Dreyfus Premier
Core Value Fund
Investing in value stocks for
long-term capital growth
Prospectus August 16, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Fund
Dreyfus Premier Core Value Fund
Ticker Symbols Class A: DCVIX
Class B: n/a
Class C: n/a
Class R: DTCRX
Class T: n/a
Institutional shares: DCVFX
Contents
The Fund
Goal/Approach Inside cover
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
Account Policies 7
Distributions and Taxes 10
Services for Fund Investors 11
Instructions for Regular Accounts 12
Instructions for IRAs 13
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 long-term capital growth as a primary objective, with current
income as a secondary objective. These objectives may be changed without
shareholder approval. To pursue its goals, the fund invests primarily in
equity securities of large-cap value companies. The fund's equity investments
may include common stocks and securities convertible into common stocks. The
fund invests mainly in the stocks of U.S. issuers; it limits its foreign
stock holdings to 20% of the value of its total assets.
In choosing stocks, the portfolio manager looks for value companies. The
portfolio manager uses a "bottom-up" approach, focusing on three key factors:
* 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 to avoid
losses, it could have the effect of reducing the benefit from any upswing in
the market.
The fund may, at times, invest some assets in derivative securities, such as
options, to hedge the fund's portfolio and also to increase returns. The
fund may also invest in foreign currencies to hedge the fund's portfolio.
When employed, these practices may reduce returns or increase volatility.
Derivatives can be illiquid, and a small investment in certain derivatives
could have a potentially large impact on the fund's performance.
At times, the fund may engage in short-term trading, which could produce
higher brokerage costs and taxable distributions.
Past Performance
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's Class A performance from year to year.
The second table compares the performance of Class A, Class R and
Institutional shares over time to that of the S&P 500, a widely recognized
unmanaged index of stock performance. These returns reflect any applicable
sales loads. Both tables assume the reinvestment of dividends. Of course,
past performance is no guarantee of future results. Since Class B, C and T
shares 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, C and T 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 (%)
Class A shares
24.96 -13.44 22.87 4.03 16.51 0.38 35.56 21.44 25.21 7.06
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +15.28%
Worst Quarter: Q3 '90 -17.44%
The year-to-date total return for the fund's Class A shares as of 6/30/99 was
18.17%.
<TABLE>
<CAPTION>
Average annual total return as of 12/31/98
Since
Inception date 1 Year 5 Years 10 Years inception
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (2/6/47) 0.89% 15.85% 12.89% -
Class R (8/4/94) 7.01% - - 19.25%
Institutional
shares (2/1/93) 7.17% 17.35% - 17.12%
S&P 500 28.60% 24.05% 19.19% 21.77%*
* Based on the life of Institutional shares. For comparative purposes the
value of the index on 1/31/93 is used as the beginning value on 2/1/93.
</TABLE>
What this fund is - and isn't
This fund is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goals, although as with all mutual funds, it
cannot offer guaranteed results.
An investment in this fund is not a bank deposit. It is not
insured or guaranteed by the FDIC or any other government agency. It is not a
complete investment program. You could lose money in this fund, but you also
have the potential
to make money.
The Fund 1
[Page 1]
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
Institutional
Class A Class B Class C Class R Class T shares
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder transaction fees
(fees paid from your account)
Maximum front-end sales charge on purchases
as a % of offering price 5.75 none none none 4.50 none
Maximum contingent deferred sales charge (CDSC)
as a % of purchase or sale price, whichever is less none* 4.00 1.00 none none* none
Annual fund operating expenses
(expenses paid from fund assets)
% of average daily net assets
Management fees .90 .90 .90 .90 .90 .90
Rule 12b-1 fee .25 1.00 1.00 none .50 .15
Other expenses .00 .00 .00 .00 .00** .00
Total 1.15 1.90 1.90 .90 1.40 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.
**"Other expenses" for Class T shares are estimated for the current fiscal
year based on the applicable amounts for Class A, B, C, R and Institutional
shares for the fund's last fiscal year.
</TABLE>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------
Class A $685 $919 $1,172 $1,892
Class B
with redemption $593 $897 $1,226 $1,848***
without redemption $193 $597 $1,026 $1,848***
Class C
with redemption $293 $597 $1,026 $2,222
without redemption $193 $597 $1,026 $2,222
Class R $92 $287 $498 $1,108
Class T $586 $873 $1,181 $2,054
Institutional shares $107 $334 $579 $1,283
*** Assumes conversion of Class B to Class A at end of the sixth year
following the date of purchase.
This example shows what you could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and no
changes in expenses. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
Management fee: the fee paid to The Dreyfus Corporation for managing the
fund. Unlike the arrangements between most investment advisers and their
funds, Dreyfus pays all fund expenses except for brokerage fees, taxes,
interest, fees and expenses of the independent directors, Rule 12b-1 fees and
extraordinary expenses.
Rule 12b-1 fee: the fee paid out of fund assets (attributable
to appropriate share classes) for distribution expenses and shareholder
service. Because this fee is paid out of the
fund's assets on an ongoing basis, over time it will increase the cost of
your investment and may cost you more than paying other types of sales
charges.
2
[Page 2]
Management
The investment adviser for the fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$120 billion in over 160 mutual fund portfolios. For the past fiscal year,
the fund paid Dreyfus a management fee at the annual rate of 0.90% of the
fund's average daily net assets. Dreyfus is the primary mutual fund business
of Mellon Bank Corporation, a broad-based financial services company with a
bank at its core. With more than $389 billion of assets under management and
$1.9 trillion of assets under administration and custody, Mellon provides a
full range of banking, investment and trust products and services to
individuals, businesses and institutions. Mellon is headquartered in
Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that
discipline and consistency are important to investment success. For each
fund, Dreyfus seeks to establish clear guidelines for portfolio management
and to be systematic in making decisions. This approach is designed to
provide each fund with a distinct, stable identity.
The fund is managed by Valerie J. Sill. Ms. Sill is a portfolio manager of
Dreyfus and senior vice president of The Boston Company Asset Management, Inc.
("TBCAM"), an affiliate of Dreyfus. She is also a member of the equity policy
group of TBCAM. She previously served as director of equity research and as an
equity research analyst for TBCAM. She has been employed by Dreyfus as a
portfolio manager of the fund since February 1996.
Dreyfus has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by Dreyfus employees does not
disadvantage any Dreyfus-managed fund. Dreyfus portfolio managers and other
investment personnel who comply with the Policy's preclearance and disclosure
procedures may be permitted to purchase, sell or hold certain types of
securities which also may be or are held in the fund(s) they advise.
Concepts to understand
Year 2000 issues: the fund could be adversely affected if the computer
systems used by Dreyfus and the fund's other service providers do not
properly process and calculate
date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems
in its systems and to obtain assurances from other service providers that
they are taking similar steps. In addition, issuers of securities in which
the fund invests may be adversely affected by year 2000-related problems.
This could have an impact on the value of the fund's investments and its
share price.
The Fund 3
[Page 3]
Financial Highlights
The following tables describe the performance of Classes A, B, C, R and
Institutional shares for the fiscal periods indicated. "Total return" shows
how much your investment in the fund would have increased (or decreased)
during each period, assuming you had reinvested all dividends and
distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's
financial statements, is included in the annual report, which is available
upon request. Since Class T shares are new, financial highlights information
is not available for that class as of the date of this prospectus.
<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 30.11 30.40 30.13 24.56 27.80
Investment operations: Investment income (loss) - net .19 .22 .31 .41 .42
Net realized and unrealized gain
(loss) on investments 1.95 6.98 6.03 8.24 (.29)
Total from investment operations 2.14 7.20 6.34 8.65 .13
Distributions: Dividends from investment income - net (.17) (.23) (.30) (.45) (.40)
Dividends in excess of investment income - net - (.01) - - -
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (2.99) (7.49) (6.07) (3.08) (3.37)
Net asset value, end of period 29.26 30.11 30.40 30.13 24.56
Total return (%)* 7.06 25.21 21.44 35.56 .38
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.15 1.14 1.13 1.13 1.11
Ratio of net investment income to average net assets (%) .61 .64 .96 1.43 1.47
Decrease reflected in above expense ratios due to
actions by the manager (%) - .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
Net assets, end of period ($ x 1,000) 555,863 585,624 486,816 401,674 317,868
*Exclusive of sales charge.
</TABLE>
<TABLE>
<CAPTION>
Period Ended December 31,
Class B 1998 1
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Per-Share Data ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) - net (.02)
Net realized and unrealized gain (loss) on investments 3.00
Total from investment operations 2.98
Distributions: Dividends from investment income - net (.01)
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%)2 10.24 3
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.82 3
Ratio of net investment income (loss) to average net assets (%) (.14) 3
Portfolio turnover rate (%) 84.32 3
Net assets, end of period ($ x 1,000) 2,033
1 From January 16, 1998 (commencement of initial offering) to December 31, 1998.
2 Exclusive of sales charge.
3 Not annualized.
[Page 4]
Period Ended December 31,
Class C 1998 1
- -----------------------------------------------------------------------------------------------------------------------
Per-Share Data ($)
Net asset value, beginning of period 29.04
Investment operations: Investment income (loss) - net (.02)
Net realized and unrealized gain (loss) on investments 3.00
Total from investment operations 2.98
Distributions: Dividends from investment income - net (.01)
Dividends from net realized gain on investments (2.82)
Total distributions (2.83)
Net asset value, end of period 29.19
Total return (%) 2 10.24 3
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.82 3
Ratio of net investment income (loss) to average net assets (%) (.13) 3
Portfolio turnover rate (%) 84.32 3
Net assets, end of period ($ x 1,000) 195
1 From January 16, 1998 (commencement of initial offering) to December 31, 1998.
2 Exclusive of sales charge.
3 Not annualized.
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
Class R 1998 1997 1996 1995 1994 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 30.11 30.46 30.18 24.56 28.45
Investment operations: Investment income (loss) - net .26 .33 .36 .62 .29
Net realized and unrealized gain
(loss) on investments 1.95 6.90 6.08 8.16 (.83)
Total from investment operations 2.21 7.23 6.44 8.78 (.54)
Distributions: Dividends from investment income - net (.25) (.32) (.39) (.53) (.38)
Dividends in excess of investment income - net - (.01) - - -
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.07) (7.58) (6.16) (3.16) (3.35)
Net asset value, end of period 29.25 30.11 30.46 30.18 24.56
Total return (%) 7.01 25.54 21.74 36.05 (2.31) 2
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .90 .89 .88 .88 .35 2
Ratio of net investment income (loss) to average net assets (%) .82 .88 1.23 1.93 .70 2
Decrease reflected in above expense ratios due to actions
by the manager (%) - .01 .02 .02 .01 2
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00 2
Net assets, end of period ($ x 1,000) 842 867 11,618 185 1,070
1 From August 4, 1994 (commencement of initial offering) to December 31, 1994.
2 Not annualized.
The Fund 5
[Page 5]
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Institutional shares 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
Per-Share Data ($)
Net asset value, beginning of period 30.10 30.38 30.12 24.56 27.80
Investment operations: Investment income (loss) - net .22 .26 .36 .47 .47
Net realized and unrealized gain
(loss) on investments 1.95 6.98 6.01 8.20 (.31)
Total from investment operations 2.17 7.24 6.37 8.67 .16
Distributions: Dividends from investment income - net (.21) (.26) (.34) (.48) (.43)
Dividends in excess of investment income - net - (.01) - - -
Dividends from net realized gain on investments (2.82) (7.25) (5.77) (2.63) (2.97)
Total distributions (3.03) (7.52) (6.11) (3.11) (3.40)
Net asset value, end of period 29.24 30.10 30.38 30.12 24.56
Total return (%) 7.17 25.34 21.57 35.60 .49
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.05 1.04 1.03 1.03 1.02
Ratio of net investment income (loss) to average net assets (%) .71 .74 1.07 1.53 1.57
Decrease reflected in above expense ratios due to actions
by the manager (%) - .01 .02 .02 .01
Portfolio turnover rate (%) 84.32 92.99 88.46 54.42 73.00
Net assets, end of period ($ x 1,000) 74,058 80,427 71,894 75,607 59,435
</TABLE>
[Page 6]
Your Investment
Account Policies
The Dreyfus Premier Funds are designed primarily for people who are investing
through a third party, such as a bank,
broker-dealer or financial adviser, or in a 401(k) or other retirement plan.
Third parties with whom you open a fund account may impose policies,
limitations and fees which are different from those described here.
You will need to choose a share class before making your initial investment.
In making your choice, you should weigh the impact of all potential costs
over the length of your investment, including sales charges and annual fees.
For example, in some cases, it can be more economical to pay an initial sales
charge than to choose a class with no initial sales charge but higher annual
fees and a CDSC.
* Class A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale
of their shares, want to take advantage of the reduced sales charges
available on larger investments and/or have a longer-term investment horizon
* Class B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100%
of their investment dollars to work immediately and/or have a longer-term
investment horizon
* Class C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100%
of their investment dollars to work immediately and/or have a shorter-term
investment horizon
* Class R shares are designed for eligible institu-
tions on behalf of their clients (individuals may not purchase these shares
directly)
* Class T 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 have a shorter-term investment horizon
* 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)
Your financial representative can help you choose the share class that is
appropriate for you.
Reduced Class A and Class T sales charge
Letter of intent: lets you purchase Class A and Class T 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, C or T 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 or
Class T investment for purposes of calculating the sales charge.
Consult the Statement of Additional Information (SAI) or your financial
representative for more details.
Your Investment 7
[Page 7]
ACCOUNT POLICIES (continued)
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. Because Class A has lower expenses than Class T, if
you invest $1 million or more in the fund, you should consider buying Class A
shares.
Sales charges
Class A and Class T - charged when you buy shares
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- -------------------------------------------------------------------------
Class Class Class Class
A T A T
- -------------------------------------------------------------------------
Up to $49,999 5.75% 4.50% 6.10% 4.70%
$50,000 - $99,999 4.50% 4.00% 4.70% 4.20%
$100,000 - $249,999 3.50% 3.00% 3.60% 3.10%
$250,000 - $499,999 2.50% 2.00% 2.60% 2.00%
$500,000 - $999,999 2.00% 1.50% 2.00% 1.50%
$1 million or more* 0.00% 0.00% 0.00% 0.00%
* A 1.00% contingent deferred sales charge may be charged on any shares sold
within one year of purchase (except shares bought through dividend
reinvestment).
Class A shares carry an annual Rule 12b-1 fee of 0.25%, and Class T shares
carry an annual Rule 12b-1 fee of 0.50%, of the respective class's average
daily net assets.
Class B - charged when you sell shares
Contingent deferred sales charge
Time since you bought as a % of your initial investment or
the shares you are selling your redemption (whichever is less)
- ------------------------------------------------------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
Class C - charged when you sell shares
A 1.00% CDSC is imposed on redemptions made within the first year of
purchase. Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the
class's average daily net assets.
Class R - no sales load or Rule 12b-1 fees
Institutional shares - no sales load
Institutional shares carry an annual Rule 12b-1 fee of 0.15% of the class's
average daily net assets.
Buying shares
The net asset value (NAV) of each class is generally calculated as of the
close of trading on the
New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern time) every day
the exchange is open. Your order will be priced at the NAV next calculated
after your order is accepted by the fund's transfer agent or other authorized
entity. The fund's investments are valued based on market value or, where
market quotations are not readily available, based on fair value as
determined in good faith by the fund's board.
Orders to buy and sell shares received by dealers by the close of trading on
the NYSE and transmitted to the distributor or its designee by the close of
its business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
Minimum investments
Initial Additional
- ------------------------------------------------------------------
Regular accounts $1,000 $100; $500 for
TeleTransfer investments
Traditional IRAs $750 no minimum
Spousal IRAs $750 no minimum
Roth IRAs $750 no minimum
Education IRAs $500 no minimum
after the first year
Dreyfus automatic $100 $100
investment plans
All investments must be in U.S. dollars. Third-party checks cannot be
accepted. You may be charged a fee for any check that does not clear. Maximum
TeleTransfer purchase is $150,000 per day. Institutional shares are not
available for new accounts.
Concepts to understand
Net asset value (NAV): the market value of one share, computed by dividing
the total net assets of a fund or class by its shares outstanding. The fund's
Class Aand Class T shares are offered to the public at NAV plus a sales
charge. Classes B, C, R and Institutional shares are offered at NAV, but
Classes B and C generally are subject to higher annual operating expenses and
a CDSC.
8
[Page 8]
Selling shares
You may sell (redeem) shares at any time through your financial
representative, or you can contact the fund directly. Your shares will be
sold at the next NAV calculated after your order is accepted by the fund's
transfer agent or other authorized entity. Any certificates representing fund
shares being sold must be returned with your redemption request. Your order
will be processed promptly and you will generally receive the proceeds within
a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject
to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is
not charged on shares you acquired by reinvesting your dividends. There are
certain instances when you may qualify to have the CDSC waived. Consult your
financial representative or the SAI
for details.
Before selling recently purchased shares, please note that if the fund has
not yet collected payment for the shares you are selling, it may delay
sending the proceeds for up to eight business days or until it has collected
payment.
Written sell orders
Some circumstances require written sell orders along with signature
guarantees. These include:
* 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.
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; 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.
Your Investment 9
[Page 9]
Distributions and Taxes
The fund generally pays its shareholders quarterly dividends from its net
investment income and
distributes any net capital gains it has realized once a year. Each share
class will generate a different dividend because each has different expenses.
Your distributions will be reinvested in additional shares of the fund unless
you instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
Fund dividends and other distributions are taxable to most investors (unless
your investment is in an IRA or other tax-advantaged account). The tax status
of any distribution is the same regardless of how long you have been in the
fund and whether you reinvest your distributions or take them in cash. In
general, distributions are federally taxable as follows:
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------
Income Ordinary Ordinary
dividends income rate income rate
Short-term Ordinary Ordinary
capital gains income rate income rate
Long-term
capital gains 10% 20%
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
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.
10
[Page 10]
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 from a designated bank account.
Registration Mark
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, B or T
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 11
[Page 11]
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:
* 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 9).
Mail your request to:
The Dreyfus Family of Funds
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 & T)
* 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 & T)
* 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,
"5620" for Class T, or "4020" for Institutional Class.
TeleTransfer Request TeleTransfer on your application. Call us to request
your transaction.
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.
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.
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.
12
[Page 12]
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
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 9).
Mail in your request to:
The Dreyfus Trust Company
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 & T)
* 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, "5620" for
Class T, or "4020" for Institutional Class.
Automatically
All services Call us or your financial
representative to request a form to add any automatic investing service (see
"Services for Fund Investors"). Complete and return the form along with any
other required materials. All contributions will count as current year.
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 13
[Page 13]
[Application p1]
[Application p2]
NOTES
[Page]
For More Information
Dreyfus Premier Core Value Fund
A Series of The Dreyfus/Laurel FundsTrust
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.
Copy Rights 1999 Dreyfus Service Corporation 312P0899
____________________________________________________________________________
DREYFUS PREMIER CORE VALUE FUND
CLASS A, CLASS B, CLASS C, CLASS R, CLASS T AND INSTITUTIONAL SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 16, 1999
____________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
the Dreyfus Premier Core Value Fund (the "Fund"), dated August 16, 1999, as
it may be revised from time to time. The Fund is a separate, diversified
portfolio of The Dreyfus/Laurel Funds Trust (the "Trust"), an open-end
management investment company known as a mutual fund. To obtain a copy of
the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-554-4611 for Class A, B, C, R or T shares,
or 1-800-645-6561 for Institutional shares
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of the Fund/Trust B-2
Management of the Fund B-18
Management Arrangements B-24
Purchase of Shares B-27
Distribution and Service Plans B-35
Redemption of Shares B-38
Shareholder Services B-43
Additional Information About Purchases, Exchanges and Redemptions B-50
Determination of Net Asset Value B-51
Dividends, Other Distributions and Taxes B-52
Portfolio Transactions B-58
Performance Information B-60
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
DESCRIPTION OF THE FUND/TRUST
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. Before April 4, 1994, the
Trust's name was The Boston Company Fund. Prior to October 17, 1994, the
Trust's name was The Laurel Funds Trust. The Trust is an open-end
management investment company comprised of separate portfolios, including
the Fund, each of which is treated as a separate fund. Prior to January 16,
1998, the name of the Fund was Dreyfus Core Value Fund. The Fund is
diversified, which means that, with respect to 75% of its total assets, the
Fund will not invest more than 5% of its assets in the securities of any
single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
U.S. Government Securities. The Fund may invest in U.S. Government
securities that are direct obligations of the U.S. Treasury, or that are
issued by agencies and instrumentalities of the U.S. Government and
supported by the full faith and credit of the U.S. Government. These
include Treasury notes, bills and bonds and securities issued by the
Government National Mortgage Association ("GNMA"), the Federal Housing
Administration, the Department of Housing and Urban Development, the
Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration.
The Fund may also invest in U.S. Government securities that are not
supported by the full faith and credit of the U.S. Government. These
include securities issued by the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Loan Banks, Tennessee Valley Authority, Student Loan Marketing Association
and District of Columbia Armory Board. Because the U.S. Government is not
obligated by law to provide support to an instrumentality it sponsors, the
Fund will invest in obligations issued by such an instrumentality only when
Dreyfus determines that the credit risk with respect to the instrumentality
does not make its securities unsuitable for investment by the Fund.
GNMA Certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans are made by mortgage
bankers, commercial banks, savings and loan associations, and other lenders
and are either insured by the Federal Housing Administration or guaranteed
by the Veterans Administration. A "pool" or group of such mortgages is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest
and principal on each mortgage is guaranteed by the full faith and credit of
the U.S. Government. Although the mortgage loans in a pool underlying a
GNMA Certificate will have maturities of up to 30 years, the average life of
a GNMA Certificate will be substantially less because the mortgages will be
subject to normal principal amortization and also may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by changes in
mortgage interest rates. In periods of falling interest rates, the rate of
prepayment on higher interest mortgage rates tends to increase, thereby
shortening the actual average life of the GNMA Certificate. Conversely,
when interest rates are rising, the rate of prepayment tends to decrease,
thereby lengthening the average life of the GNMA Certificates. Reinvestment
of prepayments may occur at higher or lower rates than the original yield of
the Certificates. Due to the prepayment feature and the need to reinvest
prepayments of principal at current rates, GNMA Certificates, with
underlying mortgages bearing higher interest rates can be less effective
than typical non-callable bonds of similar maturities at locking in yields
during periods of declining interest rates, although they may have
comparable risks of decline in value during periods of rising interest
rates.
FNMA and FHLMC are Government-sponsored corporations owned entirely by
private stockholders. Each is subject to general regulation by an office of
the Department of Housing and Urban Development. FNMA and FHLMC purchase
residential mortgages from a list of approved seller/services which include
state and federally-chartered savings and loan associations, mutual savings
banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities issued by FNMA and FHLMC are guaranteed by those
entities as to payment of principal and interest.
Bank Obligations. The Fund is permitted to invest in high-quality,
short-term money market instruments. The Fund may invest temporarily, and
without limitation in bank certificates of deposit, time deposits, and
bankers' acceptances when, in Dreyfus' opinion, a "defensive" investment
posture is warranted.
Certificates of deposit ("CDs") are short-term negotiable obligations
of commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international transactions.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members
of the Federal Reserve System and to be insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state
law are supervised and examined by state banking authorities but are members
of the Federal Reserve System only if they elect to join. In addition, all
banks whose CDs may be purchased by the Fund are insured by the FDIC and are
subject to Federal examination and to a substantial body of Federal law and
regulation. As a result of governmental regulations, domestic branches of
foreign banks are, among other things, generally required to maintain
specified levels of reserves, and are subject to other supervision and
regulations designed to promote financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
governmental regulations. Payment of interest and principal upon
obligations of foreign banks and foreign branches of domestic banks may be
affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). Examples of such action would be
the imposition of currency controls, interest limitations, seizure of
assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the Fund
may be subject to the risks associated with the holdings of such property
overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about a
domestic bank.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-
rated" securities). Low-rated securities will likely have some quality and
protective characteristics that, in the judgment of the rating organization,
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Low-rated securities are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. While the market values of low-rated
securities tend to react less to fluctuations in interest rate levels than
the market values of higher-rated securities, the market values of certain
low-rated securities tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-rated
securities. In addition, low-rated securities generally present a higher
degree of credit risk. Issuers of low-rated securities are often highly
leveraged and may not have more traditional methods of financing available
to them so that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest rates may
be impaired. The risk of loss due to default by such issuers is
significantly greater because low-rated securities generally are unsecured
and frequently are subordinated to the prior payment of senior indebtedness.
The Fund may incur additional expenses to the extent that it is required to
seek recovery upon a default in the payment of principal or interest on its
portfolio holdings. The existence of limited markets for low-rated
securities may diminish the Fund's ability to obtain accurate market
quotations for purposes of valuing such securities and calculating its net
asset value ("NAV").
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Rating Service, a division of McGraw-Hill Companies,
Inc. ("S&P") generally represent the opinions of those organizations as to
the quality of the securities that they rate. Such ratings, however, are
relative and subjective, are not absolute standards of quality and do not
evaluate the market risk of the securities. Although Dreyfus uses these
ratings as a criterion for the selection of securities for the Fund, Dreyfus
also relies on its independent analysis to evaluate potential investments
for the Fund. The Fund's achievement of its investment objective may be more
dependent on Dreyfus' credit analysis of low-rated securities than would be
the case for a portfolio of higher-rated securities.
Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. In addition, it is possible that an NRSRO might
not timely change its ratings of a particular issue to reflect subsequent
events. None of these events will require the sale of the securities by the
Fund, although Dreyfus will consider these events in determining whether the
Fund should continue to hold the securities. To the extent that the ratings
given by an NRSRO for securities may change as a result of changes in the
rating systems or due to a corporate reorganization of the NRSRO, the Fund
will attempt to use comparable ratings as standards for its investments in
accordance with the investment objective and policies of the Fund. The
Appendix to this Statement of Additional Information describes the ratings
used by Moody's, S&P and other NRSROs.
The Fund may invest in these securities when their issuers will be
close to, or already have entered, reorganization proceedings. As a result,
it is expected that at or shortly after the time of acquisition by the Fund,
these securities will have ceased to meet their interest payment
obligations, and accordingly would trade in much the same manner as an
equity security. Consequently, the Fund intends to make such investments on
the basis of potential appreciation in the price of these securities, rather
than any expectation of realizing income. Reorganization entails a complete
change in the structure of a business entity. An attempted reorganization
may be unsuccessful, resulting in substantial or total loss of amounts
invested. If a reorganization is successful, the value of securities of the
restructured entity may depend on numerous factors, including the structure
of the reorganization, the market success of the entity's products or
services, the entity's management, and the overall strength of the
marketplace.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with other
brokers or dealers that meet the Fund's credit guidelines. This technique
offers a method of earning income on idle cash. In a repurchase agreement,
the Fund buys a security from a seller that has agreed to repurchase the
same security at a mutually agreed upon date and price. The Fund's resale
price will be in excess of the purchase price, reflecting an agreed upon
interest rate. This interest rate is effective for the period of time the
Fund is invested in the agreement and is not related to the coupon rate on
the underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and
at no time will the Fund invest in repurchase agreements for more than one
year. The Fund will always receive as collateral securities whose market
value including accrued interest is, and during the entire term of the
agreement remains, at least equal to 100% of the dollar amount invested by
the Fund in each agreement, including interest, and the Fund will make
payment for such securities only upon physical delivery or upon evidence of
book entry transfer to the account of the custodian. If the seller defaults,
the Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of a security which is
the subject of a repurchase agreement, realization upon the collateral by
the Fund may be delayed or limited. The Fund seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligors under repurchase agreements, in accordance with the Fund's credit
guidelines.
Commercial Paper. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from two to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve
additional risk due to the difficulty of obtaining and enforcing judgments
against such banks and the generally less restrictive regulations to which
such banks are subject. For a description of commercial paper ratings, see
the Appendix.
Foreign Securities. The Fund may purchase securities of foreign
issuers and may invest in foreign currencies and obligations of foreign
branches of domestic banks and domestic branches of foreign banks.
Investment in such foreign currencies, securities and obligations presents
certain risks, including those resulting from fluctuations in currency
exchange rates, revaluation of currencies, adverse political and economic
developments and the possible imposition of currency exchange blockages or
other foreign governmental laws or restrictions, reduced availability of
public information concerning issuers and the fact that foreign issuers are
not generally subject to uniform accounting, auditing and financial
reporting standards or to other regulatory practices and requirements
comparable to those applicable to domestic issuers. Moreover, securities of
many foreign issuers may be less liquid and their prices more volatile than
those of comparable domestic issuers. In addition, with respect to certain
foreign countries, there is the possibility of expropriation, confiscatory
taxation and limitations on the use or removal of funds or other assets of
the Fund including withholding dividends. Foreign securities may be subject
to foreign government taxes that would reduce the return on such securities.
Illiquid Securities. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale.) The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement"
exemption from registration afforded by Section 4(2) of the Securities Act
of 1933, as amended ("Section 4(2) paper"). The Fund may also purchase
securities that are not registered under the Securities Act of 1933, as
amended, but that can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities").
Liquidity determinations with respect to Section 4(2) paper and Rule 144A
securities will be made by the Trust's Board of Trustees or by Dreyfus
pursuant to guidelines established by the Board of Trustees. The Board or
Dreyfus will consider availability of reliable price information and other
relevant information in making such determinations. Section 4(2) paper is
restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors, such as the Fund, that agree
that they are purchasing the paper for investment and not with a view to
public distribution. Any resale by the purchaser must be pursuant to
registration or an exemption therefrom. Section 4(2) paper normally is
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities from the
Fund or other holder.
Other Investment Companies. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended (the "1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Investment Techniques
In addition to the principal investment strategies discussed in the
Fund's Prospectus, the Fund also may engage in the investment techniques
described below. The Fund might not use, or may not have the ability to
use, any of these strategies and there can be no assurance that any strategy
that is used will succeed.
Borrowing. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
Lending of Portfolio Securities. The Fund may lend securities from its
portfolio to brokers, dealers and other financial organizations. Such loans,
if and when made, may not exceed 33 1/3% of the Fund's total assets, taken
at value. The Fund may not lend portfolio securities to its affiliates
without specific authorization from the Securities and Exchange Commission
(the "SEC"). Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or securities issued or guaranteed
by the U.S. Government or its agencies which will be maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities. From time to time, the Fund may return a part of the
interest earned from the investment of collateral received for securities
loaned to the borrower and/or a third party, which is unaffiliated with the
Fund and which is acting as a "finder."
By lending portfolio securities, the Fund can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or by obtaining
yield in the form of interest paid by the borrower when U.S. Government
securities are used as collateral. Requirements of the SEC, which may be
subject to future modifications, currently provide that the following
conditions must be met whenever portfolio securities are loaned: (1) the
Fund must receive at least 100% cash collateral or equivalent securities
from the borrower; (2) the borrower must increase such collateral whenever
the market value of the loaned securities rises above the level of such
collateral; (3) the Fund must be able to terminate the loan at any time; (4)
the Fund must receive reasonable interest on the loaned securities and any
increase in market value; (5) the Fund may pay only reasonable custodian
fees in connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower; however, if a material event adversely
affecting the investment occurs, the Trustees must terminate the loan and
regain the right to vote the securities. The risks in lending portfolio
securities, as well as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will be made to firms deemed by Dreyfus to be of
good standing and will not be made unless, in the judgment of Dreyfus, the
consideration to be earned from such loans would justify the risk.
Derivative Instruments. The Fund may purchase and sell various
financial instruments ("Derivative Instruments"), such as options on U.S.
and foreign securities or indices of such securities. The index Derivative
Instruments the Fund may use may be based on indices of U.S. or foreign
equity securities. These Derivative Instruments may be used, for example,
to preserve a return or spread or to facilitate or substitute for the sale
or purchase of securities.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose price
is expected to move in the opposite direction of the price of the investment
being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is sometimes
referred to as an anticipatory hedge. In an anticipatory hedge transaction,
the Fund does not own a corresponding security and, therefore, the
transaction does not relate to a security the Fund owns. Rather, it relates
to a security that the Fund intends to acquire. If the Fund does not
complete the hedge by purchasing the security it anticipated purchasing, the
effect on the Fund's portfolio is the same as if the transaction were
entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that
the Fund owns or intends to acquire. Derivative Instruments on indices, in
contrast, generally are used to attempt to hedge against price movements in
market sectors in which the Fund has invested or expects to invest.
The use of Derivative Instruments is subject to applicable regulations
of the SEC, the several options and futures exchanges upon which they are
traded, the Commodity Futures Trading Commission ("CFTC") and various state
regulatory authorities. In addition, the Fund's ability to use Derivative
Instruments may be limited by tax considerations. See "Dividends, Other
Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional opportunities
in connection with other Derivative Instruments. These new opportunities
may become available as Dreyfus develops new techniques, as regulatory
authorities broaden the range of permitted transactions and as new
techniques are developed. Dreyfus may utilize these opportunities to the
extent that they are consistent with the Fund's investment objective, and
permitted by the Fund's investment policies and applicable regulatory
authorities.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability not only to forecast the direction of price fluctuations of
the investment involved in the transaction, but also to predict movements of
the overall securities and interest rate markets, which requires different
skills than predicting changes in the prices of individual securities.
There can be no assurance that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in value
of the hedged investment, the hedge would not be fully successful. Such a
lack of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which Derivative Instruments are traded. The effectiveness of
hedges using Derivative Instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
securities being hedged.
Because there are a limited number of types of exchange-traded option
contracts, it is likely that the standardized contracts available will not
match the Fund's current or anticipated investments exactly. The Fund may
invest in options contracts based on securities with different issuers,
maturities, or other characteristics from the securities in which it
typically invests, which involves a risk that the options position will not
track the performance of the Fund's other investments.
Options prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments match the Fund's investments
well. Options are affected by such factors as current and anticipated short-
term interest rates, changes in volatility of the underlying instrument, and
the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from
differing levels of demand in the options markets and the securities
markets, from structural differences in how options and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. The Fund may purchase or sell options contracts with a greater or
lesser value than the securities it wishes to hedge or intends to purchase
in order to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in all
cases. If price changes in the Fund's options positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected a
decline in the price of a security in the Fund's portfolio, and the price of
that security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the Derivative Instrument.
Moreover, if the price of the Derivative Instrument declined by more than
the increase in the price of the security, the Fund could suffer a loss. In
either such case, the Fund would have been in a better position had it not
attempted to hedge at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Derivative Instruments involving obligations to third
parties (i.e., Derivative Instruments other than purchased options). If the
Fund were unable to close out its positions in such Derivative Instruments,
it might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. These requirements
might impair the Fund's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time.
The Fund's ability to close out a position in a Derivative Instrument prior
to expiration or maturity depends on the existence of a liquid secondary
market or, in the absence of such a market, the ability and willingness of
the other party to the transaction ("counterparty") to enter into a
transaction closing out the position. Therefore, there is no assurance that
any position can be closed out at a time and price that is favorable to the
Fund.
(5) The purchase and sale of Derivative Instruments could result in a
loss if the counterparty to the transaction does not perform as expected and
may increase portfolio turnover rates, which results in correspondingly
greater commission expenses and transaction costs, and may result in certain
tax consequences.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The Fund
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, futures or options, or (2)
cash and short-term liquid debt securities with a value sufficient at all
times to cover its potential obligations to the extent not covered as
provided in (1) above. The Fund will comply with SEC guidelines regarding
cover for Derivative Instruments and will, if the guidelines so require, set
aside cash, U.S. Government securities or other liquid, high-grade debt
securities in a segregated account with its custodian in the prescribed
amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities except that all
settlements are in cash and gain or loss depends on changes in the index in
question rather than on price movements in individual securities. The Fund
may purchase and write exchange-listed put and call options on stock indices
to hedge against risks of market-wide movements. A stock index measures the
movement of a certain group of stocks by assigning relative values to the
common stocks included in the index. The advisability of using stock index
options to hedge against the risk of market-wide movements will depend on
the extent of diversification of the Fund's stock instruments to factors
influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the
extent to which price movements in the portion of the portfolio being hedged
correlate with price movements in the stock index selected.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent
of the premium received for writing the option. However, if the investment
appreciates to a price higher than the exercise price of the call option, it
can be expected that the option will be exercised and the Fund will be
obligated to sell the investment at less than its market value.
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the investment
depreciates to a price lower than the exercise price of the put option, it
can be expected that the put option will be exercised and the Fund will be
obligated to purchase the investment at more than its market value unless
the option is closed out in an offsetting transaction.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the underlying
investment and general market conditions. Options that expire unexercised
have no value and the Fund would experience losses to the extent of premiums
paid for them.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and over-the-
counter ("OTC") options. Exchange-traded options in the United States are
issued by a clearing organization that, in effect, guarantees completion of
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty (usually a securities dealer
or a bank) with no clearing organization guarantee. Thus, when the Fund
purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of such
transaction, the sum of (i) the market value of outstanding OTC options
purchased by the Fund, (ii) the market value of the underlying securities
covered by outstanding OTC call options written by the Fund, and (iii) the
market value of all other assets of the Fund that are illiquid or are not
otherwise readily marketable, would exceed 15% of the net assets of the
Fund, taken at market value. However, if an OTC option is sold by the Fund
to a primary U.S. Government securities dealer recognized by the Federal
Reserve Bank of New York and the Fund has the unconditional contractual
right to repurchase such OTC option from the dealer at a predetermined
price, then the Fund will treat as illiquid such amount of the underlying
securities as is equal to the repurchase price less the amount by which the
option is "in-the-money" (the difference between the current market value of
the underlying securities and the price at which the option can be
exercised). The repurchase price with primary dealers is typically a
formula price that is generally based on a multiple of the premium received
for the option plus the amount by which the option is "in-the-money."
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the counterparty, or by a transaction in the secondary market
if any such market exists. Although the Fund will enter into OTC options
only with major dealers in unlisted options, there is no assurance that the
Fund will in fact be able to close out an OTC option position at a favorable
price prior to expiration. In the event of insolvency of the counterparty,
the Fund might be unable to close out an OTC option position at any time
prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.
The Fund may write options on securities only if it covers the
transaction through: an offsetting option with respect to the security
underlying the option it has written, exercisable by it at a more favorable
price; ownership of (in the case of a call) or a short position in (in the
case of a put) the underlying security; or segregation of cash or certain
other assets sufficient to cover its exposure.
Foreign Currency Strategies - Special Considerations. The Fund may use
Derivative Instruments on foreign currencies to hedge against movements in
the values of the foreign currencies in which the Fund's securities are
denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of particular
currency when no Derivative Instruments on that currency are available or
such Derivative Instruments are more expensive than certain other Derivative
Instruments. In such cases, the Fund may hedge against price movements in
that currency by entering into transactions using Derivative Instruments on
another currency or a basket of currencies, the values of which Dreyfus
believes will have a high degree of positive correlation to the value of the
currency being hedged. The risk that movements in the price of the
Derivative Instrument will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged by
having to deal in the odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices
that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large transactions
in the interbank market and thus might not reflect odd-lot transactions
where rates might be less favorable. The interbank market in foreign
currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and the
price. Forward contracts are used as a hedge against future movements in
foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund may
purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Fund intends to acquire. Forward
contracts may also serve as short hedges -- for example, the Fund may sell a
forward contract to lock in the U.S. dollar equivalent of the proceeds from
the anticipated sale of a security denominated in a foreign currency or from
anticipated dividend or interest payments denominated in a foreign currency.
Dreyfus may seek to hedge against changes in the value of a particular
currency by using forward contracts on another foreign currency or basket of
currencies, the value of which Dreyfus believes will bear a positive
correlation to the value of the currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are
usually entered into a principal basis, no fees or commissions are involved.
When the Fund enters into a forward contract, it relies on the counterparty
to make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of
any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets generally
do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by negotiating
directly with the counterparty. Thus, there can be no assurance that the
Fund will in fact be able to close out a forward contract at a favorable
price prior to maturity. In addition, in the event of insolvency of the
counterparty, the Fund might be unable to close out a forward contract at
any time prior to maturity. In either event, the Fund would continue to be
subject to market risk with respect to the position, and would continue to
be required to maintain a position in the securities or currencies that are
the subject of the hedge or to maintain cash or securities in a segregated
account.
The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value
of such securities measured in the foreign currency will change after the
forward contract has been established. Thus, the Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.
Certain Investments. From time to time, to the extent consistent with
its investment objective, policies and restrictions, the Fund may invest in
securities of companies with which Mellon Bank, N.A. ("Mellon Bank"), an
affiliate of Dreyfus, has a lending relationship.
Master/Feeder Option. The Trust may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's net investable
assets in another investment company having the same investment objective
and substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment. Such investment would be made
only if the Trustees determine it to be in the best interest of the Fund and
its shareholders. In making that determination, the Trustees will consider,
among other things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the Fund
believes that the Trustees will not approve an arrangement that is likely to
result in higher costs, no assurance is given that costs will be materially
reduced if this option is implemented.
Investment Restrictions
Fundamental. The following limitations have been adopted by the Fund.
The Fund may not change any of these fundamental investment limitations
without the consent of: (a) 67% or more of the shares present at a meeting
of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less. The
Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be invested
in the securities of one or more issuers conducting their principal
activities in the same industry. (For purposes of this limitation, U.S.
Government securities, and state or municipal governments and their
political subdivisions are not considered members of any industry. In
addition, this limitation does not apply to investments in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S.
banks).
2. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) the Fund may borrow money in an amount not exceeding
one-third of the Fund's total assets at the time of such borrowings, and (b)
the Fund may issue multiple classes of shares. The purchase or sale of
futures contracts and related options shall not be considered to involve the
borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts and other
similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objective, policies and limitations as the Fund.
Nonfundamental. The Fund has adopted the following additional
non-fundamental restrictions. These non-fundamental restrictions may be
changed without shareholder approval, in compliance with applicable law and
regulatory policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures contracts
and options are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options shall not constitute purchasing securities on
margin.
3. The Fund shall not purchase oil, gas or mineral leases (the Fund
may, however, purchase and sell the securities of companies engaging in the
exploration, development, production, refining, transportation, and
marketing of oil, gas, or minerals.)
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Trustees of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such
issuer, together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have
been in operation for less than three years, if by reason thereof, the value
of the Fund's investment in such securities would exceed 5% of the Fund's
total assets. For purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as the issuer
of a security.
6. The Fund will invest no more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with maturities
in excess of seven days and other securities which are not readily
marketable. For purposes of this limitation, illiquid securities shall not
include Section 4(2) paper and securities which may be resold under Rule
144A under the Securities Act of 1933, provided that the Board of Trustees,
or its delegate, determines that such securities are liquid based upon the
trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the Fund's assets
would be invested in warrants that are not listed on the New York or
American Stock Exchange (for purposes of this undertaking, warrants acquired
by the Fund in units or attached to securities will be deemed to have no
value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total assets
except that: (a) this limitation shall not apply to standby commitments, and
(b) this limitation shall not apply to the Fund's transactions in futures
contracts and options.
As an operating policy, the Fund will not invest more than 25% of the
value of its total assets, at the time of such purchase in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S. banks.
The Trust's Board of Trustees may change this operating policy without
shareholder approval. Notice will be given to shareholders if this
operating policy is changed by the Board.
If a percentage restriction is adhered to at the time of an investment,
a later increase or decrease in such percentage resulting from a change in
the values of assets will not constitute a violation of such restriction,
except as otherwise required by the 1940 Act.
If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains
an appropriate investment in light of the shareholder's then-current
position and needs.
MANAGEMENT OF THE FUND
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian, as well as Dreyfus' investment
advisory activities, may raise issues under these provisions. Mellon Bank
has been advised by counsel that the activities contemplated under these
arrangements are consistent with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of
such future statutes and regulations, could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services for its
customers and/or the Fund. If Mellon Bank or Dreyfus were prohibited from
serving the Fund in any of its present capacities, the Board of Trustees
would seek an alternative provider(s) of such services.
Trustees and Officers of the Trust
The Trust's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Trust,
on behalf of the Fund, and those companies that furnish services to the
Fund. These companies are as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank Custodian for the Fund
The Trust has a Board composed of nine Trustees. The following lists
the Trustees and officers and their positions with the Trust and their
present and principal occupations during the past five years. Each Trustee
who is an "interested person" of the Trust (as defined in the 1940 Act) is
indicated by an asterisk(*). Each of the Trustees also serves as a Director
of The Dreyfus/Laurel Funds, Inc. and as a Trustee of The Dreyfus/Laurel Tax-
Free Municipal Funds (collectively, with the Trust, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
Trustees of the Trust
o+JOSEPH S. DIMARTINO. Chairman of the Board of the Trust. Since January
1995, Mr. DiMartino has served as Chairman of the Board for various
funds in the Dreyfus Family of Funds. He is also a Director of The
Noel Group, Inc., a venture capital company (for which from February
1995 until November 1997, he was Chairman of the Board); The Muscular
Dystrophy Association; HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and
other benefit programs; Carlyle Industries, Inc. (formerly Belding
Heminway Company, Inc.), a button packager and distributor; Century
Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outservicing functions for small and
medium sized companies; and Career Blazers, Inc. (formerly Staffing
Resources), a temporary placement agency. For more than five years
prior to January 1995, he was President, a director and, until August
24, 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus. From August 1994 to December 31, 1994, he was a
director of Mellon Bank Corporation. Age: 55 years old. Address: 200
Park Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Trustee of the Trust; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc.; Chairman of the
Board, Davidson Cotton Company. Age: 64 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Of Counsel, Reed, Smith, Shaw &
McClay (law firm). Age: 71 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; former Chairman of the Board
and Director, Rexene Corporation. Age: 77 years old. Address: Way
Hollow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), an
affiliate of Dreyfus, and Boston Safe Deposit and Trust Company. Age:
53 years old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman and CEO, LDG
Reinsurance Corporation; Vice Chairman, HCCH. Age 52 years old.
Address: 401 Edgewater Place, Wakefield, Massachusetts 01880.
o+JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania. Age: 67 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.;
Director, American Express Centurion Bank; Director, Harvard/Pilgrim
Health Care, Inc.; Director, Massachusetts Electric Company; Director,
the Hyams Foundation, Inc. Age: 49 years old. Address: 25 Braddock
Park, Boston, Massachusetts 02116-5816.
o+BENAREE PRATT WILEY. Trustee of the Trust; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC. Age: 53
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: 42 years old.
#DOUGLAS C. CONROY. Vice President and Assistant Secretary of the Trust.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. Age: 30 years old.
#JOHN P. COVINO. Vice President and Assistant Treasurer of the Trust. Vice
President and Treasury Group Manager of Treasury Servicing and
Administration of Funds Distributor, Inc. From December 1995 to
November 1998, he was employed by Fidelity Investments where he held
multiple positions in their Institutional Brokerage Group. Prior to
joining Fidelity, he was employed by SunGard Brokerage Systems where he
was responsible for the technology and development of the accounting
product group. Age: 35 years old.
#FREDRICK C. DEY. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Vice President of New Business Development of
Funds Distributor, Inc. From 1988 to August 1994, he was Manager of
High Performance Fabrics Division of Springs Industries, Inc. Age: 37
years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Trust. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. Age: 34 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the Trust.
Manager of Treasury Services Administration of Funds Distributor, Inc.
From July 1994 to November 1995, she was a Fund Accountant for
Investors Bank & Trust Company. Age: 27 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Trust. Vice
President of the Distributor and Funds Distributor, Inc. Age: 35 years
old.
#STEPHANIE D. PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Trust. Vice President and Client Development Manager
of Funds Distributor, Inc. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was a Second
Vice President with Chase Manhattan Bank. Age: 30 years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Trust.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. 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.
#KAREN JACOPPO-WOOD. Vice President and Assistant Secretary of the Trust.
Vice President and Senior Counsel of Funds Distributor, Inc. From June
1994 to January 1996, she was Manager of SEC Registration at Scudder,
Stevens & Clark, Inc.
Age: 32 years old.
________________________________
# Officer also serves as an officer for other investment companies advised
by Dreyfus, including The Dreyfus/Laurel Funds, Inc. and The
Dreyfus/Laurel Tax-Free Municipal Funds.
The address of each officer of the Trust is 200 Park Avenue, New York,
New York 10166.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Trust for serving
as an officer or Trustee of the Trust. In addition, no officer or employee
of Dreyfus (or of any parent, subsidiary or affiliate thereof) serves as an
officer or Trustee of the Trust. Effective July 1, 1998, the Dreyfus/Laurel
Funds pay each Director/Trustee who is not an "interested person" of the
Trust (as defined in the 1940 Act) $40,000 per annum, plus $5,000 per joint
Dreyfus/Laurel Funds Board meeting attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly
scheduled Board meeting and $500 for Board meetings and separate committee
meetings attended that are conducted by telephone. The Dreyfus/Laurel Funds
also reimburse each Director/Trustee who is not an "interested person" of
the Trust (as defined in the 1940 Act) for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). In the event
that there is a joint committee meeting of the Dreyfus/Laurel Funds and the
Dreyfus High Yield Strategies Fund, the $2,000 fee will be allocated between
the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund. The
compensation structure described in this paragraph is referred to
hereinafter as the "Current Compensation Structure."
In addition, the Trust currently has three Emeritus Board members who
are entitled to receive an annual retainer and a per meeting fee of one-half
the amount paid to them as Board members pursuant to the Current
Compensation Structure.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was not an "interested person" of the Trust (as defined
in the 1940 Act) $27,000 per annum (and an additional $25,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Funds) and
$1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750 per
joint Dreyfus/Laurel Funds Audit Committee meeting attended, and reimbursed
each such Director/Trustee for travel and out-of-pocket expenses (the
"Former Compensation Structure").
The aggregate amounts of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1998, and from
all other funds in the Dreyfus Family of Funds for which such person was a
Board member (the number of which is set forth in parenthesis next to each
Board member's total compensation)* during the year ended December 31, 1998,
pursuant to the Former Compensation Structure for the period from January 1,
1998 through June 30, 1998 and the Current Compensation Structure for the
period from July 1, 1998 through December 31, 1998, were as follows:
Total Compensation
Aggregate From the Trust
Name of Board Compensation and Fund Complex
Member From the Trust# Paid to Board Member
Joseph S. DiMartino** $18,267.34 $619,660 (187)
James M. Fitzgibbons $18,600.68 $ 60,010 (31)
J. Tomlinson Fort*** none none (31)
Arthur L. Goeschel $18,934.01 $ 61,010 (31)
Kenneth A. Himmel $15,684.01 $ 50,260 (31)
Stephen J. Lockwood $16,100.67 $ 51,010 (31)
John J. Sciullo $18,267.34 $ 59,010 (31)
Roslyn M. Watson $18,934.01 $ 61,010 (31)
Benaree Pratt Wiley**** $15,673.68 $ 49,628 (31)
____________________________
# Amounts required to be paid by the Trust directly to the non-interested
Trustees, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-
interested Trustees. Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $4,292.30 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Trust, for which the Board
member served.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
*** J. Tomlinson Fort is paid directly by Dreyfus for serving as a Board member
of the Trust and the funds in the Dreyfus/Laurel Funds and separately by the
Dreyfus High Yield Strategies Fund. For the fiscal year ended December 31,
1998, the aggregate amount of fees received by J. Tomlinson Fort from
Dreyfus for serving as a Board member of the Trust was $18,267.34. For the
year ended December 31, 1998, the aggregate amount of fees received by Mr.
Fort for serving as a Board member of all funds in the Dreyfus/Laurel Funds
(including the Trust) and Dreyfus High Yield Strategies Fund (for which
payment is made directly by the fund) was $59,010. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,110.77 for expenses attributable to the
Trust's Board meetings which is not included in the $4,292.30 amount in note
# above.
****Payments to Ms. Wiley were for the period from April 23, 1998 (the date she
was elected as a Board member) through December 31, 1998.
The officers and Trustees of the Trust as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of July 28,
1999.
Principal Shareholders. As of July 28, 1999, the following
shareholder(s) owned beneficially or of record 5% or more of Class B shares of
the Fund: MLPF & S for The Sole Benefit Of Its Customers, 4800 Deer Lake
Drive E., Floor 3, Jacksonville, FL 32246-6484, 20.54%.
As of July 28, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class C shares of the Fund: MLPF & S For The Sole
Benefit Of Its Customers, 4800 Deer Lake Drive E., Floor 3, Jacksonville, FL
32246-6484; 51.70%, Norwest Investment Services, Inc., FBO 112609161,
Northstar Building East, 9th Floor, 608 Second Avenue, South, Minneapolis,
MN 55479-0162; 15.73%, Bear Stearns Securities Corp., FBO 486-04600-15, 1
Metrotech Center North, Brooklyn, NY 11261-3859; 6.40% and BT Alex Brown
Incorporated, FBO 210-37131-17, P.O. Box 1346, Baltimore, MD 21203; 5.73%.
As of July 28, 1999 the following shareholder(s) owned beneficially or
of record 5% or more of Class R shares of the Fund: Boston Safe Deposit &
Trust Co. Trustee, As Agent-Omnibus Account, 1 Cabot Road, Medford, MA
02155-5141, 45.36%; Dreyfus Trust Co. Custodian, FBO Mark Petersson, Under
SEP IRA Plan, 141 Scannell Road, Chatham, NY 12037-2020, 8.99%; and NFSC
FEBO # AB2-892955, State Street Bank & Trust, State Street Bank & Trust
Trustee, 800 Boylston Street - P354, Boston, MA 02199, 5.23%.
A shareholder who beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed a "control person" (as
defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Federal
Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the 25 largest bank holding
companies in the United States based on total assets.
Management Agreement. Dreyfus serves as the investment manager for the
Fund pursuant to an Investment Management Agreement with the Trust dated
April 4, 1994 (the "Management Agreement"), transferred to Dreyfus as of
October 17, 1994, subject to the overall authority of the Trust's Board of
Trustees in accordance with Massachusetts law. Pursuant to the Management
Agreement, Dreyfus provides, or arranges for one or more third parties to
provide, investment advisory, administrative, custody, fund accounting and
transfer agency services to the Fund. As investment manager, Dreyfus manages
the Fund by making investment decisions based on the Fund's investment
objective, policies and restrictions. The Management Agreement is subject to
review and approval at least annually by the Board of Trustees.
The Management Agreement will continue from year to year provided that
a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of the Trust and either a majority of all Trustees or a
majority of the shareholders of the Fund approve its continuance. The
Management Agreement was last approved by the Board of Trustees on February
4, 1999 to continue until April 4, 2000. The Trust may terminate the
Management Agreement upon the vote of a majority of the Board of Trustees or
upon the vote of a majority of the outstanding voting securities of the Fund
on 60 days' written notice to Dreyfus. Dreyfus may terminate the Management
Agreement upon 60 days' written notice to the Trust. The Management
Agreement will terminate immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice-
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
Under Dreyfus' personal securities trading policy (the "Policy"),
Dreyfus employees must preclear personal transactions in securities not
exempt under the Policy. In addition, Dreyfus employees must report their
personal securities transactions and holdings, which are reviewed for
compliance with the Policy. In that regard, Dreyfus portfolio managers and
other investment personnel also are subject to the oversight of Mellon's
Investment Ethics Committee. Dreyfus portfolio managers and other
investment personnel who comply with the Policy's preclearance and
disclosure procedures, and the requirements of the Committee, may be
permitted to purchase, sell or hold securities which also may be or are held
in fund(s) they manage or for which they otherwise provide investment
advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.90 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses,
except brokerage fees, taxes, interest, fees and expenses of the non-
interested Trustees (including counsel fees), Rule 12b-1 fees (if
applicable) and extraordinary expenses. Although Dreyfus does not pay for
the fees and expenses of the non-interested Trustees (including counsel
fees), Dreyfus is contractually required to reduce its investment management
fee by an amount equal to the Fund's allocable share of such fees and
expenses. From time to time, Dreyfus may voluntarily waive a portion of the
investment management fees payable by the Fund, which would have the effect
of lowering the expense ratio of the Fund and increasing return to
investors. Expenses attributable to the Fund are charged against the Fund's
assets; other expenses of the Trust are allocated among its funds on the
basis determined by the Trustees, including, but not limited to,
proportionately in relation to the net assets of each fund.
For the last three fiscal years, the Fund has had the following
expenses:
For the Fiscal Year Ended December 31,
1998 19971 19962
Advisory and/or $5,950,806 $5,794,335 $4,489,878
Management Fee
________________
1. For the fiscal year ended December 31, 1997, the management fee payable
by the Fund amounted to $5,842,985, which amount was reduced by $48,650
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $5,794,335 for fiscal 1997.
2. For the fiscal year ended December 31, 1996, the management fee payable
by the Fund amounted to $4,593,348, which amount was reduced by $103,470
pursuant to undertakings then in effect, resulting in a net fee paid to
Dreyfus of $4,489,878 for fiscal 1996.
The Distributor. Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109,
serves as the Fund's distributor on a best efforts basis pursuant to an
agreement which is renewable annually. Dreyfus may pay the Distributor for
shareholder services from Dreyfus' own assets, including past profits but
not including the management fee paid by the Fund. The Distributor may use
part or all of such payments to pay certain banks, securities brokers or
dealers and other financial institutions ("Agents") for these services. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds.
For the fiscal year ended December 31, 1998, the Distributor retained
no sales loads on the Fund's Class A shares. For the period January 16,
1998 (inception date of Class B and Class C shares) through December 31,
1998, the Distributor retained $2,189 and $340 from the contingent deferred
sales charge ("CDSC") on the Fund's Class B and Class C shares,
respectively.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is
being purchased. The decision as to which Class of shares is most
beneficial to you depends on the amount and the intended length of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee, service fee
and CDSC, if any, on Class B or Class C shares would be less than the
accumulated distribution fee and initial sales charge on Class A shares or
the accumulated distribution fee, service fee and initial sales charge on
Class T shares, purchased at the same time, and to what extent, if any, such
differential would be offset by the return on Class A shares and Class T
shares, respectively. You may also want to consider whether, during the
anticipated life of your investment in the Fund, the accumulated
distribution fee, service fee, and initial sales charge on Class T shares
would be less than the accumulated distribution fee and higher initial sales
charge on Class A shares purchased at the same time, and to what extent, if
any, such differential could be offset by the return of Class A.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution and service fees on Class B or Class C shares and the
accumulated distribution fee, service fee and initial sales charge on Class
T shares may exceed the accumulated distribution fee and initial sales
charge on Class A shares during the life of the investment. Finally, you
should consider the effect of the CDSC period and any conversion rights of
the Classes in the context of your own investment time frame. For example,
while Class C shares have a shorter CDSC period than Class B shares, Class C
shares do not have a conversion feature and, therefore, are subject to
ongoing distribution and service fees. Thus, Class B shares may be more
attractive than Class C shares to investors with longer term investment
outlooks. Generally, Class A shares will be most appropriate for investors
who invest $1,000,000 or more in Fund shares, and Class A and Class T shares
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, Class B, Class C and Class T 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. In addition, holders of
Investor shares of the Fund as of January 15, 1998 may continue to purchase
Class A shares of the Fund at NAV. Subsequent purchases may be sent
directly to the Transfer Agent or your Agent.
Institutional shares are offered to those customers of certain
financial planners and investment advisers who held shares of a predecessor
class of the Fund on April 4, 1994.
Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates)
acting on behalf of customers having a qualified trust or investment account
or relationship at such institution, or to customers who have received and
hold shares of the Fund distributed to them by virtue of such an account or
relationship. In addition, holders of Restricted shares of the Fund as of
January 15, 1998 may continue to purchase Class R shares of the Fund whether
or not they would otherwise be eligible to do so. Class R shares may be
purchased for a retirement plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such a plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
The minimum initial investment is $1,000. Subsequent investments must
be at least $100. With respect to Class A, Class B, Class C, Class R and
Class T shares, the minimum initial investment for Dreyfus-sponsored self-
employed individual retirement plans ("Keogh Plans"), IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant is $750 and
$500 for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases except that the no minimum on Education IRAs does not apply until
after the first year. The initial investment must be accompanied by the
Fund's Account Application. The Fund reserves the right to offer Fund
shares without regard to minimum purchase requirements to employees
participating in certain qualified or non-qualified employee benefit plans
or other programs where contributions or account information can be
transmitted in a manner and form acceptable to the Fund. The Fund reserves
the right to vary further the initial and subsequent investment minimum
requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code") imposes
various limitations on the amount that may be contributed annually to
certain qualified or non-qualified employee benefit plans or other programs,
including pension, profit-sharing and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). These limitations apply
with respect to participants at the plan level and, therefore, do not
directly affect the amount that may be invested in the Fund by a Retirement
Plan. Participants and plan sponsors should consult their tax advisers for
details.
Fund shares are sold on a continuous basis. NAV per share is
determined as of the close of trading on the floor of the New York Stock
Exchange ("NYSE") (currently 4:00 p.m., New York time), on each day the NYSE
is open for business. For purposes of determining NAV, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the NYSE. NAV per share of each class is computed by dividing the value
of the Fund's net assets represented by such class (i.e., the value of its
assets less liabilities) by the total number of shares of such class
outstanding. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the NYSE (currently 4:00 p.m., New York time) on a
business day, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the NYSE on the next
business day, except where shares are purchased through a dealer as provided
below.
Orders for the purchase of Fund shares received by dealers by the close
of trading on the floor of the NYSE on any business day and transmitted to
the Distributor or its designee by the close of its business day (normally
5:15 p.m., New York time) will be based on the public offering price per
share determined as of the close of trading on the floor of the NYSE on that
day. Otherwise, the orders will be based on the next determined NAV. It is
the dealers' responsibility to transmit orders so that they will be received
by the Distributor or its designee before the close of its business day.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution
could be held liable for resulting fees and/or losses.
Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Agents may
impose certain conditions on their clients which are different from those
described in the Fund's Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees which
would be in addition to any amounts which might be received under the
Distribution and Service Plans. Each Agent has agreed to transmit to its
clients a schedule of such fees. You should consult your Agent in this
regard.
The Distributor may pay dealers a fee based on 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"). Generally, the fee paid to dealers will not exceed 1% of the
amount invested through such dealers. The Distributor, however, may pay
dealers a higher fee and reserves the right to cease paying these fees at
any time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified taxpayer
identification number ("TIN") upon opening or reopening an account. See the
Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject
you to a $50 penalty imposed by the Internal Revenue Service.
Class A Shares. The public offering price for Class A shares is the
NAV of that Class, plus, except for shareholders owning Investor shares of
the Fund on January 15, 1998, a sales load as shown below:
Total Sales Load as a % Dealers' Reallowance
Amount of Transaction of Offering Price Per Share as a % of
Offering Price
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-
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 sales charge on purchases of $1,000,000 or more of
Class A shares. However, if you purchase Class A shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem all
or a portion of those shares within one year of purchase, a CDSC of 1.00%
will be assessed at the time of redemption. Pursuant to an agreement with
the Distributor, Dreyfus Service Corporation may pay Agents an amount up to
1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained below under "Redemption of Shares -
Contingent Deferred Sales Charge - Class B Shares" (other than the amount of
the CDSC and time periods) and "Redemption of Shares - Waiver of CDSC" are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of
other financial institutions which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage related or clearing arrangement with an NASD member firm or
financial institution with respect to the sale of Fund shares) may purchase
Class A shares for themselves directly or pursuant to an employee benefit
plan or other program, or for their spouses or minor children at NAV,
provided that they have furnished the Distributor with such information as
it may request from time to time in order to verify eligibility for this
privilege. This privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time employees are
eligible to purchase Class A shares at NAV. In addition, Class A shares are
offered at NAV to full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Company's Board, or the spouse
or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be
purchased (including by exchange) at NAV without a sales load for Dreyfus-
sponsored IRA "Rollover Accounts" with the distribution proceeds from a
qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided
that, at the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible
Benefit Plan and all or a portion of such plan's assets were invested in
funds in the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds
or certain other products made available by the Distributor to such plans,
or (b) invested all of its assets in certain funds in the Dreyfus Premier
Family of Funds or the Dreyfus Family of Funds or certain other products
made available by the Distributor to such plans.
Class A shares may be purchased at NAV through certain broker-dealers
and other financial institutions which have entered into an agreement with
the Distributor, which includes a requirement that such shares be sold for
the benefit of clients participating in a "wrap account" or a similar
program under which such clients pay a fee to such broker-dealer or other
financial institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with
the proceeds from the redemption of shares of a registered open-end
management investment company not managed by Dreyfus or its affiliates. The
purchase of Class A shares of the Fund must be made within 60 days of such
redemption and the shareholder must have either (i) paid an initial sales
charge or a CDSC or (ii) been obligated to pay at any time during the
holding period, but did not actually pay on redemption, a deferred sales
charge with respect to such redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or instrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000
or more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 669 of the Code).
Class T Shares. The public offering price for Class T shares is the
NAV per share of that Class plus a sales load as shown below:
Total Sales Load as a % Dealers' Reallowance
Amount of Transaction of Offering Price Per Share as a % of Offering Price
Less than $50,000 4.50 4.00
$50,000 to less than $100,000 4.00 3.50
$100,000 to less than $250,000 3.00 2.50
$250,000 to less than $500,000 2.00 1.75
$500,000 to less than $1,000,000 1.50 1.25
$1,000,000 or more -0- -0-
There is no initial sales charge on purchases of $1,000,000 or more of
Class T shares. However, if you purchase Class T shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem all
or a portion of those shares within one year of purchase, a CDSC of 1.00%
will be assessed at the time of redemption. Pursuant to an agreement with
the Distributor, Dreyfus Service Corporation may pay Agents an amount up to
1% of the NAV of Class T 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 T shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class T shares. Because
the expenses associated with Class A shares will be lower than those
associated with Class T shares, purchasers investing $1,000,000 or more in
the Fund will generally find it beneficial to purchase Class A shares rather
than Class T shares.
Dealer Reallowance -- Class A and Class T Shares. The dealer
reallowance provided with respect to Class A and Class T shares 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 and Class T shares. In some
instances, these incentives may be offered only to certain dealers who have
sold or may sell significant amounts of such shares.
Sales Loads -- Class A and Class T Shares. The scale of sales loads
applies to purchases of Class A and Class T 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 $29.26
Per Share Sales Charge - 5.75% of offering price
(6.10% of NAV per share) $ 1.78
Per Share Offering Price to Public $31.04
Set forth below is an example of the method of computing the offering
price of the Fund's Class T shares. The example assumes a purchase of Class
T shares of the Fund aggregating less than $50,000 subject to the schedule
of sales charges set forth in the Fund's Prospectus at a price based upon
the initial offering price of $12.50:
NAV per share $12.50
Per Share Sales Charge - 4.50% of offering price
(4.70% of NAV per share) $ .59
Per Share Offering Price to Public $13.09
Right of Accumulation-Class A and Class T Shares. Reduced sales loads
apply to any purchase of Class A and Class T 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 or Class T 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 or Class T shares of the Fund or shares of an Eligible Fund having a
current value of $20,000, the sales load applicable to the subsequent
purchase would be reduced to 4.50% of the offering price in the case of
Class A shares or 4.00% of the offering price in the case of Class T shares.
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.
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.
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 B and Class C Shares. Pursuant to an agreement with the
Distributor, Dreyfus Service Corporation compensates certain Agents for
selling Class B and Class C shares at the time of purchase from its own
assets. The proceeds of the CDSC and the distribution fee, in part, are
used to defray these expenses.
Class R Shares. The public offering price for Class R shares is the
NAV per share of that Class.
Institutional Shares. The public offering price for Institutional
shares is the NAV per share of that Class.
TeleTransfer Privilege. You may purchase Fund shares by telephone
through the TeleTransfer Privilege if you have checked the appropriate box
and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between the bank account designated in one of these
documents and your Fund account. Only a bank account maintained in a
domestic financial institution that is an Automated Clearing House ("ACH")
member may be so designated. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day that the Transfer Agent and the NYSE are open for business will
be credited to the shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00 p.m., New
York time, on any business day the Transfer Agent and the NYSE are open for
business, or orders made on Saturday, Sunday or any Fund holiday (e.g., when
the NYSE is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order.
To qualify to use the TeleTransfer Privilege, the initial payment for
purchase of Fund shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request must
be in writing and signature-guaranteed. See "Redemption of Shares -
TeleTransfer Privilege." The Fund may modify or terminate this Privilege at
any time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund
may at its discretion, permit the purchase of shares through an "in-kind"
exchange of securities. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAVs of the
shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securities
become the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call
1-800-554-4611.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
Class A, Class B, Class C, Class T 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 (the "Distribution 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 Distribution Plan allows
the Distributor to make payments from the Rule 12b-1 fees it collects from
the Fund to compensate Agents that have entered into Selling Agreements
("Agreements") with the Distributor. Under the Agreements, the Agents are
obligated to provide distribution related services with regard to the Fund
and/or shareholder services to the Agent's clients that own Class A shares
and Institutional shares of the Fund. The Trust's Board of Trustees
believes that there is a reasonable likelihood that the Distribution Plan
will benefit the Fund and the holders of Class A and Institutional shares.
The Distribution Plan provides that a report of the amounts expended
under the Distribution 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 Distribution Plan provides that it may
not be amended to increase materially the costs which holders of Class A or
Institutional shares may bear pursuant to the Distribution Plan without
approval of the holders of such Classes and that other material amendments
of the Distribution 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 Distribution Plan or in any
agreement entered into in connection with the Distribution Plan, cast in
person at a meeting called for the purpose of considering such amendments.
The Distribution Plan is subject to annual approval by such vote of Trustees
cast in person at a meeting called for the purpose of voting on the
Distribution Plan. The Distribution Plan was so approved at a meeting of
the Board of Trustees held on February 4, 1999. The Distribution Plan is
terminable, as to the Fund's Class A and Institutional 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
Distribution 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, Class C and Class T Shares.
In addition to the above described Distribution Plan for Class A and
Institutional shares, the Board of Trustees has adopted a Service Plan (the
"Service Plan") under the Rule for Class B, Class C and Class T 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, Class C and Class T shares for the provision of
certain services to the holders of Class B, Class C and Class T shares,
respectively. 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,
Class C and Class T 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 "Class B and Class C Plan") and a separate
Distribution Plan pursuant to the Rule with respect to Class T shares (the
"Class T Plan"). Pursuant to the Class B and Class C Plan, 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, respectively. Pursuant to the Class T Plan,
the Fund pays the Distributor for distributing the Fund's Class T shares at
an annual rate of 0.25% of the value of the average daily net assets of
Class T shares. The Distributor may pay one or more Agents in respect of
advertising, marketing and other distribution services for Class T shares,
and determines the amounts, if any, to be paid to Agents and the basis on
which such payments are made. The Trust's Board of Trustees believes that
there is a reasonable likelihood that the Service Plan, the Class B and
Class C Plan and the Class T Plan (each a "Plan" and collectively, the
"Plans") will benefit the Fund and the holders of Class B, Class C and Class
T 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, Class C
or Class T shares may bear pursuant to the Plan without the approval of the
holders of such Classes and that other material amendments of the Plan must
be approved by the Board of Trustees and by the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, by vote cast in person
at a meeting called for the purpose of considering such amendments. Each
Plan is subject to annual approval by such vote of the Trustees cast in
person at a meeting called for the purpose of voting on the Plan. The
Service Plan with respect to Class B and Class C shares and the Class B and
Class C Plan were so approved by the Trustees at a meeting held on February
4, 1999. The Service Plan with respect to Class T shares and the Class T
Plan were initially approved by the Trustees at a meeting held on July 29,
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, Class C or Class T shares, as applicable.
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 each plan described above are payable
without regard to actual expenses incurred. The Fund and the Distributor
may suspend or reduce payments under any of the plans at any time, and
payments are subject to the continuation of the Fund's plans and the
Agreements described above. From time to time, the Agents, the Distributor
and the Fund may voluntarily agree to reduce the maximum fees payable under
the plans.
For the fiscal year ended December 31, 1998, the Fund paid the
Distributor and Dreyfus Service Corporation $66,565 and $1,386,921,
respectively, pursuant to the Distribution Plan with respect to Class A
shares and $17,565 and $99,028, respectively, pursuant to the Distribution
Plan with respect to Institutional shares. For the fiscal year ended
December 31, 1998, the Fund paid the Distributor $8,452 and $1,020, pursuant
to the Class B and Class C Plan with respect to Class B and Class C shares,
respectively, and paid the Distributor and Dreyfus Service Corporation
$1,755 and $1,063, respectively, pursuant to the Service Plan with respect
to Class B shares and $340 and $0, respectively, pursuant to the Service
Plan with respect to Class C shares. The Class T Plan and the Service Plan
with respect to Class T shares were not in effect during the fiscal year
ended December 31, 1998, and accordingly, no fees were paid pursuant to
those plans with respect to Class T shares during that period.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
General. If you hold Fund shares of more than one Class, any request
for redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares of
the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you or
your Agent.
The Fund imposes no charges (other than any applicable CDSC) when
shares are redeemed. Agents may charge their clients a fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares being
redeemed must be submitted with the redemption request. The value of the
shares redeemed may be more or less than their original cost, depending upon
the Fund's then-current NAV.
Procedures. You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it
by checking the applicable "No" box on the Account Application. The
Telephone Redemption Privilege may be established for an existing account by
a separate signed Shareholder Services Form or by oral request from any of
the authorized signatories on the account by calling 1-800-554-4611 if you
hold Class A, Class B, Class C, Class R or Class T 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 T shares through the
Selected Dealer. Other redemption procedures may be in effect for clients
of certain Agents and institutions. The Fund makes available to certain
large institutions the ability to issue redemption instructions through
compatible computer facilities. The Fund reserves the right to refuse any
request made by telephone, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
The Fund may modify or terminate any redemption privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs, or other retirement
plans, and shares for which certificates have been issued, are not eligible
for the Wire Redemption, Telephone Redemption or TeleTransfer Privilege.
The Telephone Redemption Privilege or Telephone Exchange Privilege
authorizes the Transfer Agent to act on telephone instructions (including
The Dreyfus Touchr automated telephone system) from any person representing
himself or herself to be you, or a representative of your Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you
should consider using the other redemption procedures described herein. Use
of these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if TeleTransfer
telephone redemption had been used. During the delay, the Fund's NAV may
fluctuate.
Redemption Through a Selected Dealer. With respect to Class A, Class
B, Class C and Class T shares, customers of Selected Dealers may make
redemption requests to their Selected Dealer. If the Selected Dealer
transmits the redemption request so that it is received by the Transfer
Agent prior to the close of trading on the floor of the NYSE (currently 4:00
p.m., New York time), the redemption request will be effective on that day.
If a redemption request is received by the Transfer Agent after the close of
trading on the floor of the NYSE, the redemption request will be effective
on the next business day. It is the responsibility of the Selected Dealer
to transmit a request so that it is received in a timely manner. The
proceeds of the redemption are credited to your account with the Selected
Dealer.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund shares held by shareholders. Repurchase orders received
by dealers by the close of trading on the floor of the NYSE on any business
day and transmitted to the Distributor or its designee prior to the close of
its business day (normally 5:15 p.m., New York time) are effected at the
price determined as of the close of trading on the floor of the NYSE on that
day. Otherwise, the Fund shares will be redeemed at the next determined
NAV. It is the responsibility of the Selected Dealer to transmit orders on
a timely basis. The Selected Dealer may charge the shareholder a fee for
executing the order. This repurchase arrangement is discretionary and may
be withdrawn at any time.
Reinvestment Privilege. Upon written request, you may reinvest up to
the number of Class A, Class B or Class T 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 or Class T 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 shares
reinvested. The Reinvestment Privilege may be exercised only once.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone, or letter
redemption instructions from any person representing himself or herself to
be the investor, or a representative of the investor's Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to this Privilege on the next
business day after receipt by the Transfer Agent of the redemption request
in proper form. Redemption proceeds ($1,000 minimum) will be transferred by
Federal Reserve wire only to the commercial bank account specified by the
investor on the Account Application or Shareholder Services Form, or a
correspondent bank if the investor's bank is not a member of the Federal
Reserve System. Holders of jointly registered Fund or bank accounts may
have redemption proceeds of only up to $250,000 wired within any 30-day
period. Fees ordinarily are imposed by such bank and usually are borne by
the investor. Immediate notification by the correspondent bank to the
investor's bank is necessary to avoid a delay in crediting the funds to the
investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
TeleTransfer Privilege. You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an ACH member may be designated. Redemption proceeds
will be on deposit in your account at an ACH member bank ordinarily two days
after receipt of the redemption request. Investors should be aware that if
they have selected the TeleTransfer Privilege, any request for a wire
redemption will be effected as a TeleTransfer transaction through the ACH
system unless more prompt transmittal specifically is requested. Holders of
jointly registered Fund or bank accounts may redeem through the TeleTransfer
Privilege for transfer to their bank account only up to $250,000 within any
30-day period. See "Purchase of Shares-TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification. For
more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. In the case of
requests for redemptions in excess of such amount, the Board of Trustees
reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the NYSE is closed
(other than customary weekend and holiday closings), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the SEC so that disposal of the Fund's investments
or determination of its NAV is not reasonably practicable, or (c) for such
other periods as the SEC by order may permit to protect the Fund's
shareholders.
Contingent Deferred Sales Charge - Class B Shares. A CDSC is paid to
Dreyfus Service Corporation 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% is
paid to Dreyfus Service Corporation 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 advised or administered by Dreyfus. Class A,
Class B, Class C, Class R and Class T shares may be exchanged for shares of
the same Class of another fund in the Dreyfus Premier Family of Funds or
shares of certain other funds advised or administered by Dreyfus. Shares of
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 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, Class R and Class T 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, Class R and Class T shares and 1-800-645-
6561 in the case of Institutional shares. By using the Telephone Exchange
Privilege, the investor authorizes the Transfer Agent to act on telephonic
instructions (including over The Dreyfus Touchr automated telephone system)
from any person representing himself or herself to be the investor, or a
representative of the investor's Agent, and reasonably believed by the
Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance
with rules promulgated by the SEC.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to regularly purchase (on a semi-monthly, monthly,
quarterly or annual basis), in exchange for Institutional shares of the
Fund, shares of certain other funds managed or administered by Dreyfus of
which the investor is a shareholder and, in exchange for Class A, Class B,
Class C, Class R and Class T 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 as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of
this Privilege is effective three business days following notification by
the investor. An investor will be notified if the investor's account falls
below the amount designated to be exchanged under this Privilege. In this
case, an investor's account will fall to zero unless additional investments
are made in excess of the designated amount prior to the next Dreyfus Auto-
Exchange transaction. Shares held under IRAs and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between
IRA accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
The right to exercise this Privilege may be modified or canceled by the
Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to Dreyfus Premier
Core Value Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The
Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. For more information concerning this Privilege
and the funds in the Dreyfus Premier Family of Funds or the Dreyfus Family
of Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-554-4611 for
Class A, Class B, Class C, Class R and Class T shares and
1-800-645-6561 for Institutional shares.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations. The exchange of
shares of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange and, therefore, an
exchanging shareholder (other than a tax-exempt Retirement Plan) may realize
a taxable gain or loss.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund exchange service or the
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus-Automatic Asset Builderr. Dreyfus-Automatic Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000
per transaction) at regular intervals selected by you. Fund shares are
purchased by transferring funds from the bank account designated by you.
Only an account maintained at a domestic financial institution which is an
ACH member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling 1-800-554-
4611 for Class A, Class B, Class C, Class R and Class T 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, Class R and Class T shares and 1-
800-645-6561 for Institutional shares. Automatic Withdrawal may be
terminated at any time by the investor, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
Particular Retirement Plans, including Dreyfus-sponsored Retirement
Plans, may permit certain participants to establish an automatic withdrawal
plan from such Retirement Plans. Participants should consult their
Retirement Plan sponsor and tax adviser for details. Such a withdrawal plan
is different from the Automatic Withdrawal Plan. The Automatic Withdrawal
Plan may be ended at any time by the shareholder, the Fund or the Transfer
Agent. Shares for which certificates have been issued may not be redeemed
through the Automatic Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals
made under the Automatic Withdrawal Plan, provided that the amounts
withdrawn under the plan do not exceed on an annual basis 12% of the account
value at the time the shareholder elects to participate in the Automatic
Withdrawal Plan. Withdrawals with respect to Class B shares under the
Automatic Withdrawal Plan that exceed on an annual basis 12% of the value of
the shareholder's account will be subject to a CDSC on the amounts exceeding
12% of the initial account value. Class C shares, and Class A or Class T
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 or Class T shares where the sales load is imposed
concurrently with withdrawals of Class A or Class T 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, Class R or Class T
shares of 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 other funds purchased pursuant to this
Privilege will be purchased on the basis of relative NAV per share as
follows:
A. Dividends and other distributions paid by a fund may be
invested without imposition of a sales load in shares of other
funds that are offered without a sales load.
B. Dividends and other distributions paid by a fund which does
not charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will be
deducted.
C. Dividends and other distributions paid by a fund which
charges a sales load may be invested in shares of other funds sold
with a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the fund from which
dividends or other distributions are being swept, without giving
effect to any reduced loads, the difference will be deducted.
D. Dividends and other distributions paid by a fund may be
invested in shares of other funds that impose a CDSC and the
applicable CDSC, if any, will be imposed upon redemption of such
shares.
Dividend ACH permits you to transfer electronically dividends or
dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
For more information concerning these Privileges, or to request a
Dividend Options Form, please call toll free 1-800-554-4611 for Class A,
Class B, Class C, Class R and Class T 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, Class R and Class T 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, Class R and Class T shares and 1-800-645-6561 for
Institutional shares. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the sole
responsibility of your employer, not the Distributor, your Agent, Dreyfus,
the Fund, the Transfer Agent or any other person, to arrange for
transactions under the Dreyfus Payroll Savings Plan. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for this Privilege.
Dreyfus Step Program. Holders of the Fund's Investor shares prior to
January 16, 1998 who had enrolled in Dreyfus Step Program may continue to
purchase shares of the same class (currently designated Class A shares)
without regard to the Fund's minimum initial investment requirements through
Dreyfus-Automatic Asset Builderr, 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 and Class T 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
or Class T shares of the Fund, as applicable, 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 or Class T shares,
you must indicate your intention to do so under a Letter of Intent.
Purchases pursuant to a Letter of Intent will be made at the then-current
NAV plus the applicable sales load in effect at the time such Letter of
Intent was executed.
Retirement Plans. The Fund makes available a variety of pension and
profit-sharing plans, including Keogh Plans, IRAs (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, rollover IRAs
and Education IRAs), 401(k) Salary Reduction Plans and 403(b)(7) Plans.
Plan support services also are available. You can obtain details on the
various plans by calling the following numbers toll free: for Keogh Plans,
please call 1-800-358-5566; for IRAs and IRA "Rollover Accounts," please
call 1-800-554-4611 for Class A, Class B, Class C and Class R shares and 1-
800-645-6561 for Institutional shares; for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian may charge a fee for Keogh Plans,
403(b)(7) Plans or IRAs, may charge a fee, payment of which could require
the liquidation of shares. All fees charged are described in the
appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
Each investor should read the prototype retirement plan and the
appropriate form of Custodial Agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
ADDITIONAL INFORMATION ABOUT PURCHASES,
EXCHANGES AND REDEMPTIONS
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term
market movements. A pattern of frequent purchases and exchanges can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and its shareholders. Accordingly, if
the Fund's management determines that an investor is engaged in excessive
trading, the Fund, with or without prior notice, may temporarily or
permanently terminate the availability of Fund Exchanges, or reject in whole
or part any purchase or exchange request, with respect to such investor's
account. Such investors also may be barred from purchasing other funds in
the Dreyfus Family of Funds. Generally, an investor who makes more than
four exchanges out of the Fund during any calendar year or who makes
exchanges that appear to coincide with an active market-timing strategy may
be deemed to be engaged in excessive trading. Accounts under common
ownership or control will be considered as one account for purposes of
determining a pattern of excessive trading. In addition, the Fund may
refuse or restrict purchase or exchange requests by any person or group if,
in the judgment of the Fund's management, the Fund would be unable to invest
the money effectively in accordance with its investment objective and
policies or could otherwise be adversely affected or if the Fund receives or
anticipates receiving simultaneous orders that may significantly affect the
Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If an
exchange request is refused, the Fund will take no other action with respect
to the shares until it receives further instructions from the investor. The
Fund may delay forwarding redemption proceeds for up to seven days if the
investor redeeming shares is engaged in excessive trading or if the amount
of the redemption request otherwise would be disruptive to efficient
portfolio management or would adversely affect the Fund. The Fund's policy
on excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus Auto-
Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employee-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend exchange privileges temporarily without notice and treat exchange
requests based on their separate components - redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case,
the redemption request would be processed at the Fund's next determined NAV
but the purchase order would be effective only at the NAV next determined
after the fund being purchased receives the proceeds of the redemption,
which may result in the purchase being delayed.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. The Fund's securities are valued at
the last sale price on the securities exchange or national securities market
on which such securities primarily are traded. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. Where market
quotations are not readily available, the Fund's investments are valued
based on fair value as determined in good faith by the Trust's Board. Debt
securities may be valued by an independent pricing service approved by the
Trust's Board and are valued at fair value as determined by the pricing
service. Any assets or liabilities initially expressed in terms of foreign
currency will be translated into U.S. dollars at the midpoint of the New
York interbank market spot exchange rate as quoted on the day of such
translation or, if no such rate is quoted on such date, such other quoted
market exchange rate as may be determined to be appropriate by Dreyfus. If
the Fund has to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of NAV may not take place
contemporaneously with the determination of prices of certain of the Fund's
securities. Short-term investments are carried at amortized cost, which
approximates value. Expenses and fees, including the management fee, are
accrued daily and taken into account for the purpose of determining the NAV
of the Fund's shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available or which are not valued by a
pricing service approved by the Board of Trustees, are valued at fair value
as determined in good faith by the Board of Trustees. The Board of Trustees
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Board of Trustees
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class
of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This
discount will be revised periodically by the Board of Trustees if it
believes that the discount no longer reflects the value of the restricted
securities. Restricted securities not of the same class as securities for
which a public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Trustees.
NYSE Closings. The holidays (as observed) on which the NYSE is
currently scheduled to be closed are: New Year's Day, Dr. Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distributions and
Taxes."
General. The Fund ordinarily declares and pays dividends from its net
investment income, if any, four times yearly and distributes net realized
capital gains and gains from foreign currency transactions, if any, once a
year, but it may make distributions on a more frequent basis to comply with
the distribution requirements of the Code, in all events in a manner
consistent with of the 1940 Act. All expenses are accrued daily and
deducted before declaration of dividends to investors. The Fund will not
make distributions from net realized capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. Investors other
than qualified retirement plans may choose whether to receive dividends and
other distributions in cash, to receive dividends in cash and reinvest other
distributions in additional Fund shares at NAV, or to reinvest both
dividends and other distributions in additional Fund shares at NAV;
dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV. Dividends and
other distributions paid by each Class are calculated at the same time and
in the same manner and will be in the same amount, except that the expenses
attributable solely to a particular Class are borne exclusively by that
Class. The dividends received will vary because of the different fee
structures of the Classes. Thus, Class R will receive the highest dividend
per share, followed by Institutional Class, Class A, Class T and Class B and
Class C.
It is expected that the Fund will continue to qualify for treatment as
a regulated investment company ("RIC") under the Code so long as such
qualification is in the best interests of its shareholders. Such
qualification will relieve the Fund of any liability for federal income tax
to the extent its earnings and realized gains are distributed in accordance
with applicable provisions of the Code. To qualify for treatment as a RIC
under the Code, the Fund -- which is treated as a separate corporation for
federal tax purposes -- (1) must distribute to its shareholders each year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) ("Distribution Requirement"), (2)
must derive at least 90% of its annual gross income from specified sources
("Income Requirement"), and (3) must meet certain asset diversification and
other requirements. The term "regulated investment company" does not imply
the supervision of management or investment practices or policies by any
government agency. If the Fund failed to qualify for treatment as a RIC for
any taxable year, (1) it would be taxed at corporate rates on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would
treat all those distributions, including distributions of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
as dividends (that is, ordinary income) to the extent of the Fund's earnings
and profits. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make substantial
distributions before requalifying for RIC treatment. The Fund will be
subject to a non-deductible 4% excise tax ("Excise Tax"), to the extent it
fails to distribute as substantially all of its taxable investment income
and capital gains.
Distributions. If you elect to receive dividends and other
distributions in cash, and your distribution check is returned to the Fund
as undeliverable or remains uncashed for six months, the Fund reserves the
right to reinvest that distribution and all future distributions payable to
you in additional Fund shares at NAV. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains not realized gains
from certain foreign currency transactions and all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds
(collectively, "dividend distributions"), will be taxable to U.S.
shareholders, including certain non-qualified retirement plans, as ordinary
income to the extent of the Fund's earnings and profits, whether received in
cash or reinvested in additional Fund shares. Distributions from net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) are taxable to those shareholders as long-term capital gains
regardless of how long the shareholders have held their Fund shares and
whether the distributions are received in cash or reinvested in additional
Fund shares. Dividends and other distributions also may be subject to state
and local taxes.
Dividend distributions paid by the Fund to a non-resident foreign
investor generally are subject to U.S. withholding tax at the rate of
30%,unless the foreign investor claims the benefit of a lower rate specified
in a tax treaty. Distributions from net capital gain paid by the Fund to a
non-resident foreign investor, as well as the proceeds of any redemptions by
such an investor, regardless of the extent to which gain or loss may be
realized, generally are not subject to U.S. withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his or her non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions
will be mailed to you annually. You also will receive periodic summaries of
your account that will include information as to distributions if any, paid
during the year.
The Code provides for the "carryover" of some or all of the sales load
imposed on Class A and Class T 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 or Class T 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 or Class T shares, up to the amount of the reduction of the
sales load pursuant to the Reinvestment Privilege or on the exchange, as the
case may be, is not included in the tax basis of those shares for purposes
of computing gain or loss and instead is added to the tax basis of the
acquired shares.
Dividends and other distributions paid by the Fund to qualified
retirement plans ordinarily will not be subject to taxation until the
proceeds are distributed from the plans. The Fund will not report to the
Internal Revenue Service ("IRS") distributions paid to such plans.
Generally, distributions from qualified retirement plans, except those
representing returns of non-deductible contributions thereto, will be
taxable as ordinary income and, if made prior to the time the participant
reaches age 59 1/2, generally will be subject to an additional tax equal to
10% of the taxable portion of the distribution. The administrator, trustee
or custodian of a qualified retirement plan will be responsible for
reporting distributions from the plan to the IRS. Moreover, certain
contributions to a qualified retirement plan in excess of the amounts
permitted by law may be subject to an excise tax. If a distributee of an
"eligible rollover distribution" from a qualified retirement plan does not
elect to have the distribution paid directly from the plan to an retirement
plan in a "direct rollover," the distribution is subject to 20% income tax
withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is
correct. Backup withholding at that rate also is required from dividends
and capital gain distributions payable to such a shareholder if (1) the
shareholder fails to certify that he or she has not received notice from the
IRS of being subject to backup withholding as a result of a failure properly
to report taxable dividend or interest income on a federal income tax return
or (2) the IRS notifies the Fund to institute backup withholding because the
IRS determines that the shareholder's TIN is incorrect or that the
shareholder has failed properly to report such income. A TIN is either the
Social Security number, IRS individual taxpayer identification number or
employer identification number of the record owner of an account. Any tax
withheld as a result of backup withholding does not constitute an additional
tax imposed on the record owner and may be claimed as a credit on his or her
federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares
below the cost of his or her investment. Such distribution would be a
return on investment in an economic sense, although taxable as discussed
above. In addition, if a shareholder sells shares of the Fund held for six
months or less and receives any capital gain distributions with respect to
those shares, any loss incurred on the sale of those shares will be treated
as a long-term capital loss to the extent of those distributions.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the year
in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash
or reinvested in additional Fund shares, may be eligible for the dividends-
received deduction allowed to corporations. The eligible portion may not
exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
Federal alternative minimum tax.
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that
would reduce the yield and/or total return on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate foreign taxes, however, and many foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own,
directly, indirectly, or constructively, at least 10% of that voting power)
as to which the Fund is a U.S. shareholder -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or
(2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, the Fund will
be subject to federal income tax on a portion of any "excess distribution"
received on the stock of a PFIC or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a dividend to its shareholders. The balance
of the PFIC income will be included in the Fund's investment company taxable
income and, accordingly, will not be taxable to it to the extent that it
distributes income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each
year its pro rata share of the QEF's annual ordinary earnings and net
capital gain -- which likely would have to be distributed by the Fund to
satisfy the Distribution Requirement and avoid imposition of the Excise Tax
- -- even if those earnings and gain were not distributed to the Fund by the
QEF. In most instances it will be very difficult, if not impossible, to
make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC. "Marking-
to-market," in this context, means including in ordinary income each taxable
year the excess, if any, of the fair market value of a PFIC's stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not
capital, loss) the excess, if any, of its adjusted basis in PFIC stock over
the fair market value thereof as of the taxable year-end, but only to the
extent of any net mark-to-market gains with respect to that stock included
by the Fund for prior taxable years. The Fund's adjusted basis in each
PFIC's stock with respect to which it makes this election would be adjusted
to reflect the amounts of income included and deductions taken under the
election and under regulations proposed in 1992 that provided a similar
election with respect to the stock of certain PFIC(s).
Foreign Currency and Hedging Transactions. Gains from the sale or
other disposition of foreign currencies (except certain gains therefrom that
may be excluded by future regulations), and gains from options, futures and
forward contracts derived by the Fund with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income under the Income Requirement.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gains and
losses from the disposition of foreign currencies and certain foreign-
currency-denominated instruments (including debt instruments and financial
forward and futures contracts and options) may be treated as ordinary income
or loss under Section 988 of the Code. In addition, all or a portion of any
gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that would otherwise be treated as
capital gain may be treated as ordinary income. "Conversion transactions"
are defined to include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund
on the exercise or lapse of, or closing transactions respecting, certain
options, futures and forward contracts ("Section 1256 Contracts") will be
treated as 60% long-term capital gain or loss and 40% short-term capital
gain or loss. In addition, any Section 1256 Contracts remaining unexercised
at the end of the Fund's taxable year will be treated as sold for their then
fair market value (a process known as "marking-to-market"), resulting in
additional gain or loss to the Fund characterized in the same manner.
Offsetting positions held by the Fund involving certain options,
futures or forward contracts may constitute "straddles", which are defined
to include "offsetting positions" in actively traded personal property.
Under Section 1092 of the Code, any loss from the disposition of a position
in a straddle generally may be deducted only to the extent the loss exceeds
the unrealized gain on the offsetting positions(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise
would be recognized under the mark-to-market rules discussed above. The
regulations under Section 1092 also provide certain "wash sale" rules, which
apply to transactions where a position is sold at a loss and a new
offsetting position is acquired within a prescribed period, and "short sale"
rules applicable to straddles. If the Fund makes certain elections
(including an election as to straddles that include a position in one or
more Section 1256 Contracts (so-called "mixed straddles'), the amount,
character, and timing of recognition of gains and losses from the affected
straddle positions would be determined under rules that vary according to
the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) could, under special tax rules, affect
the amount and timing of distributions to shareholders by using the Fund to
recognize income prior to the receipt of cash payments. For example, the
Fund would be required to take into gross income annually a portion of the
discount (or deemed discount) at which the securities were issued and could
need to distribute that income to satisfy the Distribution Requirement and
avoid the Excise Tax. In that case, the Fund may have to dispose of
securities it might otherwise have continued to hold in order to generate
cash to satisfy these requirements.
State and Local Taxes. Depending upon the extent of its activities in
states and localities in which it is deemed to be conducting business, the
Fund may be subject to the tax laws thereof. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes to them.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder") depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed below. Special
U.S. federal income tax rules that differ from those described below may
apply to certain foreign persons who invest in the Fund, such as a foreign
shareholder entitled to claim the benefits of an applicable tax treaty.
Foreign shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund.
Foreign Shareholders - Income Not Effectively Connected. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the
foreign shareholder generally will be subject to U.S. federal withholding
tax of 30% (or lower treaty rate). Capital gains realized by foreign
shareholders on the sale of Fund shares and distributions to them of net
capital gain generally will not be subject to U.S. federal income tax unless
the foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable year.
In the case of certain foreign shareholders, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that shareholder
on the disposition of the Fund shares will be subject to U.S. federal income
tax at the graduated rates applicable to U.S. citizens and domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with the Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. The Fund will
pay a spread or commission in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. In selecting
brokers or dealers, Dreyfus will consider various relevant factors,
including, but not limited to, the size and type of the transaction; the
nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial
condition of the broker-dealer; the broker-dealer's execution services
rendered on a continuing basis; and the reasonableness of any spreads (or
commissions, if any). Any spread, commission, fee or other remuneration paid
to an affiliated broker-dealer is paid pursuant to the Trust's procedures
adopted in accordance with Rule 17e-1 under the 1940 Act. Dreyfus may use
research services of and place brokerage transactions with broker-dealers,
affiliated with it or Mellon Bank if the commissions are reasonable, fair
and comparable to commissions charged by non-affiliated brokerage firms for
similar services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to Dreyfus in carrying out its obligations to the
Fund. The receipt of such research services does not reduce the normal
independent research activities of Dreyfus; however, it enables these
organizations to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its
own staffs.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated
in accordance with a formula considered by Dreyfus to be equitable to each
account. In some cases this system could have a detrimental effect on the
price or volume of the investment instrument as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. While
the Trustees will continue to review simultaneous transactions, it is their
present opinion that the desirability of retaining Dreyfus as investment
manager to the Fund outweighs any disadvantages that may be said to exist
from exposure to simultaneous transactions.
For the fiscal years ended December 31, 1998, 1997 and 1996, the Fund
paid brokerage commissions amounting to $1,384,023, $1,638,246 and
$1,391,532, respectively.
The aggregate amount of transactions during the fiscal year ended
December 31, 1998 in securities effected on an agency basis through a broker
dealer for research was $130,194,183, and the commissions and concessions
related to such transactions was $167,385.
Portfolio Turnover. While securities are purchased for the fund on the
basis of potential for long-term growth of capital and not for short-term
trading profits, the Fund's portfolio turnover rate may exceed 100%. A
portfolio turnover rate of 100% would occur, for example, if all the
securities held by the Fund were replaced once in a period of one year. A
higher rate of portfolio turnover involves correspondingly greater brokerage
commissions and other expenses that must be borne directly by the Fund and,
thus, indirectly by its shareholders. In addition, a higher rate of
portfolio turnover may result in the realization of larger amounts of short-
term and/or long-term capital gains that, when distributed to the Fund's
shareholders, are taxable to them at the then current rate. Nevertheless,
securities transactions for the Fund will be based only upon investment
considerations and will not be limited by any other considerations when
Dreyfus deems its appropriate to make changes in the Fund's assets. The
portfolio turnover rate for the Fund is calculated by dividing the lesser of
the Fund's annual sales or purchases of portfolio securities (exclusive of
purchases and sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of
securities in the Fund during the year. Portfolio turnover may vary from
year to year as well as within a year. The portfolio turnover rates for the
fiscal years ended October 31, 1998 and 1997 were 84.32% and 92.99%,
respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
Average annual total return (expressed as a percentage) for the Class A
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Periods Ended December 31, 1998
1 Year 5 Years 10 Years
Class A Shares 0.89% 15.85% 12.89%
The foregoing chart assumes deduction of the maximum sales load from
the hypothetical initial investment at the time of purchase although no
sales load was applicable to Class A shares or its predecessor class until
January 16, 1998.
Average annual total return (expressed as a percentage) for the
Institutional shares of the Fund for each or the periods noted was:
Average Annual Total Return for the
Periods Ended December 31, 1998
1 Year 5 Years Since Inception
Institutional Shares 7.17% 17.35% 17.12% (2/1/93)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return (expressed as a percentage) for the Class R
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Period Ended December 31, 1998
1 Year Since Inception
Class R Shares 7.01% 19.25% (8/4/94)
Inception date appears in parentheses following the average annual
total return since inception.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at NAV (maximum offering price
in the case of Class A and Class T) 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 or Class T, the maximum sales
load has been deducted from the hypothetical initial investment at the time
of purchase or, in the case of Class B or Class C, the maximum applicable
CDSC has been paid upon redemption at the end of the period.
The Fund's total return for Class A shares (formerly called Investor
shares), Class R shares (formerly called Restricted shares), and
Institutional shares for the period February 6, 1947, August 4, 1994 and
February 1, 1993 to December 31, 1998 were 22,443%, 117.38% and 154.51%,
respectively (assuming, in the case of Class A shares, deduction of the
maximum sales load from the hypothetical initial investment at the time of
purchase, although no sales load was applicable to Class A shares or its
predecessor class until January 16, 1998). Without giving effect to the
applicable front-end sales load, the total return for Class A was 23,823.18%
for the same period. Total return is calculated by subtracting the amount
of the Fund's NAV (maximum offering price in the case of Class A and Class
T) per share at the beginning of a stated period from the NAV 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 and Class T) 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 or Class T 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 or Class T shares or any applicable CDSC with
respect to Class B or C shares, which, if reflected, would reduce the
performance quoted.
The aggregate total return (expressed as a percentage) for Class B
shares and Class C shares of the Fund for the period from inception of each
class (January 16, 1998) to December 31, 1998 was 6.24% and 9.24%,
respectively (assuming, assessment of the maximum CDSC). Without giving
effect to the applicable CDSC, the aggregate total return for Class B and
Class C was 10.24% and 10.24% respectively, for the same period.
No performance information is provided for Class T shares since they
were not offered as of December 31, 1998.
The Fund may compare the performance of its shares to that of other
mutual funds, relevant indices or rankings prepared by independent services
or other financial or industry publications that monitor mutual fund
performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No
Load Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and
World Report, Forbes, Fortune, Barron's, Financial Planning, Financial
Planning on Wall Street, Certified Financial Planner Today, Investment
Advisor, Kiplinger's, Smart Money and similar publications may also be used
in comparing the Fund's performance. Furthermore, the Fund may quote its
yields in advertisements or in shareholder reports.
From time to time, the Fund's advertising materials may refer to
Lipper, Morningstar, or Value Line rankings or ratings, and the related
analyses supporting such rankings or ratings.
From time to time, advertising materials may refer to studies performed
by The Dreyfus Corporation or its affiliates, such as "The Dreyfus Tax
Informed Investing Study" or "The Dreyfus Gender Investment Comparison Study
(1996-1997)" or other such studies.
INFORMATION ABOUT THE FUND/TRUST
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus entitled "The Fund."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares are without par value, have no preemptive or subscription
rights, and are freely transferable. The Fund is one of three portfolios of
the Trust.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Trust to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of
Trustees or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Trust to
hold a special meeting of shareholders for purposes of removing a Trustee
from office or any other purpose. Shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Trust's outstanding voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders.
The Trust is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Trust, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Trustees from the separate voting requirements of the Rule.
The Fund will send annual and semi-annual financial statements to all
of its shareholders.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or a Trustee. The Agreement and Declaration of
Trust provides for indemnification from Fund property for all losses and
expenses of any shareholder held personally liable for the obligations of
the Fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a possibility which
Dreyfus believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder of the Fund paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Trustees intend to
conduct the operations of the Fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the
Fund.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Trust's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Trust, Dreyfus Transfer, Inc. arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications between
shareholders and the Fund, and the payment of dividends and distributions
payable by the Fund. For these services, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Trust during the month, and is reimbursed for certain out-
of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's
investments. Under a custody agreement with the Company, Mellon Bank holds
the Fund's portfolio securities and keeps all necessary accounts and
records. Dreyfus Transfer, Inc. and Mellon Bank, as custodian, have no part
in determining the investment policies of the Fund or which securities are
to be purchased or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this Statement of Additional
Information.
KPMG LLP, 757 Third Avenue, New York, NY 10017, was appointed by the
Trustees to serve as the Fund's independent auditors for the year ending
December 31, 1999, providing audit services including (1) examination of the
annual financial statements, (2) assistance, review and consultation in
connection with SEC filings and (3) review of the annual federal income tax
return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended December 31, 1998
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements included in the Annual
Report, and the Independent Auditors' Report thereon contained therein, and
related notes, are incorporated herein by reference.
APPENDIX
DESCRIPTION OF STANDARD AND POOR'S, MOODY'S, FITCH IBCA
AND DUFF RATINGS
Standard & Poor's
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as
having significant speculative characteristics. `BB' indicates the
least degree of speculation and `C' the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment
and is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D' rating
category is used when payments on a obligation are not made on the
date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The `D' rating also will be used upon the filing of
a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a
plus (+) or a minus (-) sign to show relative standing within the major
rating categories
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt service
is given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the
term of the notes.
SP-3 Speculative capacity to pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated `B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is
used when interest payments of principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes such payments will be made during such grace
period.
Moody's
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally
are referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which suggest
a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment charac
teristics and in fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very
moderate, and thereby not well safeguarded during both good and
bad times over the future. Uncertainty of position characterizes
bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked short-comings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within each generic rating classification from Aa through B.
The modifier 1 indicates a ranking for the security in the higher end
of a rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates a ranking in the lower end of a rating
category.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that define
an investment grade situation. These are designated Moody's Investment
Grade as MIG 1 (best quality) through MIG 4 (adequate quality). Short-term
obligations of speculative quality are designated SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an evaluation of
the degree of risk associated with scheduled principal and interest
payments, and the other represents an evaluation of the degree of risk
associated with the demand feature. The short-term rating assigned to the
demand feature of VRDOs is designated as VMIG. When either the long- or
short-term aspect of a VRDO is not rated, that piece is designated NR, e.g.,
Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the
following characteristics:
* Leading market positions in well-established industries.
* High rates of return on funds employed.
* Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
* Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
* Well-established access to a range of financial markets
and assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt
protection measurements and may require relatively high financial
leverage. Adequate alternative liquidity is maintained.
Fitch IBCA, Inc.
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest
expectation of credit risk. They are assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low
expectation of credit risk. They indicate very strong capacity
for timely payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of
credit risk. The capacity for timely payment of financial
commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB Good credit quality. `BBB' ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions
are more likely to impair this capacity. This is the lowest
investment-grade category.
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse
economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit
risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity
for continued payment is contingent upon a sustained, favorable
business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon
sustained, favorable business or economic developments. A `CC'
rating indicates that default of some kind appears probable. `C'
ratings signal imminent default.
DDD, DD,
and D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For
U.S. corporates, for example, `DD' indicates expected recovery of
50% - 90% of such outstandings, and `D' the lowest recovery
potential, i.e. below 50%.
Short-Term and Commercial Paper Ratings
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and
thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.
F-1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F-2 Good credit quality. A satisfactory capacity for timely payment
of financial commitments, but the margin of safety is not as great
as in the case of the higher ratings.
F-3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could
result in a reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in
financial and economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained,
favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the `AAA'
long-term rating category, to categories below `CCC', or to short-
term ratings other than `F-1'.
Duff & Phelps Rating Co.
Long-Term Ratings
AAA Highest credit quality. The risks factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is
modest but
AA may vary slightly from time to time because of economic
conditions.
AA-
A+ Protection factors are average but adequate. However, risk
factors are
A more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered sufficient
for prudent
BBB investment. Considerable variability in risk during economic
cycles.
BBB-
BB+ Below investments grade but deemed likely to meet obligations when
due.
BB Present or prospective financial protection factors fluctuate
according to
BB- industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will
not be met
B when due. Financial protection factors will fluctuate widely
according to
B- economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends.
Protection factors are narrow and risk can be substantial with
unfavorable
economic/industry conditions, and/or with unfavorable company
developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or
interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financial requirements, access to capital markets is
good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
D-4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high
degree of variation.
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
