]
<PAGE >
[Application p 2 here]
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Premier Core Value Fund
A Series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
312P0599
<PAGE>
Dreyfus Premier Limited Term High Income Fund
Investing in fixed-income securities rated below investment grade for high
current income
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Premier Limited Term High Income Fund
---------------------------------
Ticker Symbols CLASS A: DPLTX
CLASS B: DLTBX
CLASS C: PTHIX
CLASS R: N/A
Contents
The Fund
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
- --------------------------------------------------------------------------------
Account Policies 6
Distributions and Taxes 8
Services for Fund Investors 9
Instructions for Regular Accounts 10
Instructions for IRAs 11
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
GOAL/APPROACH
The fund seeks high current income. To pursue this goal, it normally invests at
least 65% of net assets in fixed-income securities that, at the time of
purchase, are rated below investment grade ("high yield" or "junk" bonds) or are
the unrated equivalent as determined by Dreyfus. The fund's portfolio may
include various types of fixed-income securities including corporate bonds and
notes, mortgage-related securities, asset-backed securities, zero coupon
securities, convertible securities, preferred stock and other debt instruments
of U.S. and foreign issuers.
In choosing securities, the portfolio manager seeks to capture the higher yields
offered by junk bonds, while managing credit risk and the volatility caused by
interest rate movements. The fund attempts to reduce interest rate risk by
maintaining an average effective portfolio duration of 3.5 years or less and an
average effective portfolio maturity of 4 years or less, although there is no
limit on the maturity or duration of individual securities.
The fund's investment process is based on fundamental credit research, and at
times, focusing on companies that are currently out-of-favor. The fund looks at
a variety of factors when assessing a potential investment, including the
company's financial strength, the state of the industry or sector it belongs to,
the long-term fundamentals of that industry or sector, the company's management,
and whether there is sufficient equity value in the company. Under certain
circumstances, the fund may also invest in investment grade bonds. Under adverse
market conditions, the fund could invest some or all of its assets in money
market securities.
Concepts to understand
HIGH YIELD BONDS: those rated below BBB or Baa by credit rating agencies such as
Standard & Poor's or Moody's. Because their issuers may be at an early stage of
development or may have been unable to repay past debts, these bonds typically
must offer higher yields than investment grade bonds to compensate investors for
greater credit risk.
DURATION: 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,
which incorporates the security's yield, coupon interest payments, final
maturity and option features into one measure.
<PAGE>
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. When
rates rise, bond prices and the fund's share price usually drop. As a result,
the value of your investment in the fund could go up and down, which means you
could lose money. The fund's shorter maturity and duration will generally cause
it to have a lower yield than longer-term funds that invest in high yield bonds.
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price and less liquid and are considered
speculative. As with stocks, the prices of high yield bonds can fall in response
to bad news about the issuer, the issuer's industry or the economy in general.
The fund's share price could also be hurt if it holds bonds of issuers that
default on payments of principal or interest, or if there is a decline in the
credit quality of a bond it holds, or the perception of a decline.
Other risk factors could have an effect on the fund's performance:
(pound) if the loans underlying the fund's mortgage-related securities are paid
off earlier or later than expected, which could occur because of
movements in market interest rates, the fund's share price or yield
could be hurt and the duration of its portfolio affected
(pound) the value of certain types of stripped mortgage-backed securities may
move in the same direction as interest rates
(pound) price and yield of any foreign debt security the fund may own may be
affected by factors such as political/economic instability, changes in
currency exchange rates and less liquid markets
The fund's investments in investment grade bonds and money market securities
could also reduce the fund's yield and/or return.
Other potential risks
The fund may invest in options and futures to hedge the fund's portfolio. The
fund may also invest up to 25% of its assets in asset-backed and
mortgage-related securities and sell short. These practices carry additional
risk and sometimes may reduce returns or increase volatility. In addition, the
fund may borrow for certain purposes including to facilitate trades in its
portfolio securities (a form of leveraging), which could have the effect of
magnifying the fund's gains or losses. At times, the fund may engage in
short-term trading. This could increase the fund's transaction costs and taxable
distributions, lowering its after-tax performance accordingly.
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's Class A performance from year to year. The
performance figures do not reflect sales loads, and would be lower if they did.
The second table compares the fund's performance over time to that of the
Merrill Lynch High Yield Master II Index, an unmanaged bond performance
benchmark. These returns include applicable sales loads. Both tables assume
reinvestment of dividends. Of course, past performance is no guarantee of future
results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
-0.10
98
CLASS A SHARES
BEST QUARTER: Q1 '98 +3.84%
WORST QUARTER: Q3 '98 -5.15%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Since inception
1 Year (6/2/97)
- --------------------------------------------------------------------------------
CLASS A -4.62% 0.33%
CLASS B -4.24% 0.49%
CLASS C -1.84% 2.51%
CLASS R 0.14% 3.50%
MERRILL LYNCH HIGH YIELD
MASTER II INDEX 2.95% 7.26%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 5/31/97 IS USED AS THE
BEGINNING VALUE ON 6/2/97.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE 1>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
Fee table
<TABLE>
CLASS A CLASS B CLASS C CLASS R
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
% OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
% OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
gement fees .70 .70 .70 .70
Rule 12b-1 fee .25 .75 1.00 NONE
Other expenses .00 .00 .00 .00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL .95 1.45 1.70 .70
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
Expense example
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A $666 $860 $1,070 $1,674
CLASS B
WITH REDEMPTION $548 $759 $992 $1,476**
WITHOUT REDEMPTION $148 $459 $792 $1,476**
CLASS C
WITH REDEMPTION $273 $536 $923 $2,009
WITHOUT REDEMPTION $173 $536 $923 $2,009
CLASS R $72 $224 $390 $871
** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
<PAGE 2>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages more than $120
billion in over 160 mutual fund portfolios. The fund pays Dreyfus an annual
management fee of 0.70% of the fund's average net assets. Dreyfus is the primary
mutual fund business of Mellon Bank Corporation, a broad-based financial
services company with a bank at its core. With more than $389 billion of assets
under management and $1.9 trillion of assets under administration and custody,
Mellon provides a full range of banking, investment and trust products and
services to individuals, businesses and institutions. Mellon is headquartered in
Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Roger King, Senior Portfolio Manager and Head of Taxable High Yield Investments
at Dreyfus, has managed the fund since its inception. Mr. King has been employed
by Dreyfus since February 1996 after serving as Vice President and Director of
High Yield Research at Citibank Securities, Inc.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: 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 from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
The Fund
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS A 1998 1997(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 12.46 12.50
Investment operations: Investment income -- net 1.15 .71
Net realized and unrealized gain (loss) on investments (1.14) (.04)
Total from investment operations .01 .67
Distributions: Dividends from investment income -- net (1.14) (.71)
Net asset value, end of period 11.33 12.46
Total return (%) (2) (.10) 9.16(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .95 .95(3)
Ratio of interest expense to average net assets (%) .02 .08(3)
Ratio of net investment income to average net assets (%) 9.55 9.34(3)
Portfolio turnover rate (%) 45.34 28.83(4)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 147,131 65,705
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
CLASS B 1998 1997(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.46 12.50
Investment operations: Investment income -- net 1.09 .66
Net realized and unrealized gain (loss) on investments (1.14) (.04)
Total from investment operations (.05) .62
Distributions: Dividends from investment income -- net (1.08) (.66)
Net asset value, end of period 11.33 12.46
Total return (%) (2) (.61) 8.57(3)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.45 1.45(3)
Ratio of interest expense to average net assets (%) .02 .09(3)
Ratio of net investment income to average net assets (%) 9.02 8.73(3)
Portfolio turnover rate (%) 45.34 28.83(4)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 551,415 198,057
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
<PAGE 4>
YEAR ENDED DECEMBER 31,
CLASS C 1998 1997(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.47 12.50
Investment operations: Investment income -- net 1.06 .65
Net realized and unrealized gain (loss) on investments (1.15) (.03)
Total from investment operations (.09) .62
Distributions: Dividends from investment income -- net (1.05) (.65)
Net asset value, end of period 11.33 12.47
Total return (%) (2) (.93) 8.47(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.70 1.70(3)
Ratio of interest expense to average net assets (%) .02 .09(3)
Ratio of net investment income to average net assets (%) 8.77 8.54(3)
Portfolio turnover rate (%) 45.34 28.83(4)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 204,184 67,495
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.45 12.50
Investment operations: Investment income -- net 1.25 .81
Net realized and unrealized gain (loss) on investments (1.21) (.14)
Total from investment operations .04 .67
Distributions: Dividends from investment income -- net (1.17) (.72)
Net asset value, end of period 11.32 12.45
Total return (%) .14 9.26(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .70 .75(2)
Ratio of interest expense to average net assets (%) .03 .05(2)
Ratio of net investment income to average net assets (%) 10.41 10.08(2)
Portfolio turnover rate (%) 45.34 28.83(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 127 127
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) ANNUALIZED.
(3) NOT ANNUALIZED.
</TABLE>
The Fund
<PAGE 5>
Your Investment
ACCOUNT POLICIES
THE DREYFUS PREMIER FUNDS are designed primarily for people who are investing
through a third party, such as a bank, broker-dealer or financial adviser, or in
a 401(k) or other retirement plan. Third parties with whom you open a fund
account may impose policies, limitations and fees which are different from those
described here.
YOU WILL NEED TO CHOOSE A SHARE CLASS before making your initial investment. In
making your choice, you should weigh the impact of all potential costs over the
length of your investment, including sales charges and annual fees. For example,
in some cases, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but higher annual fees and a CDSC.
(pound) CLASS A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale of their shares,
want to take advantage of the reduced sales charges available on larger
investments and/or have a longer-term investment horizon
(pound) CLASS B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a longer-term investment horizon
(pound) CLASS C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a shorter-term investment horizon
(pound) CLASS R shares are designed for eligible institutions on behalf of
their clients. Individuals may not purchase these shares directly.
Your financial representative can help you choose the share class that is
appropriate for you.
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or the SAI to see if this may apply to you.
- --------------------------------------------------------------------------------
Sales charges
CLASS A -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- --------------------------------------------------------------------------------
Up to $49,999 4.50% 4.70%
$50,000 -- $99,999 4.00% 4.20%
$100,000 -- $249,999 3.00% 3.10%
$250,000 -- $499,999 2.50% 2.60%
$500,000 -- $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% contingent deferred sales charge may be charged on any shares sold
within one year of purchase (except shares bought through dividend reinvestment)
.
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
Contingent deferred sales charge
Time since you bought as a % of your initial investment or
the shares you are selling your redemption (whichever is less)
- --------------------------------------------------------------------------------
Up to 2 years 4.00%
2 -- 4 years 3.00%
4 -- 5 years 2.00%
5 -- 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 0.75% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS C -- CHARGED WHEN YOU SELL SHARES
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES LOAD OR RULE 12B-1 FEES
Reduced Class A sales charge
LETTER OF INTENT: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
RIGHT OF ACCUMULATION: lets you add the value of any Class A, B or C shares in
this fund or any other Dreyfus Premier fund sold with a sales load that you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.
<PAGE 6>
Buying shares
THE NET ASSET VALUE (NAV) of each class is generally calculated as of the close
of trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are generally valued based on market
value or, where market quotations are not readily available, based on fair value
as determined in good faith by the fund's board.
ORDERS TO BUY AND SELL SHARES RECEIVED BY DEALERS by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A shares are offered to the public at NAV plus a sales charge. Classes B, C and
R are offered at NAV, but Classes B and C generally are subject to higher annual
operating expenses and a CDSC.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
TO KEEP YOUR CDSC AS LOW AS POSSIBLE, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject to
the lowest charge. The CDSC is based on the lesser of the original purchase cost
or the current market value of the shares being sold, and is not charged on
shares you acquired by reinvesting your dividends. There are certain instances
when you may qualify to have the CDSC waived. Consult the SAI for details.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to eight business days or until it has collected payment.
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 7>
ACCOUNT POLICIES (CONTINUED)
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
(pound) refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group
who, in the fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the fund within
a calendar year)
(pound) refuse any purchase or exchange request in excess of 1% of the fund's
total assets
(pound) change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS monthly dividends from its net
investment income and distributes any net capital gains it has realized once a
year. Each share class will generate a different dividend because each has
different expenses. Your distributions will be reinvested in additional shares
of the fund unless you instruct the fund otherwise. There are no fees or sales
charges on reinvestments.
FUND DIVIDENDS AND OTHER DISTRIBUTIONS ARE TAXABLE to most investors (unless
your investment is in an IRA or other tax-advantaged account). The tax status of
any distribution is the same regardless of how long you have been in the fund
and whether you reinvest your distributions or take them in cash. In general,
distributions are federally taxable as follows:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; accounts opened through a financial institution.
If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 30 days, the fund may close your account and
send you the proceeds.
Taxes on transactions
Except for tax-advantaged accounts, any sale or exchange of fund shares,
including through the checkwriting privilege, may generate a tax liability. Of
course, withdrawals or distributions from tax-deferred accounts are taxable when
received.
The table above can provide a guide for potential tax liability when selling or
exchanging fund shares. "Short-term capital gains" applies to fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
<PAGE 8>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds. There will be no CDSC
on Class B shares, as long as the amounts withdrawn do not exceed 12% annually
of the account value at the time the shareholder elects to participate in the
plan.
Checkwriting privilege
YOU CAN WRITE REDEMPTION CHECKS for Class A shares for $500 or more. Please
consider share price fluctuations when doing so. Checks are free, but a stop
payment fee may be charged. Do not use checks to close an account. Do not
postdate your checks.
Exchange privilege
YOU CAN EXCHANGE SHARES WORTH $500 OR MORE (no minimum for retirement accounts)
from one class of the fund into the same class of another Dreyfus Premier fund.
You can request your exchange by contacting your financial representative. Be
sure to read the current prospectus for any fund into which you are exchanging
before investing. Any new account established through an exchange will generally
have the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may be charged
a sales load when exchanging into any fund that has a higher one.
TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and following the instructions on
your application, or contact your financial representative.
Reinvestment privilege
UPON WRITTEN REQUEST, YOU CAN REINVEST up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price without
any sales charge. If you paid a CDSC, it will be credited back to your account.
This privilege may be used only once.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Your Investment
<PAGE 9>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Name of Fund P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit & Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4550" for
Class A, "4560" for Class B, "4570" for Class C, or "4580" for Class R.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a redemption check (Class A only) OR write a letter of instruction that
includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 7).
Mail your request to: The Dreyfus Family of Funds P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
<PAGE 10>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit & Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class * your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4550" for
Class A, "4560" for Class B, "4570" for Class C, or "4580" for Class R.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 7).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
Your Investment
<PAGE 11>
NOTES
<PAGE 12>
[Application p 1 here]
<PAGE 13>
[Application p 2 here]
<PAGE 14>
NOTES
<PAGE 15>
NOTES
<PAGE 16>
NOTES
<PAGE 17>
For More Information
Dreyfus Premier Limited Term High Income Fund
A Series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation
029P0599
<PAGE>
Dreyfus Premier Managed Income Fund
Investing in fixed-income securities for high current income
PROSPECTUS May 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Premier Managed Income Fund
- ---------------------------------
Ticker Symbols CLASS A: PMNIX
CLASS B: DTMBX
CLASS C: DTMCX
CLASS R: DTMRX
Contents
The Fund
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 3
Management 4
Financial Highlights 5
Your Investment
- --------------------------------------------------------------------------------
Account Policies 7
Distributions and Taxes 9
Services for Fund Investors 10
Instructions for Regular Accounts 11
Instructions for IRAs 12
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
GOAL/APPROACH
The fund seeks high current income consistent with what is believed to be
prudent risk of capital. This objective may be changed without shareholder
approval. To pursue its goal, the fund normally invests at least 65% of total
assets in various types of U.S. government and investment grade corporate debt
obligations (or their unrated equivalent as determined by Dreyfus). The fund
also normally invests at least 65% of total assets in debt obligations having
remaining maturities of 10 years or less.
The fund may also invest up to:
* 35% of total assets in obligations rated below investment grade or
comparable unrated securities
* 25% of total assets in convertible debt obligations and preferred
stocks
* 25% of total assets in asset-backed securities, including
mortgage-backed securities
* 20% of total assets in foreign securities
In seeking to avoid losses, under adverse market conditions, the fund could
invest some or all of its assets in money market instruments.
Concepts to understand
CREDIT QUALITY: independent rating organizations analyze and evaluate a bond
issuer's credit history and ability to repay debts. Based on their assessment,
they assign letter grades that reflect the issuer's creditworthiness. AAA or Aaa
represents the highest credit rating, AA/Aa the second highest, and so on down
to D, for defaulted debt. Bonds rated BBB or Baa and above are considered
investment grade, although they have some speculative characteristics. Bonds
rated below BBB or Baa are sometimes referred to as "junk" bonds. Because their
issuers may be at an early stage of development or may have been unable to repay
past debts, junk bonds typically must offer higher yields than investment grade
bonds to compensate for greater credit risk.
MATURITY: length of time between the date on which a bond is issued and the date
the principal amount must be paid. Bonds with a longer maturity tend to offer
higher yields, but generally fluctuate more in price than shorter-term
counterparts.
<PAGE>
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. When
rates rise, bond prices and the fund's share price usually drop. As a result,
the value of your investment in the fund could go up and down, which means you
could lose money.
To the extent that the fund maintains a longer maturity than short-term funds,
its share price will react more strongly to interest rate movements. The fund's
share price could also be hurt if it holds bonds of issuers that default on
payments of interest or principal or if there is a decline in the credit quality
of a bond it holds, or the perception of a decline.
Other risk factors could have an effect on the fund's performance:
* if the loans underlying the fund's mortgage-backed securities are paid
off earlier or later than expected, which could occur because of movements in
market interest rates, the fund's share price or yield could be hurt
* derivatives, including some mortgage-backed securities, can be
illiquid and highly sensitive to changes in their underlying security,
interest rate or index, so that their value can be highly volatile, and a
small investment in them could have a potentially large impact on the fund
* general downturns in the economy could cause the value of asset-backed
securities to fall, and the risk that any recovery on repossessed collateral
might be inadequate is greater where such securities are not backed by
mortgages
* foreign securities carry additional risks beyond comparable types of
securities from the United States, including political and economic
instability, changes in currency exchange rates and less liquid markets for
such securities
While some of the fund's securities may carry guarantees by the U.S. government
or its agencies or instrumentalities, these guarantees do not apply to shares of
the fund itself.
The fund's investments in money market instruments could reduce its yield and/or
total return.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
Other potential risks
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price and less liquid and are considered highly
speculative. As with stocks, the prices of junk bonds can fall in response to
bad news about the issuer, the issuer's industry or the economy generally.
At times, the fund may engage in short-term trading. This could increase the
fund's transaction costs and taxable distributions, lowering its after-tax
performance accordingly.
The Fund 1
<PAGE 1>
PAST PERFORMANCE
The two tables on this page show some of the risks of investing in the fund. The
first table shows how the performance of the fund's Class A shares has varied
from year to year. Sales loads are not reflected in that table; if they were,
returns would be less than those shown. The second table compares the
performance of each share class over time to that of the Lehman Brothers
Aggregate Bond Index, a widely recognized unmanaged index of corporate,
government and government agency debt instruments, mortgage-backed securities
and asset-backed securities. These returns include any applicable sales loads.
Both tables assume the reinvestment of dividends. As with all mutual funds, the
past is not a prediction of the future.
<TABLE>
Year-by-year total return AS OF 12/31 EACH YEAR (%)
CLASS A SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.56 4.40 17.03 8.77 14.54 -5.14 17.32 3.42 9.80 4.90
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '95 +6.79%
WORST QUARTER: Q2 '94 -2.98%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
Average annual total return AS OF 12/31/98
Inception Since
date 1 Year 5 Years 10 Years inception
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A (8/1/79) 0.17% 4.82% 7.36% --
CLASS B (12/19/94) 0.17% -- -- 7.29%
CLASS C (12/19/94) 3.19% -- -- 7.69%
CLASS R (2/1/93) 5.26% 6.06% -- 7.24%
LEHMAN BROTHERS
AGGREGATE BOND INDEX 8.69% 7.27% 9.26% 7.44%*
* BASED ON THE LIFE OF CLASS R SHARES. FOR COMPARATIVE PURPOSES, THE VALUE OF
THE INDEX ON 1/31/93 IS USED AS THE BEGINNING VALUE.
</TABLE>
2
<PAGE>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
<TABLE>
Fee table
CLASS A CLASS B CLASS C CLASS R
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
% OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
% OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees .70 .70 .70** .70
Rule 12b-1 fee .25 1.00 1.00 NONE
Other expenses .00 .00 .00 .00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL .95 1.70 1.70 .70
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1 MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF
REDEEMED WITHIN ONE YEAR.
** THE FUND'S 0.70% MANAGEMENT FEE WAS 0.69% WITH RESPECT TO CLASS C SHARES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AS A RESULT
OF THE METHODS OF COMPUTATION.
</TABLE>
<TABLE>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A $543 $739 $952 $1,564
CLASS B
WITH REDEMPTION $573 $836 $1,123 $1,627***
WITHOUT REDEMPTION $173 $536 $923 $1,627***
CLASS C
WITH REDEMPTION $273 $536 $923 $2,009
WITHOUT REDEMPTION $173 $536 $923 $2,009
CLASS R $72 $224 $390 $871
*** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Fund 3
<PAGE 3>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $120 billion in over 160 mutual
fund portfolios. Dreyfus is the primary mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $389 billion of assets under management and $1.9 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
During the past fiscal year, the fund paid Dreyfus an investment advisory fee at
the annual rate of 0.70% of the fund's average daily net assets.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The fund is managed by Arthur J. MacBride, III. Mr. MacBride is a portfolio
manager of Dreyfus and an officer of The Boston Company Asset Management, Inc.,
an affiliate of Dreyfus. He has been employed by Dreyfus as a portfolio manager
of the fund since October 1994.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: 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 from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
4
<PAGE 4>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS A 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 11.01 10.73 11.08 10.12 11.38
Investment operations: Investment income -- net .73 .73 .69 .75 .69
Net realized and unrealized gain (loss) on investments (.19) .27 (.35) .96 (1.26)
Total from investment operations .54 1.00 .34 1.71 (.57)
Distributions: Dividends from investment income -- net (.74) (.72) (.69) (.75) (.69)
Net asset value, end of period 10.81 11.01 10.73 11.08 10.12
Total return (%)(1) 4.90 9.80 3.42 17.32 (5.14)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .95 .95 .95 .95 .98(2)
Ratio of net investment income to average net assets (%) 6.62 6.74 6.48 7.08 6.32
Portfolio turnover rate (%) 238.95 244.44 251.66 236.10 270.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 71,902 72,878 77,305 80,782 79,548
</TABLE>
(1) EXCLUSIVE OF SALES CHARGE.
(2) 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 YEAR ENDED DECEMBER 31, 1994 WOULD HAVE
BEEN 0.99%.
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS B 1998 1997 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 11.01 10.73 11.08 10.12
Investment operations: Investment income -- net .64 .65 .61 .67
Net realized and unrealized gain (loss) on investments (.19) .27 (.35) .96
Total from investment operations .45 .92 .26 1.63
Distributions: Dividends from investment income -- net (.65) (.64) (.61) (.67)
Net asset value, end of period 10.81 11.01 10.73 11.08
Total return (%)(2) 4.10 8.97 2.54 16.55
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.70 1.70 1.70 1.69
Ratio of net investment income to average net assets (%) 5.81 5.98 5.77 6.41
Portfolio turnover rate (%) 238.95 244.44 251.66 236.10
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 16,325 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 CHARGE.
</TABLE>
The Fund 5
<PAGE 5>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS C 1998 1997 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 11.02 10.73 11.08 10.12
Investment operations: Investment income -- net .64 .64 .61 .67
Net realized and unrealized gain (loss) on investments (.19) .29 (.35) .96
Total from investment operations .45 .93 .26 1.63
Distributions: Dividends from investment income -- net (.65) (.64) (.61) (.67)
Net asset value, end of period 10.82 11.02 10.73 11.08
Total return (%)(2) 4.17 8.96 2.49 16.54
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.69 1.70 1.68 1.66
Ratio of net investment income to average net assets (%) 5.74 5.95 5.69 6.03
Portfolio turnover rate (%) 238.95 244.44 251.66 236.10
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 5,369 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 CHARGE.
</TABLE>
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 11.01 10.73 11.08 10.12 11.38
Investment operations: Investment income -- net .74 .76 .72 .78 .72(1)
Net realized and unrealized gain (loss) on investments (.17) .27 (.35) .96 (1.26)
Total from investment operations .57 1.03 .37 1.74 (.54)
Distributions: Dividends from investment income -- net (.77) (.75) (.72) (.78) (.72)
Net asset value, end of period 10.81 11.01 10.73 11.08 10.12
Total return (%) 5.26 9.97 3.58 17.71 (4.88)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .70 .70 .70 .70 .71(2)
Ratio of net investment income to average net assets (%) 6.77 6.99 6.74 7.31 6.59
Portfolio turnover rate (%) 238.95 244.44 251.66 236.10 270.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 10,707 11,031 12,567 11,532 9,588
(1) 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.
(2) 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% FOR THE YEAR ENDED DECEMBER 31, 1994.
</TABLE>
6
<PAGE 6>
Your Investment
ACCOUNT POLICIES
THE DREYFUS PREMIER FUNDS are designed primarily for people who are investing
through a third party, such as a bank, broker-dealer or financial adviser, or in
a 401(k) or other retirement plan. Third parties with whom you open a fund
account may impose policies, limitations and fees which are different from
those described here.
YOU WILL NEED TO CHOOSE A SHARE CLASS before making your initial investment. In
making your choice, you should weigh the impact of all potential costs over the
length of your investment, including sales charges and annual fees. For example,
in some cases, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but higher annual fees and a CDSC.
* CLASS A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale of their shares, want to
take advantage of the reduced sales charges available on larger investments
and/or have a longer-term investment horizon
* CLASS B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work immediately
and/or have a longer-term investment horizon
* CLASS C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work immediately
and/or have a shorter-term investment horizon
* CLASS R shares are designed for eligible institu-
tions on behalf of their clients. Individuals may not purchase these shares
directly.
Your financial representative can help you choose the share class that is
appropriate for you.
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or refer to the SAI to see if this may apply to you. Shareholders holding Class
A shares of the fund since December 19, 1994 may continue to purchase Class A
shares without a front-end sales load.
- --------------------------------------------------------------------------------
Sales charges
CLASS A -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- --------------------------------------------------------------------------------
Up to $49,999 4.50% 4.70%
$50,000 -- $99,999 4.00% 4.20%
$100,000 -- $249,999 3.00% 3.10%
$250,000 -- $499,999 2.50% 2.60%
$500,000 -- $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% contingent deferred sales charge may be charged on any shares sold
within one year of purchase (except shares bought through dividend reinvestment)
.
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
Contingent deferred sales charge
Time since you bought as a % of your initial investment or
the shares you are selling your redemption (whichever is less)
- --------------------------------------------------------------------------------
Up to 2 years 4.00%
2 -- 4 years 3.00%
4 -- 5 years 2.00%
5 -- 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS C -- CHARGED WHEN YOU SELL SHARES
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES LOAD OR RULE 12B-1 FEES
Reduced Class A sales charge
LETTER OF INTENT: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
RIGHT OF ACCUMULATION: lets you add the value of any Class A, B or C shares in
this fund or any other Dreyfus Premier fund sold with a sales load that you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.
Your Investment 7
<PAGE 7>
ACCOUNT POLICIES (CONTINUED)
Buying shares
THE NET ASSET VALUE (NAV) of each class is generally calculated as of the close
of trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the NAV next
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the fund's board.
ORDERS TO BUY AND SELL SHARES RECEIVED BY DEALERS by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A shares are offered to the public at NAV plus a sales charge. Classes B, C and
R are offered at NAV, but Classes B and C generally are subject to higher annual
operating expenses and a CDSC.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
TO KEEP YOUR CDSC AS LOW AS POSSIBLE, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject to
the lowest charge. The CDSC is based on the lesser of the original purchase cost
or the current market value of the shares being sold, and is not charged on
shares you acquired by reinvesting your dividends. Certain investors may qualify
to have the CDSC waived. Consult your financial representative or the SAI for
details.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to eight business days or until it has collected payment.
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
8
<PAGE 8>
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets
* change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS dividends from its net investment
income monthly and distributes any net capital gains it has realized once a
year. Each share class will generate a different dividend because each has
different expenses. Your distributions will be reinvested in additional shares
of the fund unless you instruct the fund otherwise. There are no fees or sales
charges on reinvestments.
FUND DIVIDENDS AND OTHER DISTRIBUTIONS ARE TAXABLE to most investors (unless
your investment is in an IRA or other tax-advantaged account). The tax status of
any distribution is the same regardless of how long you have been in the fund
and whether you reinvest your distributions or take them in cash. In general,
distributions are federally taxable as follows:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; and accounts opened through a financial
institution.
If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.
Taxes on transactions
Except for tax-advantaged accounts, any sale or exchange of fund shares may
generate a tax liability. Of course, withdrawals or distributions from
tax-deferred accounts are taxable when received.
The table above can provide a guide for potential tax liability when selling or
exchanging fund shares. "Short-term capital gains" applies to fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
Your Investment 9
<PAGE 9>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds. There will be no CDSC
on Class B shares, as long as the amounts
withdrawn do not exceed 12% annually of the
account value at the time the shareholder elects
to participate in the plan.
Exchange privilege
YOU CAN EXCHANGE SHARES WORTH $500 OR MORE (no minimum for retirement accounts)
from one class of the fund into the same class of another Dreyfus Premier fund.
You can request your exchange by contacting your financial representative. Be
sure to read the current prospectus for any fund into which you are exchanging
before investing. Any new account established through an exchange will generally
have the same privileges as your original account (as long as they are
available). There is currently no fee for exchanges, although you may be charged
a sales load when exchanging into any fund that has a higher one.
TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and following the instructions on
your application, or contact your financial representative.
Reinvestment privilege
UPON WRITTEN REQUEST, YOU CAN REINVEST up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price without
any sales charge. If you paid a CDSC, it will be credited back to your account.
This privilege may be used only once.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
10
<PAGE 10>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587 Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Name of Fund P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to The Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4370" for
Class A, "4380" for Class B, "4390" for Class C, or "4400" for Class R.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 8).
Mail your request to: The Dreyfus Family of Funds P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to: The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427 Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class * your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4370" for
Class A, "4380" for Class B, "4390" for Class C, or "4400" for Class R.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 8).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions are subject to a $1,000
minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment 11
<PAGE 11>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4370" for
Class A, "4380" for Class B, "4390" for Class C, or "4400" for Class R.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 8).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
<PAGE 12>
Account Application page 1
<PAGE>
Account Application page 2
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Premier Managed Income Fund
A Series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation 349P0599
<PAGE>
______________________________________________________________________________
**1**
DREYFUS PREMIER MANAGED INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1999
______________________________________________________________________________
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 (the "Fund"), dated May 1, 1999, as
it may be revised from time to time. The Fund is a separate, diversified
portfolio of The Dreyfus/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. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of the Fund/Trust B-2
Management of the Fund B-18
Management Arrangements B-24
Purchase of Shares B-26
Distribution and Service Plans B-33
Redemption of Shares B-36
Shareholder Services B-40
Additional Information About Purchases, Exchanges and Redemptions B-46
Determination of Net Asset Value B-47
Dividends, Other Distributions and Taxes B-48
Portfolio Transactions B-53
Performance Information B-55
Information About the Fund/Trust B-57
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-58
Financial Statements B-59
Appendix B-60
DESCRIPTION OF THE FUND/TRUST
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. Before April 4, 1994, the
Trust's name was The Boston Company Fund. Prior to October 17, 1994, the
Trust's name was The Laurel Funds Trust. The Trust is an open-end
management investment company comprised of separate portfolios, including
the Fund, each of which is treated as a separate fund. Prior to March 31,
1997, the name of the Fund was Premier Managed Income Fund and prior to
October 17, 1994, the Fund's name was Laurel Managed Income. The Fund is
diversified, which means that, with respect to 75% of its total assets, the
Fund will not invest more than 5% of its assets in the securities of any
single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
Corporate Obligations. The Fund may invest in corporate obligations
rated Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard
& Poor's Rating Service, a division of McGraw-Hill Companies, Inc. ("S&P")
or if unrated, of comparable quality as determined by Dreyfus. Securities
rated BBB by S&P or Baa by Moody's are considered by those rating agencies
to be "investment grade" securities, although Moody's considers securities
rated Baa to have speculative characteristics. Further, while bonds rated
BBB by S&P exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and principal for debt in this category than debt
in higher rated categories. The Fund may also invest in obligations rated
below the four highest ratings of Moody's or S&P, with no minimum rating
required, or comparable unrated securities. 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. See "Low-Rated Securities."
Government Obligations. 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 are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans are made by mortgage
bankers, commercial banks, savings and loan associations, and other lenders
and are either insured by the Federal Housing Administration or guaranteed
by the Veterans Administration. A "pool" or group of such mortgages is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest
and principal on each mortgage is guaranteed by the full faith and credit of
the U.S. Government. Although the mortgage loans in a pool underlying a
GNMA Certificate will have maturities of up to 30 years, the average life of
a GNMA Certificate will be substantially less because the mortgages will be
subject to normal principal amortization and also may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by changes in
mortgage interest rates. In periods of falling interest rates, the rate of
prepayment on higher interest mortgage rates tends to increase, thereby
shortening the actual average life of the GNMA Certificate. Conversely,
when interest rates are rising, the rate of prepayment tends to decrease,
thereby lengthening the average life of the GNMA Certificates. Reinvestment
of prepayments may occur at higher or lower rates than the original yield of
the Certificates. Due to the prepayment feature and the need to reinvest
prepayments of principal at current rates, GNMA Certificates, with
underlying mortgages bearing higher interest rates can be less effective
than typical non-callable bonds of similar maturities at locking in yields
during periods of declining interest rates, although they may have
comparable risks of decline in value during periods of rising interest
rates.
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.
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, mortgage bankers and private
mortgage insurance companies. 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 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. 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. 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. CMOs may be structured in other ways
that, based on mathematical modeling or similar techniques, are 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.
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.
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 open 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 pre-payments 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.
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
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.
The purchase of non-mortgage backed securities raises considerations
peculiar to the financing of the instruments underlying such securities. For
example, most organizations that issue non-mortgage 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 non-mortgage 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 non-mortgage
backed securities, usually is not amended to reflect the assignment of the
seller's security interest for the benefit of the holders of the
non-mortgage 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 non-mortgage 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 non-mortgage 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 non-mortgage
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 (collectively referred to in this discussion as "low-
rated" securities). 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 ("NAV").
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's and 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 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. The
Appendix to this Statement of Additional Information describes the ratings
used by Moody's, S&P and other NRSROs.
The average distribution of investments of the Fund in corporate bonds
by ratings for the fiscal year ended December 31, 1998, calculated monthly
on a dollar weighted basis, was as follows:
Moody's S&P Percentage
Aaa AAA 47.5%
Aa AA 3.1%
A A 12.9%
Baa BBB 11.3%
Ba BB 6.9%
B B 22.6%
Caa CCC .9%
NR NR 2.9%*
108.1%**
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 have been determined by Dreyfus to be of
comparable quality to securities rated: AAA: 1.8%, B: 0.3%, and CCC:
0.8%.
** The Fund also owns convertible bonds - BB 0.3%. Approximately (8.4%) of
the Fund's assets were invested in cash or cash equivalents.
Convertible Securities. The Fund may purchase convertible securities,
which are fixed-income securities such as bonds or preferred stock that may
be converted into or exchanged for a specified number of shares of common
stock of the same or a different issuer within a specified period of time
and at a specified price or formula. Convertible securities are senior to
common stock in a corporation's capital structure, but may be subordinated
to non-convertible debt securities. Before conversion, convertible
securities ordinarily provide a stable stream of income with yields
generally higher than those on common stock, but lower than those on non-
convertible debt securities of similar quality. In general, the market
value of a convertible security is the higher of its "investment value"
(i.e., its value as a fixed-income security) or its "conversion value"
(i.e., the value of the underlying shares of common stock if the security is
converted). As a fixed-income security, the market value of a convertible
security generally increases when interest rates decline and generally
decreases when interest rates rise. However, the price of a convertible
security also is influenced by the market value of the security's underlying
common stock. Thus, the price of a convertible security generally increases
as the market value of the underlying stock rises, and generally decreases
as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the
common stock of the same issuer. The Fund does not invest in common stocks
and does not intend to exercise conversion rights for any convertible
security that it may hold and will sell any common stocks received upon the
conversion of convertible securities as promptly as it can and in a manner
that it believes will reduce its risk of loss in connection with the sale.
Preferred Stock. The Fund may also purchase preferred stock, which is a
class of capital stock that typically pays dividends at a specified rate.
Preferred stock is generally senior to common stock, but subordinate to debt
securities, with respect to the payment of dividends and on liquidation of
the issuer. In general, the market value of preferred stock is its
"investment value," or its value as a fixed-income security. Accordingly,
the market value of preferred stock generally increases when interest rates
decline and decreases when interest rates rise, but, as with debt
securities, is also affected by the issuer's ability to make payments on the
preferred stock.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the Fund's credit guidelines. This technique
offers a method of earning income on idle cash. In a repurchase agreement,
the Fund buys a security from a seller that has agreed to repurchase the
same security at a mutually agreed upon date and price. The Fund's resale
price will be in excess of the purchase price, reflecting an agreed upon
interest rate. This interest rate is effective for the period of time the
Fund is invested in the agreement and is not related to the coupon rate on
the underlying security. Repurchase agreements may also be viewed as a
fully collateralized loan of money by the Fund to the seller. The period of
these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for more
than one year. The Fund will always receive as collateral securities whose
market value including accrued interest is, and during the entire term of
the agreement remains, at least equal to 100% of the dollar amount invested
by the Fund in each agreement, including interest, 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 Fund's credit
guidelines.
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 two 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 IBCA, Inc., or Duff-1 by Duff & Phelps
Credit Rating Co. For a description of ratings, see the Appendix.
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 are short-term negotiable obligations of
commercial banks; time deposits are non-negotiable deposits maintained in
banking institutions for specified periods of time at stated interest rates;
and bankers' acceptances are time drafts drawn on commercial banks by
borrowers, usually in connection with international transactions. Domestic
commercial banks organized under Federal law are supervised and examined by
the Comptroller of the Currency and are required to be members of the
Federal Reserve System and to be insured by the Federal Deposit Insurance
Corporation (the "FDIC"). Domestic banks organized under state law are
supervised and examined by state banking authorities but are members of the
Federal Reserve System only if they elect to join. In addition, all banks
whose certificates of deposit may be purchased by the Fund are insured by
the FDIC and are subject to Federal examination and to a substantial body of
Federal law and regulation. As a result of governmental regulations,
domestic branches of foreign banks are, among other things, generally
required to maintain specified levels of reserves, and are subject to other
supervision and regulations designed to promote financial soundness.
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.
The Fund may invest in Eurodollar certificates of deposit ("ECDs"),
Eurodollar time deposits ("ETDs") and Yankee Dollar certificates of deposit
("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks. ETDs are U.S. dollar-
denominated time deposits in a foreign branch of a U.S. bank or a foreign
bank. Yankee CDs are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the United States. The
Fund may also invest in Eurodollar bonds and notes which are obligations
that pay principal and interest in U.S. dollars held in banks outside the
United States, primarily in Europe. All of these obligations are subject to
somewhat different risks than are the obligations of domestic banks or
issuers in the United States. See "Foreign Securities."
Obligations of foreign branches of domestic 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 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 Fund 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.
Foreign Securities. The Fund may purchase securities of foreign issuers
and may invest in foreign currencies and obligations of foreign branches of
domestic banks and domestic branches of foreign banks. Investment in such
foreign currencies, securities and obligations presents certain risks,
including those resulting from fluctuations in currency exchange rates,
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 Investments. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including repurchase
agreements and time deposits with maturities in excess of 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. 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.
Other Investment Companies. The Fund may invest in securities issued by
other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended (the "1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Investment Techniques
In addition to the principal investment strategies discussed in the
Fund's Prospectus, the Fund also may engage in the investment techniques
described below. The Fund might not use, or may not have the ability to
use, any of these strategies and there can be no assurance that any strategy
that is used will succeed.
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.
When-Issued Securities and Delayed Delivery Transactions. 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 seven 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 NAV.
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 and/or, 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.
To secure advantageous prices or yields, the Fund 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 delayed
delivery basis involves the risk that 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 delayed delivery
commitments.
Loans of Fund 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, dividends 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 33-
1/3% 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.
These loans are terminable by the Fund at any time upon specified notice.
The Fund might experience loss if the institution to which it has lent its
securities fails financially or breaches its agreement with 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, the
Fund considers all relevant factors and circumstances including the
creditworthiness of the borrower.
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.
Certain Investments. 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, N.A. ("Mellon Bank"), an
affiliate of Dreyfus, has a lending relationship.
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
Fundamental. 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 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
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objective, policies, and limitations as the Fund.
Nonfundamental. 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 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 such 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.
If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains
an appropriate investment in light of the shareholder's then-current
position and needs.
MANAGEMENT OF THE FUND
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging in
the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian, 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's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Trust,
on behalf of the Fund, and those companies that furnish services to the
Fund. These companies are as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank Custodian for the Fund
The Trust has a Board composed of nine Trustees. 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 Director
of The Dreyfus/Laurel Funds, Inc. and as a Trustee of The Dreyfus/Laurel Tax-
Free Municipal Funds (collectively, with the Trust, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
Trustees of the Trust
o+JOSEPH S. DIMARTINO. Chairman of the Board of the Trust. Since January
1995, Mr. DiMartino has served as Chairman of the Board for various
funds in the Dreyfus Family of Funds. He is also a Director of The
Noel Group, Inc., a venture capital company (for which from February
1995 until November 1997, he was Chairman of the Board); The Muscular
Dystrophy Association; HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and
other benefit programs; Carlyle Industries, Inc. (formerly Belding
Heminway Company, Inc.), a button packager and distributor; Century
Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outservicing functions for small and
medium sized companies; and Career Blazers, Inc (formerly Staffing
Resources) a temporary placement agency. 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: 55 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.; Chairman of the
Board, Davidson Cotton Company. Age: 64 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Of Counsel, Reed, Smith, Shaw &
McClay (law firm). Age: 71 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. Age: 77 years old. Address: Way
Hollow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), an
affiliate of Dreyfus, and Boston Safe Deposit and Trust Company. Age
52 years old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman and CEO LDG
Reinsurance Corporation, Vice Chairman, HCCH Age 52 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; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania. Age: 67 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.; Director, Massachusetts Electric Company;
Director, the Hyams Foundation, Inc. Age: 49 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. Age: 52
years old. Address: 334 Boylston Street, Suite 400, Boston,
Massachusetts 02146.
________________________________
* "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
# MARGARET W. CHAMBERS. Vice President and Secretary of the Trust. Senior
Vice President and General Counsel of Funds Distributor, Inc. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. Age: 39
years old.
#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: 41 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. Age: 30 years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. Age: 34 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Manager of Treasury Services Administration of Funds Distributor, Inc.
From July 1994 to November 1995, she was a Fund Accountant for
Investors Bank & Trust Company. Age: 26 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: 35 years old.
#STEPHANIE D. PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Vice President and Client Development Manager
of Funds Distributor, Inc. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was a Second
Vice President with Chase Manhattan Bank. Age: 30 years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Trust.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. From September 1983 to May 1994, he was Senior
Vice President and Manager of Client Services and Director of Internal
Audit at TBC. Age: 44 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: 36 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: 37 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.
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. Effective July 1, 1998, the Dreyfus/Laurel
Funds pay each Director/Trustee who is not an "interested person" of the
Trust (as defined in the 1940 Act) $40,000 per annum, plus $5,000 per joint
Dreyfus/Laurel Funds Board meeting attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly
scheduled Board meeting and $500 for Board meetings and separate committee
meetings attended that are conducted by telephone. The Dreyfus/Laurel Funds
also reimburse each Director/Trustee who is not an "interested person" of
the Trust (as defined in the 1940 Act) for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. The
compensation structure described in this paragraph is referred to
hereinafter as the "Current Compensation Structure."
In addition, the Trust currently has three Emeritus Board members who are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members pursuant to the Current Compensation
Structure.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was 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) and
$1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per
joint Dreyfus/Laurel Funds Audit Committee meeting attended, and reimbursed
each such Director/Trustee for travel and out-of-pocket expenses (the
"Former Compensation Structure").
The aggregate amount of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1998, and from
all other funds in the Dreyfus Family of Funds for which such person is a
Board member (the number of which is set forth in parenthesis next to each
Board member's total compensation)* during the year ended December 31, 1998,
pursuant to the Former Compensation Structure for the period from January 1,
1998 through June 30, 1998 and the Current Compensation Structure for the
period from July 1, 1998 through December 31, 1998, were as follows:
Total Compensation
Aggregate From the Trust
Name of Board Compensation and Fund Complex
Member From the Trust# Paid to Board Member
Joseph S. DiMartino** $18,267.34 $619,660 (187)
James M. Fitzgibbons $18,600.68 $60,010 (31)
J. Tomlinson Fort*** none none
Arthur L. Goeschel $18,934.01 $61,010 (31)
Kenneth A. Himmel $15,684.01 $50,260 (31)
Stephen J. Lockwood $16,100.67 $51,010 (31)
John J. Sciullo $18,267.34 $59,010 (31)
Roslyn M. Watson $18,934.01 $61,010 (31)
Benaree Pratt Wiley**** $15,673.68 $49,628 (31)
____________________________
# 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 $4,292.30 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
*** J. Tomlinson Fort is paid directly by Dreyfus for serving as a Board
member of the Trust and the funds in the Dreyfus/Laurel Funds and separately
by the Dreyfus High Yield Strategies Fund. For the fiscal year ended
December 31, 1998, the aggregate amount of fees received by J. Tomlinson
Fort from Dreyfus for serving as a Board member of the Trust was $18,267.34.
For the year ended December 31, 1998, the aggregate amount of fees received
by Mr. Fort for serving as a Board member of all funds in the
Dreyfus/Laurel Funds (including the Trust) and Dreyfus High Yield Strategies
Fund (for which payment is made directly by the fund) was $59,010. In
addition, Dreyfus reimbursed Mr. Fort a total of $1,110.77 for expenses
attributable to the Trust's Board meetings which is not included in the
$4,292.30 amount in note # above.
****Payments to Ms. Wiley were for the period from April 23, 1998 (the date she
was elected as a Board member) through December 31, 1998.
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, 1999.
As of April 1, 1999, the following shareholder(s) owned beneficially or
of record 5% or more of Class A shares of the Fund: Boston Safe Deposit &
Trust Co., Trustee, as Agent-Omnibus Account, 1 Cabot Road, Medford, MA
02155-5141, 6.82%.
As of April 1, 1999, the following shareholder(s) owned beneficially or
of record 5% or more of Class B shares of the Fund: MLPF & S For The Sole
Benefit of Its Customers, 4800 Deer Lake Drive East, Floor 3, Jacksonville,
FL 30246-6484, 32.94%.
As of April 1, 1999, the following shareholder(s) owned beneficially or
of record 5% or more of Class C shares of the Fund: MLPF & S For The Sole
Benefit Of Its Customers, 4800 Deer Lake Drive East, Floor 3, Jacksonville,
FL 32246-6484, 65.51%.
As of April, 1999, the following shareholder(s) owned beneficially or
of record 5% or more of Class R shares of the Fund: Boston Safe Deposit &
Trust Co. Trustee, as Agent-Omnibus Account, 1 Cabot Road, Medford, MA 02155-
5141, 67.34% and Boston & Company, P.O. Box 3198, Pittsburgh, PA 15230-3198,
20.13%.
A shareholder who beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("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 25 largest bank holding
companies in the United States based on total assets.
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, subject to the overall authority of the Trust's Board of
Trustees in accordance with Massachusetts law. 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 (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 February 4, 1999 to
continue until April 4, 2000. 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 Fund's outstanding voting securities 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:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice-Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice-
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
Under Dreyfus' personal securities trading policy (the "Policy"), Dreyfus
employees must preclear personal transactions in securities not exempt under the
Policy. In addition, Dreyfus employees must report their personal securities
transactions and holdings, which are reviewed for compliance with the Policy.
In that regard, Dreyfus portfolio managers and other investment personnel also
are subject to the oversight of Mellon's Investment Ethics Committee. Dreyfus
portfolio managers and other investment personnel who comply with the Policy's
preclearance and disclosure procedures, and the requirements of the Committee,
may be permitted to purchase, sell or hold securities which also may be or are
held in fund(s) they manage or for which they otherwise provide investment
advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, fees and expenses of the non-
interested Trustees (including counsel fees), Rule 12b-1 fees (if
applicable) and extraordinary expenses. Although Dreyfus does not pay for
the fees and expenses of the non-interested Trustees (including counsel
fees), Dreyfus is contractually required to reduce its investment management
fee 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. Expenses attributable to the Fund are charged against the Fund's
assets; other expenses of the Trust are allocated among its funds on the
basis determined by the Trustees, including, but not limited to,
proportionately in relation to the net assets of each fund.
For the last three years, the Fund had the following expenses:
For the Fiscal Year Ended December 31,
1998 1997 1996
Management fees $680,914 $656,463 $653,857
The Distributor. Premier Mutual Fund Services, Inc. (the "Distributor"),
located at 60 State Street, Boston, Massachusetts 02109, serves as the
Fund's distributor on a best efforts basis pursuant to an agreement which is
renewable annually. Dreyfus may pay the Distributor for shareholder
services from Dreyfus' own assets, including past profits but not including
the management fee paid by the Fund. The Distributor may use part or all of
such payments to pay certain banks, securities brokers or dealers and other
financial institutions ("Agents") for these services. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds.
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 contingent deferred sales charge
("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. For the fiscal year ended December, 31, 1998,
the Distributor retained no sales loads on the Fund's Class A shares. For
the same period, the Distributor retained $27,936 from the CDSC on Class B
shares. For the same period, the Distributor retained $884 from the CDSC on
Class C shares.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is
being purchased. The decision as to which Class of shares is most
beneficial to you depends on the amount and the intended length of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee, service fee
and CDSC, if any, on Class B or Class C shares would be less than the
accumulated distribution fee and initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
would be offset by the return 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 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. The Fund reserves the right to reject any purchase order.
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 Trust'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 bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment account
or relationship at such institution, 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 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.
The minimum initial investment is $1,000. Subsequent investments must be
at least $100. The minimum initial investment for Dreyfus-sponsored self-
employed individual retirement plans ("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 is $750 and
$500 for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases except that the no minimum on Education IRAs does not apply until
after the first year. 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 or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
Fund shares are sold on a continuous basis. NAV per share is determined
as of the close of trading on the floor of the New York Stock Exchange
("NYSE") (currently 4:00 p.m., New York time), on each day the NYSE is open
for business. For purposes of determining NAV, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the NYSE. NAV per share of each class is computed by dividing the value
of the Fund's net assets represented by such class (i.e., the value of its
assets less liabilities) by the total number of shares of such class
outstanding. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the NYSE (currently 4:00 p.m., New York time) on a
business day, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on the next
business day, except where shares are purchased through a dealer as provided
below.
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 NAV. 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.
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 the Fund's 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 Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where
(i) the employers or affiliated employers maintaining such plans or programs
have a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in 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 taxpayer
identification number ("TIN") upon opening or reopening an account. See 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.
Class A Shares. The public offering price for Class A shares is the NAV of
that Class, plus a sales load as shown below:
Total Sales Load as a % Dealers' Reallowance
Amount of Transaction of Offering Price Per Share as a % of Offering Price
Less than $50,000 4.50 4.25
$50,000 to less than $100,000 4.00 3.75
$100,000 to less than $250,000 3.00 2.75
$250,000 to less than $500,000 2.50 2.25
$500,000 to less than $1,000,000 2.00 1.75
$1,000,000 or more -0- -0-
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 Code although
more than one beneficiary is involved; or a group of accounts established by
or on behalf of the employees of an employer or affiliated employers
pursuant to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k), and 457 of the Code); or an
organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares of the Fund aggregating less than $50,000 subject to the schedule
of sales charges set forth in the Fund's Prospectus at a price based upon
the NAV of a Class A share at the close of business on December 31, 1998.
NAV per Share $10.81
Per Share Sales Charge - 4.5%
of offering price (4.7% of
NAV per share) $ 0.51
Per Share Offering Price to
the Public $11.32
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.
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 below under "Redemption of
Shares - Contingent Deferred Sales Charge - Class B Shares" (other than the
amount of the CDSC and time periods) and "Redemption of 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 Trust'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 intrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000
or more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 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. Dealers
receive a larger percentage of the sales load from the Distributor than they
receive for selling most other funds.
Class B Shares. The public offering price for Class B shares is the NAV
per share of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC is imposed, however, on certain redemptions of Class B
shares as described in the Fund's Prospectus. 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.
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative NAVs for
shares of each such Class. Class B shares that have been acquired through
the reinvestment of dividends and distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C Shares. The public offering price for Class C shares is the NAV
per share of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC 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
per share of that Class.
Right of Accumulation-Class A Shares. Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the 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 above, 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 4.5% 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 by telephone
through 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. 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 Automated Clearing House ("ACH")
member may be so designated. 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 the Transfer Agent and the 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." 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.
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund
may at its discretion, permit the purchase of shares through an "in-kind"
exchange of securities. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest
earned on the securities following their delivery to the Fund and prior to
the exchange will be considered in valuing the securities. All interest,
dividends, subscription or other rights attached to the securities become
the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call 1-800-554-4611.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
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 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 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
Class A Plan allows the Distributor to make payments from the Rule 12b-1
fees it collects from the Fund to compensate Agents that have entered into
Selling Agreements ("Agreements") with the Distributor. Under the
Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the Agent's
clients that own Class A shares of the Fund.
The 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 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 approved by the Trustees at a meeting held on February 4, 1999.
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 Class C Shares. In
addition to the above described current Class A Plan for Class A shares, the
Board of Directors has adopted a Service Plan (the "Service Plan") under the
Rule for Class B and Class C shares, pursuant to which the Fund pays the
Distributor and Dreyfus Service Corporation a fee at the annual rate of
0.25% of the value of the average daily net assets of Class B and Class C
shares for the provision of certain services to the holders of Class B and
Class C shares. 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 in respect of services for 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. 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")
pursuant to which the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an aggregate annual rate of 0.75% of the value
of the average daily net assets of Class B and Class C shares. 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.
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 February 4, 1999. 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.
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 Statement of
Additional Information 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 Plans 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.
For the fiscal year ended December 31, 1998, the Fund paid the
Distributor and Dreyfus Service Corporation $25,530 and $157,121,
respectively, pursuant to the Class A Plan. For the fiscal year ended
December 31, 1998, the Fund paid the Distributor $78,057 and $18,739,
pursuant to the Distribution Plan with respect to Class B and Class C
shares, respectively, and paid the Distributor and Dreyfus Service
Corporation $6,416 and $19,603, respectively, pursuant to the Service Plan
with respect to Class B shares and $220 and $6,026, respectively, pursuant
to the Service Plan with respect to 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 "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
General. 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 per share.
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 certain Agents ("Selected
Dealers"), you may redeem Fund shares through the Selected Dealer. Other
redemption procedures may be in effect for clients of other 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 The Dreyfus Touchr 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.
Redemption Through a Selected Dealer. Customers of Selected Dealers may
make redemption requests to their 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.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund 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 Fund shares will be redeemed at the next determined NAV
per share. 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, your 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.
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. 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 ACH
system unless more prompt transmittal specifically is requested. 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. See "Purchase of Shares-TeleTransfer Privilege."
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.
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 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 NAV is not reasonably practicable, or (c) for such
other periods as the SEC by order may permit to protect the Fund's
shareholders.
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.
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.
Waiver of CDSC. The CDSC will be waived in connection with (a)
redemptions made within one year after the death or disability, as defined
in Section 72(m)(7) of the Code, of the shareholder, (b) redemptions by
employees participating in Eligible Benefit Plans, (c) redemptions as a
result of a combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) a distribution following retirement
under a tax-deferred retirement plan or upon attaining age 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 below. If the Trust's Board determines to discontinue the waiver
of the CDSC, the disclosure herein 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 or this
Statement of Additional Information 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.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
Fund Exchanges. Shares of any class of the Fund may be exchanged for
shares of the same 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 NAV per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or other distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for shares
of another fund will be subject to the higher applicable CDSC of
the two funds, and for purposes of calculating CDSC rates and
conversion periods, if any, will be deemed to have been held since
the date the shares being exchanged were initially purchased.
To accomplish an exchange under item D above, 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. Any such exchange is subject
to confirmation of an investor's holdings through a check of appropriate
records.
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. 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, also by
calling 1-800-554-4611. 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. 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.
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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to regularly purchase (on a semi-monthly, monthly,
quarterly or annual basis), in exchange for shares of the Fund, shares of
the same Class of certain other funds in the Dreyfus Premier Family of Funds
or the Dreyfus Family of Funds of which the investor is a shareholder. The
amount the investor designates, 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 the investor has selected. 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 NAV per share 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.
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. 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 a Dreyfus Auto-Exchange Authorization Form, please call toll free 1-800-
554-4611.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations. The exchange of
shares of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange and, therefore, an
exchanging shareholder (other than a tax-exempt Retirement Plan) may realize
a taxable gain or loss.
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
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus-Automatic Asset Builderr. 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.
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
other distributions, the investor's shares will be reduced and eventually
may be depleted. 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. 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.
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.
Dividend Options. Dividend Sweep allows investors to invest
automatically their dividends or dividends and other distributions, if any,
from the Fund in shares of the same Class of certain other funds in the
Dreyfus Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative NAV 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 hereinafter 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
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.
Dividend ACH permits you to transfer electronically dividends or
dividends and other distributions, if any, from the Fund to a designated
bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
For more information concerning these Privileges, or to request a
Dividend Options Form, please call toll free 1-800-554-4611. 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.
Dreyfus Government Direct Deposit Privilege. Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit
as much of such payments as you elect. You should consider whether Direct
Deposit of your entire payment into a fund with fluctuating NAV, such as the
Fund, may be appropriate for you. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained 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.
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. 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.
Retirement Plans. The Fund makes available 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.
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.
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.
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 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 Fund exchanges 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.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Substantially all of the Fund's
investments (excluding short-term investments) are valued each business day
by an independent pricing service (the "Service") approved by the Fund's
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 debt securities 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 carried at amortized cost, which approximates value. Debt
securities that are not valued by the Service are valued at the average of
the most recent bid and asked prices in the market in which such investments
are primarily traded, or at the last sales price for securities traded
primarily on an exchange. In the absence of reported sales of investments
traded primarily on an exchange, the average of the most recent bid and
asked prices is used. Bid price is used when no asked price is available.
Investments traded in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. If the Fund has to obtain prices as of
the close of trading on various exchanges throughout the world, the
calculation of NAV may not take place contemporaneously with the
determination of prices of certain of the Fund's securities. Expenses and
fees, including the management fee, are accrued daily and are taken into
account for the purpose of determining the NAV of Fund shares.
NYSE 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 "Distributions and
Taxes."
General. The Fund ordinarily declares daily and pays monthly dividends
from its net investment income and distributes net realized capital gains
and gains from foreign currency transactions, 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 1940 Act. All expenses are accrued daily and deducted before
declaration of dividends to investors. The Fund will not make distributions
from net realized capital gains unless all capital loss carryovers, if any,
have been utilized or have expired. Shares begin accruing dividends on the
day following the date of purchase. 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. 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 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.
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 ("RIC") 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. To qualify for treatment as a RIC
under the Code, the Fund -- which is treated as a separate corporation for
federal tax purposes -- (1) must distribute to its shareholders each year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) ("Distribution Requirement"), (2)
must derive at least 90% of its annual gross income from specified sources
("Income Requirement"), and (3) must meet certain asset diversification and
other requirements. The term "regulated investment company" does not imply
the supervision of management or investment practices or policies by any
government agency. If the Fund failed to qualify for treatment as a RIC for
any taxable year, (1) it would be taxed at corporate rates on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would
treat all those distributions, including distributions of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
as dividends (that is, ordinary income) to the extent of the Fund's earnings
and profits. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make substantial
distributions before requalifying for RIC treatment. The Fund will be
subject to a non-deductible 4% excise tax ("Excise Tax") to the extent it
fails to distribute substantially all of its taxable investment income and
capital gains.
Distributions. If you elect to receive dividends and other distributions
in cash, and your distribution check is returned to the Fund as
undeliverable or remains uncashed for six months, the Fund reserves the
right to reinvest that distribution and all future distributions payable to
you in additional Fund shares at NAV. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Dividends derived from net investment income, together with distributions
from net realized short-term capital gains, net realized gains from certain
foreign currency transactions and all or a portion of any gains realized
from the sale or other disposition of certain market discount bonds
(collectively, "dividend distributions"), will be 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) are taxable to those shareholders as long-term capital gains
regardless of how long the shareholders have held their Fund shares and
whether the distributions are received in cash or reinvested in additional
Fund shares.
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, 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 distributions paid during
the year.
Dividends and other distributions paid by the Fund to qualified
retirement plans ordinarily will not be subject to taxation until the
proceeds are distributed from the plans. The Fund will not report to the
Internal Revenue Service ("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 59 1/2, generally will be subject to an additional tax equal to
10% of the taxable portion of the distribution. The administrator, trustee
or custodian of a qualified retirement plan will be responsible for
reporting distributions from the plan 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 distribution paid directly from the plan to an eligible
retirement plan in a "direct rollover," the distribution is subject to 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,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is
correct. Backup withholding at that rate also is required from dividends
and capital gain distributions payable to such a shareholder if (1) the
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 an account. Any tax
withheld as a result of backup withholding does not constitute an additional
tax imposed on the record owner and may be claimed as a credit on his or her
federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares
below the cost of his or her investment. Such a distribution would be a
return on investment in an economic sense, although taxable as discussed
above. In addition, if a shareholder sells shares of the Fund held for six
months or less and receives any capital gain distributions 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 those distributions.
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.
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.
Foreign Currency 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 gains and losses. 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 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 otherwise would 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") 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 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 same manner.
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. Under
Section 1092 of the Code, any loss from the disposition of a position in a
straddle generally may be deducted only to the extent the loss exceeds the
unrealized gain on the offsetting position(s) of the straddle. In addition,
these rules may postpone the recognition of loss that otherwise would be
recognized under the mark-to-market rule discussed above. The regulations
under Section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting
position is acquired within a prescribed period, and "short sale" rules
applicable to straddles. If the Fund makes certain elections (including an
election as to straddles that include a position in one or more Section 1256
Contracts (so-called "mixed straddles")), the amount, character, and timing
of recognition of gains and losses from the affected straddle positions
would be determined under rules that vary according to the elections made.
Because only a few of the regulations implementing the straddle rules have
been promulgated, the tax consequences to the Fund of straddle transactions
are not entirely clear.
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 would 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 that income to satisfy the Distribution Requirement and
avoid imposition of the 4% excise tax referred to in the Fund's Prospectus
under "Dividends, Other Distributions and Taxes." In that 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 its 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 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 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 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 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.
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 Dreyfus in carrying out its obligations to the
Fund. The receipt of such research services does not reduce the normal
independent research activities of Dreyfus; however, it enables these
organizations to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its
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, 1996, 1997 and 1998 the Fund did
not pay any brokerage commissions.
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 portfolio 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 higher 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 its appropriate to make changes in the Fund's assets. The
portfolio turnover rate for the Fund is calculated by dividing the lesser of
the Fund's annual sales or purchases of portfolio securities (exclusive of
purchases and sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of
securities in the Fund during the year. Portfolio turnover may vary from
year to year as well as within a year.
The portfolio turnover rates for the fiscal years ended 1997 and 1998 for
the Fund were 244.44% and 238.95%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
The current yield for the 30-day period ended December 31, 1998 was
6.35%, 5.90%, 5.89% and 6.91% for 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 NAV 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, 1998 were 0.17%, 4.82% and 7.36%,
respectively. The average annual total returns for Class B shares for the 1
year period ended December 31, 1998 and for the period December 19, 1994
(inception of Class B) through December 31, 1998 were 0.17% and 7.29%,
respectively. The average annual total returns for Class C shares for the 1
year period ended December 31, 1998 and for the period December 19, 1994
(inception of Class C) through December 31, 1998 were 3.19%, and 7.69%,
respectively. The average annual total returns for Class R shares for the 1
and 5 year period ended December 31, 1998 and for the period February 1,
1993 (inception of Class R) through December 31, 1998 were 5.26%, 6.06% and
7.24%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at NAV (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, 1998 for Class A was 442.42%. Based on NAV per
share, the total return for Class A was 467.94% 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, 1998 was 32.89%
and 34.92%, respectively. Without giving effect to the applicable CDSC, the
total return for Class B and C was 34.89% and 34.92%, respectively, for this
period. The Fund's total return for the period February 1, 1993 (inception
date of Class R) through December 31, 1998 was 51.14%.
Total return is calculated by subtracting the amount of the Fund's NAV
(maximum offering price in the case of Class A) per share at the beginning
of a stated period from the NAV (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 NAV (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 NAV per share at the beginning of
the period instead of the maximum offering price per share at the beginning
of the period for Class A shares or without giving effect to any applicable
CDSC at the end of the period for Class B or C shares. 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/TRUST
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "The Fund."
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 are without par value, have no preemptive or subscription rights, and
are freely transferable. The Fund is one of three portfolios of the Trust.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Trust 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 Trust to
hold a special meeting of shareholders for purposes of removing a Trustee
from office or any other purpose. Shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Trust'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 Trust is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Trust, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Trustees from the separate voting requirements of the Rule.
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, N.W., Second
Floor, Washington, D.C. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this Statement of Additional
Information.
KPMG LLP, 757 Third Avenue, New York, New York 10017, was appointed by
the Trustees to serve as the Fund's independent auditors for the year ending
December 31, 1999, 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, 1998,
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 AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
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.
Obligations rated `BB', `B', `CCC', `CC', and `C' are
regarded as having significant speculative characteristics. `BB'
indicates the least degree of speculation and `C' the highest.
While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment
and is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity
to meet its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been
taken, but payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D'
rating category is used when payments on a obligation are not made
on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during
such grace period. The `D' rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus (+)
or a minus (-) sign to show relative standing within the major
rating categories
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt service is
given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
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.
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.
A-2 Capacity for timely payment on issues with this designation
is satisfactory. However, the relative degree of safety is not as
high as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity
for timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B Issues rated `B' are regarded as having only speculative
capacity for timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is used
when interest payments of principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period.
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 characteristics and in fact
have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very
moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds
in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked short-comings.
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 each generic rating classification from Aa
through 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.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that
define an investment grade situation. These are designated Moody's
Investment Grade as MIG 1 (best quality) through MIG 4 (adequate
quality). Short-term obligations of speculative quality are
designated SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an
evaluation of the degree of risk associated with scheduled
principal and interest payments, and the other represents an
evaluation of the degree of risk associated with the demand
feature. The short-term rating assigned to the demand feature of
VRDOs is designated as VMIG. When either the long- or short-term
aspect of a VRDO is not rated, that piece is designated NR, e.g.,
Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced by
many of the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements and
may require relatively high financial leverage. Adequate
alternative liquidity is maintained.
Fitch IBCA, Inc.
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest
expectation of credit risk. They are assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low
expectation of credit risk. They indicate very strong capacity for
timely payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of
credit risk. The capacity for timely payment of financial
commitments is considered strong. This capacity may, nevertheless,
be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
BBB Good credit quality. `BBB' ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered adequate, but
adverse changes in circumstances and in economic conditions are
more likely to impair this capacity. This is the lowest investment-
grade category.
BB Speculative. `BB' ratings indicate that there is a
possibility of credit risk developing, particularly as the result
of adverse economic change over time; however, business or
financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not
investment grade.
B Highly speculative. `B' ratings indicate that significant
credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity
for continued payment is contingent upon a sustained, favorable
business and economic environment.
CCC, CC,High default risk. Default is a real possibility. Capacity for
C meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating indicates
that default of some kind appears probable. `C' ratings signal imminent
default.
DDD, DD,
and D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For
U.S. corporates, for example, `DD' indicates expected recovery of
50% - 90% of such outstandings, and `D' the lowest recovery
potential, i.e. below 50%.
Short-Term and Commercial Paper Ratings
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and
thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.
F-1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F-2 Good credit quality. A satisfactory capacity for timely
payment of financial commitments, but the margin of safety is not
as great as in the case of the higher ratings.
F-3 Fair credit quality. The capacity for timely payment of
financial commitments is adequate; however, near-term adverse
changes could result in a reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of
financial commitments, plus vulnerability to near-term adverse
changes in financial and economic conditions.
C High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon a
sustained, favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the `AAA' long-
term rating category, to categories below `CCC', or to short-
term ratings other than `F-1'.
Duff & Phelps Rating Co.
Long-Term Ratings
AAA Highest credit quality. The risks factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is
AA modest but may vary slightly from time to time because of economic
AA- conditions.
A+ Protection factors are average but adequate. However, risk
A factors are more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk during
BBB- economic cycles.
BB+ Below investment grade but deemed likely to meet obligations
BB when due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations
B will not be met when due. Financial protection factors will fluctuate
B- widely according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors.
Risk factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors
are very small.
D-2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financial requirements, access to capital markets is
good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
D-4 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.
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
____________________________________________________________________________
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, 1999
____________________________________________________________________________
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 Limited Term High Income Fund (the "Fund"), dated May 1,
1999, as it may be revised from time to time. The Fund is a separate,
diversified portfolio of The Dreyfus/Laurel Funds Trust (the "Trust"), an
open-end management investment company, known as a mutual fund. To obtain a
copy of the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of the Fund/Trust B-2
Management of the Trust B-25
Management Arrangements B-31
Purchase of Shares B-34
Distribution and Service Plans B-41
Redemption of Shares B-43
Shareholder Services B-48
Additional Information About Purchases,
Exchanges and Redemptions B-54
Determination of Net Asset Value B-55
Dividends, Other Distributions And Taxes B-56
Portfolio Transactions B-61
Performance Information B-63
Information About the Fund/Trust B-65
Transfer and Dividend Disbursing Agent, Custodian, Counsel
and Independent Auditors B-66
Financial Statements B-67
Appendix B-68
DESCRIPTION OF THE FUND/TRUST
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. Before April 4, 1994, the
Trust's name was The Boston Company Fund. Prior to October 17, 1994, the
Trust's name was the Laurel Funds Trust. The Trust is an open-end
management investment company comprised of separate portfolios, including
the Fund, each of which is treated as a separate fund. The Fund is
diversified, which means that, with respect to 75% of its total assets, the
Fund will not invest more than 5% of its assets in the securities of any
single issuer.
The Fund's investment objective is to provide high current income.
This objective 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.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
Investment Grade Obligations. Corporate obligations rated Baa by
Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Rating Service, a division of McGraw-Hill Companies, Inc. ("S&P") , Fitch
IBCA, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") are
considered by those rating agencies to be "investment grade" securities.
The Fund may invest in investment grade securities (or if unrated, of
comparable quality as determined by Dreyfus) 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 securities when Dreyfus
determines that a defensive investment position is appropriate in light of
market or economic conditions.
Lower Rated Securities. The Fund generally will invest in securities
rated below investment grade such as those rated Ba or lower by Moody's or
BB or lower by S&P, Fitch and Duff & Phelps Credit Rating Co. ("Duff" and
with Moody's, S&P and Fitch, the "Rating Agencies") (commonly known as junk
bonds). 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 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. 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 invests in higher rated securities.
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. Bond prices are inversely related to
interest rate changes; however, bond price volatility also is inversely
related to coupon. Accordingly, below investment grade securities may be
relatively less sensitive to interest rate changes than higher quality
securities of comparable maturity, because of their higher coupon. This
higher coupon is what the investor receives in return for bearing greater
credit risk.
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 ("NAV"). 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.
The average distribution of investments of the Fund in corporate bonds
by ratings for the fiscal year ended December 31, 1998, calculated monthly
on a dollar weighted basis, was as follows:
Moody's S&P, Fitch or Duff Percentage
Aaa AAA 2.3%
A A 1.0%
Baa BBB .4%
Ba BB 6.7%
B B 64.1%
Caa CCC 5.3%
Ca CC .3%
NR NR 10.4%*
90.5%**
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 10.4% have been determined by Dreyfus to be of
comparable quality to securities rated: BB: .7%, B: 5.6% and CCC: 4.1%.
** The Fund also owns equity securities .1%, convertible preferred stocks
- BB 1.5% convertible preferred stocks - CCC: .8%, and convertible
bonds - B: 5.6%. Approximately 1.5% of the Fund's assets were invested
in cash or cash equivalents.
U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities which 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.
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.
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. 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.
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 security
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
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 the Fund's mortgage-backed
securities to decrease broadly, the Fund's average effective duration, and
thus sensitivity to increase rate fluctuations, would increase. Therefore,
depending on the circumstances, such an increase could result in an average
effective duration of more than 3.5 years.
Certificates of the Government National Mortgage Association ("GNMA")
are mortgage-backed securities representing part ownership of a pool of
mortgage loans. These loans are made by mortgage bankers, commercial banks,
savings and loan associations, and other lenders and are either insured by the
Federal Housing Administration or guaranteed by the Veterans Administration. A
"pool" or group of such mortgages is assembled and, after being approved by
GNMA, is offered to investors through securities dealers. Once approved by
GNMA, the timely payment of interest and principal on each mortgage is
guaranteed by the full faith and credit of the U.S. Government. Although the
mortgage loans in a pool underlying a GNMA Certificate will have maturities of
up to 30 years, the average life of a GNMA Certificate will be substantially
less because the mortgages will be subject to normal principal amortization and
also may be prepaid prior to maturity. Prepayment rates vary widely and may be
affected by changes in mortgage interest rates. In periods of falling interest
rates, the rate of prepayment on higher interest mortgage rates tends to
increase, thereby shortening the actual average life of the GNMA Certificate.
Conversely, when interest rates are rising, the rate of prepayment tends to
decrease, thereby lengthening the average life of the GNMA Certificates.
Reinvestment of prepayments may occur at higher or lower rates than the original
yield of the Certificates. Due to the prepayment feature and the need to
reinvest prepayments of principal at current rates, GNMA Certificates with
underlying mortgages bearing higher interest rates can be less effective than
typical non-callable bonds of similar maturities at locking in yields during
periods of declining interest rates, although they may have comparable risks of
decline in value during periods of rising interest rates.
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.
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 nongovernmental 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. Non-mortgage asset backed securities are
a form of Derivative. The securitization techniques used for non-mortgage
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 non-
mortgage asset backed securities that may be developed in the future.
Non-mortgage 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.
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 non-mortgage 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 non-
mortgage 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 non-mortgage 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 non-mortgage 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 non-mortgage
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 non-mortgage asset backed securities, credit card receivables are
unsecured obligations of the card holder.
The development of non-mortgage asset backed securities is at an early
stage compared to mortgage backed securities. While the market for non-
mortgage securities is becoming increasingly liquid, the market for mortgage
backed securities issued by certain private organizations and non-mortgage
asset backed securities is not as well developed.
Senior-Subordinated Securities. Mortgage-related and non-mortgage
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.
Repurchase Agreements. The Fund may enter into repurchase agreements.
In a repurchase agreement, the Fund buys a security from a seller that has
agreed to repurchase the same security at a mutually agreed upon date and
price. The Fund's resale price will be in excess of the purchase price,
reflecting an agreed upon interest rate. This interest rate is effective for
the period of time the Fund is invested in the agreement and is not related
to the coupon rate on the underlying security. Repurchase agreements may
also be viewed as a fully collateralized loan of money by the Fund to the
seller. The period of these repurchase agreements will usually be short,
from overnight to one week, and at no time will the Fund invest in
repurchase agreements for more than one year. The Fund will always receive
as collateral securities whose market value including accrued interest is,
and during the entire term of the agreement remains, at least equal to 100%
of the dollar amount invested by the Fund in each agreement, including
interest, 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 Fund's credit guidelines.
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 below
for other commercial paper issuers.
Commercial paper consists of short-term, unsecured obligations issued
by banks and corporations that have maturities ranging from two 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 A1 by S&P, Fitch or Duff or (c) if unrated, determined to by
Dreyfus to be of comparable quality to those rated obligations which may be
purchased by the Fund.
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 "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.
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.
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.
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.
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 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.
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 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.
Illiquid Investments. The Fund may invest up to 15% of the value of
its net assets in illiquid securities, including repurchase agreements and
time deposits with maturities in excess of seven days, certain mortgage-
backed securities, securities involved in swap, collar and floor
transactions, and privately negotiated traded options and securities used to
cover such options. 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. 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.
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 securities will be subject to market fluctuations. During this
period, the Fund's NAV could be adversely effected.
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.
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.
Investment Techniques
In addition to the principal investment strategies discussed in the
Fund's Prospectus, the Fund also may engage in the investment techniques
described below. The Fund might not use, or may not have the ability to
use, any of these strategies and there can be no assurance that any strategy
that is used will succeed.
Portfolio Maturity. Under normal market conditions, the average
effective portfolio maturity of the Fund is expected to be four years or
less. For purposes of calculating average effective 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
average effective 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.
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 U.S. or abroad.
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.
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
NAV of any increase or decrease in the market value of the Fund's portfolio.
Money borrowed will be limited to 33 1/3% 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.
For borrowings for investment purposes, the 1940 Act, as amended,
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.
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.
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
NAV per share.
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. 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.
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 33
1/3% 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.
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, 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 and include 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 Fund may invest in Derivatives for a variety of
reasons, including to preserve a return or spread, to lock in unrealized
market value gains or losses, to facilitate or substitute for the sale or
purchase of securities, to manage the duration of securities, to alter the
exposure of a particular investment or portion of the Fund's portfolio to
fluctuations in interest rates or currency rates, to uncap a capped security
or to convert a fixed rate security into a variable rate security or a
variable rate security into a fixed rate security. The Fund 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 non-
mortgage asset backed securities in an amount exceeding, in the aggregate,
25% of its net assets.
Derivatives may provide a cheaper, quicker or more specifically focused
way for the Fund to invest than "traditional" securities would. 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. 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 NAV, can decrease the liquidity of the
Fund's portfolio and make more difficult the accurate pricing of the Fund's
portfolio. 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 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.
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.
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 Statement of Additional
Information.
Certain Investments. 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, N.A. ("Mellon Bank"), an
affiliate of Dreyfus, has a lending relationship.
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 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 efficiency. 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
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.
If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains
an appropriate investment in light of the shareholder's then-current
position and needs.
MANAGEMENT OF THE TRUST
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian, 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's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Trust,
on behalf of the Fund, and those companies that furnish services to the
Fund. These companies are as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank Custodian for the Fund
The Trust has a Board composed of nine Trustees. 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 Director
of The Dreyfus/Laurel Funds, Inc. and as a Trustee of The Dreyfus/Laurel Tax-
Free Municipal Funds and (collectively, with the Trust, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
Trustees of the Trust
o+JOSEPH S. DIMARTINO. Chairman of the Board of the Trust. Since January
1995, Mr. DiMartino has served as Chairman of the Board for various
funds in the Dreyfus Family of Funds. He is also a Director of The
Noel Group, Inc., a venture capital company (for which from February
1995 until November 1997, he was Chairman of the Board); The Muscular
Dystrophy Association; HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and
other benefit programs; Carlyle Industries, Inc. (formerly Belding
Heminway Company, Inc.), a button packager and distributor; Century
Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outservicing functions for small and
medium sized companies; and Career Blazers, Inc. (formerly Staffing
Resources), a temporary placement agency. 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: 55 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.; Chairman of the
Board, Davidson Cotton Company. Age: 64 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Of Counsel, Reed, Smith, Shaw &
McClay (law firm). 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. Age: 77 years old. Address: Way
Hollow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), an
affiliate of Dreyfus, and Boston Safe Deposit and Trust Company. Age:
52 years old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman and CEO LDG
Reinsurance Corporation; Vice Chairman, HCCH. Age 52 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; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania. Age: 67 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.; Director, Massachusetts Electric Company;
Director, the Hyams Foundation, Inc. Age: 49 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. Age: 52
years old. Address: 334 Boylston Street, Suite 400, Boston,
Massachusetts 02146.
________________________________
* "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
# MARGARET W. CHAMBERS. Vice President and Secretary of the Trust. Senior
Vice President and General Counsel of Funds Distributor, Inc. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. Age: 39
years old.
#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: 41 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. Age: 30 years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. Age: 34 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Manager of Treasury Services Administration of Funds Distributor, Inc.
From July 1994 to November 1995, she was a Fund Accountant for
Investors Bank & Trust Company. Age: 26 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: 34 years old.
#STEPHANIE D. PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Vice President and Client Development Manager
of Funds Distributor, Inc. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was a Second
Vice President with Chase Manhattan Bank. Age: 30 years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Trust.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. From September 1983 to May 1994, he was Senior
Vice President and Manager of Client Services and Director of Internal
Audit at TBC. Age: 44 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: 36 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: 37 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.
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. Effective July 1, 1998, the Dreyfus/Laurel
Funds pay each Director/Trustee who is not an "interested person" of the
Trust (as defined in the 1940 Act) $40,000 per annum, plus $5,000 per joint
Dreyfus/Laurel Funds Board meeting attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly
scheduled Board meeting and $500 for Board meetings and separate committee
meetings attended that are conducted by telephone. The Dreyfus/Laurel Funds
also reimburse each Director/Trustee who is not an "interested person" of
the Trust (as defined in the 1940 Act) for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. The
compensation structure described in this paragraph is referred to
hereinafter as the "Current Compensation Structure."
In addition, the Trust currently has three Emeritus Board members who
are entitled to receive an annual retainer and a per meeting fee of one-half
the amount paid to them as Board members pursuant to the Current
Compensation Structure.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was 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) and
$1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per
joint Dreyfus/Laurel Funds Audit Committee meeting attended, and reimbursed
each such Director/Trustee for travel and out-of-pocket expenses (the
"Former Compensation Structure").
The aggregate amounts of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1998, and from
all other funds in the Dreyfus Family of Funds for which such person is a
Board member (the number of which is set forth in parenthesis next to each
Board members total compensation)* during the year ended December 31, 1998,
pursuant to the Former Compensation Structure for the period from January 1,
1998 through June 30, 1998 and the Current Compensation Structure for the
period from July 1, 1998 through December 31, 1998, were as follows:
Total Compensation
Aggregate From the Trust
Name of Board Compensation and Fund Complex
Member From the Trust# Paid to Board Member
Joseph S. DiMartino** $18,267.34 $619,660 (187)
James M. Fitzgibbons $18,600.68 $60,010 (31)
J. Tomlinson Fort*** none none
Arthur L. Goeschel $18,934.01 $61,010 (31)
Kenneth A. Himmel $15,684.01 $50,260 (31)
Stephen J. Lockwood $16,100.67 $51,010 (31)
John J. Sciullo $18,267.34 $59,010 (31)
Roslyn M. Watson $18,934.01 $61,010 (31)
Benaree Pratt Wiley**** $15,673.68 $49,628 (31)
____________________________
# 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 $4,292.30 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
*** J. Tomlinson Fort is paid directly by Dreyfus for serving as a Board member
of the Trust and the funds in the Dreyfus/Laurel Funds and separately by
the Dreyfus High Yield Strategies Fund. For the fiscal year ended December
31, 1998, the aggregate amount of fees received by J. Tomlinson Fort from
Dreyfus for serving as a Board member of the Trust was $18,267.34. For the
year ended December 31, 1998, the aggregate amount of fees received by Mr.
Fort for serving as a Board member of all funds in the Dreyfus/Laurel Funds
(including the Trust) and Dreyfus High Yield Strategies Fund (for which
payment is made directly by the fund) was $59,010. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,110.77 for expenses attributable to the
Trust's Board meetings which is not included in the $4,292.30 amount in
note # above.
**** Payments to Ms. Wiley were for the period from April 23, 1998 (the date she
was elected as a Board member) through December 31, 1998.
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,
1999.
As of April 1, 1999, the following shareholder(s) owned beneficially or
of record 5% or more of Class A shares of the Fund: MLPF & S For The Sole
Benefit Of Its Customers, 4800 Deer Lake Dr. E., Floor 3, Jacksonville, FL
32246-6488, 19.86%; and Everen Securities, Inc., Tifkat LP, 111 East Kilbourn
Avenue, Milwaukee, WI 53202, 7.05%.
As of April 1, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class B shares of the Fund: MLPF & S For The Sole
Benefit Of Its Customers, 4800 Deer Lake Dr. E., Floor 3, Jacksonville, FL.
32246-6484, 41.33%.
As of April 1, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class C shares of the Fund: MLPF & S For The Sole
Benefit Of Its Customers, 4800 Deer Lake Dr. E. Floor 3, Jacksonville, FL.
32246-6484, 51.87%.
As of April 1, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class R shares of the Fund: MBCIC, C/O Mellon
Bank, 919 N. Market Street, Wilmington, DE 19801-3023, 96.67%; and Edward M.
Crafa & Frances P. Crafa Trustees, Crafa Family Living Trust, DTD 07-02-96,
99 Norman Street, New Hyde Park, NY 11040-13077, 7.12%
A shareholder who beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("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 25 largest bank holding
companies in the United States based on total assets.
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, subject to the overall authority of the Trust's Board of
Trustees in accordance with Massachusetts law. 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 (as defined in the 1940 Act) 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 February 4, 1999 to
continue until April 4, 2000. 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 Fund's outstanding voting securities 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:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice-Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice-
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
Under Dreyfus' personal securities trading policy (the "Policy"),
Dreyfus employees must preclear personal transactions in securities not
exempt under the Policy. In addition, Dreyfus employees must report their
personal securities transactions and holdings, which are reviewed for
compliance with the Policy. In that regard, Dreyfus portfolio managers and
other investment personnel also are subject to the oversight of Mellon's
Investment Ethics Committee. Dreyfus portfolio managers and other
investment personnel who comply with the Policy's preclearance and
disclosure procedures, and the requirements of the Committee, may be
permitted to purchase, sell or hold securities which also may be or are held
in fund(s) they manage or for which they otherwise provide investment
advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, fees and expenses of the non-
interested Trustees (including counsel fees), Rule 12b-1 fees (if
applicable) and extraordinary expenses. Although Dreyfus does not pay for
the fees and expenses of the non-interested Trustees (including counsel
fees), Dreyfus is contractually required to reduce its investment management
fee 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. Expenses attributable to the Fund are charged against the Fund's
assets; other expenses of the Trust are allocated among its funds on the
basis determined by the Trustees, including, but not limited to,
proportionately in relation to the net assets of each fund.
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. For the year fiscal year ended December 31, 1998, the Fund paid
Dreyfus a management fee of $4,630,486.
The Distributor. Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109,
serves as the Fund's distributor on a best efforts basis pursuant to an
agreement which is renewable annually. Dreyfus may pay the Distributor for
shareholder services from Dreyfus' own assets, including past profits but
not including the management fee paid by the Fund. The Distributor may use
part or all of such payments to pay certain banks, securities brokers or
dealers and other financial institutions ("Agents") for these services. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds.
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 contingent deferred sales charge ("CDSC") on Class B
shares. For the same period, the Distributor retained $10,967 from the CDSC
on Class C shares. For the fiscal year ended December 31, 1998, the
Distributor retained no sales loads on the Fund's Class A shares. For the
same period, the Distributor retained $914,067 from the CDSC on Class B
shares. For the same period, the Distributor retained $182,439 from the
CDSC on Class C shares.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is
being purchased. The decision as to which Class of shares is most
beneficial to you depends on the amount and the intended length of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee, service fee
and CDSC, if any, on Class B or Class C shares would be less than the
accumulated distribution fee and initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
would be offset by the return 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 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. The Fund reserves the right to reject any purchase order.
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 Trust'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 bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment account
or relationship at such institution, 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. Institutions effecting transactions in Class R
shares for the accounts of their clients may charge their clients direct
fees in connection with such transactions.
The minimum initial investment is $1,000. Subsequent investments must
be at least $100. The minimum initial investment for Dreyfus-sponsored self-
employed individual retirement plans ("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 is $750 and
$500 for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases except that the no minimum on Education IRAs does not apply until
after the first year. 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 or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
Fund shares are sold on a continuous basis. NAV per share is
determined as of the close of trading on the floor of the New York Stock
Exchange ("NYSE") (currently 4:00 p.m., New York time), on each day the NYSE
is open for business. For purposes of determining NAV, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the NYSE. NAV per share of each class is computed by dividing the value
of the Fund's net assets represented by such class (i.e., the value of its
assets less liabilities) by the total number of shares of such class
outstanding. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the NYSE (currently 4:00 p.m., New York time) on a
business day, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on the next
business day, except where shares are purchased through a dealer as provided
below.
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 NAV. 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.
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 the Fund's 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 Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where
(i) the employers or affiliated employers maintaining such plans or programs
have a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in 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 taxpayer
identification number ("TIN") upon opening or reopening an account. See 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.
Class A Shares. The public offering price for Class A shares is the
NAV of that Class, plus a sales load as shown below:
Total Sales Load Dealers' Reallowance
as a % of Offering as a % of
Amount of Transaction Price Per Share Offering Price
Less than $50,000 4.50 4.25
$50,000 to less than $100,000 4.00 3.75
$100,000 to less than $250,000 3.00 2.75
$250,000 to less than $500,000 2.50 2.25
$500,000 to less than $1,000,000 2.00 1.75
$1,000,000 or more -0- -0-
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 Code although
more than one beneficiary is involved; or a group of accounts established by
or on behalf of the employees of an employer or affiliated employers
pursuant to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k) and 457 of the Code); or an
organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares of the Fund aggregating less than $50,000 subject to the schedule
of sales charges set forth above and in the Fund's Prospectus at a price
based upon the NAV of a Class A share at the close of business on December
31, 1998.
NAV per Share $11.33
Per Share Sales Charge - 4.5% of offering price
(4.7% of NAV per share) $ .53
Per Share Offering Price to the Public $11.86
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 below under "Redemption of
Shares - Contingent Deferred Sales Charge - Class B Shares" (other than the
amount of the CDSC and time periods) and "Redemption of 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 Trust'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 intrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000
or more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 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 per share of that Class. No initial sales charge is imposed at the time
of purchase. A CDSC is imposed, however, on certain redemptions of Class B
shares as described in the Fund's Prospectus. 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.
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative NAVs for
shares of each such Class. Class B shares that have been acquired through
the reinvestment of dividends and distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C Shares. The public offering price for Class C shares is the
NAV per share of that Class. No initial sales charge is imposed at the time
of purchase. A CDSC 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 per share of that Class.
Right of Accumulation-Class A Shares. Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the 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 above, 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% 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 by telephone
through 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. 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 Automated Clearing House ("ACH")
member may be so designated. 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 the Transfer Agent and the 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." 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.
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 NAVs 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.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
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 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 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 Class A Plan allows the Distributor to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with the Distributor. Under
the Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the Agent's
clients that own Class A shares of the Fund.
The 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 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 approved by the Trustees at a meeting held on February
4, 1999. 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 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 a fee at the annual rate of
0.25% of the value of the average daily net assets of Class B and Class C
shares for the provision of certain services to the holders of Class B and
Class C shares. 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 in respect of services for 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. 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")
pursuant to which the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an aggregate annual rate of 0.50% and 0.75% of
the value of the average daily net assets of Class B and Class C shares,
respectively. 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.
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 February 4, 1999. 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.
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 Statement of
Additional Information 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 Plans 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.
For the fiscal year ended December 31, 1998, the Fund paid the
Distributor and Dreyfus Service Corporation $20,265 and $256,297,
respectively, pursuant to the Class A Plan. For the fiscal year ended
December 31, 1998, the Fund paid the Distributor $1,900,285 and $1,145,150,
pursuant to the Distribution Plan with respect to Class B and Class C
shares, respectively, and paid the Distributor and Dreyfus Service
Corporation $123,528 and $871,615, respectively, pursuant to the Service
Plan with respect to Class B shares and $6,082 and $375,635, respectively,
pursuant to the Service Plan with respect to 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 "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
General. 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 per share.
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 TeleTransfer Privilege if you have checked the appropriate box
and supplied the necessary information on the Account Application or have
filed a Shareholders Services Form with the Transfer Agent. If you are a
client of certain Agents ("Selected Dealers"), you may redeem Fund shares
through the Selected Dealer. Other redemption procedures may be in effect
for clients of other 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 The Dreyfus Touchr 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.
Check Redemption Privilege - Class A. Investors may write Redemption
Checks ("Checks") drawn on their Fund accounts. The Fund provides 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. Potential fluctuations in the NAV
of Class A should be considered in determining the amount of a 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. Checks are free but the
Transfer Agent will impose a fee for stopping payment of a Check upon
request or if the Transfer Agent cannot honor a Check because of
insufficient funds or other valid reason. Investors should date Checks with
the current date when writing them. Please do not postdate Checks. If
Checks are postdated, the Transfer Agent will honor, upon presentment, even
if presented before the date of the Check, all postdated Checks which are
dated within six months of presentment for payment, if they are otherwise in
good order.
This privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding
on redemptions. Any Check written on an account which has become subject to
backup withholding on redemptions will not be honored by the Transfer Agent.
Redemption Through a Selected Dealer. Customers of Selected Dealers
may make redemption requests to their 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.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund 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 Fund shares will be redeemed at the next determined NAV
per share. 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, your 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.
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. 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 ACH
system unless more prompt transmittal specifically is requested. 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. See "Purchase of Shares-TeleTransfer Privilege."
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 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 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.
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 Trustees reserve 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 NAV is not reasonably practicable, or (c) for such
other periods as the SEC by order may permit to protect the Fund's
shareholders.
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.
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.
Waiver of CDSC. The CDSC applicable to Class B and Class C shares (and
to certain Class A shares) will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition
of assets or otherwise, (d) a distribution following retirement under a tax-
deferred retirement plan or upon attaining age 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
below. If the Trust's Board determines to discontinue the waiver of the
CDSC, the disclosure herein 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 or this
Statement of Additional Information 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.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
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 other funds
purchased by exchange will be purchased on the basis of relative NAV per
share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or other distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for
shares of another fund will be subject to the higher applicable
CDSC of the two funds and, for purposes of calculating CDSC rates
and conversion periods, if any, will be deemed to have been held
since the date the shares being exchanged were initially
purchased.
To accomplish an exchange under item D above, 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. Any such exchange is subject
to confirmation of an investor's holdings through a check of appropriate
records.
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 "Redemption of Shares." Redemption
proceeds for Exchange Account shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for the Auto-Exchange Privilege,
Dividend Sweep and the Automatic Withdrawal Plan.
To 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. 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, also by
calling 1-800-554-4611. 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. 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.
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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to regularly purchase (on a semi-monthly, monthly,
quarterly or annual basis), in exchange for shares of the Fund, shares of
the same Class of certain other funds in the Dreyfus Premier Family of Funds
or certain other funds in the Dreyfus Family of Funds of which the investor
is a shareholder. The amount the investor designates, 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 the investor has selected. 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
NAV per share 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.
The right to exercise this Privilege may be modified or canceled by the
Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to Dreyfus Premier
Limited Term High Income Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. For more information
concerning this Privilege and the funds in the Dreyfus Premier Family of
Funds or the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain an Auto-Exchange Authorization Form, please call
toll free 1-800-554-4611.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations. The exchange of
shares of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange and, therefore, an
exchanging shareholder (other than a tax-exempt Retirement Plan) may realize
a taxable gain or loss.
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
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus-Automatic Asset Builderr. 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.
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
other distributions, the investor's shares will be reduced and eventually
may be depleted. 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. 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.
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.
Dividend Options. Dividend Sweep allows investors to invest
automatically their dividends or dividends and other distributions, if any,
from the Fund in shares of the same Class of certain other funds in the
Dreyfus Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of certain other funds in other funds
purchased pursuant to this Privilege will be purchased on the basis of
relative NAV 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 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.
Dividend ACH permits you to transfer electronically dividends or
dividends and other distributions, if any, from the Fund to a designated
bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
For more information concerning these Privileges, or to request a
Dividend Options Form, please call toll free 1-800-554-4611. 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 Dreyfus Dividend
Sweep. The Fund may modify or terminate these privileges at any time or
charge a service fee. No such fee currently is contemplated. Shares held
under Keogh Plans, IRAs or other retirement plans are not eligible for
Dreyfus Dividend Sweep.
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.
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. 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.
Retirement Plans. The Fund makes available 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.
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.
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.
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 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 non-IRA plan accounts.
During times of drastic economic or market conditions, the Fund may
suspend Fund exchanges 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.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Substantially all of the Fund's
investments (excluding short-term investments) are valued each business day
by an independent pricing service (the "Service") approved by the Fund's
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 debt securities 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 carried at amortized cost, which approximates value. Debt
securities that are not valued by the Service are valued at the average of
the most recent bid and asked prices in the market in which such investments
are primarily traded, or at the last sales price for securities traded
primarily on an exchange. In the absence of reported sales of investments
traded primarily on an exchange, the average of the most recent bid and
asked prices is used. Bid price is used when no asked price is available.
Investments traded in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. If the Fund has to obtain prices as of
the close of trading on various exchanges throughout the world, the
calculation of NAV may not take place contemporaneously with the
determination of prices of certain of the Fund's securities. Expenses and
fees, including the management fee, are accrued daily and are taken into
account for the purpose of determining the NAV of Fund shares.
NYSE 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 "Distributions and
Taxes."
General. The Fund ordinarily declares daily and pays monthly dividends
from its net investment income and distributes net realized capital gains
and gains from foreign currency transactions, 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 1940 Act. All expenses are accrued daily and deducted before
declaration of dividends to investors. The Fund will not make distributions
from net realized capital gains unless all capital loss carryovers, if any,
have been utilized or have expired. Shares begin accruing dividends on the
day following the date of purchase. 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. 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 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.
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 ("RIC") 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. To qualify for treatment as a RIC
under the Code, the Fund -- which is treated as a separate corporation for
federal tax purposes -- (1) must distribute to its shareholders each year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) ("Distribution Requirement"), (2)
must derive at least 90% of its annual gross income from specified sources
("Income Requirement"), and (3) must meet certain asset diversification and
other requirements. The term "regulated investment company" does not imply
the supervision of management or investment practices or policies by any
government agency. If the Fund failed to qualify for treatment as a RIC for
any taxable year, (1) it would be taxed at corporate rates on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would
treat all those distributions, including distributions of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
as dividends (that is, ordinary income) to the extent of the Fund's earnings
and profits. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make substantial
distributions before requalifying for RIC treatment. The Fund will be
subject to a non-deductible 4% excise tax ("Excise Tax") to the extent it
fails to distribute substantially all of its taxable investment income and
capital gains.
Distributions. If you elect to receive dividends and other
distributions in cash, and your distribution check is returned to the Fund
as undeliverable or remains uncashed for six months, the Fund reserves the
right to reinvest that distribution and all future distributions payable to
you in additional Fund shares at NAV. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains, net realized gains
from certain foreign currency transactions and all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds
(collectively, "dividend distributions"), will be 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) are taxable to those shareholders as long-term capital gains
regardless of how long the shareholders have held their Fund shares and
whether the distributions are received in cash or reinvested in additional
Fund shares.
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, 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 distributions paid during
the year.
Dividends and other distributions paid by the Fund to qualified
retirement plans ordinarily will not be subject to taxation until the
proceeds are distributed from the plans. The Fund will not report to the
Internal Revenue Service ("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 59 1/2, generally will be subject to an additional tax equal to
10% of the taxable portion of the distribution. The administrator, trustee
or custodian of a qualified retirement plan will be responsible for
reporting distributions from the plan 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 distribution paid directly from the plan to an eligible
retirement plan in a "direct rollover," the distribution is subject to 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,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is
correct. Backup withholding at that rate also is required from dividends
and capital gain distributions payable to such a shareholder if (1) the
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 an account. Any tax
withheld as a result of backup withholding does not constitute an additional
tax imposed on the record owner and may be claimed as a credit on his or her
federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares
below the cost of his or her investment. Such a distribution would be a
return on investment in an economic sense, although taxable as discussed
above. In addition, if a shareholder sells shares of the Fund held for six
months or less and receives any capital gain distributions 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 those distributions.
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.
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.
Foreign Currency 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 gains and losses. 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 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 otherwise would 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") 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 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 same manner.
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.
Under Section 1092 of the Code, any loss from the disposition of a position
in a straddle generally may be deducted only to the extent the loss exceeds
the unrealized gain on the offsetting position(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise
would be recognized under the mark-to-market rule discussed above. The
regulations under Section 1092 also provide certain "wash sale" rules, which
apply to transactions where a position is sold at a loss and a new
offsetting position is acquired within a prescribed period, and "short sale"
rules applicable to straddles. If the Fund makes certain elections
(including an election as to straddles that include a position in one or
more Section 1256 Contracts (so-called "mixed straddles")), the amount,
character, and timing of recognition of gains and losses from the affected
straddle positions would be determined under rules that vary according to
the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
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 would 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 that income to satisfy the Distribution Requirement and
avoid imposition of the 4% excise tax referred to in the Fund's Prospectus
under "Dividends, Other Distributions and Taxes." In that 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 its 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 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 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 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.
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 Dreyfus in carrying out its obligations to the
Fund. The receipt of such research services does not reduce Dreyfus' normal
independent research activities; however, it enables Dreyfus to avoid the
additional expenses which might otherwise be incurred if it were to attempt
to develop comparable information through its own staff.
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. 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. For the fiscal year ended December 31, 1998,
the Fund did not pay any brokerage commissions.
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 out weighs any disadvantages that may be said to exist
from exposure to simultaneous transactions.
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 portfolio turnover rate of the Fund may exceed 100%. A
portfolio turnover rate or 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 (100% or greater) involves correspondingly
greater brokerage commissions and other expenses that must be born 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
shareholder, are taxable to them as ordinary income. Nevertheless, security
transactions 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. The portfolio turnover rate for the Fund
is calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year. Portfolio
turnover may vary from year to year as well as within a year. 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% and for the year ended
December 31, 1998 was 45.34%.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
The Fund's current yield for the 30-day period ended December 31, 1998
was 10.37%, 10.35%, 10.10% and 11.13% 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 NAV 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 Class A, Class B, Class C
and Class R shares for the 1 year period ended December 31, 1998 were
(4.62)%, (4.24)%, (1.84)% and 0.14%, respectively, and for the period from
June 2, 1997 (inception) through December 31, 1998 were 0.33%, 0.49%, 2.51%
and 3.50%, respectively. Average annual total return is calculated by
determining the ending redeemable value of an investment purchased at NAV
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, 1998 was 0.53%. Based on
NAV per share, the total return for Class A was 5.27% 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, 1998
was 0.78% and 4.00%, respectively. Without giving effect to the applicable
CDSC, the total return for Class B and Class C shares for this period was
4.41% and 4.40%, 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, 1998 was 5.59%. Total return is calculated by subtracting the
amount of a Fund's NAV (maximum offering price in the case of Class A
shares) per share at the beginning of a stated period from the NAV (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 NAV (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 NAV per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period for Class A
shares or without giving effect to any applicable CDSC at the end of the
period for Class B or C shares. 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/TRUST
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "The Fund."
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 are without par value, have no preemptive or subscription
rights, and are freely transferable. The Fund is one of three portfolios of
the Trust.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Trust 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 Trust to
hold a special meeting of shareholders for purposes of removing a Trustee
from office or any other purpose. Shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Trust'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 Trust is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Trust, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Trustees from the separate voting requirements of the Rule.
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 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 Statement of Additional
Information.
KPMG LLP, 757 Third Avenue, New York, NY 10017, was appointed by the
Trustees to serve as the Fund's independent auditors for the year ending
December 31, 1999, 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, 1998,
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 AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
Standard & Poor's
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.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
significant speculative characteristics. `BB' indicates the least
degree of speculation and `C' the highest. While such obligations
will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to
adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment and
is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity
to meet its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D' rating
category is used when payments on a obligation are not made on the
date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The `D' rating also will be used upon the filing of
a bankruptcy petition or the taking of a similar action if payments
on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus (+)
or a minus (-) sign to show relative standing within the major
rating categories.
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined
to possess a very strong capacity to pay debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
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.
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.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated `B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is
used when interest payments of principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes such payments will be made during such grace
period.
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 characteristics and in fact
have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect
to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked short-comings.
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 each generic rating classification from Aa through 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.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that
define an investment grade situation. These are designated Moody's
Investment Grade as MIG 1 (best quality) through MIG 4 (adequate
quality). Short-term obligations of speculative quality are
designated SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an
evaluation of the degree of risk associated with scheduled
principal and interest payments, and the other represents an
evaluation of the degree of risk associated with the demand
feature. The short-term rating assigned to the demand feature of
VRDOs is designated as VMIG. When either the long- or short-term
aspect of a VRDO is not rated, that piece is designated NR, e.g.,
Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of
rated issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-
1 repayment ability will often be evidenced by many of the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements and
may require relatively high financial leverage. Adequate
alternative liquidity is maintained.
Fitch IBCA, Inc.
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest
expectation of credit risk. They are assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low
expectation of credit risk. They indicate very strong capacity for
timely payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more
vulnerable to changes in circumstances or in economic conditions
than is the case for higher ratings.
BBB Good credit quality. `BBB' ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered adequate, but
adverse changes in circumstances and in economic conditions are
more likely to impair this capacity. This is the lowest investment-
grade category.
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse
economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit
risk is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable
business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating
indicates that default of some kind appears probable. `C' ratings
signal imminent default.
DDD, DD,
and DDefault. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For
U.S. corporates, for example, `DD' indicates expected recovery of
50% - 90% of such outstandings, and `D' the lowest recovery
potential, i.e. below 50%.
Short-Term and Commercial Paper Ratings
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and
thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.
F-1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F-2 Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as
in the case of the higher ratings.
F-3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could
result in a reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in
financial and economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained,
favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the `AAA' long-
term rating category, to categories below `CCC', or to short-
term ratings other than `F-1'.
Duff & Phelps Rating Co.
Long-Term Ratings
AAA Highest credit quality. The risks factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is
modest but
AA may vary slightly from time to time because of economic conditions.
AA-
A+ Protection factors are average but adequate. However, risk factors
are
A more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered sufficient
for prudent
BBB investment. Considerable variability in risk during economic
cycles.
BBB-
BB+ Below investments grade but deemed likely to meet obligations when
due.
BB Present or prospective financial protection factors fluctuate
according to
BB- industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will
not be met
B when due. Financial protection factors will fluctuate widely
according to
B- economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be
substantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financial requirements, access to capital markets is good.
Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
D-4 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.
D-5 Issuer failed to meet scheduled principal and/or interest payments.
_______________________________________________________________________________
DREYFUS PREMIER CORE VALUE FUND
CLASS A, CLASS B, CLASS C, CLASS R AND INSTITUTIONAL SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1999
________________________________________________________________________________
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 Core Value Fund (the "Fund"), dated May 1, 1999, as it
may be revised from time to time. The Fund is a separate, diversified
portfolio of The Dreyfus/Laurel Funds Trust (the "Trust"), an open-end
management investment company known as a mutual fund. To obtain a copy of
the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-554-4611 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. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of The Fund/Trust............................................ B-2
Management of The Fund................................................... B-18
Management Arrangements.................................................. B-24
Purchase of Shares....................................................... B-26
Distribution and Service Plans........................................... B-34
Redemption of Shares..................................................... B-36
Shareholder Services...................................................... B-41
Additional Information About Purchases, Exchanges and Redemptions......... B-48
Determination of Net Asset Value.......................................... B-49
Dividends, Other Distributions and Taxes.................................. B-50
Portfolio Transactions.................................................... B-55
Performance Information................................................... B-58
Information About the Fund/Trust.......................................... B-60
Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors............................. B-61
Financial Statements...................................................... B-62
Appendix.................................................................. B-63
DESCRIPTION OF THE FUND/TRUST
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. Before April 4, 1994, the
Trust's name was The Boston Company Fund. Prior to October 17, 1994, the
Trust's name was The Laurel Funds Trust. The Trust is an open-end
management investment company comprised of separate portfolios, including
the Fund, each of which is treated as a separate fund. Prior to January 16,
1998, the name of the Fund was Dreyfus Core Value Fund. The Fund is
diversified, which means that, with respect to 75% of its total assets, the
Fund will not invest more than 5% of its assets in the securities of any
single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
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 are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans are made by mortgage
bankers, commercial banks, savings and loan associations, and other lenders
and are either insured by the Federal Housing Administration or guaranteed
by the Veterans Administration. A "pool" or group of such mortgages is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest
and principal on each mortgage is guaranteed by the full faith and credit of
the U.S. Government. Although the mortgage loans in a pool underlying a
GNMA Certificate will have maturities of up to 30 years, the average life of
a GNMA Certificate will be substantially less because the mortgages will be
subject to normal principal amortization and also may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by changes in
mortgage interest rates. In periods of falling interest rates, the rate of
prepayment on higher interest mortgage rates tends to increase, thereby
shortening the actual average life of the GNMA Certificate. Conversely,
when interest rates are rising, the rate of prepayment tends to decrease,
thereby lengthening the average life of the GNMA Certificates. Reinvestment
of prepayments may occur at higher or lower rates than the original yield of
the Certificates. Due to the prepayment feature and the need to reinvest
prepayments of principal at current rates, GNMA Certificates, with
underlying mortgages bearing higher interest rates can be less effective
than typical non-callable bonds of similar maturities at locking in yields
during periods of declining interest rates, although they may have
comparable risks of decline in value during periods of rising interest
rates.
FNMA and FHLMC 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 CDs may be purchased by the Fund are insured by the FDIC and are
subject to Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches of
foreign banks are, among other things, generally required to maintain
specified levels of reserves, and are subject to other supervision and
regulations designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would be
the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the Fund
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.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-
rated" securities). 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 ("NAV").
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Rating 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 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. The
Appendix to this Statement of Additional Information describes the ratings
used by Moody's, S&P and other NRSROs.
The Fund may 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. Reorganization entails a complete
change in the structure of a business entity. An attempted reorganization
may be unsuccessful, resulting in substantial or total loss of amounts
invested. If a reorganization is successful, the value of securities of the
restructured entity may depend on numerous factors, including the structure
of the reorganization, the market success of the entity's products or
services, the entity's management, and the overall strength of the
marketplace.
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 Fund's credit guidelines. This technique
offers a method of earning income on idle cash. In a repurchase agreement,
the Fund buys a security from a seller that has agreed to repurchase the
same security at a mutually agreed upon date and price. The Fund's resale
price will be in excess of the purchase price, reflecting an agreed upon
interest rate. This interest rate is effective for the period of time the
Fund is invested in the agreement and is not related to the coupon rate on
the underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and
at no time will the Fund invest in repurchase agreements for more than one
year. The Fund will always receive as collateral securities whose market
value including accrued interest is, and during the entire term of the
agreement remains, at least equal to 100% of the dollar amount invested by
the Fund in each agreement, including interest, 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 Fund's credit
guidelines.
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 two 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. For a description of commercial paper ratings, see
the Appendix.
Foreign Securities. The Fund may purchase securities of foreign
issuers and may invest in foreign currencies and obligations of foreign
branches of domestic banks and domestic branches of foreign banks.
Investment in such foreign currencies, securities and obligations 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 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 Trust's 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 holder.
Other Investment Companies. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended (the "1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Investment Techniques
In addition to the principal investment strategies discussed in the
Fund's Prospectus, the Fund also may engage in the investment techniques
described below. The Fund might not use, or may not have the ability to
use, any of these strategies and there can be no assurance that any strategy
that is used will succeed.
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. 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 Securities and Exchange Commission
(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.
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 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 may 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 not only to forecast the direction of price fluctuations of
the investment involved in the transaction, but also 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 option
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.
(5) The purchase and sale of Derivative Instruments could result in a
loss if the counterparty to the transaction does not perform as expected and
may increase portfolio turnover rates, which results in correspondingly
greater commission expenses and transaction costs, and may result in certain
tax consequences.
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 Fund
may purchase and write exchange-listed put and call options on stock indices
to hedge against risks of market-wide 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. 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 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.
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 unless
the option is closed out in an offsetting transaction.
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 and the Fund would experience losses to the extent of premiums
paid for them.
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 price at which the option can be
exercised). 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 options on securities only if it covers the
transaction through: an offsetting option with respect to the security
underlying the option it has written, exercisable by it at a more favorable
price; ownership of (in the case of a call) or a short position in (in the
case of a put) the underlying security; or segregation of cash or certain
other assets sufficient to cover its exposure.
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.
Certain Investments. 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, N.A. ("Mellon Bank"), an
affiliate of Dreyfus, has a lending relationship.
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 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
Fundamental. The following limitations have been adopted by the Fund.
The Fund may not change any of these fundamental investment limitations
without the consent of: (a) 67% or more of the shares present at a meeting
of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less. The
Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be invested
in the securities of one or more issuers conducting their principal
activities in the same industry. (For purposes of this limitation, U.S.
Government securities, and state or municipal governments and their
political subdivisions are not considered members of any industry. In
addition, this limitation does not apply to investments in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S.
banks).
2. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) the Fund may borrow money in an amount not exceeding
one-third of the Fund's total assets at the time of such borrowings, and (b)
the Fund may issue multiple classes of shares. The purchase or sale of
futures contracts and related options shall not be considered to involve the
borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts and other
similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objective, policies and limitations as the Fund.
Nonfundamental. 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 such 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 its 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 Trust's Board of Trustees may change this operating policy without
shareholder approval. Notice will be given to shareholders if this
operating 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.
If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains
an appropriate investment in light of the shareholder's then-current
position and needs.
MANAGEMENT OF THE FUND
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian, 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's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Trust,
on behalf of the Fund, and those companies that furnish services to the
Fund. These companies are as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank Custodian for the Fund
The Trust has a Board composed of nine Trustees. 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 Director
of The Dreyfus/Laurel Funds, Inc. and as a Trustee of The Dreyfus/Laurel Tax-
Free Municipal Funds (collectively, with the Trust, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
Trustees of the Trust
o+JOSEPH S. DIMARTINO. Chairman of the Board of the Trust. Since January
1995, Mr. DiMartino has served as Chairman of the Board for various
funds in the Dreyfus Family of Funds. He is also a Director of The
Noel Group, Inc., a venture capital company (for which from February
1995 until November 1997, he was Chairman of the Board); The Muscular
Dystrophy Association; HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and
other benefit programs; Carlyle Industries, Inc. (formerly Belding
Heminway Company, Inc.), a button packager and distributor; Century
Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outservicing functions for small and
medium sized companies; and Career Blazers, Inc. (formerly Staffing
Resources), a temporary placement agency. 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: 55 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.; Chairman of the
Board, Davidson Cotton Company. Age: 64 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Of Counsel, Reed, Smith, Shaw &
McClay (law firm). Age: 71 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. Age: 77 years old. Address: Way
Hollow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), and
affiliate of Dreyfus, and Boston Safe Deposit and Trust Company. Age:
52 years old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman and CEO, LDG
Reinsurance Corporation; Vice Chairman, HCCH. Age 52 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; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania. Age: 67 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.; Director, Massachusetts Electric Company;
Director, the Hyams Foundation, Inc. Age: 49 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. Age: 52
years old. Address: 334 Boylston Street, Suite 400, Boston,
Massachusetts 02146.
________________________________
* "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
#MARGARET W. CHAMBERS. Vice President and Secretary of the Trust. Senior
Vice President and General Counsel of Funds Distributor, Inc. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. Age: 39
years old.
#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: 41 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. Age: 30 years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. Age: 34 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Manager of Treasury Services Administration of Funds Distributor, Inc.
From July 1994 to November 1995, she was a Fund Accountant for
Investors Bank & Trust Company. Age: 26 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: 35 years old.
#STEPHANIE D. PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Vice President and Client Development Manager
of Funds Distributor, Inc. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was a Second
Vice President with Chase Manhattan Bank. Age: 30 years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Trust.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. From September 1983 to May 1994, he was Senior
Vice President and Manager of Client Services and Director of Internal
Audit at TBC. Age: 44 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: 36 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: 37 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.
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. Effective July 1, 1998, the Dreyfus/Laurel
Funds pay each Director/Trustee who is not an "interested person" of the
Trust (as defined in the 1940 Act) $40,000 per annum, plus $5,000 per joint
Dreyfus/Laurel Funds Board meeting attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly
scheduled Board meeting and $500 for Board meetings and separate committee
meetings attended that are conducted by telephone. The Dreyfus/Laurel Funds
also reimburse each Director/Trustee who is not an "interested person" of
the Trust (as defined in the 1940 Act) for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. The
compensation structure described in this paragraph is referred to
hereinafter as the "Current Compensation Structure."
In addition, the Trust currently has three Emeritus Board members who
are entitled to receive an annual retainer and a per meeting fee of one-half
the amount paid to them as Board members pursuant to the Current
Compensation Structure.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was 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) and
$1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per
joint Dreyfus/Laurel Funds Audit Committee meeting attended, and reimbursed
each such Director/Trustee for travel and out-of-pocket expenses (the
"Former Compensation Structure").
The aggregate amounts of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1998, and from
all other funds in the Dreyfus Family of Funds for which such person is a
Board member for the year ended December 31, 1998, pursuant to the Former
Compensation Structure for the period from January 1, 1998 through June 30,
1998 and the Current Compensation Structure for the period from July 1, 1998
through December 31, 1998, were as follows:
Total Compensation
Aggregate From the Trust
Name of Board Compensation and Fund Complex
Member From the Trust# Paid to Board Member
Joseph S. DiMartino* $18,267.34 $619,660 (187)
James M. Fitzgibbons $18,600.68 $ 60,010 (31)
J. Tomlinson Fort** none none
Arthur L. Goeschel $18,934.01 $ 61,010 (31)
Kenneth A. Himmel $15,684.01 $ 50,260 (31)
Stephen J. Lockwood $16,100.67 $ 51,010 (31)
John J. Sciullo $18,267.34 $ 59,010 (31)
Roslyn M. Watson $18,934.01 $ 61,010 (31)
Benaree Pratt Wiley*** $15,673.68 $ 49,628 (31)
____________________________
# 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 $4,292.30 for the Trust.
* Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
** J. Tomlinson Fort is paid directly by Dreyfus for serving as a Board member
of the Trust and the funds in the Dreyfus/Laurel Funds and separately by the
Dreyfus High Yield Strategies Fund. For the fiscal year ended December 31,
1998, the aggregate amount of fees received by J. Tomlinson Fort from
Dreyfus for serving as a Board member of the Trust was $18,267.34. For the
year ended December 31, 1998, the aggregate amount of fees received by Mr.
Fort for serving as a Board member of all funds in the Dreyfus/Laurel Funds
(including the Trust) and Dreyfus High Yield Strategies Fund (for which
payment is made directly by the fund) was $59,010. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,110.77 for expenses attributable to the
Trust's Board meetings which is not included in the $4,292.30 amount in note
# above.
*** Payments to Ms. Wiley were for the period from April 23, 1998 (the date she
was elected as a Board member) through December 31, 1998.
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,
1999.
Principal Shareholders. As of April 1, 1999, the following
shareholder(s) owned beneficially or of record 5% or more of Class B shares of
the Fund: MLPF & S for The Sole Benefit Of Its Customers, 4800 Deer Lake
Drive E., Floor 3, Jacksonville, FL 32246-6484, 17.36%.
As of April 1, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class C shares of the Fund: MLPF & S for The Sole
Benefit Of Its Customers, 4800 Deer Lake Drive E., Floor 3, Jacksonville, FL
32246-6484, 35.30%; BT Alex Brown Incorporated, FBO 210-37131-17, P.O. Box
1346, Baltimore, MD 21203, 22.95%; PaineWebber For The Benefit Of Lorraine
J. Dilisio And Ralph Dilisio Trustees Of UAD 11 25 97, 21185 Woodmont,
Harper Woods, MI 48225-1815, 7.86%; PaineWebber For The Benefit of
PaineWebber CDN FBO Richard E. Lacca, P.O. Box 3321, Weehawken, NJ 07087-
8154, 6.94%; and PaineWebber For The Benefit of Seward L. Schreder Trustee,
Antoinette R. Schreder Trustee, FBO Seward L. Schreder, P.O. Box 7785 Chico,
CA 95927-7785, 5.11%.
As of April 1, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class R shares of the Fund: Boston Safe Deposit &
Trust Co. Trustee, As Agent-Omnibus Account, 1 Cabot Road, Medford, MA
02155-5141, 42.84%; Dreyfus Trust Co. Custodian, FBO Mark Petersson, Under
SEP IRA Plan, 141 Scannell Road, Chatham, NY 12037-2020, 8.85%; and NFSC
FEBO # AB2-892955, State Street Bank & Trust, State Street Bank & Trust
Trustee, 800 Boylston Street - P354, Boston, MA 02199, 5.15%.
A shareholder who beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("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 25 largest bank holding
companies in the United States based on total assets.
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, subject to the overall authority of the Trust's Board of
Trustees in accordance with Massachusetts law. 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 of the shareholders of the Fund approve its continuance. The
Management Agreement was last approved by the Board of Trustees on February
4, 1999 to continue until April 4, 2000. 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:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice-
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
Under Dreyfus' personal securities trading policy (the "Policy"),
Dreyfus employees must preclear personal transactions in securities not
exempt under the Policy. In addition, Dreyfus employees must report their
personal securities transactions and holdings, which are reviewed for
compliance with the Policy. In that regard, Dreyfus portfolio managers and
other investment personnel also are subject to the oversight of Mellon's
Investment Ethics Committee. Dreyfus portfolio managers and other
investment personnel who comply with the Policy's preclearance and
disclosure procedures, and the requirements of the Committee, may be
permitted to purchase, sell or hold securities which also may be or are held
in fund(s) they manage or for which they otherwise provide investment
advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.90 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 the non-
interested Trustees (including counsel fees), Rule 12b-1 fees (if
applicable) and extraordinary expenses. Although Dreyfus does not pay for
the fees and expenses of the non-interested Trustees (including counsel
fees), Dreyfus is contractually required to reduce its investment management
fee 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. Expenses attributable to the Fund are charged against the Fund's
assets; other expenses of the Trust are allocated among its funds on the
basis determined by the Trustees, including, but not limited to,
proportionately in relation to the net assets of each fund.
For the last three fiscal years, the Fund has had the following
expenses:
For the Fiscal Year Ended December 31,
1998 1997(1) 1996(2)
____ _______ _______
Advisory and/or $5,950,806 $5,794,335 $4,489,878
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.
The Distributor. Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109,
serves as the Fund's distributor on a best efforts basis pursuant to an
agreement which is renewable annually. Dreyfus may pay the Distributor for
shareholder services from Dreyfus' own assets, including past profits but
not including the management fee paid by the Fund. The Distributor may use
part or all of such payments to pay certain banks, securities brokers or
dealers and other financial institutions ("Agents") for these services. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds.
For the fiscal year ended December 31, 1998, the Distributor retained
no sales loads on the Fund's Class A shares. For the period January 16,
1998 (inception date of Class B and Class C shares) through December 31,
1998, the Distributor retained $2,189 and $340 from the contingent deferred
sales charge ("CDSC"), on the Fund's Class B and Class C shares,
respectively.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is
being purchased. The decision as to which Class of shares is most
beneficial to you depends on the amount and the intended length of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee, service fee
and CDSC, if any, on Class B or Class C shares would be less than the
accumulated distribution fee and initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
would be offset by the return 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 fee and
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment time
frame. For example, while Class C shares have a shorter CDSC period than
Class B shares, Class C shares do not have a conversion feature and,
therefore, are subject to ongoing distribution and service fees. Thus,
Class B shares may be more attractive than Class C shares to investors with
longer term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares, but
will not be appropriate for investors who invest less than $50,000 in Fund
shares. The Fund reserves the right to reject any purchase order.
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 Trust'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. 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.
Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment account
or relationship at such institution, 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.
The minimum initial investment is $1,000. Subsequent investments must
be at least $100. With respect to Class A, Class B, Class C and Class R
shares, the minimum initial investment for Dreyfus-sponsored self-employed
individual retirement plans ("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 is $750 and $500 for
Dreyfus-sponsored Education IRAs, with no minimum on subsequent purchases
except that the no minimum on Education IRAs does not apply until after the
first year. 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 or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
Fund shares are sold on a continuous basis. NAV per share is
determined as of the close of trading on the floor of the New York Stock
Exchange ("NYSE") (currently 4:00 p.m., New York time), on each day the NYSE
is open for business. For purposes of determining NAV, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the NYSE. NAV per share of each class is computed by dividing the value
of the Fund's net assets represented by such class (i.e., the value of its
assets less liabilities) by the total number of shares of such class
outstanding. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the NYSE (currently 4:00 p.m., New York time) on a
business day, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on the next
business day, except where shares are purchased through a dealer as provided
below.
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 NAV. 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.
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 the Fund's 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 Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where
(i) the employers or affiliated employers maintaining such plans or programs
have a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in 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 taxpayer
identification number ("TIN") upon opening or reopening an account. See 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.
Class A Shares. The public offering price for Class A shares is the
NAV of that Class, plus, except for shareholders owning Investor shares of
the Fund on January 15, 1998, a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load as a % Dealers' Reallowance
Amount of Transaction of Offering Price Per Share as a % of Offering Price
_____________________ ___________________________ ________________________
<S> <C> <C>
Less than $50,000 5.75 5.00
$50,000 to less than $100,000 4.50 3.75
$100,000 to less than $250,000 3.50 2.75
$250,000 to less than $500,000 2.50 2.25
$500,000 to less than $1,000,000 2.00 1.75
$1,000,000 or more -0- -0-
</TABLE>
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 Code) although
more than one beneficiary is involved; or a group of accounts established by
or on behalf of the employees of an employer or affiliated employers
pursuant to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k) and 457 of the Code); or an
organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares of the Fund aggregating less than $50,000 subject to the schedule
of sales charges set forth in the Fund's Prospectus at a price based upon
the NAV of a Class A (Investor) share at the close of business on December
31, 1998:
NAV per share $29.26
Per Share Sales Charge - 5.75% of offering price
(6.10% of NAV per share) $ 1.78
Per Share Offering Price to Public $31.04
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 below under "Redemption of
Shares - Contingent Deferred Sales Charge - Class B Shares" (other than the
amount of the CDSC and time periods) and "Redemption of 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 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 defined in Section 501(c)(3) of the Code) investing $50,000
or more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 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
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 per share of that Class. No initial sales charge is imposed at the time
of purchase. A CDSC is imposed, however, on certain redemptions of Class B
shares as described in the Fund's Prospectus. 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.
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative NAVs for
shares of each such Class. Class B shares that have been acquired through
the reinvestment of dividends and distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C Shares. The public offering price for Class C shares is the
NAV per share of that Class. No initial sales charge is imposed at the time
of purchase. A CDSC 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 per share of that Class.
Right of Accumulation-Class A Shares. Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the 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 above, 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 4.5% 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 by telephone
through 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. 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 Automated Clearing House ("ACH")
member may be so designated. 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 the Transfer Agent and the 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." 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.
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 NAVs 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.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
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 shares and Institutional shares of the Fund, the Trust has
adopted a Distribution Plan ("Plan") pursuant to the Rule whereby 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, 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 and Institutional
shares of the Fund. The Plan allows the Distributor to make payments from
the Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with the Distributor. Under
the Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the Agent's
clients that own Class A shares and Institutional shares of the Fund.
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 Trust's 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" (as defined in the 1940 Act)
of the Trust and who do not have any direct or indirect financial interest
in the operation of the Plan or in any agreement entered into in connection
with the Plan, cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by such
vote of Trustees 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 February 4, 1999. 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 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 a fee at the annual rate of
0.25% of the value of the average daily net assets of Class B and Class C
shares for the provision of certain services to the holders of Class B and
Class C shares. 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 in respect of services for 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. 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")
pursuant to which the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an aggregate annual rate of 0.75% of the value
of the average daily net assets of Class B and Class C shares. 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.
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" (as defined in the 1940 Act) of the trust 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 February 4, 1999. 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.
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 Statement of
Additional Information 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 Plans 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.
For the fiscal year ended December 31, 1998, the Fund paid the
Distributor and Dreyfus Service Corporation $66,565 and $1,386,921,
respectively, pursuant to the Plan with respect to Class A shares and
$17,565 and $99,028, respectively, pursuant to the Plan with respect to
Institutional shares. For the fiscal year ended December 31, 1998, the Fund
paid the Distributor $8,452 and $1,020, pursuant to the Distribution Plan
with respect to Class B and Class C shares, respectively, and paid the
Distributor and Dreyfus Service Corporation $1,755 and $1,063, respectively,
pursuant to the Service Plan with respect to Class B shares and $340 and $0,
respectively, pursuant to the Service Plan with respect to 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 "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
General. 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.
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 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 if you
hold Class A, Class B or Class C shares and 1-800-645-6561 if you hold
Institutional shares. 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 Shareholders Services Form with the Transfer
Agent. If you are a client of certain Agents ("Selected Dealers"), you can
also redeem Class A, Class B, Class C and Class R 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
The Dreyfus Touchr automated telephone system) from any person representing
himself or herself to be you, or a representative of your Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or 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
telephone redemption had been used. During the delay, the Fund's NAV may
fluctuate.
Redemption Through a Selected Dealer. With respect to Class A, Class
B, Class C and Class R shares, customers of Selected Dealers may make
redemption requests to their 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.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund 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 Fund 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, your 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.
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 by the Transfer Agent of the redemption request
in proper form. Redemption proceeds ($1,000 minimum) 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, or a
correspondent bank if the investor's bank is not a member of the Federal
Reserve System. Holders of jointly registered Fund or bank accounts may
have redemption proceeds of only up to $250,000 wired within any 30-day
period. Fees ordinarily are imposed by such bank and usually are borne by
the investor. Immediate notification by the correspondent bank to the
investor's bank is necessary to avoid a delay in crediting the funds to the
investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
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. 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 ACH
system unless more prompt transmittal specifically is requested. 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. See "Purchase of Shares-TeleTransfer Privilege."
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.
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 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 NAV is not reasonably practicable, or (c) for such
other periods as the SEC by order may permit to protect the Fund's
shareholders.
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.
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.
Waiver of CDSC. The CDSC will be waived in connection with (a)
redemptions made within one year after the death or disability, as defined
in Section 72(m)(7) of the Code, of the shareholder, (b) redemptions by
employees participating in Eligible Benefit Plans, (c) redemptions as a
result of a combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) a distribution following retirement
under a tax-deferred retirement plan or upon attaining age 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 below. If the Company's Board determines to discontinue the
waiver of the CDSC, the disclosure herein 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 or this Statement of Additional Information 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.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
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 NAV per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or other distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for
shares of another fund will be subject to the higher applicable
CDSC of the two funds and, for purposes of calculating CDSC rates
and conversion periods, if any, will be deemed to have been held
since the date the shares being exchanged were initially
purchased.
To accomplish an exchange under item D above, 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 investor's account number.
Any such exchange is subject to confirmation of an investor's holdings
through a check of appropriate records.
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 "Redemption of Shares." Redemption
proceeds for Exchange Account shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for the Auto-Exchange Privilege,
Dividend Sweep and the Automatic Withdrawal Plan.
To 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. 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 in the
case of Class A, Class B, Class C and Class R shares and 1-800-645-6561 in
the case of Institutional shares, or by oral request from any of the
authorized signatories on the account, also by calling 1-800-554-4611 in the
case of Class A, Class B, Class C and Class R shares and 1-800-645-6561 in
the case of Institutional shares. 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. 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.
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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to regularly purchase (on a semi-monthly, monthly,
quarterly or annual basis), in exchange for Institutional shares of the
Fund, shares of certain other funds managed or administered by Dreyfus of
which the investor is a shareholder 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 of which the investor
is a shareholder. The amount the investor designates, 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 the investor has selected. 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 NAV 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 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.
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. 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 a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-554-4611 for
Class A, Class B, Class C and Class R shares and 1-800645-6561 for
Institutional shares.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations. The exchange of
shares of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange and, therefore, an
exchanging shareholder (other than a tax-exempt Retirement Plan) may realize
a taxable gain or loss.
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
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus-Automatic Asset Builder(R). 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 for Class A, Class B, Class C and Class R shares and 1-800-645-6561 for
Institutional shares. 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.
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
other distributions, the investor's shares will be reduced and eventually
may be depleted. 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 for Class A, Class B, Class C and Class R shares and
1-800-645-6561 for Institutional shares. 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.
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.
Dividend Options. 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 NAV 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 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.
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 for Class A,
Class B, Class C and Class R shares and 1-800-645-6561 for Institutional
shares. 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 for Class A, Class B, Class C and Class R shares and 1-800-645-6561 for
Institutional shares. 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 $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, 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 for
Class A, Class B, Class C and Class R shares and 1-800-645-6561 for
Institutional shares. 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.
Dreyfus Step Program. Holders of the Fund's Investor shares prior to
January 16, 1998 who had enrolled in 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 Builder(R), 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 NAV is $500 or less. See "Account Policies-General Policies" in
the Fund's Prospectus. 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.
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. 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.
Retirement Plans. The Fund makes available 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 Class A, Class B, Class C and Class R shares and 1-
800-645-6561 for Institutional shares; for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
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 may charge a fee 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.
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.
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 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 employee-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend exchange privileges 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.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. The Fund's securities are valued at
the last sale price on the securities exchange or national securities market
on which such securities primarily are traded. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. Where market
quotations are not readily available, the Fund's investments are valued
based on fair value as determined in good faith by the Trust's Board. Debt
securities may be valued by an independent pricing service approved by the
Trust's Board and are valued at fair value as determined by the pricing
service. 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 or, if no such rate is quoted on such date, such other quoted
market exchange rate as may be determined to be appropriate by Dreyfus. If
the Fund has to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of NAV may not take place
contemporaneously with the determination of prices of certain of the Fund's
securities. Short-term investments are carried at amortized cost, which
approximates value. Expenses and fees, including the management fee, are
accrued daily and taken into account for the purpose of determining the NAV
of the Fund's shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available or which are not valued by a
pricing service approved by the Board of Trustees, are valued at fair value
as determined in good faith by the Board of Trustees. The Board of Trustees
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Board of Trustees
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 of Trustees 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 of Trustees.
NYSE 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 "Distributions and
Taxes."
General. The Fund ordinarily declares and pays dividends from its net
investment income, if any, four times yearly and distributes net realized
capital gains and gains from foreign currency transactions, 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 of the 1940 Act. All expenses are accrued daily and
deducted before declaration of dividends to investors. The Fund will not
make distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. Investors other
than qualified retirement plans may choose whether to receive dividends and
other distributions in cash, 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. 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. 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.
It is expected that the Fund will continue to qualify for treatment as
a regulated investment company ("RIC") 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. To qualify for treatment as a RIC
under the Code, the Fund -- which is treated as a separate corporation for
federal tax purposes -- (1) must distribute to its shareholders each year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) ("Distribution Requirement"), (2)
must derive at least 90% of its annual gross income from specified sources
("Income Requirement"), and (3) must meet certain asset diversification and
other requirements. The term "regulated investment company" does not imply
the supervision of management or investment practices or policies by any
government agency. If the Fund failed to qualify for treatment as a RIC for
any taxable year, (1) it would be taxed at corporate rates on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would
treat all those distributions, including distributions of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
as dividends (that is, ordinary income) to the extent of the Fund's earnings
and profits. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make substantial
distributions before requalifying for RIC treatment. The Fund will be
subject to a non-deductible 4% excise tax ("Excise Tax"), to the extent it
fails to distribute as substantially all of its taxable investment income
and capital gains.
Distributions. If you elect to receive dividends and other
distributions in cash, and your distribution check is returned to the Fund
as undeliverable or remains uncashed for six months, the Fund reserves the
right to reinvest that distribution and all future distributions payable to
you in additional Fund shares at NAV. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains not realized gains
from certain foreign currency transactions and all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds
(collectively, "dividend distributions"), will be 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) are taxable to those shareholders as long-term capital gains
regardless of how long the shareholders have held their Fund shares and
whether the 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 distributions if any, paid
during the year.
The Code provides for the "carryover" of some or all of the sales load
imposed on Class A shares if a shareholder redeems those shares or exchanges
them for shares of another fund advised or administered by Dreyfus, within
90 days of purchase, and (1) in the case of a redemption, the shareholder
acquires other Fund Class A shares through exercise of the Reinvestment
Privilege (2) or, in the case of an exchange, the other fund reduces or
eliminates its otherwise applicable sales load. 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 tax basis of those shares for purposes of computing gain or
loss and instead is added to the tax basis of the acquired shares.
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 plans. The Fund will not report to the
Internal Revenue Service ("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 59 1/2, generally will be subject to an additional tax equal to
10% of the taxable portion of the distribution. The administrator, trustee
or custodian of a qualified retirement plan will be responsible for
reporting distributions from the plan 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 distribution paid directly from the plan to an retirement
plan in a "direct rollover," the distribution is subject to 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,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is
correct. Backup withholding at that rate also is required from dividends
and capital gain distributions payable to such a shareholder if (1) the
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 an account. Any tax
withheld as a result of backup withholding does not constitute an additional
tax imposed on the record owner and may be claimed as a credit on his or her
federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares
below the cost of his or her investment. Such distribution would be a
return on investment in an economic sense, although taxable as discussed
above. In addition, if a shareholder sells shares of the Fund held for six
months or less and receives any capital gain distributions 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 those distributions.
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
Federal 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 total return on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate foreign taxes, however, and many foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own,
directly, indirectly, or constructively, at least 10% of that voting power)
as to which the Fund is a U.S. shareholder -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or
(2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, the Fund will
be subject to federal income tax on a portion of any "excess distribution"
received on the stock of a PFIC or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a dividend to its shareholders. The balance
of the PFIC income will be included in the Fund's investment company taxable
income and, accordingly, will not be taxable to it to the extent that it
distributes income 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 -- which likely would have to be distributed by the Fund to
satisfy the Distribution Requirement and avoid imposition of the Excise Tax
- -- even if those earnings and gain were not distributed to the Fund by 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 would be adjusted
to reflect the amounts of income included and deductions taken under the
election and under regulations proposed in 1992 that provided a similar
election with respect to the stock of certain PFIC(s).
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 gains and losses. 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") will 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 same manner.
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.
Under Section 1092 of the Code, any loss from the disposition of a position
in a straddle generally may be deducted only to the extent the loss exceeds
the unrealized gain on the offsetting positions(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise
would be recognized under the mark-to-market rules discussed above. The
regulations under Section 1092 also provide certain "wash sale" rules, which
apply to transactions where a position is sold at a loss and a new
offsetting position is acquired within a prescribed period, and "short sale"
rules applicable to straddles. If the Fund makes certain elections
(including an election as to straddles that include a position in one or
more Section 1256 Contracts (so-called "mixed straddles'), the amount,
character, and timing of recognition of gains and losses from the affected
straddle positions would be determined under rules that vary according to
the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
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 using the Fund to
recognize income prior to the receipt of cash payments. For example, the
Fund would 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 that income to satisfy the Distribution Requirement and
avoid the Excise Tax. In that 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 its 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 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 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.
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.
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 Dreyfus in carrying out its obligations to the
Fund. The receipt of such research services does not reduce the normal
independent research activities of Dreyfus; however, it enables these
organizations to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its
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, 1998, 1997 and 1996, the Fund
paid brokerage commissions amounting to $1,384,023, $1,638,246 and
$1,391,532, respectively.
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 portfolio 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 higher 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 its appropriate to make changes in the Fund's assets. The
portfolio turnover rate for the Fund is calculated by dividing the lesser of
the Fund's annual sales or purchases of portfolio securities (exclusive of
purchases and sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of
securities in the Fund during the year. Portfolio turnover may vary from
year to year as well as within a year. The portfolio turnover rates for the
fiscal years ended October 31, 1998 and 1997 were 84.32% and 92.99%,
respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
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, 1998
1 Year 5 Years 10 Years
Class A Shares 0.89% 15.85% 12.89%
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, 1998
1 Year 5 Years Since Inception
Institutional Shares 7.17% 17.35% 17.12% (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
Period Ended December 31, 1998
1 Year Since Inception
Class R Shares 7.01% 19.25% (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 NAV (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, 1998 were 22,443%, 117.38% and 154.51%,
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 23,823.18%
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 NAV (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
NAV (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.
The aggregate total return (expressed as a percentage) for Class B
shares and Class C shares of the Fund for the period from inception of each
class (January 16, 1998) to December 31, 1998 was 6.24% and 9.24%,
respectively (assuming, assessment of the maximum CDSC). Without giving
effect to the applicable CDSC, the aggregate total return for Class B and
Class C was 10.24% and 10.24% respectively, for this period.
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/TRUST
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus entitled "The Fund."
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 are without par value, have no preemptive or subscription rights, and
are freely transferable. The Fund is one of three portfolios of the Trust.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Trust 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 Trust to
hold a special meeting of shareholders for purposes of removing a Trustee
from office or any other purpose. Shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Trust'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 Trust is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain
matters under the 1940 Act and for other purposes. A shareholder of one
portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Trust, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Trustees from the separate voting requirements of the Rule.
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.
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. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this Statement of Additional
Information.
KPMG LLP, 757 Third Avenue, New York, NY 10017, was appointed by the
Trustees to serve as the Fund's independent auditors for the year ending
December 31, 1999, 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, 1998
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 AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
Standard & Poor's
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.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as
having significant speculative characteristics. `BB' indicates the
least degree of speculation and `C' the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment
and is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D' rating
category is used when payments on a obligation are not made on the
date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The `D' rating also will be used upon the filing of
a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a
plus (+) or a minus (-) sign to show relative standing within the major
rating categories
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt service
is given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the
term of the notes.
SP-3 Speculative capacity to pay principal and interest.
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.
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.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated `B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is
used when interest payments of principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes such payments will be made during such grace
period.
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.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very
moderate, and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position characterizes
bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked short-comings.
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 each generic rating classification from Aa through 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.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that define
an investment grade situation. These are designated Moody's Investment
Grade as MIG 1 (best quality) through MIG 4 (adequate quality). Short-term
obligations of speculative quality are designated SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an evaluation of
the degree of risk associated with scheduled principal and interest
payments, and the other represents an evaluation of the degree of risk
associated with the demand feature. The short-term rating assigned to the
demand feature of VRDOs is designated as VMIG. When either the long- or
short-term aspect of a VRDO is not rated, that piece is designated NR, e.g.,
Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt
protection measurements and may require relatively high financial
leverage. Adequate alternative liquidity is maintained.
Fitch IBCA, Inc.
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest
expectation of credit risk. They are assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low
expectation of credit risk. They indicate very strong capacity
for timely payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of
credit risk. The capacity for timely payment of financial
commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB Good credit quality. `BBB' ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions
are more likely to impair this capacity. This is the lowest
investment-grade category.
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse
economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit
risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity
for continued payment is contingent upon a sustained, favorable
business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon
sustained, favorable business or economic developments. A `CC'
rating indicates that default of some kind appears probable. `C'
ratings signal imminent default.
DDD, DD,
and D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For
U.S. corporates, for example, `DD' indicates expected recovery of
50% - 90% of such outstandings, and `D' the lowest recovery
potential, i.e. below 50%.
Short-Term and Commercial Paper Ratings
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and
thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.
F-1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F-2 Good credit quality. A satisfactory capacity for timely payment
of financial commitments, but the margin of safety is not as great
as in the case of the higher ratings.
F-3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could
result in a reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in
financial and economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained,
favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the `AAA'
long-term rating category, to categories below `CCC', or to short-
term ratings other than `F-1'.
Duff & Phelps Rating Co.
Long-Term Ratings
AAA Highest credit quality. The risks factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is
modest but
AA may vary slightly from time to time because of economic
conditions.
AA-
A+ Protection factors are average but adequate. However, risk
factors are
A more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered sufficient
for prudent
BBB investment. Considerable variability in risk during economic
cycles.
BBB-
BB+ Below investments grade but deemed likely to meet obligations when
due.
BB Present or prospective financial protection factors fluctuate
according to
BB- industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will
not be met
B when due. Financial protection factors will fluctuate widely
according to
B- economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends.
Protection factors are narrow and risk can be substantial with
unfavorable
economic/industry conditions, and/or with unfavorable company
developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or
interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financial requirements, access to capital markets is
good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
D-4 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.
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
(b) Exhibits:
A(1) Second Amended and Restated Agreement and Declaration of Trust.
Incorporated by reference to Post-Effective Amendment No. 87 to
the Registrant's Registration Statement on Form N-1A.
A(2) 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 to
the Registrant's Registration Statement on Form N-1A ("Post
Effective Amendment No. 90").
A(3) 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.
A(4) Amendment No. 3 to Registrant's Second Amended and Restated
Agreement and Declaration of Trust. Incorporated by reference to
Post-Effective Amendment No. 93 to the Registrant's Registration
Statement on Form N-1A, filed on December 13, 1994 ("Post-
Effective Amendment No. 93").
A(5) Amendment No. 4 to Registrant's Second Amended and Restated
Agreement and Declaration. Incorporated by reference to Post-
Effective Amendment No. 93.
B Amended and Restated By-Laws. Incorporated by reference to Post-
Effective Amendment No. 75 to the Registrant's Registration
Statement on Form N-1A.
D(1) Investment Management Agreement between the Registrant and Mellon
Bank, N.A., dated April 4, 1994. Incorporated by Reference to
Post-Effective Amendment No. 90.
D(2) 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.
E 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.
F Not applicable.
G(1) 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 to the Registration Statement
on Form N-1A, filed on April 23, 1997 ("Post-Effective Amendment
No. 102").
G(2) Amendment to Custody and Fund Accounting Agreement, dated August 1,
1994. Incorporated by reference to Post-Effective Amendment No.
93.
H(1) 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.
H(2) Supplement to Transfer Agent Agreement for the Registrant, dated
June 1, 1989. Incorporated by reference to Post-Effective
Amendment No. 78 to the Registrant's Registration Statement on
Form N-1A.
H(3) Supplement to Transfer Agent Agreement for the Registrant, dated
April 4, 1994. Incorporated by reference to Post-Effective
Amendment No. 93.
I(1) Opinion of counsel is incorporated by reference to the Registration
Statement and to Post-Effective Amendment No. 93 filed on December
13, 1994.
I(2) Consent of Counsel. Filed herewith.
J Consent of KPMG. Filed herewith.
K Not Applicable.
M(1) Restated Distribution Plan (relating to Investor Shares and Class A
Shares). Incorporated by reference to Post-Effective Amendment No.
93.
M(2) Form of Distribution and Service Plans (relating to Class B Shares
and Class C Shares). Incorporated by reference to Post-Effective
Amendment No. 93.
N Financial Data Schedule.
O Registrant's Rule 18f-3 Plans, as revised. Incorporated by
reference to Post-Effective Amendment No. 100 to the Registrant's
Registration Statement on Form N-1A.
Other Exhibits
- --------------
(a) Power of Attorney of Benaree Pratt Wiley dated May 28, 1998.
Filed herewith.
(b) Powers of attorney of the Trustees dated June 15, 1998. Filed
herewith.
(c) Power of Attorney of Marie E. Connolly dated July 6, 1998.
Filed herewith.
Item 24. Persons Controlled By or Under Common Control with Registrant
Item 25. 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 26 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 and
manager 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. Dreyfus Investment Advisors, Inc., another wholly-
owned subsidiary, provides investment management services to various pension
plans, institutions and individuals.
<TABLE>
<CAPTION>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Franklin Portfolio Associates, LLC* Director 1/97 - Present
Chairman of the Board and
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 -Present
Mellon Capital Management Director 5/95 -Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 -1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Christopher M. Condron The Boston Company, Inc.* Vice Chairman 1/94 - Present
Chairman and Chief Director 5/93 - Present
Executive Officer
(Continued) Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 -Present
Company*
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
Mandell L. Berman Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
Burton C. Borgelt DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Bank Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
Stephen E. Canter Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, LLC* Director 2/99 - Present
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Stephen E. Canter Founders Asset Management, LLC Member, Board of 12/97 - Present
President, Chief Operating 2930 East Third Ave. Managers
Officer, Chief Investment Denver, CO 80206 Acting Chief Executive 7/98 - 12/98
Officer, and Director Officer
(Continued)
The Dreyfus Trust Company+++ Director 6/ 95 - Present
Thomas F. Eggers Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
and Director
Founders Asset Management, LLC Member, Board of 2/99 - Present
2930 East Third Avenue Managers
Denver, CO 80206
Steven G. Elliott Mellon Bank Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+ Chairman 7/89 - 11/97
President 4/88 - 11/97
Chief Executive Officer 4/88 - 11/97
Mellon International Investment Director 9/89 - 8/97
Corporation+
Steven G. Elliott Mellon Financial Services Treasurer 12/87 - Present
Director (Continued) Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
Lawrence S. Kash Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - Present
401 North Maple Ave. Chief Executive Officer 11/97 - Present
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.++ + Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - Present
Organization, Inc.++ President 1/97 - Present
Seven Six Seven Agency, Inc. ++ Director 1/97 - Present
Dreyfus Insurance Agency of Chairman 5/97 - Present
Massachusetts, Inc.++++ President 5/97 - Present
Director 5/97 - Present
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
Founders Asset Management, LLC Member, Board of 12/97 - Present
2930 East Third Avenue Managers
Denver, CO. 80206
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Lawrence S. Kash Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Vice Chairman Chairman 9/93 - 1/98
And Director (Continued) President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Martin G. McGuinn Mellon Bank Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
Mellon Financial Vice President 9/86 - 10/97
Corporation (MD)
Rockville, Maryland
J. David Officer Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman Director 3/99 - Present
And Director
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - Present
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - Present
Services, Inc.* Director 8/96 - Present
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
J. David Officer Mellon Trust of New York Director 6/96 - Present
Vice Chairman and 1301 Avenue of the Americas
Director (Continued) New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
Richard W. Sabo Founders Asset Management LLC President 12/98 - Present
Director 2930 East Third Avenue Chief Executive Officer 12/98 - Present
Denver, CO. 80206
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
Richard F. Syron American Stock Exchange Chairman 4/94 - Present
Director 86 Trinity Place Chief Executive Officer 4/94 - Present
New York, NY 10006
Ronald P. O'Hanley Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
TBCAM Holdings, Inc.* Chairman 6/98 - Present
Director 10/97 - Present
The Boston Company Asset Chairman 6/98 - Present
Management, LLC* Director 1/98 - 6/98
The Boston Company Asset Director 2/97 - 12/97
Management, Inc. *
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 5/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon Equity Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon-France Corporation+ Director 3/97 - Present
Ronald P. O'Hanley Laurel Capital Advisors+ Trustee 3/97 - Present
Vice Chairman (Continued)
Mark N. Jacobs Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - Present
Organization, Inc.++
William H. Maresca The Dreyfus Trust Company+++ Director 3/97 - Present
Controller
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 -Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Assistant Treasurer 3/93 - Present
Organization, Inc.++
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
William T. Sandalls, Jr. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97-12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
William T. Sandalls, Jr. Dreyfus-Lincoln, Inc. Director 12/96 - Present
Executive Vice President 4500 New Linden Hill Road President 1/97 - Present
(Continued) Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
Dreyfus Partnership President 1/97 - 6/97
Management, Inc.++ Director 1/96 - 6/97
Dreyfus Service Organization, Director 1/96 - 6/97
Inc.++ Executive Vice President 1/96 - 6/97
Treasurer 10/96- Present
Dreyfus Insurance Agency of Director 5/97 - Present
Massachusetts, Inc.++++ Treasurer 5/97- Present
Executive Vice President 5/97 - Present
Diane P. Durnin Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Schachar Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
Dreyfus Investment Advisors, Inc.++ Vice President - Tax 10/96 - Present
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Inc.++ Vice President - Tax 10/96 - Present
Wendy Strutt None
Vice President
Richard Terres None
Vice President
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice-President -
Information Systems
James Bitetto The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
Steven F. Newman Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
_______________________________
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ 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 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. 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 Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Debt and Equity Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus U.S. Treasury Intermediate Term Fund
59) Dreyfus U.S. Treasury Long Term Fund
60) Dreyfus 100% U.S. Treasury Money Market Fund
61) Dreyfus U.S. Treasury Short Term Fund
62) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
63) Dreyfus Pennsylvania Municipal Money Market Fund
64) Dreyfus Premier California Municipal Bond Fund
65) Dreyfus Premier Equity Funds, Inc.
66) Dreyfus Premier International Funds, Inc.
67) Dreyfus Premier GNMA Fund
68) Dreyfus Premier Worldwide Growth Fund, Inc.
69) Dreyfus Premier Municipal Bond Fund
70) Dreyfus Premier New York Municipal Bond Fund
71) Dreyfus Premier State Municipal Bond Fund
72) Dreyfus Premier Value Fund
73) Dreyfus Short-Intermediate Government Fund
74) Dreyfus Short-Intermediate Municipal Bond Fund
75) The Dreyfus Socially Responsible Growth Fund, Inc.
76) Dreyfus Stock Index Fund, Inc.
77) Dreyfus Tax Exempt Cash Management
78) The Dreyfus Third Century Fund, Inc.
79) Dreyfus Treasury Cash Management
80) Dreyfus Treasury Prime Cash Management
81) Dreyfus Variable Investment Fund
82) Dreyfus Worldwide Dollar Money Market Fund, Inc.
83) Founders Funds, Inc.
84) General California Municipal Bond Fund, Inc.
85) General California Municipal Money Market Fund
86) General Government Securities Money Market Fund, Inc.
87) General Money Market Fund, Inc.
88) General Municipal Bond Fund, Inc.
89) General Municipal Money Market Funds, Inc.
90) General New York Municipal Bond Fund, Inc.
91) 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 Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Jean M. O'Leary+ Assistant Vice President, None
Assistant Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Stephanie D. Pierce++ Vice President Vice President,
Assistant Secretary
and Assistant
Treasurer
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 28. Location of Accounts and Records
_______ ________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
_______ ____________
None
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, 1999.
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 04/30/99
- ---------------------------
Marie E. Connolly
/s/Joseph S. DiMartino* Trustee 04/30/99
- ---------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 04/30/99
- ---------------------------
James M. Fitzgibbons
/s/J. Tomlinson Fort* Trustee 04/30/99
- ---------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 04/30/99
- ---------------------------
Arthur L. Goeschel
/s/Kenneth A. Himmel* Trustee 04/30/99
- ---------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 04/30/99
- ---------------------------
Stephen J. Lockwood
/s/John Sciullo* Trustee 04/30/99
- ---------------------------
John Sciullo
/s/Roslyn M. Watson* Trustee 04/30/99
- ---------------------------
Roslyn M. Watson
/s/Benaree Pratt Wiley* Trustee 04/30/99
- ---------------------------
Benaree Pratt Wiley
*By: Kathleen Morrissey
---------------------------
Attorney-in-Fact
INSERT INDEX OF EXHIBITS
Independent Auditors' Consent
To the Board of Directors and Shareholders of
The Dreyfus/Laurel Funds Trust
We consent to the use of our reports dated February 4, 1999, with respect to the
three Funds listed below of The Dreyfus/Laurel Funds Trust, incorporated herein
by reference and to the references to our Firm under the headings "Financial
Highlights" in the Prospectus and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" in the Statement of Additional
Information.
Funds:
Dreyfus Premier Core Value Fund
Dreyfus Premier Managed Income Fund
Dreyfus Premier Limited Term High Income Fund
/s/ KPMG LLP
April 29, 1999
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POWER OF ATTORNEY
The undersigned hereby constitute and appoint Marie E. Connolly, Douglas C.
Conroy, Richard W. Ingram, Christopher Kelley, Kathleen K. Morrisey, Michael S.
Petrucelli, and Elba Vasquez and each of them, with full power to act without
the other, her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for her and in her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to the Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/Benaree Pratt Wiley Dated May 28, 1998
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers, Marie
E. Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Michael S. Petrucelli,
Stephanie Pierce and Elba Vasquez, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her, and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments to the Registration Statement of each Fund
enumerated on Exhibit A hereto (including post-effective amendments and
amendments thereto), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
/s/ Francis P. Brennan June 15, 1998
/s/ Ruth Marie Adams June 15, 1998
/s/ Joseph S. DiMartino June 15, 1998
/s/ James M. Fitzgibbons June 15, 1998
/s/ J. Tomlinson Fort June 15, 1998
/s/ Arthur L. Goeschel June 15, 1998
/s/ Kenneth Himmel June 15, 1998
/s/ Arch S. Jeffery June 15, 1998
/s/ Stephen J. Lockwood June 15, 1998
/s/ John J. Sciullo June 15, 1998
/s/ Roslyn Watson June 15, 1998
/s/ Benaree Pratt Wiely June 15, 1998
EXHIBIT A
The Dreyfus/Laurel Funds, Inc.:
Dreyfus International Equity Allocation Fund
Dreyfus Bond Market Index Fund
Dreyfus Premier Midcap Stock Fund
Dreyfus Disciplined Intermediate Bond Fund
Dreyfus Disciplined Stock Fund
Dreyfus Institutional Government Money Market Fund
Dreyfus Institutional Prime Money Market Fund
Dreyfus Institutional U.S. Treasury Money Market Fund Dreyfus Money Market
Reserves
Dreyfus Municipal Reserves
Dreyfus BASIC S&P 500 Stock Index Fund
Dreyfus U.S. Treasury Reserves
Dreyfus Premier Balanced Fund
Dreyfus Premier Limited Term Income Fund
Dreyfus Premier Small Company Stock Fund
Dreyfus Premier Tax Managed Growth Fund
Dreyfus Premier Large Company Stock Fund
Dreyfus Premier Small Cap Value Fund
The Dreyfus/Laurel Funds Trust:
Dreyfus Premier Core Value Fund
Dreyfus Premier Managed Income Fund
Dreyfus Premier Limited Term High Income Fund
The Dreyfus/Laurel Tax-Free Municipal Funds:
Dreyfus BASIC California Municipal Money Market Fund
Dreyfus BASIC Massachusetts Municipal Money Market Fund Dreyfus BASIC New York
Municipal Money Market Fund
Dreyfus Premier Limited Term California Municipal Fund Dreyfus Premier Limited
Term Massachusetts Municipal Fund Dreyfus Premier Limited Term Municipal Fund
Dreyfus Premier Limited Term New York Municipal Fund
Dreyfus High Yield Strategies Fund
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Margaret W. Chambers,
Christopher J. Kelley, Kathleen K. Morrisey, Michael S. Petrucelli, Stephanie
Pierce and Elba Vasquez, and each of them, with full power to act without the
other, her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for her, and in her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to the Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Marie E. Connolly July 6, 1998
