File No. 811-524
33-43846
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. 109 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 109 [ 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)
[ ] on (date) pursuant to paragraph (b)
[X] 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.
<PAGE>
THE DREYFUS LAUREL FUNDS TRUST
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement:
The following post-effective amendment to the Registrant's Registration
Statement on Form N-1A relates to the following series of the
Registrant:
DREYFUS PREMIER CORE VALUE FUND
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
DREYFUS PREMIER MANAGED INCOME FUND
Part C of Form N-1A
Signature Page
Exhibits
<PAGE>
Dreyfus Premier Core Value Fund
Investing in value stocks for long-term capital growth
PROSPECTUS May 1, 1999
(reg.tm)
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: XXXXX
CLASS B: XXXXX
CLASS C: XXXXX
CLASS R: XXXXX
INSTITUTIONAL SHARES: XXXXX
Contents
The Fund
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
<PAGE>
GOAL/APPROACH
The fund seeks long-term capital growth as a primary objective, with current
income as a secondary objective. These objectives may be charged 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 assets.
In choosing stocks, the portfolio management team looks for value companies. The
team uses a "bottom up" approach focusing on three key factors:
. 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.
. SOUND BUSINESS FUNDAMENTALS: a company's balance sheet and income data are
examined to determine the company's financial history.
. 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 only in seeking to
avoid losses, it could have the effect of reducing the benefit from any upswing
in the market.
Other potential risks
The fund may 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. 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.
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 1
<PAGE>
PAST PERFORMANCE
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 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 is not included in
this section of the prospectus for those classes. 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.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: 2Q '97 +15.28%
WORST QUARTER: 3Q '90 -17.44%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Life of
Inception date 1 Year 5 Years 10 Years fund
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A (2/6/47) 0.89% 15.85% 12.89% N/A
CLASS R (8/4/94) 7.01% N/A N/A 19.25%
INSTITUTIONAL
SHARES (2/1/93) 7.17% 17.35% N/A 17.12%
S&P 500 INDEX 28.60% 24.05% 19.19% N/A
</TABLE>
The Fund 1A
<PAGE>
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>
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum sales charge on purchases
AS A % OF OFFERING PRICE 5.75 NONE NONE NONE NONE
Maximum deferred sales charge (CDSC)
AS A % 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 0.00 0.00 0.00 0.00 0.00
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TOTAL 1.15 1.90 1.90 0.90 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>
Expense example
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
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CLASS A $000 $000 $000 $000
CLASS B
WITH REDEMPTION $000 $000 $000 $000**
WITHOUT REDEMPTION $000 $000 $000 $000**
CLASS C
WITH REDEMPTION $000 $000 $000 $000
WITHOUT REDEMPTION $000 $000 $000 $000
CLASS R $000 $000 $000 $000
INSTITUTIONAL SHARES $000 $000 $000 $000
** 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.
2
<PAGE>
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 promotional 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.
2A
<PAGE>
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 $117 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 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.
MANAGEMENT PHILOSOPHY
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.
PORTFOLIO MANAGEMENT TEAM
The fund is managed by a committee of portfolio managers of Dreyfus and no one
person is primarily responsible for making recommendations for the fund. This
committee also comprises the Equity Policy Group of The Boston Company Asset
Management, Inc., an affiliate of Dreyfus.
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 3
<PAGE>
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 figures have been
independently audited by _____________, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
CLASS A 1998 1997 1996 1995 1994
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PER-SHARE DATA ($)
Net asset value, beginning of period 30.11 30.40 30.13 24.56 27.80
Investment operations: Investment income -- 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 (%)(1) 7.06 25.21 21.44 35.56 .38
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.15 1.14 1.13 1.13 1.11
Ratio of interest expense, loan commitment fees
and dividends on securities sold short to average net assets (%) .61 .64 .96 1.43 1.47
Ratio of net investment income to average net assets (%) -- .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) 555,863 585,624 486,816 401,674 317,868
(1) EXCLUSIVE OF SALES CHARGE.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PERIOD ENDED DECEMBER 31,
CLASS B 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) -- net (.02)
Net realized and unrealized gain (loss) on investments --
Total from investment operations --
Distributions: Dividends from investment income -- net (.01)
Dividends in excess of investment income -- net --
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%)(2) 10.24
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.82
Ratio of interest expense, loan commitment fees and dividends on
securities sold short to average net assets (%) --
Ratio of net investment income (loss) to average net assets (%) (.14)
Portfolio turnover rate (%) 84.32
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,033
</TABLE>
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO
DECEMBER 31, 1998.
(2) EXCLUSIVE OF SALES CHARGE.
4A
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PERIOD ENDED DECEMBER 31,
CLASS C 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) -- net (.02)
Net realized and unrealized gain (loss) on investments 3.00
Total from investment operations 2.98
Distributions: Dividends from investment income -- net (.01)
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%)(2) 10.24
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.82
Ratio of net investment income (loss) to average net assets (%) (.13)
Portfolio turnover rate (%) 84.32
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 195
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1998. (2 ) EXCLUSIVE OF SALES CHARGE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
INSTITUTIONAL SHARES 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 30.10 30.38 30.12 24.56 27.80
Investment operations: Investment income (loss) -- net .22 .26 .36 .47 .47
Net realized and unrealized gain (loss) on investments 1.95 6.98 6.01 8.20 (.31)
Total from investment operations 2.17 7.24 6.37 8.67 .16
Distributions: Dividends from investment income -- net (.21) (.26) (.34) (.48) (.43)
Dividends in excess of investment income -- net -- (.01) -- -- --
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.03) (7.52) (6.11) (3.11) (3.40)
Net asset value, end of period 29.24 30.10 30.38 30.12 24.56
Total return (%) 7.17 25.34 21.57 35.60 .49
- ------------------------------------------------------------------------------------------------------------------------------------
The Fund 5
<PAGE>
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.05 1.04 1.03 1.03 1.02
Ratio of net investment income (loss) to average net assets (%) .71 .74 1.07 1.53 1.57
Decrease reflected in above expense ratios due to undertakings by the manager -- .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 74,058 80,427 71,894 75,607 59,435
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997 1996 1995 1994(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 30.11 30.46 30.18 24.56 28.45
Investment operations: Investment income (loss) -- net .26 .33 .36 .62 .29
Net realized and unrealized gain (loss) on investments 1.95 6.90 6.08 8.16 (.83)
Total from investment operations 2.21 7.23 6.44 8.78 (.54)
Distributions: Dividends from investment income -- net (.25) (.32) (.39) (.53) (.38)
Dividends in excess of investment income -- net -- (.01) -- -- --
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.07) (7.58) (6.16) (3.16) (3.35)
Net asset value, end of period 29.25 30.11 30.46 30.18 24.56
Total return (%) 7.01 25.54 21.74 36.05 (2.31)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .90 .89 .88 .88 .35
Ratio of net investment income (loss) to average net assets (%) .82 .88 1.23 1.93 .70
Decrease reflected in above expense ratios due to undertakings by the manager -- .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 842 867 11,618 185 1,070
(1) FROM AUGUST 4, 1994 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1994.
</TABLE>
The Fund 5A
<PAGE>
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 institutions on behalf of their
clients. Individuals may not purchase these shares directly.
. 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
<TABLE>
<CAPTION>
<S> <C> <C>
Sales charge Sales charge as
deducted as a % 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 reinvestment).
</TABLE>
Class A shares also carry an annual rule 12b-1 fee of 0.25% of the class's
average net assets.
- --------------------------------------------------------------------------------
6
<PAGE>
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 AND A 0.15% RULE 12B-1 FEE.
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.
6A
<PAGE>
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 any
other entity authorized to accept orders on behalf of the fund. 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. Class B, C, R and
Institutional shares are offered at NAV, but Classes B and C are subject to
higher annual distribution fees and may be subject to a sales charge upon
redemption.
Your Investment 7
<PAGE>
SELLING SHARES
YOU MAY SELL 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 any
other entity authorized to accept orders on behalf of the fund. 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.
Your Investment 7A
<PAGE>
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:
. 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 quarterly dividends from its net
investment income and distributes any net capital gains that 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 taxable at the federal level 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.
8
<PAGE>
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.
8A
<PAGE>
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 9
<PAGE>
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 02940-658
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, and "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.
10
<PAGE>
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.
10A
<PAGE>
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, and "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.
Your Investment 11
<PAGE>
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 11A
<PAGE>
[Application p 1 here]
<PAGE>
[Application p 2 here]
<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.
(COPYRIGHT) 1999, Dreyfus Service Corporation
<PAGE>
- ------------------------------------------------------------------------------
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 (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:
CallToll 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....................................................B-2
Management of the Fund.....................................................B-17
Management Arrangements....................................................B-23
Purchase of Shares.........................................................B-25
Distribution and Service Plans.............................................B-32
Redemption of Shares.......................................................B-34
Shareholder Services.......................................................B-39
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-56
Information About the Fund/Trust...........................................B-58
Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors..............................B-59
Financial Statements.......................................................B-60
Appendix ..................................................................B-61
<PAGE>
DESCRIPTION OF THE FUND
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 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel Funds
Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on October
17, 1994. The 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 _________, 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 represent ownership interests in a pool of mortgages
issued by a mortgage banker or other mortgagee. Distributions on GNMA
certificates include principal and interest components. GNMA, a corporate
instrumentality of the U.S. Department of Housing and Urban Development,
guarantees timely payment of principal and interest on GNMA certificates; this
guarantee is deemed a general obligation of the United States, backed by its
full faith and credit.
B-2
<PAGE>
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans Administration. The
mortgages have maximum maturities of 40 years. Government statistics indicate,
however, that the average life of the underlying mortgages is shorter, due to
scheduled amortization and unscheduled repayments (attributable to voluntary
prepayments or foreclosures).
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
certificates of deposit may be purchased by the Fund are insured by the FDIC and
are subject to Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches of
foreign banks are, among other things, generally required to maintain specified
levels of reserves, and are subject to other supervision and regulations
designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation and by governmental
regulations. Payment of interest and principal upon obligations of foreign banks
and foreign branches of domestic banks may be affected by governmental action in
the country of domicile of the branch (generally referred to as sovereign risk).
Examples of such action would be the imposition of currency controls, interest
limitations, seizure of assets, or the declaration of a moratorium. Evidence of
ownership of portfolio securities may be held outside of the United States, and
the Fund may be subject to the risks associated with the holdings of such
property overseas.
B-3
<PAGE>
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
B-4
<PAGE>
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 intends to invest in these securities when their issuers will
be close to, or already have entered, reorganization proceedings. As a result,
it is expected that at or shortly after the time of acquisition by the Fund,
these securities will have ceased to meet their interest payment obligations,
and accordingly would trade in much the same manner as an equity security.
Consequently, the Fund intends to make such investments on the basis of
potential appreciation in the price of these securities, rather than any
expectation of realizing income.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet the 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, 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
B-5
<PAGE>
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 Board of Directors or by Dreyfus
pursuant to guidelines established by the Board of Directors. 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
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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 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
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securities. These Derivative Instruments may be used, for example, to preserve a
return or spread or to facilitate or substitute for the sale or purchase of
securities.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative Instrument
intended partially or fully to offset potential declines in the value of one or
more investments held in the Fund's portfolio. Thus, in a short hedge the Fund
takes a position in a Derivative Instrument whose price is expected to move in
the opposite direction of the price of the investment being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to acquire.
Thus, in a long hedge the Fund takes a position in a Derivative Instrument whose
price is expected to move in the same direction as the price of the prospective
investment being hedged. A long hedge is sometimes referred to as an
anticipatory hedge. In an anticipatory hedge transaction, the Fund does not own
a corresponding security and, therefore, the transaction does not relate to a
security the Fund owns. Rather, it relates to a security that the Fund intends
to acquire. If the Fund does not complete the hedge by purchasing the security
it anticipated purchasing, the effect on the Fund's portfolio is the same as if
the transaction were entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that the
Fund owns or intends to acquire. Derivative Instruments on indices, in contrast,
generally are used to attempt to hedge against price movements in market sectors
in which the Fund has invested or expects to invest.
The use of Derivative Instruments is subject to applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures Trading
Commission ("CFTC") and various state regulatory authorities. In addition, the
Fund's ability to use Derivative Instruments 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
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overall securities and interest rate markets, which requires different skills
than predicting changes in the prices of individual securities. There can be no
assurance that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of the
investments being hedged. For example, if the value of a Derivative Instrument
used in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of correlation
might occur due to factors unrelated to the value of the investments being
hedged, such as speculative or other pressures on the markets in which
Derivative Instruments are traded. The effectiveness of hedges using Derivative
Instruments on indices will depend on the degree of correlation between price
movements in the index and price movements in the securities being hedged.
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts available
will not match the Fund's current or anticipated investments exactly. The Fund
may invest in options contracts based on securities with different issuers,
maturities, or other characteristics from the securities in which it typically
invests, which involves a risk that the options position will not track the
performance of the Fund's other investments.
Options prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments match the Fund's investments
well. Options are affected by such factors as current and anticipated short-term
interest rates, changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect security prices
the same way. Imperfect correlation may also result from differing levels of
demand in the options markets and the securities markets, from structural
differences in how options and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or sell
options contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in the Fund's options
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements. However, such strategies can also reduce opportunity for gain by
offsetting the positive effect of favorable price movements. For example, if the
Fund entered into a short hedge because Dreyfus projected a decline in the price
of a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by a
decline in the price of the Derivative Instrument. Moreover, if the price of the
Derivative Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss. In either such case, the Fund would have
been in a better position had it not attempted to hedge at all.
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(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
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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.
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)
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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
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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
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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 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.
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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.
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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.
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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
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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 Trustee of The Dreyfus/Laurel
Tax-Free Municipal Funds and as a Director of The Dreyfus/Laurel Funds, Inc.
(collectively, with the Trust, the "Dreyfus/Laurel Funds") and 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. Mr. DiMartino is a Board
member of 99 funds in the Dreyfus Family of Funds. 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. Age: 64 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
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o*J. TOMLINSON FORT. Trustee of the Trust; Partner, 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
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. Age: 52 years old. Address: 625 Madison Avenue, New
York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 51 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, an
affiliate of Dreyfus. 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.
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<PAGE>
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: 29 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. From October 1992 to March
1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. 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.
#MICHAEL S. PETRUCELLI. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and director of Strategic
Client Initiatives of Funds Distributor, Inc. From December 1989
through November, 1996, he was employed by GE Investment Services where
he held various financial, business development and compliance
positions. He also served as Treasurer of the GE Funds and as Director
of GE Investment Services. Age: 37 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.
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<PAGE>
#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: 37 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.
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<PAGE>
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 for the year ended December 31, 1998, pursuant to the Former Compensation
Structure for the period from November 1, 1997 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*
James M. Fitzgibbons
J. Tomlinson Fort** none none
Arthur L. Goeschel
Kenneth A. Himmel
Stephen J. Lockwood
John J. Sciullo
Roslyn M. Watson
Benaree Pratt Wiley***
- ---------------
# 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 $[ ] for the Trust.
* Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
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<PAGE>
** 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
______________________. 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
______________________. In addition, Dreyfus reimbursed Mr. Fort a total of
$__________________ for expenses attributable to the Trust's Board meetings
which is not included in the $__________________ 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 Dreyfus Family of Funds consists of 163 mutual fund portfolios.
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 __________ __,
199_.
PRINCIPAL SHAREHOLDERS. As of __________ __, 199_, the following
shareholder(s) owned of record 5% or more of Class A, Class B, Class C or Class
R 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 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
B-23
<PAGE>
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; 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.
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.
B-24
<PAGE>
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 $_________ $5,794,335 $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.
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
B-25
<PAGE>
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 Company's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Agent. 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 Banks acting on behalf of
customers having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. In addition,
holders of Restricted shares of the Fund as of January 15, 1998 may continue to
purchase Class R shares of the Fund whether or not they would otherwise be
eligible to do so. Class R shares may be purchased for a retirement plan only by
a custodian, trustee, investment manager or other entity authorized to act on
behalf of such a plan. Institutions effecting transactions in Class R shares for
the accounts of their clients may charge their clients direct fees in connection
with such transactions.
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.
B-26
<PAGE>
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
B-27
<PAGE>
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 Internal Revenue Code of 1986, as
amended (the "Code")) although more than one beneficiary is involved; or a group
of accounts established by or on behalf of the employees of an employer or
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k) and 457 of
the Code); or an organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Fund's Prospectus at a price based upon the NAV
of a Class A (Investor) share at the close of business on December 31, 1998:
NAV per share $_____
Per Share Sales Charge - 5.75% of offering price
(6.10% of NAV per share) $_____
Per Share Offering Price to Public $_____
B-28
<PAGE>
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 contingent deferred sales
charge ("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
B-29
<PAGE>
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 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 for Class R shares is the NAV per
share of that Class.
B-30
<PAGE>
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.
B-31
<PAGE>
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.
B-32
<PAGE>
The Plan provides that a report of the amounts expended under the Plan,
and the purposes for which such expenditures were incurred, must be made to the
Trustees for their review at least quarterly. In addition, the Plan provides
that it may not be amended to increase materially the costs which the Fund may
bear for distribution pursuant to the Plan without approval of the Fund's
shareholders, and that other material amendments of the Plan must be approved by
the vote of a majority of the Trustees and of the Trustees who are not
"interested persons" (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,
cast in person at a meeting called for the purpose of considering such
amendments. The Plan is subject to annual approval by the entire Board of
Trustees and by the Trustees who are neither interested persons nor have any
direct or indirect financial interest in the operation of the Plan, by vote cast
in person at a meeting called for the purpose of voting on the Plan. The Plan
was so approved at a meeting of the Board of Trustees held on 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 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
B-33
<PAGE>
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 $____ and $______, respectively,
pursuant to the Plan with respect to Class A shares and $____ and $______,
respectively, pursuant to the Plan with respect to Institutional shares. For the
fiscal year ended December 31, 1998, the Fund paid the Distributor $______ and
$______, pursuant to the Plan with respect to Class B and Class C shares,
respectively, and paid the Distributor and Dreyfus Service Corporation $_____
and $_____, respectively, pursuant to the Service Plan with respect to Class B
shares and $_____ and $_____ 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 nominal fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the shares
redeemed may be more or less than their original cost, depending upon the Fund's
then-current NAV.
B-34
<PAGE>
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 Touch(R) 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 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
B-35
<PAGE>
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
B-36
<PAGE>
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
B-37
<PAGE>
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
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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.
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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
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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 Touch(R) 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.
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 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
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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 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
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
DREYFUS-AUTOMATIC ASSET BUILDER (REGISTERED TRADEMARK). 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
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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.
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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
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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(REGISTERED TRADEMARK), 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
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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.
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The Fund's policy on excessive trading applies to investors who invest in the
Fund directly or through financial intermediaries, but does not apply to the
Dreyfus Auto-Exchange Privilege, to any automatic investment or withdrawal
privilege described herein, or to non-IRA retirement plan accounts.
During times of drastic economic or market conditions, the Fund may
suspend 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 Company's Board. Debt securities may be valued
by an independent pricing service approved by the Company'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
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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
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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.
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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
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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).
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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
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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.
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PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally traded
on a net basis (i.e., without commission) through dealers acting for their own
account and not as brokers, or otherwise involve transactions directly with the
issuer of the instrument. This means that a dealer (the securities firm or bank
dealing with the Fund) makes a market for securities by offering to buy at one
price and sell at a slightly higher price. The difference between the prices is
known as a spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection with
such transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to the
benefits received. Dreyfus also places transactions for other accounts that it
provides with investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional capability
and the value and quality of their services. In selecting brokers or dealers,
Dreyfus will consider various relevant factors, including, but not limited to,
the size and type of the transaction; the nature and character of the markets
for the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the Trust's
procedures adopted in accordance with Rule 17e-1 under the 1940 Act. Dreyfus may
use research services of and place brokerage transactions with broker-dealers,
affiliated with it or Mellon Bank if the commissions are reasonable, fair and
comparable to commissions charged by non-affiliated brokerage firms for similar
services.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or its
affiliates exercise investment discretion. Such services may include advice
concerning the value of securities; the advisability of investing in, purchasing
or selling securities; the availability of securities or the purchasers or
sellers of securities; furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its other
clients; and, conversely, such information provided by brokers or dealers who
have executed transaction orders on behalf of other clients of Dreyfus may be
useful to 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.
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. During the fiscal years ended December 31,
1998, 1997 and 1996, the Fund paid brokerage commissions of $______, $ and
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$_____, respectively, to affiliates of Dreyfus or Mellon Bank. The amount paid
to affiliated brokerage firms during the fiscal years ended December 31, 1998,
1997 and 1996, was approximately ____%, ____% and ____%, respectively, of the
aggregate brokerage commissions paid by the Fund, for transactions involving
approximately ____%, ____% and ____%, respectively, of the aggregate dollar
volume of transactions for which the Fund paid brokerage commissions. The
difference in these percentages was due to the lower commissions paid to
affiliates of Dreyfus.
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 $______, $1,638,246 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 _______% and 92.99%, respectively.
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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 _____% _____% _____%
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 Inception
-------- ------- ---------
Institutional Shares _____% _____% _____%
(2/1/93)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return (expressed as a percentage) for the Class R
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Periods Ended December 31, 1998
1 Year Inception
Class R Shares ______% _____%
(8/4/94)
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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 ________%, _________% and ________%, 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 ________% 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 ____% and ____%, 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 _____%
and ____% 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
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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.
B-58
<PAGE>
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.
_____________________________________________________, has passed upon
the legality of the shares offered by the Prospectus and this Statement of
Additional Information.
_____________________________________________________, 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.
B-59
<PAGE>
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.
<PAGE>
APPENDIX
DESCRIPTION OF STANDARD AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
STANDARD & POOR'S ("S&P")
Bond Ratings
- ------------
AAA An obligation rated `AAA' has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment
on the obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its
financial commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
of the obligor to meet its financial commitment on the
obligation.
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.
B-61
<PAGE>
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.'
B-62
<PAGE>
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.
B-63
<PAGE>
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.
B-64
<PAGE>
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:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
o 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
B-65
<PAGE>
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.
B-66
<PAGE>
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. ("DUFF & PHELPS")
Long-Term Ratings
- -----------------
AAA Highest credit quality. The risks factors are negligible,
being only slightly more than for risk-free U.S. Treasury
debt.
B-67
<PAGE>
AA+ High credit quality. Protection factors are strong. Risk is
AA modest but may vary slightly from time to time because of
AA- economic conditions.
A+ Protection factors are average but adequate. However, risk
A factors are more variable and greater in periods of economic
A- stress.
BBB+ Below-average protection factors but still considered
BBB sufficient for prudent investment. Considerable
BBB- variability in risk during economic cycles.
BB+ Below investments grade but deemed likely to meet obligations
BB when due. Present or prospective financial protection
BB- factors fluctuate 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
B- fluctuate 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.
B-68
<PAGE>
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.
<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
(reg.tm)
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.
<PAGE>
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:
. 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
. the value of certain types of stripped mortgage-backed securities may move in
the same direction as interest rates
. 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 first table shows the performance of the fund's Class A shares for calendar
year 1998. Sales loads are not reflected; if they were, returns would be less
than shown. The second table compares the performance of each of the fund's
share classes over time to that of the Merrill Lynch High Yield Master II Index,
an unmanaged bond performance benchmark. 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.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q1 '98 +3.84%
WORST QUARTER: Q3 '98 -5.15%
- --------------------------------------------------------------------------------
The Fund 1
<PAGE>
Average annual total return AS OF 12/31/98
<TABLE>
<CAPTION>
<S> <C> <C>
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
</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 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 1A
<PAGE>
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>
<S> <C> <C> <C> <C>
CLASS A CLASS B CLASS C CLASS R
- ---------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front end sales charge on purchases
AS A % OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
Maximum account fee
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES BELOW $2,000
(SEE "YOUR INVESTMENT--ACCOUNT POLICIES") $12 $12 $12 $12
- ---------------------------------------------------------------------------------------------------------------------------------
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 .75 1.00 NONE
Other expenses
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL
</TABLE>
* 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
CLASS B
WITH REDEMPTION
WITHOUT REDEMPTION
CLASS C
WITH REDEMPTION
WITHOUT REDEMPTION
CLASS R
** 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 promotional 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.
2
<PAGE>
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 $121 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 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.
MANAGEMENT PHILOSOPHY
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.
PORTFOLIO MANAGER
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.
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 3
<PAGE>
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 figures have been
independently audited by ____________, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31,
CLASS A 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .97 .95
Ratio of interest expense to average net assets (%) -- .08
Ratio of net investment income to average net assets (%) 9.55 9.34
Portfolio turnover rate (%) 45.34 28.83
- ---------------------------------------------------------------------------------------------------------------------------------
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.
4
<PAGE>
YEAR ENDED DECEMBER 31,
CLASS B 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.46 12.50
Investment operations: Investment income -- net 1.09 .66
Net realized and unrealized gain (loss) on investments (1.14) (.04)
Total from investment operations (.05) .62
Distributions: Dividends from investment income -- net (1.08) (.66)
Net asset value, end of period 11.33 12.46
Total return (%) (2) (.61) 8.57
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.47 1.45
Ratio of interest expense to average net assets (%) -- .09
Ratio of net investment income to average net assets (%) 9.02 8.73
Portfolio turnover rate (%) 45.34 28.83
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ 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.
4A
<PAGE>
YEAR ENDED DECEMBER 31,
CLASS C 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.47 12.50
Investment operations: Investment income -- net 1.06 .65
Net realized and unrealized gain (loss) on investments (1.15) (.03)
Total from investment operations (.09) .62
Distributions: Dividends from investment income -- net (1.05) (.65)
Net asset value, end of period 11.33 12.47
Total return (%) (2) (.93) 8.47
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.72 1.70
Ratio of interest expense to average net assets (%) -- .09
Ratio of net investment income to average net assets (%) 8.77 8.54
Portfolio turnover rate (%) 45.34 28.83
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ 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.
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.45 12.50
Investment operations: Investment income -- net 1.25 .81
Net realized and unrealized gain (loss) on investments (1.21) (.14)
Total from investment operations .04 .67
Distributions: Dividends from investment income -- net (1.17) (.72)
Net asset value, end of period 11.32 12.45
Total return (%) (2) .14 9.26
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .73 .75
Ratio of interest expense to average net assets (%) -- .05
Ratio of net investment income to average net assets (%) 10.41 10.08
Portfolio turnover rate (%) 45.34 28.83
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 127 127
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
</TABLE>
The Fund 5
<PAGE>
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 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.
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.
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
<TABLE>
<CAPTION>
<S> <C> <C>
Sales charge Sales charge as
deducted as a % 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 reinvestment).
</TABLE>
6
<PAGE>
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average 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
6A
<PAGE>
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
entity authorized to accept orders on behalf of the fund. 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 are subject to higher annual
distribution fees and may be subject to a sales charge upon redemption.
Selling shares
YOU MAY SELL 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
entity authorized to accept orders on behalf of the fund. 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.
Your Investment 7
<PAGE>
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.
Your Investment 7A
<PAGE>
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:
. 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).
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.
8
<PAGE>
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS monthly dividends from its net
investment income and distributes any net capital gains that 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.
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.
8A
<PAGE>
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.
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.
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.
Your Investment 9
<PAGE>
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 9A
<PAGE>
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, "4580" for Class R.
TELETRANSFER Request TeleTransfer on your
application. Call us to request your transaction.
10
<PAGE>
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
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.
10A
<PAGE>
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, "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.
Your Investment 11
<PAGE>
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 11A
<PAGE>
[Application p 1 here]
<PAGE>
[Application p 2 here]
<PAGE>
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.
(COPYRIGHT) 1999, Dreyfus Service Corporation
<PAGE>
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
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Description of the Fund................................................. B-2
Management of the Fund.................................................. B-25
Management Arrangements................................................. B-31
Purchase of Shares...................................................... B-33
Distribution and Service Plans.......................................... B-40
Redemption of Shares.................................................... B-42
Shareholder Services.................................................... B-47
Additional Information About Purchases, Exchanges and Redemptions....... B-53
Determination of Net Asset Value........................................ B-54
Dividends, Other Distributions and Taxes................................ B-55
Portfolio Transactions.................................................. B-60
Performance Information................................................. B-61
Information About the Fund/Trust........................................ B-62
Transfer and Dividend Disbursing Agent, Custodian, Counsel and
Independent Auditors.................................................... B-63
Financial Statements.................................................... B-64
Appendix................................................................ B-65
<PAGE>
DESCRIPTION OF THE FUND
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 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel Funds
Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on October
17, 1994. The 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") 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.
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 IBCA, Inc. ("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
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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.
B-3
<PAGE>
The average distribution of investments of the Dreyfus Premier Limited
Term High Income Fund in corporate bonds by ratings for the fiscal year ended
December 31, 1998, calculated monthly on a dollar weighted basis, was as
follows:
Moody's S&P, Fitch or Duff Percentage
------- ------------------ ----------
Aaa AAA __%
Aa AA __%
A A __%
BB BBB __%
B BB __%
B B __%
Caa CCC __%
Ca CC __%
C C __%
NR NR __%*
__%**
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 The Dreyfus
Corporation to be of comparable quality to securities rated: B (__%),
CCC (__%), convertible bonds - B (__%) and convertible bonds - CCC
(__%).
** The Fund also owns preferred stock - B (__%), preferred stock - CCC
(__%), convertible bonds - BBB (__%) and convertible bonds - B (__%).
Approximately (__%) 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
that differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law.
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
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<PAGE>
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.
B-5
<PAGE>
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 a Fund's mortgage-backed securities to
decrease broadly, the Fund's effective average duration, and thus sensitivity to
B-6
<PAGE>
increase rate fluctuations, would increase. Therefore, depending on the
circumstances, such as in crease could result in an effective average duration
of more than 3.5 years.
Certificates of the Government National Mortgage Association ("GNMA")
represent ownership interests in a pool of mortgages issued by a mortgage banker
or other mortgagee. Distributions on GNMA certificates include principal and
interest components. GNMA, a corporate instrumentality of the U.S. Department of
Housing and Urban Development ("HUD"), guarantees timely payment of principal
and interest on GNMA certificates; this guarantee is deemed a general obligation
of the United States, backed by its full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is
insured by the Federal Housing Administration or the Farmers Home
Administration, or is insured or guaranteed by the Veterans Administration. The
mortgages have maximum maturities of 40 years. Government statistics indicate,
however, that the average life of the underlying mortgages is shorter, due to
scheduled amortization and unscheduled prepayments (attributable to voluntary
prepayments or foreclosures). GNMA has introduced a pass through security backed
by adjustable rate mortgages. The securities will bear interest at a rate which
will be adjusted annually. The prepayment experience of the mortgages underlying
these securities may vary from that for fixed rate mortgages.
The Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") are Government sponsored corporations owned
by private stockholders. Each is subject to general regulation by an office
within HUD. FNMA and FHLMC purchase residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks, credit unions and
mortgage bankers. Pass through securities issued by FNMA and FHLMC are
guaranteed by FNMA or FHLMC as to payment of principal and interest.
Interests in pools of mortgage backed securities differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a "pass
through" of the monthly payments made by the individual borrowers on their
residential mortgage loans, net of any fees paid. Additional payments are caused
by repayments resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs which may be incurred. Some
mortgage backed securities are described as "modified pass through." These
securities entitle the holders to receive all interest and principal payments
owed on the mortgages in the pool, net of certain fees, regardless of whether or
not the mortgagors actually make the payments.
Collateralized Mortgage Obligations ("CMOs") are generally issued as a
series of different classes. Interest and principal payments on the mortgages
underlying any series will first be applied to meet the interest payment
requirements of each class in the series other than any class in respect of
which interest accrues but is not paid or any principal only class. Then,
B-7
<PAGE>
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
B-8
<PAGE>
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, and the Fund will make payment for such securities only upon
B-9
<PAGE>
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 in the Fund's Prospectus 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 IBCA, Inc. or
Duff 1 by Duff & Phelps Rating Co., (b) issued by companies having an
outstanding unsecured debt issue currently rated at least A3 by Moody's or A1 by
S&P, Fitch IBCA, Inc. or Duff & Phelps Rating Co., or (c) if unrated, determined
to by Dreyfus to be of comparable quality to those rated obligations which may
be purchased by the Fund.
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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 is 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
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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
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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.
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.
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
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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.
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
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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 effective
average portfolio maturity of the Fund is expected to be four years or less. For
purposes of calculating effective average portfolio maturity, a security that is
subject to redemption at the option of the issuer on a particular date (the
"call date") which is prior to the security's stated maturity may be deemed to
mature on the call date rather than on its stated maturity date. The call date
of a security will be used to calculate effective average portfolio maturity
when Dreyfus reasonably anticipates, based upon information available to it,
that the issuer will exercise its right to redeem the security. Dreyfus may base
its conclusion on such factors as the interest rate paid on the security
compared to prevailing market rates, the amount of cash available to the issuer
of the security, events affecting the issuer of the security, and other factors
that may compel or make it advantageous for the issuer to redeem a security
prior to its stated maturity.
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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 receivables on a forward commitment or
when-issued security are fixed when the Fund enters into the commitment, but the
Fund does not make payment until it receives delivery from the counterparty. The
Fund will commit to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the Fund
consisting of permissible liquid assets at least equal at all times to the
amount of the commitments will be established and maintained at the Fund's
custodian bank.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
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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.
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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.
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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.
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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.
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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
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<PAGE>
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
B-22
<PAGE>
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 Trust having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. Shareholders of the Fund will be given at least 30 days' prior
notice of any such investment. Such investment would be made only if the
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 onethird of
the Fund's total assets at the time of such borrowing, and (b) the Fund may
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<PAGE>
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.
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<PAGE>
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, N.A. 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.
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<PAGE>
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 Trustee of The Dreyfus/Laurel
Tax-Free Municipal Funds and as a Director of The Dreyfus/Laurel Funds, Inc.
(collectively, with the Trust, the "Dreyfus/Laurel Funds") and 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. Mr. DiMartino is a Board
member of 99 funds in the Dreyfus Family of Funds. 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. Age: 64 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
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<PAGE>
o*J. TOMLINSON FORT. Trustee of the Trust; Partner, 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
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. Age: 52 years old. Address: 625 Madison Avenue, New
York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 51 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, an
affiliate of Dreyfus. 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.
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<PAGE>
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: 29 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. From October 1992 to March
1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. 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.
#MICHAEL S. PETRUCELLI. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and director of Strategic
Client Initiatives of Funds Distributor, Inc. From December 1989
through November, 1996, he was employed by GE Investment Services where
he held various financial, business development and compliance
positions. He also served as Treasurer of the GE Funds and as Director
of GE Investment Services. Age: 37 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.
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<PAGE>
#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: 37 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.
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<PAGE>
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 for the year ended December 31, 1998, pursuant to the Former Compensation
Structure for the period from November 1, 1997 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*
James M. Fitzgibbons
J. Tomlinson Fort**
Arthur L. Goeschel
Kenneth A. Himmel
Stephen J. Lockwood
John J. Sciullo
Roslyn M. Watson
Benaree Pratt Wiley***
- ---------------
# 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 $[ ] 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
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<PAGE>
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 ______________________. 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 ______________________. In
addition, Dreyfus reimbursed Mr. Fort a total of $__________________ for
expenses attributable to the Trust's Board meetings which is not included in
the $__________________ 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 Dreyfus Family of Funds consists of 163 mutual fund portfolios.
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 __________ __,
1999.
As of __________ __, 1999, the following shareholder(s) owned of record
5% or more of Class A, Class B, Class C or Class R 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
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<PAGE>
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; 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.
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 a management fee of $595,072.
For the year fiscal year ended December 31, 1998, the Fund paid a management fee
of $_______.
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.
B-32
<PAGE>
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 Banks acting on behalf of
customers having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. Class R shares
may be purchased for a retirement plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such a plan. 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 and is $750 and
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$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
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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:
<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 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-
</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
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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 $_____
Per Share Sales Charge - 4.5% of offering price
(4.7% of NAV per share) $_____
Per Share Offering Price to the Public $_____
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 contingent deferred sales
charge ("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.
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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.
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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 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
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<PAGE>
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,
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<PAGE>
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
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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 $____ and $______, respectively,
pursuant to the Class A Plan. For the fiscal year ended December 31, 1998, the
Fund paid the Distributor $______ and $______, pursuant to the Plan with respect
to Class B and Class C shares, respectively, and paid the Distributor and
Dreyfus Service Corporation $_____ and $_____, respectively, pursuant to the
Service Plan with respect to Class B shares and $_____ and $_____ respectively,
pursuant to the Service Plan with respect to Class C shares.
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<PAGE>
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 nominal fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the shares
redeemed may be more or less than their original cost, depending upon the Fund's
then-current NAV 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 Touch(R) 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
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<PAGE>
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
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<PAGE>
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
B-44
<PAGE>
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.
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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.
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<PAGE>
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.
B-47
<PAGE>
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 Touch(R) 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 request an exchange, an investor or an investor's Agent acting on
the investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by telephone
is given to all Fund shareholders automatically unless the investor checks the
applicable "No" box on the Account Application, indicating that the investor
specifically refuses this privilege. By using the Telephone Exchange Privilege,
the investor authorizes the Transfer Agent to act on telephonic exchange
instructions (including over the Dreyfus Touch(R) 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.
B-48
<PAGE>
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.
AUTO-EXCHANGE PRIVILEGE. The 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 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 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
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
B-49
<PAGE>
DREYFUS-AUTOMATIC ASSET BUILDER (REGISTERED TRADEMARK). 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.
B-50
<PAGE>
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 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
B-51
<PAGE>
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.
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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.
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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 (reduced by
the expense limitation, if any) 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.
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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. 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 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.
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
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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.
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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
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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.
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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
Dreyfus assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in the best judgment
of Dreyfus and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most favorable net
price. Subject to this consideration, the brokers selected will include those
that supplement the research facilities of Dreyfus with statistical data,
investment information, economic facts and opinions. Information so received is
in addition to and not in lieu of services required to be performed by Dreyfus
and the fees payable to Dreyfus are not reduced as a consequence of the receipt
of such supplemental information. Such information may be useful to Dreyfus in
serving both the Fund and other funds which it advises and, conversely,
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supplemental information obtained by the placement of business of other clients
may be useful to Dreyfus in carrying out its obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades may, in certain
cases, result from two or more funds advised or administered by Dreyfus being
engaged simultaneously in the purchase or sale of the same security. Certain of
the Fund's transactions in securities of foreign issuers may not benefit from
the negotiated commission rates available to the Fund for transactions in
securities of domestic issuers. When transactions are executed in the
over-the-counter market, the Fund will deal with the primary market makers
unless a more favorable price or execution otherwise is obtainable. Foreign
exchange transactions are made with banks or institutions in the interbank
market at prices reflecting a mark-up or mark-down and/or commission.
For the period from May 30, 1997 (the date the Fund commenced
operations) to December 31, 1997, the Fund did not pay any brokerage
commissions. For the fiscal year ended December 31, 1998, the Fund paid
brokerage commissions of $________.
Portfolio turnover may vary from year to year as well as within a year.
It is anticipated that in any fiscal year the turnover rate of the Fund may
approach 200%. In periods in which extraordinary market conditions prevail,
Dreyfus will not be deterred from changing the Fund's investment strategy as
rapidly as needed, in which case higher turnover rates can be anticipated which
would result in greater brokerage expenses. In addition, to the extent the Fund
realizes short-term gains as a result of more portfolio transactions, such gain
would be taxable to shareholders (other than tax-exempt shareholders) at
ordinary income tax rates. The overall reasonableness of brokerage commissions
paid is evaluated by Dreyfus based upon its knowledge of available information
as to the general level of commissions paid by other institutional investors for
comparable services.
The Fund's portfolio turnover rate for the period from May 30, 1997
(the date the Fund commenced operations) to December 31, 1997 was 28.83% and for
the year ended December 31, 1998 was _____%.
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 ____%, ____%, ____% and ____% 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
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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 year ended December 31, 1998 were ____%, ____%, ____%
and ____%, respectively, and for the period from May 30, 1997 (inception)
through December 30, 1998 were ____%, ____%, ____% and ____%, 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 May 30, 1997
(inception date of Class A shares) to December 31, 1998 was ____%. Without
giving effect to the applicable front-end sales load, the total return for Class
A shares was ____% for this period. The Fund's total return for Class B and
Class C shares for the period from May 30, 1997 (inception date of Class B and
Class C shares) to December 31, 1998 was ____% and ____%, respectively. Without
giving effect to the applicable CDSC, the total return for Class B and Class C
shares for this period was ____% and ____%, respectively. The Fund's total
return for Class R shares for the period from May 30, 1997 (inception date of
Class R shares) to December 31, 1998 was ____%. 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.
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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.
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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
B-63
<PAGE>
policies of the Fund or which securities are to be purchased or sold by the
Fund.
_____________________________________________, has passed upon the
legality of the shares offered by the Prospectus and this Statement of
Additional Information.
________________________________________, 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.
B-64
<PAGE>
APPENDIX
DESCRIPTION OF STANDARD AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
STANDARD & POOR'S ("S&P")
Bond Ratings
- ------------
AAA An obligation rated `AAA' has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its
financial commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
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.
B-65
<PAGE>
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.'
B-66
<PAGE>
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.
B-67
<PAGE>
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.
B-68
<PAGE>
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:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o 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
B-69
<PAGE>
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.
B-70
<PAGE>
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'.
B-71
<PAGE>
DUFF & PHELPS RATING CO. ("DUFF & PHELPS")
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
AA- economic conditions.
A+ Protection factors are average but adequate. However, risk
A factors are more variable and greater in periods of economic
A- stress.
BBB+ Below-average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk
BBB- during economic cycles.
BB+ Below investments grade but deemed likely to meet obligations
BB when due. Present or prospective financial protection factors
BB- fluctuate 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 will
B not be met when due. Financial protection factors will
B- fluctuate 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.
B-72
<PAGE>
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.
<PAGE>
Dreyfus Premier Managed Income Fund
Investing in fixed income securities for high current income
PROSPECTUS May 1, 1999
(REGISTERED TRADEMARK)
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: XXXXX
CLASS B: XXXXX
CLASS C: XXXXX
CLASS R: XXXXX
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.
<PAGE>
THE FUND
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:
o 35% of total assets in obligations rated below investment grade or
comparable unrated securities
o 25% of total assets in convertible debt obligations and preferred stocks
o 25% of total assets in asset-backed securities
o 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.
INSIDE COVER
<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:
o 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
o derivatives, including inverse floaters and 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
o 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
o 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, 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.
Concepts to understand
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.
<PAGE>
PAST PERFORMANCE
- ----------------
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 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.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: QX 'XX X.XX%
WORST QUARTER: QX 'XX X.XX%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception date 1 Year 5 Years 10 Years Since inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A 8/1/79 XX.XX% XX.XX% XX.XX% XX.XX%
CLASS B 12/19/94 XX.XX% N/A N/A XX.XX%
CLASS C 12/19/94 XX.XX% N/A N/A XX.XX%
CLASS R 2/1/93 XX.XX% N/A N/A XX.XX%
LEHMAN BROTHERS
AGGREGATE BOND INDEX XX.XX% XX.XX% XX.XX%*
</TABLE>
* BASED ON THE LIFE OF CLASS A SHARES. FOR COMPARATIVE PURPOSES, THE VALUE OF
THE INDEX ON X/XX/XX IS USED AS THE BEGINNING VALUE ON X/XX/XX.
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 1
<PAGE>
EXPENSES
- --------
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fee table
CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum sales charge on purchases
AS A % OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum deferred sales charge (CDSC)
AS A % OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
Maximum account fee
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES BELOW $2,000
(SEE "YOUR INVESTMENT--ACCOUNT POLICIES") $12 $12 $12 $12
- ------------------------------------------------------------------------------------------------------------------------------------
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
</TABLE>
* 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>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
CLASS B
WITH REDEMPTION
WITHOUT REDEMPTION
CLASS C
WITH REDEMPTION
WITHOUT REDEMPTION
CLASS R
</TABLE>
** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
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 promotional 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.
2
<PAGE>
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 $117 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 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.
Management philosophy
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.
Portfolio manager
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 17, 1994.
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 3
<PAGE>
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 figures have been
independently audited by [ ], whose report, along with the fund's financial
statements, is included in the annual report.
<TABLE>
<CAPTION>
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
Investment operations: Investment income (loss) -- net
Net realized and unrealized gain (loss) on investments
Total from investment operations
Distributions: Dividends from investment income -- net
Dividends from net realized gain on investments
Total distributions
Net asset value, end of period
Total return (%)(1)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%)
Ratio of net investment income (loss) to average net assets (%)
Decrease reflected in above expense ratios due to actions by Dreyfus (%)
Portfolio turnover rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000)
(1) EXCLUSIVE OF SALES CHARGE.
<PAGE>
YEAR ENDED DECEMBER 31,
CLASS B 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period
Investment operations: Investment income (loss) -- net
Net realized and unrealized gain (loss) on investments
Total from investment operations
Distributions: Dividends from investment income -- net
Dividends from net realized gain on investments
Total distributions
Net asset value, end of period
Total return (%) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%)
Ratio of net investment income (loss) to average net assets (%)
Decrease reflected in above expense ratios due to actions by Dreyfus (%)
Portfolio turnover rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000)
(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.
4
<PAGE>
YEAR ENDED DECEMBER 31,
CLASS C 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period
Investment operations: Investment income (loss) -- net
Net realized and unrealized gain (loss) on investments
Total from investment operations
Distributions: Dividends from investment income -- net
Dividends from net realized gain on investments
Total distributions
Net asset value, end of period
Total return (%)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%)
Ratio of net investment income (loss) to average net assets (%)
Decrease reflected in above expense ratios due to actions by Dreyfus (%)
Portfolio turnover rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000)
(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.
YEAR ENDED DECEMBER 31,
CLASS R 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period
Investment operations: Investment income -- net
Net realized and unrealized gain (loss) on investments
Total from investment operations
Distributions: Dividends from investment income -- net
Dividends from net realized gain on investments
Total distributions
Net asset value, end of period
Total return (%)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%)
Ratio of net investment income to average net assets (%)
Decrease reflected in above expense ratios due to actions by Dreyfus (%)
Portfolio turnover rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000)
</TABLE>
The Fund 5
<PAGE>
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.
o 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
o 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
o 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
o 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.
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>
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. Contact 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 as
deducted as a % 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 reinvestment).
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average 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
6
<PAGE>
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
entity authorized to accept orders on behalf of the fund. 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 are subject to higher annual
distribution fees and may be subject to a sales charge upon redemption.
<PAGE>
SELLING SHARES
YOU MAY SELL 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
entity authorized to accept orders on behalf of the fund. 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:
o amounts of $1,000 or more on accounts whose address has been changed within
the last 30 days
o 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 7
<PAGE>
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:
o 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)
o refuse any purchase or exchange request in excess of 1% of the fund's total
assets
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
o change its minimum investment amounts
o 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).
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.
<PAGE>
DISTRIBUTIONS AND TAXES
- -----------------------
THE FUND GENERALLY PAYS ITS SHAREHOLDERS dividends from its net investment
income monthly and distributes any net capital gains that 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 taxable at the federal level 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.
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.
8
<PAGE>
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(REGISTERED from a designated bank account.
TRADEMARK)
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.
Your Investment 9
<PAGE>
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.
<PAGE>
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
TO SELL SHARES
Write a letter of instruction that includes:
o your name and signature(s)
o your account number
o the dollar amount you want to sell
o how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 7).
Mail in your request to:
The Dreyfus Family of Funds
P.O. Box 6587, Providence, RI 02940-6427
Attn: Institutional Processing
10
<PAGE>
TO OPEN AN ACCOUNT
By Telephone
WIRE Have your bank send your
investment to The Boston Safe Deposit &
Trust Co., with these instructions:
o ABA# 011001234
o DDA# 044350
o the fund name
o the share class
o your Social Security or tax ID number
o name(s) of investor(s)
o dealer number if applicable
Call us to obtain an account number.
Return your application with the account
number on the application.
TO ADD TO AN ACCOUNT
WIRE Have your bank send your investment
to The Boston Safe Deposit &
Trust Co., with these instructions:
o ABA# 011001234
o DDA# 044350
o the fund name
o the share class
o your account number
o name(s) of investor(s)
o 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 and "4400" for Class R.
TELETRANSFER Request TeleTransfer on your
application. Call us to request your transaction.
TO SELL SHARES
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.
<PAGE>
TO OPEN AN ACCOUNT
Automatically
WITH AN INITIAL INVESTMENT Indicate on
your application which automatic
service(s) you want. Return your
application with your investment.
TO ADD TO AN ACCOUNT
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
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 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>
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
P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
TO SELL SHARES
Write a letter of instruction that includes:
o your name and signature
o your account number and fund name
o the dollar amount you want to sell
o how and where to send the proceeds
o whether the distribution is qualified or premature
o 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
<PAGE>
TO OPEN AN ACCOUNT
By Telephone
----------
TO ADD TO AN ACCOUNT
WIRE Have your bank send your
investment to The Boston Safe Deposit &
Trust Co., with these instructions:
o ABA# 011001234
o DDA# 044350
o the fund name
o the share class
o your account number
o name of investor
o the contribution year
o 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 and "4400" for Class R.
TO SELL SHARES
----------
<PAGE>
TO OPEN AN ACCOUNT
Automatically
----------
TO ADD TO AN ACCOUNT
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
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 11
<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.
(COPYRIGHT) 1999, Dreyfus Service Corporation
<PAGE>
[Application p 1 here]
<PAGE>
[Application p 2 here]
<PAGE>
- ------------------------------------------------------------------------------
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................................................... B-2
Management of the Fund.................................................... B-15
Management Arrangements................................................... B-21
Purchase of Shares........................................................ B-23
Distribution and Service Plans............................................ B-30
Redemption of Shares...................................................... B-32
Shareholder Services...................................................... B-36
Additional Information About Purchases, Exchanges and Redemptions......... B-41
Determination of Net Asset Value.......................................... B-42
Dividends, Other Distributions and Taxes.................................. B-43
Portfolio Transactions.................................................... B-47
Performance Information................................................... B-49
Information About the Fund/Trust.......................................... B-51
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors........................................ B-52
Financial Statements...................................................... B-53
Appendix.................................................................. B-54
<PAGE>
DESCRIPTION OF THE FUND
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 under the name The Boston
Company Fund, changed its name effective April 4, 1994 to The Laurel Funds
Trust, and then changed its name to The Dreyfus/Laurel Funds Trust on October
17, 1994. The 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 _________, the name of the Fund was Premier Managed Income 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.
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 Standard
& Poor's 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 Standard
& Poor's 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.
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The Fund may also invest in U.S. Government securities that are not
supported by the full faith and credit of the U.S. Government. These include
securities issued by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home Loan Banks,
Tennessee Valley Authority, Student Loan Marketing Association and District of
Columbia Armory Board. Because the U.S. Government is not obligated by law to
provide support to an instrumentality it sponsors, the Fund will invest in
obligations issued by such an instrumentality only when Dreyfus determines that
the credit risk with respect to the instrumentality does not make its securities
unsuitable for investment by the Fund.
GNMA certificates represent ownership interests in a pool of mortgages
issued by a mortgage banker or other mortgagee. Distributions on GNMA
certificates include principal and interest components. GNMA, a corporate
instrumentality of the U.S. Department of Housing and Urban Development,
guarantees timely payment of principal and interest on GNMA certificates; this
guarantee is deemed a general obligation of the United States, backed by its
full faith and credit.
Each of the mortgages in a pool supporting a GNMA certificate is insured
by the Federal Housing Administration or the Farmers Home Administration, or is
insured or guaranteed by the Veterans Administration. The mortgages have maximum
maturities of 40 years. Government statistics indicate, however, that the
average life of the underlying mortgages is shorter, due to scheduled
amortization and unscheduled prepayments (attributable to voluntary prepayments
or foreclosures). GNMA has introduced a pass-through security backed by
adjustable-rate mortgages. The securities will bear interest at a rate which
will be adjusted annually. The prepayment experience of the mortgages underlying
these securities may vary from that for fixed-rate mortgages.
FNMA and FHLMC are Government sponsored corporations owned by private
stockholders. Each is subject to general regulation by an office of the
Department of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through securities
issued by FNMA and FHLMC are guaranteed by those entities as to payment of
principal and interest.
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
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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, is expected to provide certain results. As market conditions change,
however, and particularly during periods of rapid or unanticipated changes in
market interest rates, the attractiveness of a CMO class, and the ability of a
structure to provide the anticipated investment characteristics, may be
significantly reduced. Such changes can result in volatility in the market
value, and in some instances reduced liquidity, of the CMO class.
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
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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
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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
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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.
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 Standard & Poor's, Prime-1 by Moody's, F-1 by
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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 foriegn 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 if 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 Funds 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
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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
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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.
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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
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<PAGE>
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
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<PAGE>
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 Investment
Company Act of 1940, as amended (the "1940 Act") except that (a) the Fund may
borrow money in an amount not exceeding one-third of the Fund's total assets at
the time of such borrowing, and (b) the Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related options shall not
be considered to involve the borrowing of money or issuance of senior
securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such loans. For
purposes of this restriction debt instruments and repurchase agreements shall
not be treated as loans.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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,
N.A. 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 Trustee of The Dreyfus/Laurel
Tax-Free Municipal Funds and as a Director of The Dreyfus/Laurel Funds, Inc.
(collectively, with the Trust, the "Dreyfus/Laurel Funds") and 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
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<PAGE>
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. Mr. DiMartino is a Board
member of 99 funds in the Dreyfus Family of Funds. 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. Age: 64 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Partner, Reed, Smith, Shaw & McClay
(law firm). Age: 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
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. Age: 52 years old. Address: 625 Madison Avenue, New
York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 51 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
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<PAGE>
decision-making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 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: 29 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. From October 1992 to March
1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. 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.
#MICHAEL S. PETRUCELLI. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Senior Vice President and director of Strategic
Client Initiatives of Funds Distributor, Inc. From December 1989
through November, 1996, he was employed by GE Investment Services where
he held various financial, business development and compliance
positions. He also served as Treasurer of the GE Funds and as Director
of GE Investment Services. Age: 37 years old.
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<PAGE>
#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
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<PAGE>
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 for
the year ended December 31, 1998, pursuant to the Former Compensation Structure
for the period from November 1, 1997 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*
James M. Fitzgibbons
J. Tomlinson Fort**
Arthur L. Goeschel
Kenneth A. Himmel
Stephen J. Lockwood
John J. Sciullo
Roslyn M. Watson
Benaree Pratt Wiley***
- ---------------
# 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
B-20
<PAGE>
Trustees. Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $[ ] 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
______________________. 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
______________________. In addition, Dreyfus reimbursed Mr. Fort a total of
$__________________ for expenses attributable to the Trust's Board meetings
which is not included in the $__________________ 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 Dreyfus Family of Funds consists of 163 mutual fund portfolios.
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 __________ __,
1999.
As of __________ __, 1999, the following shareholders owned of record
5% or more of Class A, Class B, Class C or Class R 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
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<PAGE>
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; 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.
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 $____ $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
B-22
<PAGE>
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, 1995, the Distributor retained
$2,566 from sales loads on the Fund's Class A shares. For the fiscal year ended
December 31, 1995, the Distributor retained $294 from the contingent deferred
sales charge ("CDSC") on Class B shares for the Fund. For the same period, the
Distributor retained no fees from the CDSC on Class C shares for the Fund. For
the fiscal year ended December 31, 1996, the Distributor retained $32,647 from
sales loads on the Fund's Class A shares. For the same period, the Distributor
retained $26,667 from the CDSC on Class B shares. For the same period, the
Distributor retained $1,219 from the CDSC on Class C shares. For the fiscal year
ended December, 31, 1997, the Distributor retained no sales loads on the Fund's
Class A shares. For the same period, the Distributor retained $18,388 from the
CDSC on Class B shares. For the same period, the Distributor retained $756 from
the CDSC on Class C shares. For the fiscal year ended December, 31, 1998, the
Distributor retained $______ from sales loads on the Fund's Class A shares. For
the same period, the Distributor retained $_______ from the CDSC on Class B
shares. For the same period, the Distributor retained $_______ 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
B-23
<PAGE>
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 Banks acting on behalf of customers
having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. In addition,
holders of Class R shares of the Fund who have held their shares since April 4,
1994 may continue to purchase Class R shares of the Fund whether or not they
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".
B-24
<PAGE>
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.
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.
B-25
<PAGE>
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:
<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 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-
</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 share at the close of business on December 31, 1998.
NAV per Share $_____
Per Share Sales Charge - 4.5%
of offering price (4.7% of
NAV per share) $_____
Per Share Offering Price to
the Public $_____
B-26
<PAGE>
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 contingent deferred sales
charge ("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.
B-27
<PAGE>
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 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
B-28
<PAGE>
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.
B-29
<PAGE>
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
B-30
<PAGE>
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
B-31
<PAGE>
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 $____ and $______, respectively, pursuant to the
Class A Plan. For the fiscal year ended December 31, 1998, the Fund paid the
Distributor $______ and $______, pursuant to the Plan with respect to Class B
and Class C shares, respectively, and paid the Distributor and Dreyfus Service
Corporation $_____ and $_____, respectively, pursuant to the Service Plan with
respect to Class B shares and $_____ and $_____ 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 nominal fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the shares
redeemed may be more or less than their original cost, depending upon the Fund's
then-current NAV 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.
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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 Touch(REGISTERED TRADEMARK) 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
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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.
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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
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<PAGE>
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
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<PAGE>
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 Touch(R) 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.
AUTO-EXCHANGE PRIVILEGE. The 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
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<PAGE>
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 an Auto-Exchange Authorization Form,
please call toll free 1-800-554-4611.
Fund exchanges and Auto-Exchange Privilege are available to shareholders
resident in any state in which shares of the fund being acquired may legally be
sold. Shares may be exchanged only between accounts having identical names and
other identifying designations. 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 (REGISTERED TRADEMARK). 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.
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<PAGE>
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
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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.
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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
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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
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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 (reduced by
the expense limitation, if any) 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. 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 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.
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
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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.
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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.
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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
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"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
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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 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.
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. During the fiscal years ended December 31,
1998, 1997 and 1996, the Fund paid brokerage commissions of $______, $______ and
$_____, respectively, to affiliates of Dreyfus or Mellon Bank. The amount paid
to affiliated brokerage firms during the fiscal years ended December 31, 1998,
1997 and 1996, was approximately ____%, ____% and ____%, respectively, of the
aggregate brokerage commissions paid by the Fund, for transactions involving
approximately ____%, ____% and ____%, respectively, of the aggregate dollar
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volume of transactions for which the Fund paid brokerage commissions. The
difference in these percentages was due to the lower commissions paid to
affiliates of Dreyfus.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made for
these other accounts. It sometimes happens that the same security is held by
more than one of the accounts managed by Dreyfus. Simultaneous transactions may
occur when several accounts are managed by the same investment manager,
particularly when the same investment instrument is suitable for the investment
objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated in
accordance with a formula considered by Dreyfus to be equitable to each account.
In some cases this system could have a detrimental effect on the price or volume
of the investment instrument as far as the Fund is concerned. In other cases,
however, the ability of the Fund to participate in volume transactions will
produce better executions for the Fund. While the Trustees will continue to
review simultaneous transactions, it is their present opinion that the
desirability of retaining Dreyfus as investment manager to the Fund outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the fiscal years ended December 31, 1995, 1996 and 1997, the Fund did
not pay any brokerage commissions.
PORTFOLIO TURNOVER. While 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 ______%, respectively.
PERFORMANCE INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "PAST PERFORMANCE."
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The current yield for the 30-day period ended December 31, 1998 was ____%,
____%, ____% and ____% 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 ____%, ____% and ____%,
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 ____% and ____%, 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 _____%, and ____%, 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 ____%, ____% and ____%, 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 ______%. Based on NAV per
share, the total return for Class A was ______% 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 _____% and
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______%, respectively. Without giving effect to the applicable CDSC, the total
return for Class B and C was _____% and _____%, 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 _____%.
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.
B-51
<PAGE>
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
B-52
<PAGE>
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.
_____________________________________________, has passed upon the
legality of the shares offered by the Prospectus and this Statement of
Additional Information.
_____________________________________________, 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.
B-53
<PAGE>
APPENDIX
DESCRIPTION OF STANDARD AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
STANDARD & POOR'S ("S&P")
Bond Ratings
- ------------
AAA An obligation rated `AAA' has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its
financial commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
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
B-54
<PAGE>
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.
B-55
<PAGE>
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-56
<PAGE>
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
B-57
<PAGE>
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:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o 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
B-58
<PAGE>
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.
B-59
<PAGE>
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. ("DUFF & PHELPS")
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
AA- economic conditions.
A+ Protection factors are average but adequate. However, risk
A factors are more variable and greater in periods of economic
A- stress.
BBB+ Below-average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk
BBB- during economic cycles.
BB+ Below investments grade but deemed likely to meet obligations
when due.
B-60
<PAGE>
BB 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 will
B not be met when due. Financial protection factors will
B- fluctuate 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.
B-61
<PAGE>
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
Item 23. 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.
<PAGE>
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. 93").
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 Opinion of counsel is incorporated by reference to the
Registration Statement and to Post-Effective Amendment
No. 93 filed on December 13, 1994. Consent of Counsel. To be
filed by Amendment.
J Consent of KPMG LLP. To be filed by Amendment.
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. To be filed by amendment.
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.
<PAGE>
Other Exhibits
--------------
(a) Powers of attorney of the Trustees dated June 15, 1998.
Filed herewith.
(b) 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.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser (continued)
- -------- ----------------------------------------------------
Officers and Directors of Investment Adviser
--------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Mellon Preferred Director 3/96 - 11/96
Chairman of the Board and Capital Corporation*
Chief Executive Officer
TBCAM Holdings, Inc.* President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Chairman 1/98 - 6/98
Asset Management, LLC* President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Chief Executive Officer 4/95 - 4/97
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Franklin Portfolio
Associates Trust* Trustee 9/95 - 1/97
Certus Asset Advisors Corp.** Director 6/95 - Present
The Boston Company of Director 6/95 - 4/96
Southern California Chief Executive Officer 6/95 - 4/96
Los Angeles, CA
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
Access Capital Strategies Corp. Director 5/95 - 1/97
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
Mellon Bank, N.A. + Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - Present
<PAGE>
Christopher M. Condron Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
Chairman and Chief President 1/99 - Present
Executive Director 1/98 - Present
Officer (Continued) Vice Chairman 11/94 - 1/99
The Boston Company Financial Director 4/94- 8/96
Services, Inc.* President 4/94 - 8/96
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - Present
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Chairman 3/93 - 2/96
Company of CA Chief Executive Officer 6/93 - 2/96
Los Angeles, CA Director 6/89 - 2/96
MY, Inc.* President 9/91 - 3/96
Director 9/91 - 3/96
Reco, Inc.* President 8/91 - 11/96
Director 8/91 - 11/96
Boston Safe Deposit and Trust Director 6/89 - 2/96
Company of NY
New York, NY
Boston Safe Deposit and Trust President 9/89 - 6/96
Company* Director 5/93 -Present
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
The Boston Company Financial President 6/89 - 1/97
Strategies Group, Inc. * Director 6/89- 1/97
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 Chief Executive Officer 2/81 - 12/96
York, PA Chairman 3/89 - 1/96
<PAGE>
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
Founders Asset Management, LLC Acting Chief Executive 7/98 - 12/98
2930 East Third Ave. Officer
Denver, CO 80206
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
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 - Present
500 Grant Street Director 9/88 - Present
Pittsburgh, PA 15258 Vice President 9/88 - Present
Treasurer 9/88 - Present
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+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
<PAGE>
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 - Present
President 9/96 - Present
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
Executive Vice President 12/94 - 1/97
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 - Present
President 2/97 - Present
Chief Executive Officer 2/97 - Present
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
The Boston Company Advisors* Chairman 8/93 - 11/95
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
Cornice Acquisition Board of Managers 12/97 - Present
Company, LLC
Denver, CO
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 2/92 - Present
Laurel Capital Advisors, LLP+ President 12/91 - Present
Executive Committee 12/91 - Present
Member
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 - 1/99
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
<PAGE>
J. David Officer Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman
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
Company* President 7/96 - Present
Executive Vice President 7/96 - 1/99
1/91 - 7/96
Mellon Trust of New York Director
1301 Avenue of the Americas 6/96 - Present
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***
<PAGE>
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
Laurel Capital Advisors+ Trustee 3/97 - Present
Ronald P. O'Hanley McKinsey & Company, Inc. Partner 8/86 - 2/97
Vice Chairman (Continued) Boston, MA
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
Lion Management, Inc.++ Director 1/88 - 10/96
Vice President 1/88 - 10/96
Secretary 1/88 - 10/96
The Dreyfus Consumer Credit Secretary 4/83 - 3/96
Corporation++
Dreyfus Service Director 3/97 - Present
Organization, Inc.++ Assistant Secretary 4/83 -3/96
Major Trading Corporation++ Assistant Secretary 5/81 - 8/96
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
<PAGE>
William T. Sandalls, Jr. Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President Treasurer 1/96 - 2/97
(Continued) 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
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Dreyfus Acquisition Corporation++ Director VP and CFO 1/96 - 8/96
Vice President 1/96 - 8/96
Chief Financial Officer 1/96 - 8/96
Lion Management, Inc.++ Director 1/96 - 10/96
President 1/96 - 10/96
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
Major Trading Corporation++ Director 1/96 - 8/96
Treasurer 1/96 - 8/96
The Dreyfus Trust Company+++ Director 1/96 - 4/97
Treasurer 1/96 - 4/97
Chief Financial Officer 1/96 - 4/97
Dreyfus Personal Director 1/96 - 4/97
Management, Inc.++ Treasurer 1/96 - 4/97
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice President -
Information Systems
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
<PAGE>
Richard Terres None
Vice President
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.
<PAGE>
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
<PAGE>
(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
Michael S. Petrucelli++ Senior Vice President Vice President,
Assistant Treasurer
and Assistant
Secretary
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.
<PAGE>
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
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York on the
1st day of March, 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 3/1/99
- ---------------------------
Marie E. Connolly
/s/Joseph S. DiMartino* Trustee 3/1/99
- ---------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 3/1/99
- ---------------------------
James M. Fitzgibbons
/s/Kenneth A. Himmel* Trustee 3/1/99
- ---------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 3/1/99
- ---------------------------
Stephen J. Lockwood
/s/Roslyn M. Watson* Trustee 3/1/99
- ---------------------------
Roslyn M. Watson
/s/J. Tomlinson Fort* Trustee 3/1/99
- ---------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 3/1/99
- ---------------------------
Arthur L. Goeschel
/s/John Sciullo* Trustee 3/1/99
- ---------------------------
John Sciullo
/s/Benaree Pratt Wiley* Trustee 3/1/99
- ---------------------------
Benaree Pratt Wiley
*By: Michael S. Petrucelli
---------------------------
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
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.
<PAGE>
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. 93").
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 Opinion of counsel is incorporated by reference to the Registration
Statement and to Post-Effective Amendment No. 93 filed on December 13,
1994. Consent of Counsel. To be filed by Amendment.
J Consent of KPMG LLP. To be filed by Amendment.
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. To be filed by amendment.
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.
<PAGE>
Other Exhibits
--------------
(a) Powers of attorney of the Trustees dated June 15, 1998. Filed
herewith.
(b) Power of Attorney of Marie E. Connolly dated July 6, 1998.
Filed herewith.\\
