File No. 811-524
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 112 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 112 [ X ]
(Check appropriate box or boxes.)
THE DREYFUS/LAUREL FUNDS TRUST
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on May 1, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
The following post-effective amendment to the Registrant's
Registration Statement on Form N-1A relates to the following series of the
Registrant:
DREYFUS PREMIER MANAGED INCOME
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
DREYFUS PREMIER CORE VALUE FUND
Dreyfus Premier Core Value Fund
Investing in value stocks for long-term capital growth
PROSPECTUS May 1, 2000
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: DBCVX
CLASS C: DCVCX
CLASS R: DTCRX
CLASS T: N/A
INSTITUTIONAL SHARES: DCVFX
Contents
The Fund
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 3
Management 4
Financial Highlights 5
Your Investment
- --------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 11
Services for Fund Investors 12
Instructions for Regular Accounts 13
Instructions for IRAs 14
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.
LARGE-CAP COMPANIES: established companies that are considered "known
quantities." Large-cap companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
<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 comprehensive 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 reduce the benefit from any upswing in the market. During such periods,
the fund may not achieve its primary investment objective.
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, and lower the fund's after-tax
performance accordingly.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goals, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE 1>
PAST PERFORMANCE
The bar chart and table at right show some of the risks of investing in the
fund. The bar chart shows the changes in the fund's Class A performance from
year to year. Sales loads are not reflected in the chart; if they were, the
returns shown would have been lower. The table compares the average annual total
returns for Class A, B, C, R and Institutional shares to those of the Standard &
Poor's 500((reg.tm)) Composite Stock Price Index ("S&P 500 Composite") and the
Standard & Poor's 500/BARRA Value Index ("S&P 500/BARRA Value"), each a broad
measure of stock performance. This is the first year in which comparative
performance is being shown for the S&P 500/BARRA Value, which has been selected
as the fund's primary index based on the fund's and the index's value
orientation. Performance for the S&P 500 Composite will not be shown in the
future. Of course, past performance is no guarantee of future results. Since
Class T shares have less than one calendar year of performance, past performance
information for that class is not included in this section of the prospectus.
Performance for Class 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
- -13.44 22.87 4.03 16.51 0.38 35.56 21.44 25.21 7.06 17.29
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q2 '97 +15.28%
WORST QUARTER: Q3 '90 -17.44%
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<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
Inception date 1 Year 5 Years 10 Years inception
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A (2/6/47) 10.56% 19.52% 12.18% --
CLASS B (1/16/98) 12.37% -- -- 11.73%
CLASS C (1/16/98) 15.41% -- -- 13.57%
CLASS R (8/4/94) 17.59% 21.21% -- 18.94%
INSTITUTIONAL
SHARES (2/1/93) 17.41% 21.06% -- 17.17%
S&P 500 COMPOSITE 21.03% 28.54% 18.19% 21.65%*
S&P 500/
BARRA VALUE 12.72% 22.94% 15.37% 18.41%*
* BASED ON THE LIFE OF INSTITUTIONAL SHARES. FOR COMPARATIVE PURPOSES THE VALUE
OF EACH INDEX ON 1/31/93 IS USED AS THE BEGINNING VALUE ON 2/1/93.
<PAGE 2>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
Fee table
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS T SHARES
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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
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ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees .90 .90 .90 .90 .90 .90
Rule 12b-1 fee .25 1.00 1.00 NONE .50 .15
Other expenses .00 .00 .00 .00 .00 .00
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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.
</TABLE>
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A $685 $919 $1,172 $1,892
CLASS B
WITH REDEMPTION $593 $897 $1,226 $1,848**
WITHOUT REDEMPTION $193 $597 $1,026 $1,848**
CLASS C
WITH REDEMPTION $293 $597 $1,026 $2,222
WITHOUT REDEMPTION $193 $597 $1,026 $2,222
CLASS R $92 $287 $498 $1,108
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.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Fund
<PAGE 3>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages more than $127
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
Financial Corporation, a global financial services company with approximately
$2.5 trillion of assets under management, administration or custody, including
approximately $485 billion under management. Mellon provides wealth management,
global investment services and a comprehensive array of banking services for
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.
The fund, Dreyfus and Dreyfus Service Corporation (the fund's distributor) each
have adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
the fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
<PAGE 4>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
YEAR ENDED DECEMBER 31,
CLASS A 1999 1998 1997 1996 1995
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PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 29.26 30.11 30.40 30.13 24.56
Investment operations: Investment income (loss) -- net .13(1) .19 .22 .31 .41
Net realized and unrealized
gain (loss) on investments 4.78 1.95 6.98 6.03 8.24
Total from investment operations 4.91 2.14 7.20 6.34 8.65
Distributions: Dividends from investment income -- net (.13) (.17) (.23) (.30) (.45)
Dividends in excess of investment income -- net -- -- (.01) -- --
Dividends from net realized gain on investments (3.21) (2.82) (7.25) (5.77) (2.63)
Total distributions (3.34) (2.99) (7.49) (6.07) (3.08)
Net asset value, end of period 30.83 29.26 30.11 30.40 30.13
Total return (%) 17.29(2) 7.06(2) 25.21 21.44 35.56
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.15 1.15 1.14 1.13 1.13
Ratio of net investment income to average net assets (%) .41 .61 .64 .96 1.43
Decrease reflected in above expense ratios due to actions by Dreyfus (%) -- -- .01 .02 .02
Portfolio turnover rate (%) 91.22 84.32 92.99 88.46 54.42
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 590,129 555,863 585,624 486,816 401,674
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) EXCLUSIVE OF SALES CHARGE.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CLASS B 1999 1998(1)
- --------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of period 29.19 29.04
Investment operations: Investment income (loss) -- net (.10)(2) (.02)
Net realized and unrealized gain (loss) on investments 4.76 3.00
Total from investment operations 4.66 2.98
Distributions: Dividends from investment income -- net -- (.01)
Dividends from net realized gain on investments (3.21) (2.82)
Total distributions (3.21) (2.83)
Net asset value, end of period 30.64 29.19
Total return (%)(3) 16.37 10.24(4)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.90 1.82(4)
Ratio of net investment income (loss) to average net assets (%) (.33) (.14)(4)
Portfolio turnover rate (%) 91.22 84.32
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 6,792 2,033
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.(
(3) EXCLUSIVE OF SALES CHARGE.
(4) NOT ANNUALIZED.
The Fund
<PAGE 5>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
CLASS C 1999 1998(1)
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 29.19 29.04
Investment operations: Investment income (loss) -- net (.11)(2) (.02)
Net realized and unrealized gain (loss) on investments 4.77 3.00
Total from investment operations 4.66 2.98
Distributions: Dividends from investment income -- net -- (.01)
Dividends from net realized gain on investments (3.21) (2.82)
Total distributions (3.21) (2.83)
Net asset value, end of period 30.64 29.19
Total return (%)(3) 16.41 10.24(4)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.90 1.82(4)
Ratio of net investment income (loss) to average net assets (%) (.35) (.13)(4)
Portfolio turnover rate (%) 91.22 84.32
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,192 195
(1) FROM JANUARY 16, 1998 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1998.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.(
(3) EXCLUSIVE OF SALES CHARGE.
(4) NOT ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CLASS R 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 29.25 30.11 30.46 30.18 24.56
Investment operations: Investment income (loss) -- net .20(1) .26 .33(1) .36 .62
Net realized and unrealized gain
(loss) on investments 4.79 1.95 6.90 6.08 8.16
Total from investment operations 4.99 2.21 7.23 6.44 8.78
Distributions: Dividends from investment income -- net (.21) (.25) (.32) (.39) (.53)
Dividends in excess of investment income -- net -- -- (.01) -- --
Dividends from net realized gain on investments (3.21) (2.82) (7.25) (5.77) (2.63)
Total distributions (3.42) (3.07) (7.58) (6.16) (3.16)
Net asset value, end of period 30.82 29.25 30.11 30.46 30.18
Total return (%) 17.59 7.01 25.54 21.74 36.05
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .90 .90 .89 .88 .88
Ratio of net investment income (loss) to average net assets (%) .65 .82 .88 1.23 1.93
Decrease reflected in above expense ratios due to actions by Dreyfus (%) -- -- .01 .02 .02
Portfolio turnover rate (%) 91.22 84.32 92.99 88.46 54.42
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 885 842 867 11,618 185
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
<PAGE 6>
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
CLASS T 1999(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C>
Net asset value, beginning of period 32.45
Investment operations: Investment income (loss) -- net .01(2)
Net realized and unrealized gain (loss) on investments 1.23
Total from investment operations 1.24
Distributions: Dividends from investment income -- net (.02)
Dividends from net realized gain on investments (2.83)
Total distributions (2.85)
Net asset value, end of period 30.84
Total return (%)(3) 4.10(4)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .53(4)
Ratio of net investment income (loss) to average net assets (%) .05(4)
Portfolio turnover rate (%) 91.22
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 18
(1) FROM AUGUST 16, 1999 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1999.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) EXCLUSIVE OF SALES CHARGE.
(4) NOT ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
INSTITUTIONAL SHARES 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 29.24 30.10 30.38 30.12 24.56
Investment operations: Investment income (loss) -- net .16(1) .22 .26 .36 .47
Net realized and unrealized gain
(loss) on investments 4.78 1.95 6.98 6.01 8.20
Total from investment operations 4.94 2.17 7.24 6.37 8.67
Distributions: Dividends from investment income -- net (.16) (.21) (.26) (.34) (.48)
Dividends in excess of investment income -- net -- -- (.01) -- --
Dividends from net realized gain on investments (3.21) (2.82) (7.25) (5.77) (2.63)
Total distributions (3.37) (3.03) (7.52) (6.11) (3.11)
Net asset value, end of period 30.81 29.24 30.10 30.38 30.12
Total return (%) 17.41 7.17 25.34 21.57 35.60
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.05 1.05 1.04 1.03 1.03
Ratio of net investment income (loss) to average net assets (%) .50 .71 .74 1.07 1.53
Decrease reflected in above expense ratios due to actions by Dreyfus (%) -- -- .01 .02 .02
Portfolio turnover rate (%) 91.22 84.32 92.99 88.46 54.42
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 65,111 74,058 80,427 71,894 75,607
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
The Fund
<PAGE 7>
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
contingent deferred sales charge (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 shares you own in this
fund, any other Dreyfus Premier fund, or any other fund that is advised by
Founders Asset Management LLC ("Founders"), an affiliate of Dreyfus, sold with a
sales load, 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.
<PAGE 8>
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay or may qualify for a reduced 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through dividend reinvestment).
</TABLE>
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
CDSC as a % of your initial
Years since purchase investment or your redemption
was made (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 next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are generally valued based on market
value or, where market quotations are not readily available, based on fair value
as determined in good faith by the fund's board.
ORDERS TO BUY AND SELL SHARES received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day. Institutional shares are not available for new
accounts.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A and 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.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
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 $10,000 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.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND USUALLY 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 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 at left also can provide a guide for potential tax liability when
selling or exchanging fund shares. "Short-term capital gains" applies to fund
shares sold or exchanged up to 12 months after buying them. "Long-term capital
gains" applies to shares sold or exchanged after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
the fund into another Dreyfus fund
or certain Founders-advised funds
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges from
EXCHANGE PRIVILEGE the fund into another Dreyfus fund
or certain Founders-advised funds.
- --------------------------------------------------------------------------------
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
or Founders-advised fund. You can also exchange Class T shares into Class A
shares of certain Dreyfus Premier fixed-income funds. 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.
<PAGE 12>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to The Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044210 (Class A, B, C, R & 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.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 13>
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 the slip and the check to:
The Dreyfus Trust Company,
Custodian P.O. Box
6427, Providence, RI 02940-6427
Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044210 (Class A, B, C, R & 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.
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 10).
Mail your request to:
The Dreyfus Trust Company
P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
<PAGE 14>
NOTES
<PAGE>
For More Information
Dreyfus Premier Core Value Fund
A series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of certain 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 (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to public [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
312P0500
Dreyfus Premier Managed Income Fund
Investing in fixed-income securities for high current income
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Premier Managed Income Fund
---------------------------------
Ticker Symbols CLASS A: PMNIX
CLASS B: DTMBX
CLASS C: DTMCX
CLASS R: DTMRX
Contents
The Fund
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 2
Expenses 3
Management 4
Financial Highlights 5
Your Investment
- --------------------------------------------------------------------------------
Account Policies 7
Distributions and Taxes 9
Services for Fund Investors 10
Instructions for Regular Accounts 11
Instructions for IRAs 12
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
GOAL/APPROACH
The fund seeks high current income consistent with what is believed to be
prudent risk of capital. This objective may be changed without shareholder
approval. To pursue its goal, the fund normally invests at least 65% of total
assets in various types of U.S. government and investment grade corporate debt
obligations (or their unrated equivalent as determined by Dreyfus). The fund
also normally invests at least 65% of total assets in debt obligations having
remaining maturities of 10 years or less.
The fund may also invest up to:
* 35% of total assets in obligations rated below investment grade or
comparable unrated securities
* 25% of total assets in convertible debt obligations and preferred
stocks
* 20% of total assets in foreign securities
In addition to obligations guaranteed by the U.S. government, its agencies or
instrumentalities, the fund may invest up to 25% of its total assets in
asset-backed securities, including mortgage-backed securities.
In seeking to avoid losses, under adverse market conditions, the fund could
invest some or all of its assets in money market instruments.
Concepts to understand
CREDIT QUALITY: independent rating organizations analyze and evaluate a bond
issuer's credit history and ability to repay debts. Based on their assessment,
they assign letter grades that reflect the issuer's creditworthiness. AAA or Aaa
represents the highest credit rating, AA/Aa the second highest, and so on down
to D, for defaulted debt. Bonds rated BBB or Baa and above are considered
investment grade, although they have some speculative characteristics. Bonds
rated below BBB or Baa are sometimes referred to as "junk" bonds. Because their
issuers may be at an early stage of development or may have been unable to repay
past debts, junk bonds typically must offer higher yields than investment grade
bonds to compensate for greater credit risk.
MATURITY: length of time between the date on which a bond is issued and the date
the principal amount must be paid. Bonds with a longer maturity tend to offer
higher yields, but generally fluctuate more in price than shorter-term
counterparts.
<PAGE>
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. When
rates rise, bond prices and the fund's share price usually drop. As a result,
the value of your investment in the fund could go up and down, which means you
could lose money.
To the extent that the fund maintains a longer maturity than short-term funds,
its share price will react more strongly to interest rate movements. The fund's
share price could also be hurt if it holds bonds of issuers that default on
payments of interest or principal or if there is a decline in the credit quality
of a bond it holds, or the perception of a decline.
Other risk factors could have an effect on the fund's performance:
* if the loans underlying the fund's mortgage-backed securities are paid
off earlier or later than expected, which could occur because of movements in
market interest rates, the fund's share price or yield could be hurt
* derivatives, including some mortgage-backed securities, can be
illiquid and highly sensitive to changes in their underlying security,
interest rate or index, so that their value can be highly volatile, and a
small investment in them could have a potentially large impact on the fund
* general downturns in the economy could cause the value of asset-backed
securities to fall, and the risk that any recovery on repossessed collateral
might be inadequate is greater where such securities are not backed by
mortgages
* foreign securities may carry additional risks beyond comparable types
of securities from the United States, including political and economic
instability, changes in currency exchange rates and less liquid markets for
such securities
While some of the fund's securities may carry guarantees by the U.S. government
or its agencies or instrumentalities, these guarantees do not apply to shares of
the fund itself.
The fund's investments in money market instruments could reduce its yield and/or
total return.
Other potential risks
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price and less liquid and are considered highly
speculative. As with stocks, the prices of junk bonds can fall in response to
bad news about the issuer, the issuer's industry or the economy generally.
At times, the fund may engage in short-term trading. This could increase the
fund's transaction costs and taxable distributions, lowering its after-tax
performance accordingly.
The Fund 1
<PAGE 1>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's Class A performance from year to
year. Sales loads are not reflected in the chart; if they were, the returns
shown would have been lower. The table compares the average annual total returns
of each of the fund's share classes to those of the Lehman Brothers Aggregate
Bond Index, a broad measure of bond performance. Of course, past performance is
no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
4.40 17.03 8.77 14.54 -5.14 17.32 3.42 9.80 4.90 -1.75
90 91 92 93 94 95 96 97 98 99
CLASS A SHARES
BEST QUARTER: Q2 '95 +6.79%
WORST QUARTER: Q2 '94 -2.98%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Inception Since
date 1 Year 5 Years 10 Years inception
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A (8/1/79) -6.18% 5.56% 6.59% --
CLASS B (12/19/94) -6.18% 5.42% -- 5.44%
CLASS C (12/19/94) -3.40% 5.74% -- 5.61%
CLASS R (2/1/93) -1.57% 6.79% -- 5.92%
LEHMAN BROTHERS
AGGREGATE BOND INDEX -0.82% 7.73% 7.70% 6.21%*
* BASED ON LIFE OF CLASS R. 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 goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
2
<PAGE 2>
<TABLE>
<CAPTION>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
Fee table
CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
<S> <C> <C> <C> <C>
% OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
% OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees .70 .70 .70 .70
Rule 12b-1 fee .25 1.00 1.00 NONE
Other expenses .00 .00 .00 .00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL .95 1.70 1.70 .70
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1 MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF
REDEEMED WITHIN ONE YEAR.
</TABLE>
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A $543 $739 $952 $1,564
CLASS B
WITH REDEMPTION $573 $836 $1,123 $1,627**
WITHOUT REDEMPTION $173 $536 $923 $1,627**
CLASS C
WITH REDEMPTION $273 $536 $923 $2,009
WITHOUT REDEMPTION $173 $536 $923 $2,009
CLASS R $72 $224 $390 $871
** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Fund 3
<PAGE 3>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $127 billion in over 160 mutual
fund portfolios. For the past fiscal year, the fund paid Dreyfus a management
fee at the annual rate of 0.70% of the fund's average daily net assets. Dreyfus
is the primary mutual fund business of Mellon Financial Corporation, a global
financial services company with approximately $2.5 trillion of assets under
management, administration or custody, including approximately $485 billion
under management. Mellon provides wealth management, global investment services
and a comprehensive array of banking services for 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 Arthur J. MacBride, III. Mr. MacBride is a portfolio
manager of Dreyfus and an officer of The Boston Company Asset Management, Inc.,
an affiliate of Dreyfus. He has been employed by Dreyfus as a portfolio manager
of the fund since October 1994.
The fund, Dreyfus and Dreyfus Service Corporation (the fund's distributor) each
have adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
the fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
4
<PAGE 4>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
YEAR ENDED DECEMBER 31,
CLASS A 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 10.81 11.01 10.73 11.08 10.12
Investment operations: Investment income -- net .64 .73 .73 .69 .75
Net realized and unrealized gain (loss) on investments (.82) (.19) .27 (.35) .96
Total from investment operations (.18) .54 1.00 .34 1.71
Distributions: Dividends from investment income -- net (.64) (.74) (.72) (.69) (.75)
Net asset value, end of period 9.99 10.81 11.01 10.73 11.08
Total return (%)(1) (1.75) 4.90 9.80 3.42 17.32
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .95 .95 .95 .95 .95
Ratio of net investment income to average net assets (%) 6.21 6.62 6.74 6.48 7.08
Portfolio turnover rate (%) 309.42 238.95 244.44 251.66 236.10
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 60,755 71,902 72,878 77,305 80,782
(1) EXCLUSIVE OF SALES CHARGE.
YEAR ENDED DECEMBER 31,
CLASS B 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 10.81 11.01 10.73 11.08 10.12
Investment operations: Investment income -- net .57 .64 .65 .61 .67
Net realized and unrealized gain (loss) on investments (.83) (.19) .27 (.35) .96
Total from investment operations (.26) .45 .92 .26 1.63
Distributions: Dividends from investment income -- net (.56) (.65) (.64) (.61) (.67)
Net asset value, end of period 9.99 10.81 11.01 10.73 11.08
Total return (%)(1) (2.48) 4.10 8.97 2.54 16.55
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.70 1.70 1.70 1.70 1.69
Ratio of net investment income to average net assets (%) 5.44 5.81 5.98 5.77 6.41
Portfolio turnover rate (%) 309.42 238.95 244.44 251.66 236.10
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 15,905 16,325 6,896 4,973 2,236
(1) EXCLUSIVE OF SALES CHARGE.
The Fund 5
<PAGE 5>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
CLASS C 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 10.82 11.02 10.73 11.08 10.12
Investment operations: Investment income -- net .57 .64 .64 .61 .67
Net realized and unrealized gain (loss) on investments (.83) (.19) .29 (.35) .96
Total from investment operations (.26) .45 .93 .26 1.63
Distributions: Dividends from investment income -- net (.56) (.65) (.64) (.61) (.67)
Net asset value, end of period 10.00 10.82 11.02 10.73 11.08
Total return (%)(1) (2.48) 4.17 8.96 2.49 16.54
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.70 1.69 1.70 1.68 1.66
Ratio of net investment income to average net assets (%) 5.46 5.74 5.95 5.69 6.03
Portfolio turnover rate (%) 309.42 238.95 244.44 251.66 236.10
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 3,695 5,369 1,007 420 67
(1) EXCLUSIVE OF SALES CHARGE.
YEAR ENDED DECEMBER 31,
CLASS R 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 10.81 11.01 10.73 11.08 10.12
Investment operations: Investment income -- net .67 .74 .76 .72 .78
Net realized and unrealized gain (loss) on investments (.84) (.17) .27 (.35) .96
Total from investment operations (.17) .57 1.03 .37 1.74
Distributions: Dividends from investment income -- net (.66) (.77) (.75) (.72) (.78)
Net asset value, end of period 9.98 10.81 11.01 10.73 11.08
Total return (%) (1.57) 5.26 9.97 3.58 17.71
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .70 .70 .70 .70 .70
Ratio of net investment income to average net assets (%) 6.45 6.77 6.99 6.74 7.31
Portfolio turnover rate (%) 309.42 238.95 244.44 251.66 236.10
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 9,270 10,707 11,031 12,567 11,532
</TABLE>
6
<PAGE 6>
Your Investment
ACCOUNT POLICIES
THE DREYFUS PREMIER FUNDS are designed primarily for people who are investing
through a third party, such as a bank, broker-dealer or financial adviser, or in
a 401(k) or other retirement plan. Third parties with whom you open a fund
account may impose policies, limitations and fees which are different from
those described here.
YOU WILL NEED TO CHOOSE A SHARE CLASS before making your initial investment. In
making your choice, you should weigh the impact of all potential costs over the
length of your investment, including sales charges and annual fees. For example,
in some cases, it can be more economical to pay an initial sales charge than to
choose a class with no initial sales charge but higher annual fees and a
contingent deferred sales charge (CDSC).
* CLASS A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale of their shares, want to
take advantage of the reduced sales charges available on larger investments
and/or have a longer-term investment horizon
* CLASS B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work immediately
and/or have a longer-term investment horizon
* CLASS C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work immediately
and/or have a shorter-term investment horizon
* CLASS R shares are designed for eligible institu-
tions on behalf of their clients. Individuals may not purchase these shares
directly.
Your financial representative can help you choose the share class that is
appropriate for you.
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay a sales charge to buy or sell shares. Consult your financial representative
or refer to the SAI to see if this may apply to you. Shareholders holding Class
A shares of the fund since December 19, 1994 may continue to purchase Class A
shares without a front-end sales load.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales charges
CLASS A -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Up to $49,999 4.50% 4.70%
$50,000 -- $99,999 4.00% 4.20%
$100,000 -- $249,999 3.00% 3.10%
$250,000 -- $499,999 2.50% 2.60%
$500,000 -- $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% CDSC may be charged on any shares sold within one year of purchase (except shares bought through
dividend reinvestment).
</TABLE>
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Years since purchase investment or your redemption
was made (whichever is less)
- --------------------------------------------------------------------------------
Up to 2 years 4.00%
2 -- 4 years 3.00%
4 -- 5 years 2.00%
5 -- 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS C -- CHARGED WHEN YOU SELL SHARES
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES LOAD OR RULE 12B-1 FEES
Reduced Class A sales charge
LETTER OF INTENT: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
RIGHT OF ACCUMULATION: lets you add the value of any shares you own in this
fund, any other Dreyfus Premier fund, or any other fund that is advised by
Founders Asset Management LLC ("Founders"), an affiliate of Dreyfus, sold with a
sales load, to the amount of your next Class A investment for purposes of
calculating the sales charge.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.
Your Investment 7
<PAGE 7>
ACCOUNT POLICIES (CONTINUED)
Buying shares
THE NET ASSET VALUE (NAV) of each class is generally calculated as of the close
of trading on the New York Stock Exchange (NYSE) (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are generally valued by using
available market quotations or at fair value, which may be determined by one or
more pricing services approved by the fund's board.
ORDERS TO BUY AND SELL SHARES received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A shares are offered to the public at NAV plus a sales charge. Classes B, C and
R are offered at NAV, but Classes B and C generally are subject to higher annual
operating expenses and a CDSC.
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
TO KEEP YOUR CDSC AS LOW AS POSSIBLE, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject to
the lowest charge. The CDSC is based on the lesser of the original purchase cost
or the current market value of the shares being sold, and is not charged on
shares you acquired by reinvesting your dividends. Certain investors may qualify
to have the CDSC waived. Consult your financial representative or the SAI for
details.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to eight business days or until it has collected payment.
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
8
<PAGE 8>
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets
* change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
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.
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS dividends from its net investment
income monthly and distributes any net capital gains it has realized once a
year. Each share class will generate a different dividend because each has
different expenses. Your distributions will be reinvested in 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 also can provide a guide for potential tax liability when
selling or exchanging fund shares. "Short-term capital gains" applies to fund
shares sold or exchanged up to 12 months after buying them. "Long-term capital
gains" applies to shares sold or exchanged after 12 months.
Your Investment 9
<PAGE 9>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
the fund into another Dreyfus fund
or certain Founders-advised funds
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges from
EXCHANGE PRIVILEGE the fund into another Dreyfus fund
or certain Founders-advised funds.
- --------------------------------------------------------------------------------
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
or Founders-advised fund. You can request your exchange by contacting your
financial representative. Be sure to read the current prospectus for any fund
into which you are exchanging before investing. Any new account established
through an exchange will generally have the same privileges as your original
account (as long as they are available). There is currently no fee for
exchanges, although you may be charged a sales load when exchanging into any
fund that has a higher one.
TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and following the instructions on
your application, or contact your financial representative.
Reinvestment privilege
UPON WRITTEN REQUEST, YOU CAN REINVEST up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price without
any sales charge. If you paid a CDSC, it will be credited back to your account.
This privilege may be used only once.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
10
<PAGE 10>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587 Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Name of Fund P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to The Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4370" for
Class A, "4380" for Class B, "4390" for Class C, or "4400" for Class R.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 8).
Mail your request to: The Dreyfus Family of Funds P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions are subject to a $1,000
minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment 11
<PAGE 11>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to The Boston Safe Deposit & Trust
Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class * your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4370" for
Class A, "4380" for Class B, "4390" for Class C, or "4400" for Class R.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 8).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427, Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
12
<PAGE 12>
[Application p1]
<PAGE>
[Application p2]
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus Premier Managed Income Fund
A series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of certain 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 (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
349P0500
Dreyfus Premier Limited Term High Income Fund
Investing in fixed-income securities rated below investment grade for high
current income
PROSPECTUS May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
The Fund
- --------------------------------------------------------------------------------
Goal/Approach 1
Main Risks 2
Past Performance 3
Expenses 4
Management 5
Financial Highlights 6
Your Investment
- --------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 11
Services for Fund Investors 12
Instructions for Regular Accounts 13
Instructions for IRAs 14
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
<PAGE>
Dreyfus Premier Limited Term High Income Fund
---------------------------------
Ticker Symbols CLASS A: DPLTX
CLASS B: DLTBX
CLASS C: PTHIX
CLASS R: N/A
The Fund
GOAL/APPROACH
The fund seeks high current income. To pursue this goal, it normally invests at
least 65% of its net assets in fixed-income securities that, at the time of
purchase, are rated below investment grade ("high yield" or "junk" bonds) or are
the unrated equivalent as determined by Dreyfus. The fund's portfolio may
include various types of fixed-income securities, such as corporate bonds and
notes, mortgage-related securities, asset-backed securities, zero coupon
securities, convertible securities, preferred stock and other debt instruments
of U.S. and foreign issuers.
In choosing securities, the portfolio manager seeks to capture the higher yields
offered by junk bonds, while managing credit risk and the volatility caused by
interest rate movements. The fund attempts to manage interest rate risk by
maintaining an average effective portfolio duration of 3.5 years or less and an
average effective portfolio maturity of 4 years or less, although there is no
limit on the maturity or duration of individual securities. In calculating
average effective maturity, the fund may treat a security that can be
repurchased by its issuer on an earlier date (known as a "call date") as
maturing on the call date rather than on its stated maturity date.
The fund's investment process is based on fundamental credit research, and at
times, focusing on companies that are currently out-of-favor. The fund looks at
a variety of factors when assessing a potential investment, including the
company's financial strength, the state of the industry or sector it belongs to,
the long-term fundamentals of that industry or sector, the company's management,
and whether there is sufficient equity value in the company. Under certain
circumstances, the fund may also invest in investment grade bonds. Under adverse
market conditions, the fund could invest some or all of its assets in money
market securities.
Concepts to understand
HIGH YIELD BONDS: those rated below BBB or Baa by credit rating agencies such as
Standard & Poor's or Moody's. Because their issuers may be at an early stage of
development or may have been unable to repay past debts, these bonds typically
must offer higher yields than investment grade bonds to compensate investors for
greater credit risk.
DURATION: a way of measuring a security's maturity in terms of the average time
required to receive the present value of all interest and principal payments,
which incorporates the security's yield, coupon interest payments, final
maturity and option features into one measure.
The Fund
<PAGE 1>
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. When
rates rise, bond prices and the fund's share price usually drop. As a result,
the value of your investment in the fund could go up and down, which means you
could lose money. The fund's shorter maturity and duration will generally cause
it to have a lower yield than longer-term funds that invest in high yield bonds.
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price and less liquid and are considered
speculative. As with stocks, the prices of high yield bonds can fall in response
to bad news about the issuer, the issuer's industry or the economy in general.
The fund's share price could also be hurt if it holds bonds of issuers that
default on payments of principal or interest, or if there is a decline in the
credit quality of a bond it holds, or the perception of a decline.
Other risk factors could have an effect on the fund's performance:
(pound) if the loans underlying the fund's mortgage-related securities are
paid off earlier or later than expected, which could occur because of
movements in market interest rates, the fund's share price or yield
could be hurt and the duration of its portfolio affected
(pound) the value of certain types of stripped mortgage-backed securities may
move in the same direction as interest rates
(pound) price and yield of any foreign debt security the fund may own may be
affected by factors such as political/economic instability, changes in
currency exchange rates and less liquid markets
(pound) if the high yield market becomes "illiquid," typically when there are
many more sellers than buyers for the securities, the value of such
securities, and the fund's share price, may fall dramatically
(pound) under certain market conditions, usually during periods of market
illiquidity or rising interest rates, prices of the fund's "callable"
issues are subject to increased price fluctuation because they can be
expected to perform more like longer-term securities than shorter-term
securities
The fund's investments in investment grade bonds and money market securities
could also reduce the fund's yield and/or return.
Other potential risks
The fund may invest in options and futures to hedge the fund's portfolio. The
fund may also invest up to 25% of its assets in asset-backed and
mortgage-related securities, and sell short. These practices carry additional
risk and sometimes may reduce returns or increase volatility. In addition, the
fund may borrow for certain purposes including to facilitate trades in its
portfolio securities (a form of leveraging), which could have the effect of
magnifying the fund's gains or losses. At times, the fund may engage in
short-term trading. This could increase the fund's transaction costs and taxable
distributions, lowering its after-tax performance accordingly.
<PAGE 2>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's Class A performance from year to
year. Sales loads are not reflected in the chart; if they were, the returns
shown would have been lower. The table compares the fund's average annual total
return to that of the Merrill Lynch High Yield Master II Index ("Merrill Lynch
Index"), a broad measure of bond performance, and to that of a Customized
Limited Term High Yield Index, a blended index constructed by Dreyfus to manage
the fund that is composed of four shorter-term sub-indexes* of the Merrill Lynch
Index. Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
-0.10 1.99
90 91 92 93 94 95 96 97 98 99
CLASS A SHARES
BEST QUARTER: Q1 '98 +3.84%
WORST QUARTER: Q3 '98 -5.15%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (6/2/97)
- --------------------------------------------------------------------------------
CLASS A -2.56% 0.97%
CLASS B -2.21% 1.32%
CLASS C 0.31% 2.01%
CLASS R 2.24% 3.01%
MERRILL LYNCH INDEX 2.51% 5.40%**
DREYFUS CUSTOMIZED LIMITED
TERM HIGH YIELD INDEX* 5.23% 6.30%**
* THE FOUR SUB-INDEXES, BLENDED AND MARKET WEIGHTED, ARE (I) BB-RATED 1-3
YEARS, (II) B-RATED 1-3 YEARS, (III) BB-RATED 3-5 YEARS, AND (IV) B-RATED 3-5
YEARS.
** FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 5/31/97 IS USED AS THE
BEGINNING VALUE ON 6/2/97.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund
<PAGE 3>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
<TABLE>
Fee table
CLASS A CLASS B CLASS C CLASS R
- ---------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
<S> <C> <C> <C> <C>
% OF OFFERING PRICE 4.50 NONE NONE NONE
Maximum contingent deferred sales charge (CDSC)
% OF PURCHASE OR SALE PRICE, WHICHEVER IS LESS NONE* 4.00 1.00 NONE
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees .70 .70 .70 .70
Rule 12b-1 fee .25 .75 1.00 NONE
Other expenses .00 .00 .00 .00
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL .95 1.45 1.70 .70
* SHARES BOUGHT WITHOUT AN INITIAL SALES CHARGE AS PART OF AN INVESTMENT OF $1
MILLION OR MORE MAY BE CHARGED A CDSC OF 1.00% IF REDEEMED WITHIN ONE YEAR.
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A $543 $739 $952 $1,564
CLASS B
WITH REDEMPTION $548 $759 $992 $1,476**
WITHOUT REDEMPTION $148 $459 $792 $1,476**
CLASS C
WITH REDEMPTION $273 $536 $923 $2,009
WITHOUT REDEMPTION $173 $536 $923 $2,009
CLASS R $72 $224 $390 $871
** ASSUMES CONVERSION OF CLASS B TO CLASS A AT END OF THE SIXTH YEAR FOLLOWING
THE DATE OF PURCHASE.
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. Because actual
return and expenses will be different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
RULE 12B-1 FEE: the fee paid out of fund assets (attributable to appropriate
share classes) for distribution expenses and shareholder service. Because this
fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
<PAGE 4>
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 $127
billion in over 160 mutual fund portfolios. For the past fiscal year, the fund
paid Dreyfus a management fee at the annual rate of 0.70% of the fund's average
daily net assets. Dreyfus is the primary mutual fund business of Mellon
Financial Corporation, a global financial services company with approximately
$2.5 trillion of assets under management, administration or custody, including
approximately $485 billion under management. Mellon provides wealth management,
global investment services and a comprehensive array of banking services for
individuals, businesses and institutions. Mellon is headquartered in Pittsburgh,
Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Roger King, senior portfolio manager and head of taxable high yield investments
at Dreyfus, has managed the fund since its inception. Mr. King has been employed
by Dreyfus since February 1996 after serving as vice president and director of
high yield research at Citibank Securities, Inc.
The fund, Dreyfus and Dreyfus Service Corporation (the fund's distributor) each
have adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
the fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
The Fund
<PAGE 5>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These financial highlights have been
independently audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the annual report, which is available upon request.
<TABLE>
YEAR ENDED DECEMBER 31,
CLASS A 1999 1998 1997(1)
- --------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C>
Net asset value, beginning of period 11.33 12.46 12.50
Investment operations: Investment income -- net 1.12 1.15 .71
Net realized and unrealized gain (loss) on investments (.90) (1.14) (.04)
Total from investment operations .22 .01 .67
Distributions: Dividends from investment income -- net (1.10) (1.14) (.71)
Net asset value, end of period 10.45 11.33 12.46
Total return (%) (2) 1.99 (.10) 9.16(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .95 .95 .95(3)
Ratio of interest expense to average net assets (%) .01 .02 .08(3)
Ratio of net investment income to average net assets (%) 10.19 9.55 9.34(3)
Portfolio turnover rate (%) 40.79 45.34 28.83(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 106,959 147,131 65,705
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
CLASS B 1999 1998 1997(1)
- -------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 11.33 12.46 12.50
Investment operations: Investment income -- net 1.06 1.09 .66
Net realized and unrealized gain (loss) on investments (.89) (1.14) (.04)
Total from investment operations .17 (.05) .62
Distributions: Dividends from investment income -- net (1.05) (1.08) (.66)
Net asset value, end of period 10.45 11.33 12.46
Total return (%) (2) 1.48 (.61) 8.57(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.45 1.45 1.45(3)
Ratio of interest expense to average net assets (%) .01 .02 .09(3)
Ratio of net investment income to average net assets (%) 9.70 9.02 8.73(3)
Portfolio turnover rate (%) 40.79 45.34 28.83(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 562,605 551,415 198,057
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
<PAGE 6>
YEAR ENDED DECEMBER 31,
CLASS C 1999 1998 1997(1)
- --------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 11.33 12.47 12.50
Investment operations: Investment income -- net 1.04 1.06 .65
Net realized and unrealized gain (loss) on investments (.90) (1.15) (.03)
Total from investment operations .14 (.09) .62
Distributions: Dividends from investment income -- net (1.02) (1.05) (.65)
Net asset value, end of period 10.45 11.33 12.47
Total return (%) (2) 1.23 (.93) 8.47(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) 1.70 1.70 1.70(3)
Ratio of interest expense to average net assets (%) .01 .02 .09(3)
Ratio of net investment income to average net assets (%) 9.45 8.77 8.54(3)
Portfolio turnover rate (%) 40.79 45.34 28.83(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 170,011 204,184 67,495
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
(4) NOT ANNUALIZED.
YEAR ENDED DECEMBER 31,
CLASS R 1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 11.32 12.45 12.50
Investment operations: Investment income -- net 1.05 1.25 .81
Net realized and unrealized gain (loss) on investments (.80) (1.21) (.14)
Total from investment operations .25 .04 .67
Distributions: Dividends from investment income -- net (1.13) (1.17) (.72)
Net asset value, end of period 10.44 11.32 12.45
Total return (%) 2.24 .14 9.26(2)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .70 .70 .75(2)
Ratio of interest expense to average net assets (%) .01 .03 .05(2)
Ratio of net investment income to average net assets (%) 10.65 10.41 10.08(2)
Portfolio turnover rate (%) 40.79 45.34 28.83(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 329 127 127
(1) FROM MAY 30, 1997 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1997.
(2) ANNUALIZED.
(3) NOT ANNUALIZED.
</TABLE>
The Fund
<PAGE 7>
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
contingent deferred sales charge (CDSC).
(pound) CLASS A shares may be appropriate for investors who prefer to pay the
fund's sales charge up front rather than upon the sale of their
shares, want to take advantage of the reduced sales charges available
on larger investments and/or have a longer-term investment horizon
(pound) CLASS B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a longer-term investment horizon
(pound) CLASS C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a shorter-term investment horizon
(pound) CLASS R shares are designed for eligible institu-
tions on behalf of their clients (individuals may not purchase these
shares directly)
Your financial representative can help you choose the share class that is
appropriate for you.
Reduced Class A sales charge
LETTER OF INTENT: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
RIGHT OF ACCUMULATION: lets you add the value of any shares you own in this
fund, any other Dreyfus Premier fund, or any other fund that is advised by
Founders Asset Management LLC ("Founders"), an affiliate of Dreyfus, sold with a
sales load, to the amount of your next Class A investment for purposes of
calculating the sales charge.
CONSULT THE STATEMENT OF ADDITIONAL INFORMATION (SAI) OR YOUR FINANCIAL
REPRESENTATIVE FOR MORE DETAILS.
<PAGE 8>
Share class charges
EACH SHARE CLASS has its own fee structure. In some cases, you may not have to
pay or may qualify for a reduced sales charge to buy or sell shares. Consult
your financial representative or the SAI to see if this may apply to you.
- --------------------------------------------------------------------------------
Sales charges
CLASS A -- CHARGED WHEN YOU BUY SHARES
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- --------------------------------------------------------------------------------
Up to $49,999 4.50% 4.70%
$50,000 -- $99,999 4.00% 4.20%
$100,000 -- $249,999 3.00% 3.10%
$250,000 -- $499,999 2.50% 2.60%
$500,000 -- $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through dividend reinvestment).
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Years since purchase investment or your redemption
was made (whichever is less)
- --------------------------------------------------------------------------------
Up to 2 years 4.00%
2 -- 4 years 3.00%
4 -- 5 years 2.00%
5 -- 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 0.75% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS C -- CHARGED WHEN YOU SELL SHARES
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 1.00% of the class's
average daily net assets.
- --------------------------------------------------------------------------------
CLASS R -- NO SALES LOAD OR RULE 12B-1 FEES
Buying shares
THE NET ASSET VALUE (NAV) of each class is generally calculated as of the close
of trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. The fund's investments are generally valued based on market
value or, where market quotations are not readily available, based on fair value
as determined in good faith by the fund's board.
ORDERS TO BUY AND SELL SHARES received by dealers by the close of trading on the
NYSE and transmitted to the distributor or its designee by the close of its
business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): the market value of one share, computed by dividing the
total net assets of a fund or class by its shares outstanding. The fund's Class
A shares are offered to the public at NAV plus a sales charge. Classes B, C and
R are offered at NAV, but Classes B and C generally are subject to higher annual
operating expenses and a CDSC.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
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.
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
(pound) refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group
who, in the fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the fund within a
calendar year)
(pound) refuse any purchase or exchange request in excess of 1% of the fund's
total assets
(pound) change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; accounts opened through a financial institution.
If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 30 days, the fund may close your account and
send you the proceeds.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND USUALLY PAYS ITS SHAREHOLDERS monthly dividends from its net investment
income and distributes any net capital gains it has realized once a year. Each
share class will generate a different dividend because each has different
expenses. Your distributions will be reinvested in 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,
including through the checkwriting privilege, may generate a tax liability. Of
course, withdrawals or distributions from tax-deferred accounts are taxable when
received.
The table at left can provide a guide for potential tax liability when selling
or exchanging fund shares. "Short-term capital gains" applies to fund shares
sold or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-554-4611.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
the fund into another Dreyfus fund
or certain Founders-advised funds
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges from
EXCHANGE PRIVILEGE the fund into another Dreyfus fund
or certain Founders-advised funds.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds. There will be no CDSC
on Class B shares, as long as the amounts withdrawn do not exceed 12% annually
of the account value at the time the shareholder elects to participate in the
plan.
Checkwriting privilege (Class A only)
YOU CAN WRITE REDEMPTION CHECKS for Class A shares for $500 or more. Please
consider share price fluctuations when doing so. Checks are free, but a stop
payment fee may be charged. Do not use checks to close an account. Do not
postdate your checks.
Exchange privilege
YOU CAN EXCHANGE SHARES WORTH $500 OR MORE (no minimum for retirement accounts)
from one class of the fund into the same class of another Dreyfus Premier fund
or Founders-advised fund. You can request your exchange by contacting your
financial representative. Be sure to read the current prospectus for any fund
into which you are exchanging before investing. Any new account established
through an exchange will generally have the same privileges as your original
account (as long as they are available). There is currently no fee for
exchanges, although you may be charged a sales load when exchanging into any
fund that has a higher one.
TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on your
account by providing bank account information and following the instructions on
your application, or contact your financial representative.
Reinvestment privilege
UPON WRITTEN REQUEST, YOU CAN REINVEST up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price without
any sales charge. If you paid a CDSC, it will be credited back to your account.
This privilege may be used only once.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
<PAGE 12>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: Name of Fund P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit & Trust Co., with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to Boston Safe Deposit & Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4550" for
Class A, "4560" for Class B, "4570" for Class C, or "4580" for Class R.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a redemption check (Class A only) OR write a letter of instruction that
includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 10)
Mail your request to: The Dreyfus Family of Funds P.O. Box 6587, Providence, RI
02940-6587 Attn: Institutional Processing
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
To open an account, make subsequent investments or to sell shares, please
contact your financial representative or call toll free in the U.S.
1-800-554-4611. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 13>
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 the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427 Attn: Institutional Processing
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit & Trust Co.,
with these instructions:
* ABA# 011001234
* DDA# 044350
* the fund name
* the share class * your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "4550" for
Class A, "4560" for Class B, "4570" for Class C, or "4580" for Class R.
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 10).
Mail your request to: The Dreyfus Trust Company P.O. Box 6427, Providence, RI
02940-6427 Attn: Institutional Processing
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
For information and assistance, contact your financial representative or call
toll free in the U.S. 1-800-554-4611. Make checks payable to: THE DREYFUS TRUST
COMPANY, CUSTODIAN.
<PAGE 14>
NOTES
<PAGE>
For More Information
Dreyfus Premier Limited Term High Income Fund
A series of The Dreyfus/Laurel Funds Trust
- --------------------------------------
SEC file number: 811-5240
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of certain 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 (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
029P0500
<PAGE>
- ------------------------------------------------------------------------------
DREYFUS PREMIER CORE VALUE FUND
CLASS A, CLASS B, CLASS C, CLASS R, CLASS T AND INSTITUTIONAL
SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 2000
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Dreyfus Premier Core Value Fund (the "Fund"), dated May 1, 2000, 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, that is registered with the Securities and
Exchange Commission ("SEC"). 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
The financial statements for the fiscal year ended December 31, 1999
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.
TABLE OF CONTENTS
Page
Description of the Fund/Trust...................................B-2
Management of the Fund.........................................B-17
Management Arrangements........................................B-21
Purchase of Shares.............................................B-24
Distribution and Service Plans.................................B-32
Redemption of Shares...........................................B-35
Shareholder Services...........................................B-39
Additional Information About Purchases, Exchanges and
Redemptions..................................................B-46
Determination of Net Asset Value...............................B-47
Dividends, Other Distributions and Taxes.......................B-48
Portfolio Transactions.........................................B-53
Performance Information........................................B-55
Information about the Fund/Trust...............................B-58
Counsel and Independent Auditors...............................B-59
Year 2000 Issues...............................................B-59
Appendix.......................................................B-60
<PAGE>
DESCRIPTION OF THE FUND/TRUST
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. 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.
Dreyfus Service Corporation (the "Distributor") is the distributor of the
Fund's shares.
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 2 to 270 days. Each instrument may be backed only
by the credit of the issuer or may be backed by some form of credit enhancement,
typically in the form of a guarantee by a commercial bank. Commercial paper
backed by guarantees of foreign banks may involve additional risk due to the
difficulty of obtaining and enforcing judgments against such banks and the
generally less restrictive regulations to which such banks are subject. 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.
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.
Investment Techniques
In addition to the principal investment strategies discussed in the Fund's
Prospectus, the Fund also may engage in the investment techniques described
below. The Fund might not use, or may not have the ability to use, any of these
strategies and there can be no assurance that any strategy that is used will
succeed.
Borrowing. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
Lending of Portfolio Securities. The Fund may lend securities from its
portfolio to brokers, dealers and other financial organizations. Such loans, if
and when made, may not exceed 33 1/3% of the Fund's total assets, taken at
value. The Fund may not lend portfolio securities to its affiliates without
specific authorization from the SEC. Loans of portfolio securities by the Fund
will be collateralized by cash, letters of credit or securities issued or
guaranteed by the U.S. Government or its agencies which will be maintained at
all times in an amount equal to at least 100% of the current market value of the
loaned securities. From time to time, the Fund may return a part of the interest
earned from the investment of collateral received for securities loaned to the
borrower and/or a third party, which is unaffiliated with the Fund and which is
acting as a "finder."
By lending portfolio securities, the Fund can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or by obtaining yield in
the form of interest paid by the borrower when U.S. Government securities are
used as collateral. Requirements of the SEC, which may be subject to future
modifications, currently provide that the following conditions must be met
whenever portfolio securities are loaned: (1) the Fund must receive at least
100% cash collateral or equivalent securities from the borrower; (2) the
borrower must increase such collateral whenever the market value of the loaned
securities rises above the level of such collateral; (3) the Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable interest
on the loaned securities and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) voting
rights on the loaned securities may pass to the borrower; however, if a material
event adversely affecting the investment occurs, the Trustees must terminate the
loan and regain the right to vote the securities. The risks in lending portfolio
securities, as well as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by Dreyfus to be of good
standing and will not be made unless, in the judgment of Dreyfus, the
consideration to be earned from such loans would justify the risk.
Derivative Instruments. The Fund may purchase and sell
----------------------
various financial instruments ("Derivative Instruments"), such as
options on U.S. and foreign securities or indices of such
securities. The index Derivative Instruments the Fund may use
may be based on indices of U.S. or foreign equity 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.
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
Trustees and Officers
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
Dreyfus Service Corporation.......................Distributor
Dreyfus Transfer, Inc..........................Transfer Agent
Mellon Bank.........................................Custodian
The Trust has a Board composed of eight 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 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
outsourcing functions for small and medium sized companies and QuikCat.com,
Inc., a private company engaged in the development of high speed movement,
routing, storage and encryption of data across cable, wireless and all
other modes of data transport. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus and until August
24, 1994, the Fund's distributor. From August 1994 until December 31, 1994,
he was a director of Mellon Financial Corporation. Age: 56 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; former Chairman of the Board and CEO of Fieldcrest Cannon,
Inc. Age: 65 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: 72 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: 78 years old. Address: Way Hollow Road
and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), and Boston
Safe Deposit and Trust Company, each an affiliate of Dreyfus. Age: 53 years
old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman of the Board and CEO, LDG
Reinsurance Corporation; Vice Chairman, HCCH. Age 52 years old. Address:
401 Edgewater Place, Wakefield, Massachusetts 01880.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.;
Director, American Express Centurion Bank; Director, Ontario Hydro Services
Company; Trustee, the Hyams Foundation, Inc. Age: 50 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
STEPHEN E. CANTER. President of the Trust; President, Chief Operating Officer,
and Chief Investment Officer of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. Mr. Canter also is a
Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which is
an affiliate of Dreyfus. He is 54 years old.
MARK N. JACOBS. Vice President of the Trust; Vice President, Secretary, and
General Counsel to Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 54 years old.
JOSEPH CONNOLLY. Vice President and Treasurer of the Trust; Director - Mutual
Fund Accounting of Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 42 years old.
STEVEN F. NEWMAN. Secretary of the Trust; Associate General Counsel and
Assistant Secretary of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 50 years old.
JEFF PRUSNOFSKY. Assistant Secretary of the Trust; Assistant General Counsel of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 34 years old.
MICHAEL A. ROSENBERG. Assistant Secretary of the Trust; Associate General
Counsel of Dreyfus; and an officer of other investment companies advised
and administered by Dreyfus. He is 40 years old.
WILLIAM MCDOWELL. Assistant Treasurer of the Trust; Senior Accounting Manager -
Taxable Fixed Income of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 41 years old.
JAMES WINDELS. Assistant Treasurer of the Trust; Senior Treasury Manager of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 41 years old.
The address of each Fund officer 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. 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.
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.
The aggregate amounts of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1999, 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, 1999,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** $25,000 $642,177 (189)
James M. Fitzgibbons $16,666 $74,989 (28)
J. Tomlinson Fort*** None none (28)
Arthur L. Goeschel $20,000 $80,989 (28)
Kenneth A. Himmel $16,666 $64,489 (28)
Stephen J. Lockwood $18,333 $68,989 (28)
Roslyn M. Watson $20,000 $80,989 (28)
Benaree Pratt Wiley $20,000 $80,989 (28)
- ----------------------------
# 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 $2,503.61 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board member
serves.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
***J. Tomlinson Fort is paid directly by Dreyfus for serving as a
Board member of the Trust and the funds in the Dreyfus/Laurel Funds and
separately by the Dreyfus High Yield Strategies Fund. For the fiscal year
ended December 31, 1999, the aggregate amount of fees received by J. Tomlinson
Fort from Dreyfus for serving as a Board member of the Trust was $20,000. For
the year ended December 31, 1999, 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 $80,989. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,447.60 for expenses attributable to the
Trust's Board meetings which is not included in the $2,503.61 amount in note #
above.
The officers and Trustees of the Trust as a group owned beneficially less
than 1% of the total shares of the Fund outstanding as of April 3, 2000.
Principal Shareholders. As of April 3, 2000 the following
----------------------
shareholder(s) owned beneficially or of record 5% or more of Class A
shares of the Fund: Salomon Smith Barney Inc., 333 W 34th Street,
New York, NY, 10001-2402, 7.64%.
As of April 3, 2000, 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, 14.05%.
As of April 3, 2000 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,
40.46%; Dean Witter for the Benefit of Pacific Aviation Logistics Inc., P.O. Box
250, Church Street Station, New York, NY 10008-0250, 14.69%; Bear Stearns
Securities Corp., 1 Metrotech Center North, Brooklyn, NY 11201-3859, 5.98% and
DB Alex Brown LLC, P.O. Box 1346, Baltimore, MD 21203, 5.35%.
As of April 3, 2000 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, 53.87%
and Dreyfus Trust Co. Custodian, FBO Mark Petersson, 141 Scannell Road, Chatham,
NY 12037-2020, 7.62%.
As of April 3, 2000 the following shareholder(s) owned beneficially or of
record 5% or more of Class T shares of the Fund: J.C. Bradford & Co., Custodian,
FBO Texas MFD Housing ASSN Inc., 330 Commerce Street, Nashville, TN 37201-1809,
36.83%; Salomon Smith Barney, Inc., 333 West 34th Street, 3rd Floor, New York,
NY 10001, 17.81%; Norwest Investment Services, Inc., Northstar Building East,
9th Floor, 608 Second Avenue South, Minneapolis, MN 55479-0162, 17.64%; AG
Edwards & Sons Inc., Custodian, FBO Brad Guidi, 9932 W. Grange Hall Road,
Princeville, IL 61559-9353, 11.07%; AG Edwards & Sons Inc. Custodian, FBO Sally
R. Garcia, 38336 Cal Road, Gonzales, LA 70737-6142, 8.90%.
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, which is a
wholly-owned subsidiary of Mellon Financial 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 (the
"Management Agreement"), 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 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; Ronald P. O'Hanley III, Vice Chairman; J. David Officer,
Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior 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; Ray Van Cott,
Vice-President-Information Systems; Theodore A. Schachar, Vice President-Tax;
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.
Dreyfus' Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by Dreyfus. In that regard, portfolio managers and
other investment personnel of Dreyfus must preclear and report their personal
securities transactions and holdings, which are reviewed for compliance with the
Code of Ethics and are also subject to the oversight of Mellon's Investment
Ethics Committee. Portfolio managers and other investment personnel who comply
with the Code of Ethics 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,
1999 1998 19971
---- ---- ----
Advisory and/or $5,855,197 $5,950,806 $5,794,335
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.
The Distributor. Effective March 22, 2000, Dreyfus Service Corporation
became the distributor to the Fund. The Distributor, located at 200 Park Avenue,
New York, New York 10166, 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.
From October 17, 1994 through March 21, 2000, the distributor of the
Fund's shares was Premier Mutual Fund Services, Inc. ("Premier"). Since the
Distributor was not the Fund's distributor as of the Fund's last fiscal year
end, the disclosure of amounts retained on the sale of shares of the Fund refers
to amounts retained by Premier.
For the fiscal year ended December 31, 1999, Premier retained $6,632.95
from the sales loads on the Fund's Class A shares. For the fiscal year ended
December 31, 1999, Premier retained $14,970 and $591 from the contingent
deferred sales charge ("CDSC") on the Fund's Class B and Class C shares,
respectively. For the fiscal year ended December 31, 1998, Premier 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,
Premier retained $2,189 and $340 from the CDSC on the Fund's Class B and Class C
shares, respectively. For the period from August 16, 1999 (inception date of
Class T shares) through December 31, 1999, Premier retained $136.70 from sales
loads on the Fund's Class T shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the 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.
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 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 (the "IRS").
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. The Distributor may pay Agents an amount up
to 1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained below under "Redemption of Shares - Contingent
Deferred Sales Charge - Class B Shares" (other than the amount of the CDSC and
time periods) and "Redemption of Shares - Waiver of CDSC" are applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of Accumulation
apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of Fund shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children at NAV, provided that they have
furnished the Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at NAV. In addition, Class A shares are offered at NAV to full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of the
Company's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan
(a) met the requirements of an Eligible Benefit Plan and all or a portion of
such plan's assets were invested in funds in the Dreyfus Premier Family of
Funds, the Dreyfus Family of Funds, certain funds advised by Founders Asset
Management LLC ("Founders"), an affiliate of Dreyfus, 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, the Dreyfus
Family of Funds, certain funds advised by Founders 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, 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. The Distributor 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.
Class T 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 T shares of the Fund must be made within 60 days of such redemption and
the shares redeemed must have been subject to an initial sales charge or a CDSC.
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, 1999:
NAV per share $30.83
Per Share Sales Charge - 5.75% of offering price
(6.10% of NAV per share) $ 1.88
Per Share Offering Price to Public $32.71
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 NAV
of a Class T share at the close of business on December 31, 1999:
NAV per share $30.84
Per Share Sales Charge - 4.50% of offering price
(4.70% of NAV per share) $ 1.45
Per Share Offering Price to Public $32.29
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 which are sold with a sales load, shares of
certain other funds advised by Dreyfus or Founders, 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. The Distributor 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 Mellon Bank and
its affiliates (including but not limited to Dreyfus and the Distributor) 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 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/or any of its affiliates, 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. 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.
From October 17, 1994 through March 21, 2000, Premier acted as the Fund's
distributor and received payments under the Distribution Plan, Service Plan, the
Class B and Class C Plan and the Class T Plan. Set forth below are the total
amounts paid by the Fund to Premier, as the distributor, for shareholder
servicing activities and expenses primarily intended to result in the sale of
Class A and Institutional shares of the Fund, with respect to the Distribution
Plan, for distributing the Fund's Class B and Class C shares, with respect to
the Class B and Class C Plan, for distributing the Fund's Class T shares, with
respect to the Class T Plan, and for the provision of certain services to the
holders of Class B shares, Class C shares and Class T shares with respect to the
Service Plan, for the respective periods ended December 31, 1999. Also set forth
below are payments received by the Distributor, prior to it becoming the fund's
distributor, for shareholder servicing activities and expenses primarily
intended to result in the sale of Class A shares of the Fund, with respect to
the Class A Plan, and for the provision of certain services to the holders of
Class B and Class C shares, with respect to the Service Plan, for the same time
period.
For the fiscal year ended December 31, 1999, the Fund paid Premier and the
Distributor $81,996 and $1,354,789, respectively, pursuant to the Distribution
Plan with respect to Class A shares and $105,379 and $0, respectively, pursuant
to the Distribution Plan with respect to Institutional shares. For the fiscal
year ended December 31, 1999, the Fund paid Premier $29,790 and $6,060, pursuant
to the Class B and Class C Plan with respect to Class B and Class C shares,
respectively, and paid Premier and the Distributor $7,722 and $2,207,
respectively, pursuant to the Service Plan with respect to Class B shares and
$2,020 and $0, respectively, pursuant to the Service Plan with respect to Class
C shares. For the period August 16, 1999 (inception date of Class T shares)
through December 31, 1999, the Fund paid Premier and the Distributor $7 and $0,
respectively, pursuant to the Service Plan, and paid the Distributor $7 pursuant
to the Class T Plan, with respect to Class T shares.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies," "Services
For Fund Investors," "Instructions for Regular Accounts" and "Instructions for
IRAs."
General. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail to
specify the Class of shares to be redeemed or if you own fewer shares of the
Class than specified to be redeemed, the redemption request may be delayed until
the Transfer Agent receives further instructions from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
NAV.
Procedures. You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611 if you hold Class A, Class
B, 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, Teletransfer Privilege or Telephone
Exchange Privilege authorizes the Transfer Agent to act on telephone
instructions (including The Dreyfus Touch(R) automated telephone system) from
any person representing himself or herself to be you, or a representative of
your Agent, and reasonably believed by the Transfer Agent to be genuine. The
Fund will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Fund or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
or an exchange of Fund shares. In such cases, you should consider using the
other redemption procedures described herein. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if 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 $500,000 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 $500,000 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 payable to
the Distributor 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
the Distributor 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 may 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. You may purchase, in exchange for shares of the Fund,
shares of the same (or comparable) Class of another fund in the Dreyfus Premier
Family of Funds, shares of the same class (or comparable) of certain funds
advised by Founders, or shares of certain other funds in the Dreyfus Family of
Funds, and, with respect to Class T shares of the Fund, Class A shares of
certain Dreyfus Premier fixed-income funds, to the extent such shares are
offered for sale in your state of residence. 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
Touch(R) automated telephone system) from any person representing himself or
herself to be the investor, or a representative of the investor's Agent, and
reasonably believed by the Transfer Agent to be genuine. Telephone exchanges may
be subject to limitations as to the amount involved or the number of telephone
exchanges permitted. Shares issued in certificate form are not eligible for
telephone exchange. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not less
than 60 days' written notice, to charge shareholders a nominal fee in accordance
with rules promulgated by the SEC.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
you to purchase (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, shares of the same (or comparable) Class of
another fund in the Dreyfus Premier Family of Funds, shares of the same (or
comparable) Class of certain funds advised by Founders, or shares of certain
other funds in the Dreyfus Family of Funds, and, with respect to Class T shares
of the Fund, Class A shares of certain Dreyfus Premier fixed-income funds, of
which you are 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 Builder(R). Dreyfus-Automatic Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per
transaction) at regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. Only an account
maintained at a domestic financial institution which is an ACH member may be so
designated. To establish a Dreyfus-Automatic Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-554-4611 for Class A, Class B, Class C,
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. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from the Fund in shares of the same (or comparable) Class of another fund
in the Dreyfus Premier Family of Funds, shares of the same (or comparable) Class
of certain funds advised by Founders, or shares of certain other funds in the
Dreyfus Family of Funds, and, with respect to Class T shares of the Fund, in
Class A shares of certain Dreyfus Premier fixed-income funds, of which you are 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 Builder(R), Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan. Participation in this Program may be terminated by
the shareholder at any time by discontinuing participation in Dreyfus-Automatic
Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll
Savings Plan, as the case may be, as provided under the terms of such
Privilege(s).The Fund reserves the right to redeem your account if you have
terminated your participation in the Program and your account's NAV is $500 or
less. See "Account Policies-General Policies" in the Fund's Prospectus. The Fund
may modify or terminate this Program at any time. The Dreyfus Step Program is
not available to open new accounts in any Class of the Fund.
Letter of Intent--Class A 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 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.
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 year ended December 31, 1999, the Fund paid brokerage
commissions and concessions amounting to $1,360,878 and $414,849, respectively.
For the fiscal years ended December 31, 1998 and 1997, the Fund paid brokerage
commissions amounting to $1,384,023 and $1,638,246 respectively.
The aggregate amount of transactions during the fiscal year ended December
31, 1999 in securities effected on an agency basis through a broker dealer for
research was $3,200,489, and the commissions and concessions related to such
transactions was $3,031.
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. In periods in which extraordinary market conditions prevail,
Dreyfus will not be deterred from changing the Fund's investment strategy as
rapidly as needed, in which case higher turnover rates can be anticipated.
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, 1999
1 Year 5 Years 10 Years
------ ------- --------
Class A Shares 10.56% 19.52% 12.18%
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 Class B
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Period Ended December 31, 1999
1 Year Since Inception
Class B Shares 12.37% 11.73% (1/16/98)
Inception date appears in parentheses following the average annual total
return since inception.
Average annual total return (expressed as a percentage) for the Class C
shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Period Ended December 31, 1999
1 Year Since Inception
Class C Shares 15.41% 13.57% (1/16/98)
Inception date appears in parentheses following the average annual total
return since inception.
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, 1999
1 Year 5 Years Since Inception
Institutional Shares 17.41% 21.06% 17.17% (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, 1999
1 Year 5 Years Since Inception
Class R Shares 7.59% 21.21% 18.94% (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, 1999 were 26,339.34%, 155.61% and 198.83%, 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 27,958.08% for the same period. The Fund's 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,
1999 was 24.28% and 28.32%, 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 28.28% and 28.32% respectively, 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 Fund's aggregate total return for August 16, 1999 (commencement of
operations) to December 31, 1999 for Class T shares was (0.58)%. Based on NAV
per share, the total return for Class T was 4.10% for this period.
The Fund may compare the performance of its shares to that of other mutual
funds, relevant indices or rankings prepared by independent services or other
financial or industry publications that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load
Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and World
Report, Forbes, Fortune, Barron's, Financial Planning, Financial Planning on
Wall Street, Certified Financial Planner Today, Investment Advisor, Kiplinger's,
Smart Money and similar publications may also be used in comparing the Fund's
performance. Furthermore, the Fund may quote its yields in advertisements or in
shareholder reports.
From time to time, the Fund's advertising materials may refer to Lipper,
Morningstar, or Value Line rankings or ratings, and the related analyses
supporting such rankings or ratings.
From time to time, advertising materials may refer to studies performed by
Dreyfus 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
have equal rights in liquidation. 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, or, where matters affect different classes of a portfolio
differently, by class.
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.
COUNSEL AND INDEPENDENT AUDITORS
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, 2000, 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.
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 has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers.
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.
<PAGE>
APPENDIX
DESCRIPTION OF S&P's, MOODY'S, FITCH IBCA
AND DUFF & PHELPS RATINGS
S&P's
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation
is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues only
in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic
conditions than obligations in higher rated
categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still
strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
significant speculative characteristics. `BB' indicates the least degree
of speculation and `C' the highest. While such obligations will likely
have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions,
which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to
nonpayment than obligations rated `BB', but the obligor
currently has the capacity to meet its financial
commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair
the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to
nonpayment and is dependent upon favorable business,
financial and economic conditions for the obligor to
meet its financial commitment on the obligation. In
the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the
obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D'
rating category is used when payments on a obligation
are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that
such payments will be made during such grace period.
The `D' rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus
(+) or a minus (-) sign to show relative standing within the major rating
categories
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus
(+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high
as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
B Issues rated `B' are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is used
when interest payments of principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period.
Moody's
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment
risk and generally are referred to as "gilt edge."
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group
they comprise what generally are known as high-grade
bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other
elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium
grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked short-comings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within each generic rating classification from Aa through B. The
modifier 1 indicates a ranking for the security in the higher end of a
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of a rating category.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that define an
investment grade situation. These are designated Moody's Investment Grade as MIG
1 (best quality) through MIG 4 (adequate quality). Short-term obligations of
speculative quality are designated SG.
In the case of variable rate demand obligations (VRDOs), a two component
rating is assigned. The first element represents an evaluation of the degree of
risk associated with scheduled principal and interest payments, and the other
represents an evaluation of the degree of risk associated with the demand
feature. The short-term rating assigned to the demand feature of VRDOs is
designated as VMIG. When either the long- or short-term aspect of a VRDO is not
rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow
and market access for refinancing is likely to be less well
established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance
on debt
and ample asset protection.
o Broad margins in earnings coverage of fixed financial
charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured
sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have
a strong ability for repayment of senior short-term
debt obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation.
Capitalization characteristics, while still
appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have
an acceptable ability for repayment of senior
short-term obligations. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and profitability
may result in changes in the level of debt protection
measurements and may require relatively high financial
leverage. Adequate alternative liquidity is maintained.
Fitch IBCA, Inc.
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest expectation
of credit risk. They are assigned only in case of exceptionally
strong capacity for timely payment of financial 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.
- ------------------------------------------------------------------------------
DREYFUS PREMIER MANAGED INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 2000
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Dreyfus Premier Managed Income Fund (the "Fund"), dated May 1, 2000, 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, that is registered with the Securities and
Exchange Commission ("SEC"). To obtain a copy of the Fund's Prospectus, please
write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call one of the following numbers:
Call Toll Free 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
The financial statements for the fiscal year ended December 31, 1999,
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.
TABLE OF CONTENTS
Page
Description of the Fund/Trust..............................................B-2
Management of the Fund.....................................................B-17
Management Arrangements....................................................B-21
Purchase of Shares.........................................................B-24
Distribution and Service Plans.............................................B-31
Redemption of Shares.......................................................B-33
Shareholder Services.......................................................B-38
Additional Information about Purchases, Exchanges and Redemptions..........B-43
Determination of Net Asset Value...........................................B-44
Dividends, other Distributions and Taxes...................................B-45
Portfolio Transactions.....................................................B-50
Performance Information....................................................B-51
Information about the Fund/Trust...........................................B-54
Counsel and Independent Auditors...........................................B-55
Year 2000 Issues...........................................................B-55
Appendix...................................................................B-56
<PAGE>
DESCRIPTION OF THE FUND/TRUST
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. The Trust is an open-end
management investment company comprised of separate portfolios, including the
Fund, each of which is treated as a separate fund. Prior to March 31, 1997, the
name of the Fund was Premier Managed Income Fund. 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.
Dreyfus Service Corporation (the "Distributor") is the distributor of the
Fund's shares.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
Corporate Obligations. The Fund may invest in corporate obligations rated
Baa or higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by
Standard & Poor's Rating Service, a division of McGraw-Hill Companies, Inc.
("S&P") or if unrated, of comparable quality as determined by Dreyfus.
Securities rated BBB by S&P or Baa by Moody's are considered by those rating
agencies to be "investment grade" securities, although Moody's considers
securities rated Baa to have speculative characteristics. Further, while bonds
rated BBB by S&P exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and principal for debt in this category than debt in
higher rated categories. The Fund may also invest in obligations rated below the
four highest ratings of Moody's or S&P, with no minimum rating required, or
comparable unrated securities. Such securities, which are considered to have
speculative characteristics, include securities rated in the lowest rating
categories of Moody's or S&P (commonly known as "junk bonds") which are
extremely speculative and may be in default with respect to payment of principal
or interest. See "Low-Rated Securities."
Government Obligations. The Fund may invest in U.S. Government securities
that are direct obligations of the U.S. Treasury, or that are issued by agencies
and instrumentalities of the U.S. Government and supported by the full faith and
credit of the U.S. Government. These include Treasury notes, bills and bonds and
securities issued by the Government National Mortgage Association ("GNMA"), the
Federal Housing Administration, the Department of Housing and Urban Development,
the Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration.
The Fund may also invest in U.S. Government securities that are not
supported by the full faith and credit of the U.S. Government. These include
securities issued by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home Loan Banks,
Tennessee Valley Authority, Student Loan Marketing Association and District of
Columbia Armory Board. Because the U.S. Government is not obligated by law to
provide support to an instrumentality it sponsors, the Fund will invest in
obligations issued by such an instrumentality only when Dreyfus determines that
the credit risk with respect to the instrumentality does not make its securities
unsuitable for investment by the Fund.
GNMA Certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans are made by mortgage bankers,
commercial banks, savings and loan associations, and other lenders and are
either insured by the Federal Housing Administration or guaranteed by the
Veterans Administration. A "pool" or group of such mortgages is assembled and,
after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, the timely payment of interest and principal on
each mortgage is guaranteed by the full faith and credit of the U.S. Government.
Although the mortgage loans in a pool underlying a GNMA Certificate will have
maturities of up to 30 years, the average life of a GNMA Certificate will be
substantially less because the mortgages will be subject to normal principal
amortization and also may be prepaid prior to maturity. Prepayment rates vary
widely and may be affected by changes in mortgage interest rates. In periods of
falling interest rates, the rate of prepayment on higher interest mortgage rates
tends to increase, thereby shortening the actual average life of the GNMA
Certificate. Conversely, when interest rates are rising, the rate of prepayment
tends to decrease, thereby lengthening the average life of the GNMA
Certificates. Reinvestment of prepayments may occur at higher or lower rates
than the original yield of the Certificates. Due to the prepayment feature and
the need to reinvest prepayments of principal at current rates, GNMA
Certificates, with underlying mortgages bearing higher interest rates can be
less effective than typical non-callable bonds of similar maturities at locking
in yields during periods of declining interest rates, although they may have
comparable risks of decline in value during periods of rising interest rates.
FNMA and FHLMC are Government sponsored corporations owned by private
stockholders. Each is subject to general regulation by an office of the
Department of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/servicers which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through securities
issued by FNMA and FHLMC are guaranteed by those entities as to payment of
principal and interest.
Mortgage-Backed Securities. The mortgage-backed securities in which the
Fund will invest represent pools of mortgage loans assembled for sale to
investors by various governmental agencies and government-related organizations,
such as GNMA, FNMA and FHLMC, as well as by private issuers such as commercial
banks, savings institutions, mortgage bankers and private mortgage insurance
companies. Interests in pools of mortgage backed securities differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
residential mortgage loans, net of any fees paid. Additional payment may be made
out of unscheduled repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. Some mortgage backed securities are described as "modified
pass-through." These securities entitle the holders to receive all interest and
principal payments owed on the mortgages in the pool, net of certain fees,
regardless of whether or not the mortgagors actually make the payments. Prompt
payment of principal and interest on GNMA mortgage pass-through certificates is
backed by the full faith and credit of the United States. FNMA guaranteed
mortgage pass-through certificates and FHLMC participation certificates are
solely the obligations of those entities but are supported by the discretionary
authority of the U.S. Government to purchase the agencies' obligations. Mortgage
pools created by private organizations generally offer a higher rate of interest
than governmental and government-related pools because there are no direct or
indirect guarantees of payments in the former pools. Timely payment of interest
and principal in these pools, however, may be supported by various forms of
private insurance or guarantees, including individual loan, title, pool and
hazard insurance. There can be no assurance that the private insurers can meet
their obligations under the policies.
Collateralized mortgage obligations ("CMOs") are a type of bond secured by
an underlying pool of mortgages or mortgage pass-through certificates that are
structured to direct payments on underlying collateral to different series or
classes of the obligations. CMO classes may be specially structured in a manner
that provides any of a wide variety of investment characteristics, such as
yield, effective maturity and interest rate sensitivity. CMO structuring is
accomplished by in effect stripping out portions of the cash flows (comprised of
principal and interest payments) on the underlying mortgage assets and
prioritizing the payments of those cash flows. In the most extreme case, one
class will be a "principal-only" (PO) security, the holder of which receives the
principal payments made by the underlying mortgage-backed security. CMOs may be
structured in other ways that, based on mathematical modeling or similar
techniques, are expected to provide certain results. As market conditions
change, however, and particularly during periods of rapid or unanticipated
changes in market interest rates, the attractiveness of a CMO class, and the
ability of a structure to provide the anticipated investment characteristics,
may be significantly reduced. Such changes can result in volatility in the
market value, and in some instances reduced liquidity, of the CMO class.
An issue of CMOs tends to be backed by a larger number of mortgages than
GNMA, FNMA or FHLMC certificates, thus allowing greater statistical prediction
of prepayment characteristics. Interest and principal payments on the mortgages
underlying any series will first be applied to meet the interest payment
requirements of each class in the series other than any class in respect of
which interest accrues but is not paid or any principal only class. Then,
principal payments on the underlying mortgages are generally applied to pay the
principal amount of the class that has the earliest maturity date. Once that
class is retired, the principal payments on the underlying mortgages are applied
to the class with the next earliest maturity date. This is repeated until all
classes are paid. Therefore, while each class of CMOs remains subject to
prepayment as the underlying mortgages prepay, structuring several classes of
CMOs in the stream of principal payments allows one to more closely estimate the
period of time when any one class is likely to be repaid.
Inverse floaters are instruments whose interest rates bear an inverse
relationship to the interest rate of another security or the value of an index.
Changes in the interest rate on the other security or index inversely affect the
residual interest rate paid on the inverse floater, with the result that the
inverse floater's price will be considerably more volatile than that of a
fixed-rate bond. For example, an issuer may decide to issue two variable rate
instruments instead of a single long-term, fixed-rate bond. The interest rate on
open instrument reflects short-term interest rates, while the interest rate on
the other instrument (the inverse floater) reflects the approximate rate the
issuer would have paid on a fixed-rate bond, multiplied by two, minus the
interest rate paid on the short-term instrument. The market for inverse floaters
is relatively new.
To the extent that the Fund purchases mortgage-related securities at a
premium, mortgage foreclosures pre-payments of principal by mortgagors (which
may be made at any time without penalty) may result in some loss of the Fund's
principal investment to the extent of the premium paid. The yield of a Fund that
invests in mortgage-related securities may be affected by reinvestment of
prepayments at higher or lower rates than the original investment.
The Fund expects that U.S. Government or private entities may create
mortgage loan pools offering pass-through investments in addition to those
described above. The mortgages underlying these securities may be alternative
mortgage instruments, that is, mortgage instruments whose principal or interest
payment may vary or whose terms to maturity may be shorter than previously
customary. As new types of mortgage backed securities are developed and offered
to investors, the Fund will, consistent with its investment objective and
policies, consider making investments in such new types of securities.
Other Asset-Backed Securities. The Fund may also invest in non-mortgage
backed securities including interests in pools of receivables, such as motor
vehicle installment purchase obligations and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets. Such
securities may also be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Non-mortgage backed securities are not issued or guaranteed by the U.S.
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution (such as a bank or insurance company) unaffiliated with
the issuers of such securities. Non-mortgage backed securities will be purchased
by the Fund only when such securities are readily marketable and generally will
have remaining estimated lives at the time of purchase of 5 years or less.
The purchase of non-mortgage backed securities raises considerations
peculiar to the financing of the instruments underlying such securities. For
example, most organizations that issue non-mortgage backed securities relating
to motor vehicle installment purchase obligations perfect their interests in
their respective obligations only by filing a financing statement and by having
the servicer of the obligations, which is usually the originator, take custody
thereof. In such circumstances, if the servicer were to sell the same
obligations to another party, in violation of its duty not to do so, there is a
risk that such party could acquire an interest in the obligations superior to
that of the holders of the non-mortgage backed securities. Also, although most
such obligations grant a security interest in the motor vehicle being financed,
in most states the security interest in a motor vehicle must be noted on the
certificate of title to perfect such security interest against competing claims
of other parties. Due to the large number of vehicles involved, however, the
certificate of title to each vehicle financed, pursuant to the obligations
underlying the non-mortgage backed securities, usually is not amended to reflect
the assignment of the seller's security interest for the benefit of the holders
of the non-mortgage backed securities. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on those securities. In addition, various state and Federal
laws give the motor vehicle owner the right to assert against the holder of the
owner's obligation certain defenses such owner would have against the seller of
the motor vehicle. The assertion of such defenses could reduce payments on the
related non-mortgage backed securities. Insofar as credit card receivables are
concerned, credit card holders are entitled to the protection of a number of
state and Federal consumer credit laws, many of which give such holders the
right to set off certain amounts against balances owed on the credit card
thereby reducing the amounts paid on such receivables. In addition, unlike most
other non-mortgage backed securities, credit card receivables are unsecured
obligations of the card holder.
The development of non-mortgage backed securities is at an early stage
compared to mortgage backed securities. While the market for non-mortgage backed
securities is becoming increasingly liquid, the market for mortgage backed
securities issued by certain private organizations and non-mortgage backed
securities is not as well developed. Dreyfus intends to limit its purchases of
mortgage backed securities issued by certain private organizations and
non-mortgage backed securities to securities that are readily marketable at the
time of purchase.
Low-Rated Securities. The Fund may invest in low-rated and comparable
unrated securities (collectively referred to in this discussion as "low-rated"
securities). Low-rated securities will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are outweighed
by large uncertainties or major risk exposures to adverse conditions. Low-rated
securities are predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligation. While the market values of low-rated securities tend to react less
to fluctuations in interest rate levels than the market values of higher-rated
securities, the market values of certain low-rated securities tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, low-rated securities
generally present a higher degree of credit risk. Issuers of low-rated
securities are often highly leveraged and may not have more traditional methods
of financing available to them so that their ability to service their debt
obligations during an economic downturn or during sustained periods of rising
interest rates may be impaired. The risk of loss due to default by such issuers
is significantly greater because low-rated securities generally are unsecured
and frequently are subordinated to the prior payment of senior indebtedness. The
Fund may incur additional expenses to the extent that it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings. The existence of limited markets for low-rated securities may diminish
the Fund's ability to obtain accurate market quotations for purposes of valuing
such securities and calculating its net asset value ("NAV").
The ratings of the various nationally recognized statistical rating
organizations ("NRSROs") such as Moody's and S&P generally represent the
opinions of those organizations as to the quality of the securities that they
rate. Such ratings, however, are relative and subjective, are not absolute
standards of quality and do not evaluate the market risk of the securities.
Although Dreyfus uses these ratings as a criterion for the selection of
securities for the Fund, Dreyfus also relies on its independent analysis to
evaluate potential investments for the Fund. The Fund's achievement of its
investment objective may be more dependent on Dreyfus' credit analysis of
low-rated securities than would be the case for a portfolio of higher-rated
securities.
Subsequent to its purchase by the Fund, an issue of securities may cease to
be rated or its rating may be reduced below the minimum required for purchase by
the Fund. In addition, it is possible that an NRSRO might not timely change its
ratings of a particular issue to reflect subsequent events. None of these events
will require the sale of the securities by the Fund, although Dreyfus will
consider these events in determining whether the Fund should continue to hold
the securities. To the extent that the ratings given by an NRSRO for securities
may change as a result of changes in the rating systems or due to a corporate
reorganization of the NRSRO, the Fund will attempt to use comparable ratings as
standards for its investments in accordance with the investment objective and
policies of the Fund. The Appendix to this Statement of Additional Information
describes the ratings used by Moody's, S&P and other NRSROs.
Convertible Securities. The Fund may purchase convertible securities, which
are fixed-income securities such as bonds or preferred stock that may be
converted into or exchanged for a specified number of shares of common stock of
the same or a different issuer within a specified period of time and at a
specified price or formula. Convertible securities are senior to common stock in
a corporation's capital structure, but may be subordinated to non-convertible
debt securities. Before conversion, convertible securities ordinarily provide a
stable stream of income with yields generally higher than those on common stock,
but lower than those on non-convertible debt securities of similar quality. In
general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock if
the security is converted). As a fixed-income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock rises, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer. The Fund does not invest in common stocks and does not
intend to exercise conversion rights for any convertible security that it may
hold and will sell any common stocks received upon the conversion of convertible
securities as promptly as it can and in a manner that it believes will reduce
its risk of loss in connection with the sale.
Preferred Stock. The Fund may also purchase preferred stock, which is a
class of capital stock that typically pays dividends at a specified rate.
Preferred stock is generally senior to common stock, but subordinate to debt
securities, with respect to the payment of dividends and on liquidation of the
issuer. In general, the market value of preferred stock is its "investment
value," or its value as a fixed-income security. Accordingly, the market value
of preferred stock generally increases when interest rates decline and decreases
when interest rates rise, but, as with debt securities, is also affected by the
issuer's ability to make payments on the preferred stock.
Repurchase Agreements. The Fund may enter into repurchase agreements with
U.S. Government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System, or with such other brokers or
dealers that meet the Fund's credit guidelines. This technique offers a method
of earning income on idle cash. In a repurchase agreement, the Fund buys a
security from a seller that has agreed to repurchase the same security at a
mutually agreed upon date and price. The Fund's resale price will be in excess
of the purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the agreement
and is not related to the coupon rate on the underlying security. Repurchase
agreements may also be viewed as a fully collateralized loan of money by the
Fund to the seller. The period of these repurchase agreements will usually be
short, from overnight to one week, and at no time will the Fund invest in
repurchase agreements for more than one year. The Fund will always receive as
collateral securities whose market value including accrued interest is, and
during the entire term of the agreement remains, at least equal to 100% of the
dollar amount invested by the Fund in each agreement, including interest, and
the Fund will make payment for such securities only upon physical delivery or
upon evidence of book entry transfer to the account of the custodian. If the
seller defaults, the Fund might incur a loss if the value of the collateral
securing the repurchase agreement declines and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of a security which is the
subject of a repurchase agreement, realization upon the collateral by the Fund
may be delayed or limited. The Fund seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors under
repurchase agreements, in accordance with the Fund's credit guidelines.
Commercial Paper. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed only
by the credit of the issuer or may be backed by some form of credit enhancement,
typically in the form of a guarantee by a commercial bank. Commercial paper
backed by guarantees of foreign banks may involve additional risk due to the
difficulty of obtaining and enforcing judgments against such banks and the
generally less restrictive regulations to which such banks are subject. The Fund
will only invest in commercial paper of U.S. and foreign companies rated at the
time of purchase at least A-1 by S&P, Prime-1 by Moody's, F-1 by Fitch IBCA,
Inc. ("Fitch"), or Duff-1 by Duff & Phelps Credit Rating Co. ("Duff & Phelps").
For a description of ratings, see the Appendix.
Bank Obligations. The Fund is permitted to invest in high-quality,
short-term money market instruments. The Fund may invest temporarily, and
without limitation, in such instruments when, in Dreyfus' opinion, a "defensive"
investment posture is warranted.
Certificates of deposit are short-term negotiable obligations of commercial
banks; time deposits are non-negotiable deposits maintained in banking
institutions for specified periods of time at stated interest rates; and
bankers' acceptances are time drafts drawn on commercial banks by borrowers,
usually in connection with international transactions. Domestic commercial banks
organized under Federal law are supervised and examined by the Comptroller of
the Currency and are required to be members of the Federal Reserve System and to
be insured by the Federal Deposit Insurance Corporation (the "FDIC"). Domestic
banks organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they elect to
join. In addition, all banks whose certificates of deposit may be purchased by
the Fund are insured by the FDIC and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of governmental
regulations, domestic branches of foreign banks are, among other things,
generally required to maintain specified levels of reserves, and are subject to
other supervision and regulations designed to promote financial soundness.
Bank certificates of deposit and bankers' acceptances in which the Fund may
invest are limited to U.S. dollar-denominated instruments of domestic banks,
including their branches located outside the United States and of domestic
branches of foreign banks. In addition, the Fund may invest in U.S.
dollar-denominated, non-negotiable time deposits issued by foreign branches of
domestic banks and London branches of foreign banks; and negotiable certificates
of deposit issued by London branches of foreign banks. The foregoing investments
may be made provided that the bank has capital, surplus and undivided profits
(as of the date of its most recently published annual financial statements) in
excess of $100 million as of the date of investment.
The Fund may invest in Eurodollar certificates of deposit ("ECDs"),
Eurodollar time deposits ("ETDs") and Yankee Dollar certificates of deposit
("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks. ETDs are U.S. dollar-denominated time
deposits in a foreign branch of a U.S. bank or a foreign bank. Yankee CDs are
certificates of deposit issued by a U.S. branch of a foreign bank denominated in
U.S. dollars and held in the United States. The Fund may also invest in
Eurodollar bonds and notes which are obligations that pay principal and interest
in U.S. dollars held in banks outside the United States, primarily in Europe.
All of these obligations are subject to somewhat different risks than are the
obligations of domestic banks or issuers in the United States. See "Foreign
Securities."
Obligations of foreign branches of domestic banks may be general
obligations of the parent bank in addition to the issuing branch or may be
limited by the terms of a specific obligation and by governmental regulations.
Payment of interest and principal upon obligations of foreign banks and foreign
branches of domestic banks may be affected by governmental action in the country
of domicile of the branch (generally referred to as sovereign risk). Examples of
such action would be the imposition of currency controls, interest limitations,
seizure of assets, or the declaration of a moratorium. Evidence of ownership of
portfolio securities may be held outside of the United States, and the Fund may
be subject to the risks associated with the holdings of such property overseas.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as by governmental action in the countries in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a domestic branch of a foreign bank than about a
domestic bank.
Foreign Securities. The Fund may purchase securities of foreign issuers and
may invest in foreign currencies and obligations of foreign branches of domestic
banks and domestic branches of foreign banks. Investment in such foreign
currencies, securities and obligations presents certain risks, including those
resulting from fluctuations in currency exchange rates, adverse political and
economic developments and the possible imposition of currency exchange blockages
or other foreign governmental laws or restrictions, reduced availability of
public information concerning issuers, and the fact that foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to those
applicable to domestic issuers. Moreover, securities of many foreign issuers may
be less liquid and their prices more volatile than those of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is the
possibility of expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes that
would reduce the return on such securities.
Illiquid Investments. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including repurchase
agreements and time deposits with maturities in excess of seven days. Securities
that have readily available market quotations are not deemed illiquid for
purposes of this limitation (irrespective of any legal or contractual
restrictions on resale). The Fund may invest in commercial obligations issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). The Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but that can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Liquidity determinations with respect to Section 4(2) paper and
Rule 144A securities will be made by the Board of Trustees or by Dreyfus
pursuant to guidelines established by the Board. The Board or Dreyfus will
consider availability of reliable price information and other relevant
information in making such determinations. Section 4(2) paper is restricted as
to disposition under the federal securities laws, and generally is sold to
institutional investors, such as the Fund, that agree that they are purchasing
the paper for investment and not with a view to public distribution. Any resale
by the purchaser must be pursuant to registration or an exemption therefrom.
Section 4(2) paper normally is resold to other institutional investors like the
Fund through or with the assistance of the issuer or investment dealers who make
a market in the Section 4(2) paper, thus providing liquidity. Rule 144A
securities generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the percentage
limitation on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and it is
not possible to predict how this market will mature. Investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity to
the extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities from the Fund or other holders.
Other Investment Companies. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consistent
with the Fund's investment objective and policies and permissible under the
Investment Company Act of 1940, as amended (the "1940 Act"). As a shareholder of
another investment company, the Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
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.
Investment Techniques
In addition to the principal investment strategies discussed in the Fund's
Prospectus, the Fund also may engage in the investment techniques described
below. The Fund might not use, or may not have the ability to use, any of these
strategies and there can be no assurance that any strategy that is used will
succeed.
Borrowing. The Fund is authorized, within specified limits, to borrow money
for temporary administrative purposes and to pledge its assets in connection
with such borrowings.
When-Issued Securities and Delayed Delivery Transactions. New issues of
U.S. Treasury and Government securities are often offered on a "when-issued"
basis. This means that delivery and payment for the securities normally will
take place approximately 7 to 45 days after the date the buyer commits to
purchase them. The payment obligation and the interest rate that will be
received on securities purchased on a "when-issued" basis are each fixed at the
time the buyer enters into the commitment. The Fund will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities or dispose of the commitment
before the settlement date if it is deemed advisable as a matter of investment
strategy. Cash or marketable high-grade debt securities equal to the amount of
the above commitments will be segregated on the Fund's records. For the purpose
of determining the adequacy of these securities the segregated securities will
be valued at market. If the market value of such securities declines, additional
cash or securities will be segregated on the Fund's records on a daily basis so
that the market value of the account will equal the amount of such commitments
by the Fund.
Securities purchased on a "when-issued" basis and the securities held by
the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value of
such securities will fluctuate inversely to changes in interest rates -- i.e.,
they will appreciate in value when interest rates decline and decrease in value
when interest rates rise. Therefore, if in order to achieve higher interest
income the Fund remains substantially fully invested at the same time that it
has purchased securities on a "when-issued" basis, there will be a greater
possibility of fluctuation in the Fund's NAV.
When payment for "when-issued" securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated securities,
the sale of other securities and/or, although it would not normally expect to do
so, from the sale of the "when-issued" securities themselves (which may have a
market value greater or less than the Fund's payment obligation). The sale of
securities to meet such obligations carries with it a greater potential for the
realization of capital gains, which are subject to federal income taxes.
To secure advantageous prices or yields, the Fund may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by the
other party to the transaction. The purchase of securities on a delayed delivery
basis involves the risk that the value of the securities purchased will decline
prior to the settlement date. The sale of securities for delayed delivery
involves the risk that the prices available in the market on the delivery date
may be greater than those obtained in the sale transaction. The Fund will
establish a segregated account consisting of cash, U.S. Government securities or
other high-grade debt obligations in an amount at least equal at all times to
the amounts of its delayed delivery commitments.
Loans of Fund Securities. The Fund may lend securities from its portfolio
to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities, which affords the Fund an opportunity to earn
interest on the amount of the loan and on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33-1/3% of the value of the Fund's
total assets and the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities. These loans are terminable by the Fund at any time upon
specified notice. The Fund might experience loss if the institution to which it
has lent its securities fails financially or breaches its agreement with the
Fund. In addition, it is anticipated that the Fund may share with the borrower
some of the income received on the collateral for the loan or that it will be
paid a premium for the loan. In determining whether to lend securities, the Fund
considers all relevant factors and circumstances including the creditworthiness
of the borrower.
Currency Transactions. The Fund may engage in currency exchange
transactions as a means of managing certain risks associated with purchasing and
selling securities denominated in foreign securities. Generally, the currency
exchange transactions of the Fund will be conducted on a spot (i.e., cash) basis
at the spot rate for purchasing or selling currency prevailing in the currency
exchange market. This rate under normal market conditions differs from the
prevailing exchange rate in an amount generally less than 0.1% due to the cost
of converting from one currency to another. The Fund also may deal in forward
exchanges between currencies of the different countries in which it invests as a
hedge against possible variations in the exchange rates between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date and price set at the time
of the contract.
Dealings in forward currency exchanges by the Fund are limited to hedging
involving either specific transactions or aggregate portfolio positions.
Transaction hedging is the purchase or sale of foreign currency with respect to
specific receivables or payables of a Fund generally arising in connection with
the purchase or sale of its portfolio securities. Position hedging is the sale
of foreign currency with respect to portfolio security positions denominated or
quoted in such currency. The Fund will not speculate in forward currency
exchanges. The Fund may position hedge with respect to a particular currency to
an extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated or quoted in or
currently convertible into that particular currency. If the Fund enters into a
position hedging transaction, its custodian or sub-custodian bank will place
cash or readily marketable securities in a segregated account of the Fund in an
amount equal to the value of the Fund's total assets committed to the
consummation of such forward contract. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account so that the value of the account will equal the amount of the Fund's
commitment with respect to such contracts. The Fund will not attempt to hedge
all of its foreign portfolio positions and will enter into such transactions
only to the extent, if any, deemed appropriate by Dreyfus. The Fund will not
enter into a position hedging commitment if, as a result thereof, the Fund would
have more than 15% of the value of its total assets committed to such contracts.
The Fund will not enter into a forward contract with a term of more than one
year.
It may not be possible for the Fund to hedge against a devaluation that is
so generally anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates. The cost to the
Fund of engaging in currency transactions varies with such factors as the
currency involved, the length of the contract period and the market conditions
then prevailing. Since transactions in currency exchanges are usually conducted
on a principal basis, no fees or commissions are involved.
At or before the maturity of a forward contract, the Fund may either sell a
portfolio security and make delivery of the currency, or it may retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract with the same currency trader obligating it to
purchase, on the same maturity date, the same amount of the currency. If the
Fund retains the portfolio security and engages in an offsetting transaction,
the Fund, at the time of execution of the offsetting transaction, will incur a
gain or a loss (as described below) to the extent that there has been movement
in forward contract prices. If the Fund engages in an offsetting transaction, it
may subsequently enter into a new forward contract to sell the currency. Should
forward prices decline during the period between the Fund's entering into a
forward contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will realize a
gain to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The use of forward currency contracts by the Fund will be limited to the
transactions described above. The Fund is not required to enter into such
transactions with regard to its portfolio securities, regardless of currency
denomination, and will not do so unless deemed appropriate by Dreyfus. The use
of forward currency contracts does not eliminate fluctuations in the underlying
prices of the securities. It simply establishes a rate of exchange which can be
achieved at some future point in time. In addition, although forward currency
contracts tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain which might result
should the value of the currency increase.
Because the Fund invests in foreign securities, the Fund will hold from
time to time various foreign currencies pending its investment in foreign
securities or conversion into U.S. dollars. Although the Fund values its assets
daily in terms of U.S. dollars, it does not convert its holdings of foreign
currencies into U.S. dollars on a daily basis. When converting foreign
currencies to U.S. dollars, the Fund may incur costs of currency conversion. A
foreign exchange dealer does not charge a fee for conversion, but it does
realize a profit based on the difference, which is known as the spread, between
the prices at which the dealer is buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
Master/Feeder Option. The Trust may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to the Fund.
Shareholders of the Fund will be given at least 30 days' prior notice of any
such investment. Such investment would be made only if the Trustees determine it
to be in the best interest of the Fund and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although the Fund believes that the Trustees will not approve an
arrangement that is likely to result in higher costs, no assurance is given that
costs will be materially reduced if this option is implemented.
Investment Restrictions
Fundamental. The following limitations have been adopted by the Fund. The
Fund may not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of shareholders
duly called if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy; or (b) more than 50% of the
outstanding shares of the Fund, whichever is less. The Fund may not:
1. Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in the
same industry. (For purposes of this limitation, U.S. Government securities and
state or municipal governments and their political subdivisions are not
considered members of any industry. In addition, this limitation does not apply
to investments of domestic banks, including U.S. branches of foreign banks and
foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) the Fund may borrow money in an amount not exceeding one-third
of the Fund's total assets at the time of such borrowing, and (b) the Fund may
issue multiple classes of shares. The purchase or sale of futures contracts and
related options shall not be considered to involve the borrowing of money or
issuance of senior securities.
3. Make loans or lend securities, if as a result thereof more than
one-third the Fund's total assets would be subject to all such loans. For
purposes of this restriction debt instruments and repurchase agreements shall
not be treated as loans.
4. Underwrite securities issued by any other person, except to the extent
that the purchase of securities and the later disposition of such securities in
accordance with the Fund's investment program may be deemed an underwriting.
5. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate, including
mortgage loans, or securities of companies that engage in the real estate
business or invest or deal in real estate or interests therein).
6. Purchase or sell commodities except that the Fund may enter into futures
contracts and related options, forward currency contracts and other similar
instruments.
7. Purchase with respect to 75% of the Fund's total assets securities of
any issuer (other than securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that issuer, or (b)
the Fund would hold more than 10% of the outstanding voting securities of that
issuer.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same investment
objective, policies, and limitations as the Fund.
Nonfundamental. The Fund has adopted the following additional
non-fundamental restrictions. These non-fundamental restrictions may be changed
without shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Trust will not purchase or retain the securities of any issuer if
the officers, directors or Trustees of the Trust, its advisers, or managers
owning beneficially more than one half of one percent of the securities of each
issuer together own beneficially more than five percent of such securities.
2. The Fund will not purchase securities of issuers (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof), including their predecessors, that have been in operation
for less than three years, if by reason thereof the value of the Fund's
investment in such securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners, guarantors and
originators of underlying assets may be treated as the issuer of a security.
3. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate investment
in such classes of securities will exceed 5% of its total assets except that:
(a) this restriction shall not apply to standby commitments, and (b) this
restriction shall not apply to the Fund's transactions in futures contracts and
options.
4. The Fund will not purchase warrants if at the time of such purchase: (a)
more than 5% of the value of the Fund's assets would be invested in warrants, or
(b) more than 2% of the value of the Fund's assets would be invested in warrants
that are not listed on the New York or American Stock Exchange (for purposes of
this restriction, warrants acquired by the Fund in units or attached to
securities will be deemed to have no value).
5. The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements with remaining maturities
in excess of seven days, time deposits with maturities in excess of seven days,
and other securities which are not readily marketable. For purposes of this
restriction, illiquid securities shall not include commercial paper issued
pursuant to Section 4(2) of the Securities Act of 1933 and securities which may
be resold under Rule 144A under the Securities Act of 1933, provided that the
Board of Trustees, or its delegate, determines that such securities are liquid,
based upon the trading markets for the specific security.
6. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or acquisition
of assets and except to the extent otherwise permitted by the 1940 Act.
7. The Fund will not purchase oil, gas or mineral leases (the Fund may,
however, purchase and sell the securities of companies engaged in the
exploration, development, production, refining, transporting and marketing of
oil, gas or minerals).
8. The Fund shall not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the securities sold
short, and provided that transactions in futures contracts and options are not
deemed to constitute selling securities short.
9. The Fund shall not purchase securities on margin, except that the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options shall not constitute purchasing securities on margin.
10. The Fund shall not purchase any security while borrowings representing
more than 5% of the Fund's total assets are outstanding.
As an operating policy, the Fund will not invest more than 25% of the value
of its total assets, at the time of purchase, in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks. The Trust's Board
of Trustees may change this policy without shareholder approval. Notice will be
given to shareholders if this policy is changed by the Board.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in such percentage resulting from a change in the
values of assets will not constitute a violation of such restriction, except as
otherwise required by the 1940 Act.
If the Fund's investment objective, policies, restrictions, practices or
procedures change, shareholders should consider whether the Fund remains an
appropriate investment in light of the shareholder's then-current position and
needs.
MANAGEMENT OF THE FUND
Trustees and Officers
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
Dreyfus Service Corporation..................................Distributor
Dreyfus Transfer, Inc.....................................Transfer Agent
Mellon Bank....................................................Custodian
The Trust has a Board composed of eight 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 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
outsourcing functions for small and medium sized companies and QuikCat.com,
Inc., a private company engaged in the development of high speed movement,
routing, storage and encryption of data across cable, wireless and all
other modes of data transport. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus and until August
24, 1994, the Fund's distributor. From August 1994 until December 31, 1994,
he was a director of Mellon Financial Corporation. Age: 56 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; former Chairman of the Board and CEO of Fieldcrest Cannon,
Inc. Age: 65 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: 72 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: 78 years old. Address: Way Hollow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), and Boston
Safe Deposit and Trust Company, each an affiliate of Dreyfus. 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+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.;
Director, American Express Centurion Bank; Director, Ontario Hydro Services
Company; Trustee, the Hyams Foundation, Inc. Age: 50 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
STEPHEN E. CANTER. President of the Trust; President, Chief Operating Officer,
and Chief Investment Officer of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. Mr. Canter also is a
Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which is
an affiliate of Dreyfus. He is 54 years old.
MARK N. JACOBS. Vice President of the Trust; Vice President, Secretary, and
General Counsel to Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 54 years old.
JOSEPH CONNOLLY. Vice President and Treasurer of the Trust; Director - Mutual
Fund Accounting of Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 42 years old.
STEVEN F. NEWMAN. Secretary of the Trust; Associate General Counsel and
Assistant Secretary of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 50 years old.
JEFF PRUSNOFSKY. Assistant Secretary of the Trust; Assistant General Counsel of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 34 years old.
MICHAEL A. ROSENBERG. Assistant Secretary of the Trust; Associate General
Counsel of Dreyfus; and an officer of other investment companies advised
and administered by Dreyfus. He is 40 years old.
WILLIAM MCDOWELL. Assistant Treasurer of the Trust; Senior Accounting Manager -
Taxable Fixed Income of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 41 years old.
JAMES WINDELS. Assistant Treasurer of the Trust; Senior Treasury Manager of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 41 years old.
The address of each Fund officer 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. 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.
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.
The aggregate amount of fees and expenses received by each current Trustee
from the Trust for the fiscal year ended December 31, 1999, and from all other
funds in the Dreyfus Family of Funds for which such person is a Board member
(the number of which is set forth in parenthesis next to each Board member's
total compensation)* during the year ended December 31, 1999, 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** $25,000 $642,177 (189)
James M. Fitzgibbons $16,666 $74,989 (28)
J. Tomlinson Fort*** none none (28)
Arthur L. Goeschel $20,000 $80,989 (28)
Kenneth A. Himmel $16,666 $62,489 (28)
Stephen J. Lockwood $18,333 $68,989 (28)
Roslyn M. Watson $20,000 $80,989 (28)
Benaree Pratt Wiley $20,000 $80,989 (28)
- ----------------------------
# 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 $2,503.61 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
*** J. Tomlinson Fort is paid directly by Dreyfus for serving as a Board member
of the Trust and the funds in the Dreyfus/Laurel Funds and separately by the
Dreyfus High Yield Strategies Fund. For the fiscal year ended December 31,
1999, the aggregate amount of fees received by J. Tomlinson Fort from
Dreyfus for serving as a Board member of the Trust was $20,000. For the year
ended December 31, 1999, 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 $80,989. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,447.60 for expenses attributable to the
Trust's Board meetings which is not included in the $2,503.61 amount in note
# above.
The officers and Trustees of the Trust as a group owned beneficially less
than 1% of the total shares of the Fund outstanding as of April 3, 2000.
As of April 3, 2000, the following shareholder(s) owned beneficially or of
record 5% or more of Class A shares of the Fund: Boston Safe Deposit & Trust
Co., Trustee, as Agent-Omnibus Account, 1 Cabot Road, Medford, MA 02155-5141,
7.45%.
As of April 3, 2000, the following shareholder(s) owned beneficially or of
record 5% or more of Class B shares of the Fund: MLPF & S For The Sole Benefit
of Its Customers, 4800 Deer Lake Drive East, Floor 3, Jacksonville, FL
32246-6484, 29.07%.
As of April 3, 2000, the following shareholder(s) owned beneficially or of
record 5% or more of Class C shares of the Fund: MLPF & S For The Sole Benefit
Of Its Customers, 4800 Deer Lake Drive East, Floor 3, Jacksonville, FL
32246-6484, 54.75%.
As of April 3, 2000, 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, 65.03%
and Boston & Company, Mellon Private Asset Management, P.O. Box 534005,
Pittsburgh, PA 15253-4005, 19.09%.
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, which is a
wholly-owned subsidiary of Mellon Financial 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 (the "Management
Agreement"), 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 (as
defined in the 1940 Act) of the shareholders of the Fund approve its
continuance. The Trust may terminate the Management Agreement upon the vote of a
majority of the Board of Trustees or upon the vote of a majority of the Fund's
outstanding voting securities on 60 days' written notice to Dreyfus. Dreyfus may
terminate the Management Agreement upon 60 days' written notice to the Trust.
The Management Agreement will terminate immediately and automatically upon its
assignment.
The following persons are officers and/or directors of Dreyfus: Christopher
M. Condron, Chairman of the Board and Chief Executive Officer; Stephen E.
Canter, President, Chief Operating Officer, Chief Investment Officer and a
director; Thomas F. Eggers, Vice-Chairman-Institutional and a director; Lawrence
S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice Chairman; J. David Officer,
Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior 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; Ray Van Cott,
Vice-President-Information Systems; Theodore A. Schachar, Vice President-Tax;
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.
Dreyfus' Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by the Manager. In that regard, portfolio managers
and other investment personnel of the Manager must preclear and report their
personal securities transactions and holdings, which are reviewed for compliance
with the Code of Ethics and are also subject to the oversight of Mellon's
Investment Ethics Committee. Portfolio managers and other investment personnel
who comply with the Code of Ethics's preclearance and disclosure procedures and
the requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
Trustees (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and expenses
of the non-interested Trustees (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee by an amount
equal to the Fund's allocable share of such fees and expenses. From time to
time, Dreyfus may voluntarily waive a portion of the investment management fees
payable by the Fund, which would have the effect of lowering the expense ratio
of the Fund and increasing return to investors. Expenses attributable to the
Fund are charged against the Fund's assets; other expenses of the Trust are
allocated among its funds on the basis determined by the Trustees, including,
but not limited to, proportionately in relation to the net assets of each fund.
For the last three years, the Fund had the following expenses:
For the Fiscal Year Ended December 31,
1999 1998 1997
---- ---- ----
Management fees $683,834 $680,914 $656,463
The Distributor. Effective March 22, 2000, Dreyfus Service Corporation
became the distributor to the Fund. The Distributor, located at 200 Park Avenue,
New York, New York 10166, 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.
From October 17, 1994 through March 21, 2000, the distributor of the Fund's
shares was Premier Mutual Fund Services, Inc. ("Premier"). Since the Distributor
was not the Fund's distributor as of the Fund's last fiscal year end, the
disclosure of amounts retained on the sale of shares of the Fund refers to
amounts retained by Premier.
For the fiscal year ended December 31, 1999, Premier retained $2,200.67
from sales loads on the Fund's Class A shares. For the same period, Premier
retained $107,480 from the contingent deferred sales charge ("CDSC") on Class B
shares. For the same period, Premier retained $7,038 from the CDSC on class C
shares. For the fiscal year ended December 31, 1998, Premier retained no sales
loads on the Fund's Class A shares. For the same period, Premier retained
$27,936 from the CDSC on Class B shares. For the same period, Premier retained
$884 from the CDSC on Class C shares. For the fiscal year ended December 31,
1997, Premier retained no sales loads on the Fund's Class A shares. For the same
period, Premier retained $18,388 from the CDSC on Class B shares. For the same
period, Premier retained $756 from the CDSC on Class C shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Trust's transfer and dividend disbursing agent. Under
a transfer agency agreement with the Trust, Dreyfus Transfer, Inc. arranges for
the maintenance of shareholder account records for the Fund, the handling of
certain communications between shareholders and the Fund, and the payment of
dividends and distributions payable by the Fund. For these services, Dreyfus
Transfer, Inc. receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Trust during the month, and is
reimbursed for certain out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's investments.
Under a custody agreement with the Trust, Mellon Bank holds the Fund's portfolio
securities and keeps all necessary accounts and records. Dreyfus Transfer, Inc.
and Mellon Bank, as custodian, have no part in determining the investment
policies of the Fund or which securities are to be purchased or sold by the
Fund.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction with
the sections in the Fund's Prospectus entitled "Account Policies," "Services for
Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is being
purchased. The decision as to which Class of shares is most beneficial to you
depends on the amount and the intended length of your investment. You should
consider whether, during the anticipated life of your investment in the Fund,
the accumulated distribution fee, service fee and CDSC, if any, on Class B or
Class C shares would be less than the accumulated distribution fee and initial
sales charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return on Class A shares.
Additionally, investors qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution and
service fees on Class B or Class C shares may exceed the accumulated
distribution fees and initial sales charge on Class A shares during the life of
the investment. Finally, you should consider the effect of the CDSC period and
any conversion rights of the Classes in the context of your own investment time
frame. For example, while Class C shares have a shorter CDSC period than Class B
shares, Class C shares do not have a conversion feature and, therefore, are
subject to ongoing distribution and service fees. Thus, Class B shares may be
more attractive than Class C shares to investors with longer term investment
outlooks. Generally, Class A shares may be more appropriate for investors who
invest $1,000,000 or more in Fund shares, but will not be appropriate for
investors who invest less than $50,000 in Fund shares. The Fund reserves the
right to reject any purchase order.
Class A shares, Class B shares and Class C shares may be purchased only by
clients of Agents, except that full-time or part-time employees of Dreyfus or
any of its affiliates or subsidiaries, directors of Dreyfus, Board members of a
fund advised by Dreyfus, including members of the Trust's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Agent.
Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates) acting on
behalf of customers having a qualified trust or investment account or
relationship at such institution, or to customers who have received and hold
shares of the Fund distributed to them by virtue of such an account or
relationship. In addition, holders of Class R shares of the Fund who have held
their shares since April 4, 1994 may continue to purchase Class R shares of the
Fund whether or not they would otherwise be eligible to do so. Class R shares
may be purchased for a retirement plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such a plan. Institutions
effecting transactions in Class R shares for the accounts of their clients may
charge their clients direct fees in connection with such transactions.
The minimum initial investment is $1,000. Subsequent investments must be at
least $100. The minimum initial investment for Dreyfus-sponsored self-employed
individual retirement plans ("Keogh Plans"), IRAs (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs)
and 403(b)(7) Plans with only one participant is $750 and $500 for
Dreyfus-sponsored Education IRAs, with no minimum on subsequent purchases except
that the no minimum on Education IRAs does not apply until after the first year.
The initial investment must be accompanied by the Fund's Account Application.
The Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualified or
non-qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form acceptable to the
Fund. The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code") imposes various
limitations on the amount that may be contributed annually to certain qualified
or non-qualified employee benefit plans or other programs, including pension,
profit-sharing and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entities or state and local governments
("Retirement Plans"). These limitations apply with respect to participants at
the plan level and, therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors should
consult their tax advisers for details.
Fund shares are sold on a continuous basis. NAV per share is determined as
of the close of trading on the floor of the New York Stock Exchange ("NYSE")
(currently 4:00 p.m., New York time), on each day the NYSE is open for business.
For purposes of determining NAV, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the NYSE. NAV per share of
each class is computed by dividing the value of the Fund's net assets
represented by such class (i.e., the value of its assets less liabilities) by
the total number of shares of such class outstanding. For 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 anytime. 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 (the "IRS").
Class A Shares. The public offering price for Class A shares is the NAV of
that Class, plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load as a % Dealers' Reallowance
Amount of Transaction of Offering Price Per Share as a % Offering Price
--------------------- --------------------------- ----------------------
<S> <C> <C>
Less than $50,000 4.50 4.25
$50,000 to less than $100,000 4.00 3.75
$100,000 to less than $250,000 3.00 2.75
$250,000 to less than $500,000 2.50 2.25
$500,000 to less than $1,000,000 2.00 1.75
$1,000,000 or more -0- -0-
</TABLE>
Sales Loads--Class A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Code although more than one beneficiary
is involved; or a group of accounts established by or on behalf of the employees
of an employer or affiliated employers pursuant to an employee benefit plan or
other program (including accounts established pursuant to Sections 403(b),
408(k), and 457 of the Code); or an organized group which has been in existence
for more than six months, provided that it is not organized for the purpose of
buying redeemable securities of a registered investment company and provided
that the purchases are made through a central administration or a single dealer,
or by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering price
of the Fund's Class A shares. The example assumes a purchase of Class A shares
of the Fund aggregating less than $50,000 subject to the schedule of sales
charges set forth in the Fund's Prospectus at a price based upon the NAV of a
Class A share at the close of business on December 31, 1999.
NAV per Share $ 9.99
Per Share Sales Charge - 4.5%
of offering price (4.7% of
NAV per share) $ 0.47
Per Share Offering Price to
the Public $10.46
Holders of Class A accounts of the Fund as of December 19, 1994 may
continue to purchase Class A shares of the Fund at NAV. However, investments by
such holders in other funds advised by Dreyfus will be subject to the applicable
front-end sales load.
There is no initial 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. The Distributor may pay Agents an amount up
to 1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained below under "Redemption of Shares - Contingent
Deferred Sales Charge - Class B Shares" (other than the amount of the CDSC and
time periods) and "Redemption of Shares - Waiver of CDSC" are applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of Accumulation
apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of such shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children, at NAV, provided that they have
furnished the Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at NAV. In addition, Class A shares are offered at NAV to full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of the
Trust's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided, 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 plans assets were invested in funds in the Dreyfus Premier Family of Funds,
the Dreyfus Family of Funds, certain funds advised by Founders Asset Management
LLC ("Founders"), an affiliate of Dreyfus, 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, certain funds in the
Dreyfus Family of Funds, certain funds advised by Founders or certain other
products made available by the Distributor to such plans.
Class A shares may be purchased at NAV through certain broker-dealers and
other financial institutions which have entered into an agreement with the
Distributor, which includes a requirement that such shares be sold for the
benefit of clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with the
proceeds from the redemption of shares of a registered open-end management
investment company not managed by Dreyfus or its affiliates. The purchase of
Class A shares of the Fund must be made within 60 days of such redemption and
the shareholder must have either (i) paid an initial sales charge or a CDSC or
(ii) been obligated to pay at any time during the holding period, but did not
actually pay on redemption, a deferred sales charge with respect to such
redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or intrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000 or
more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 664 of the Code).
The dealer reallowance may be changed from time to time but will remain the
same for all dealers. The Distributor, at its own expense, may provide
additional promotional incentives to dealers that sell shares of funds advised
by Dreyfus which are sold with a sales load, such as Class A shares. In some
instances, these incentives may be offered only to certain dealers who have sold
or may sell significant amounts of such shares. Dealers receive a larger
percentage of the sales load from the Distributor than they receive for selling
most other funds.
Class B Shares. The public offering price for Class B shares is the NAV per
share of that Class. No initial sales charge is imposed at the time of purchase.
A CDSC is imposed, however, on certain redemptions of Class B shares as
described in the Fund's Prospectus.
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 C Shares. The Distributor compensates certain Agents for
selling Class B and Class C shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution fee, in
part, are used to defray these expenses.
Class R Shares. The public offering price for Class R shares is the NAV per
share of that Class.
Right of Accumulation--Class A Shares. Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Dreyfus Premier Family
of Funds which are sold with a sales load, shares of certain other funds advised
by Dreyfus or Founders, which are sold with a sales load and shares acquired by
a previous exchange of such shares (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined above, where the
aggregate investment, including such purchase, is $50,000 or more. If, for
example, you previously purchased and still hold Class A shares of the Fund, or
shares of any other Eligible Fund or combination thereof, with an aggregate
current market value of $40,000 and subsequently purchase Class A shares of the
Fund or shares of an Eligible Fund having a current value of $20,000, the sales
load applicable to the subsequent purchase would be reduced to 4% of the
offering price. All present holdings of Eligible Funds may be combined to
determine the current offering price of the aggregate investment in ascertaining
the sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify the Distributor if orders are made by wire, or the Transfer
Agent if orders are made by mail. The reduced sales load is subject to
confirmation of your holdings through a check of appropriate records.
TeleTransfer Privilege. You may purchase Fund shares by telephone through
the TeleTransfer Privilege if you have checked the appropriate box and supplied
the necessary information on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution that is an
Automated Clearing House ("ACH") member may be so designated. TeleTransfer
purchase orders may be made at any time. Purchase orders received by 4:00 p.m.,
New York time, on any business day that the Transfer Agent and the NYSE are open
for business will be credited to the shareholder's Fund account on the next bank
business day following such purchase order. Purchase orders made after 4:00
P.M., New York time, on any business day the Transfer Agent and the NYSE are
open for business, or orders made on Saturday, Sunday or any Fund holiday (e.g.,
when the NYSE is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order. To
qualify to use the TeleTransfer Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares - TeleTransfer Privilege." The
Fund may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund may
at its discretion, permit the purchase of shares through an "in-kind" exchange
of securities. Any securities exchanged must meet the investment objective,
policies and limitations of the Fund, must have a readily ascertainable market
value, must be liquid and must not be subject to restrictions on resale. The
market value of any securities exchanged, plus any cash, must be at least equal
to $25,000. Shares purchased in exchange for securities generally cannot be
redeemed for fifteen days following the exchange in order to allow time for the
transfer to settle.
The basis of the exchange will depend upon the relative NAV of the shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest earned on
the securities following their delivery to the Fund and prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. For further information about "in-kind"
purchases, call 1-800-554-4611.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
Class A, Class B and Class C shares are subject to annual fees for
distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "Rule") regulating
the circumstances under which investment companies such as the Trust may,
directly or indirectly, bear the expenses of distributing their shares. The Rule
defines distribution expenses to include expenditures for "any activity which is
primarily intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only pursuant
to a plan adopted in accordance with the Rule.
Distribution Plan--Class A Shares. The Trust has adopted a Distribution
Plan pursuant to the Rule with respect to the Class A shares of the Fund ("Class
A Plan"), whereby Class A shares of the Fund may spend annually up to 0.25% of
the average of its net assets to compensate Mellon Bank and its affiliates
(including but not limited to Dreyfus and the Distributor) for shareholder
servicing activities and the Distributor for shareholder servicing activities
and expenses primarily intended to result in the sale of Class A shares of the
Fund. The Class A Plan allows the Distributor to make payments from the Rule
12b-1 fees it collects from the Fund to compensate Agents that have entered into
Selling Agreements ("Agreements") with the Distributor. Under the Agreements,
the Agents are obligated to provide distribution related services with regard to
the Fund and/or shareholder services to the Agent's clients that own Class A
shares of the Fund.
The Class A Plan provides that a report of the amounts expended under the
Class A Plan, and the purposes for which such expenditures were incurred, must
be made to the Trust's Trustees for their review at least quarterly. In
addition, the Class A Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to the
Class A Plan without approval of the Fund's shareholders, and that other
material amendments of the Class A Plan must be approved by the vote of a
majority of the Trustees and of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust or the Distributor and who do not have
any direct or indirect financial interest in the operation of the Class A Plan,
cast in person at a meeting called for the purpose of considering such
amendments. The Class A Plan is subject to annual approval by the entire Board
of Trustees and by the Trustees who are neither interested persons nor have any
direct or indirect financial interest in the operation of the Class A Plan, by
vote cast in person at a meeting called for the purpose of voting on the Class A
Plan. The Class A Plan is terminable, as to the Fund's Class A shares, at any
time by vote of a majority of the Trustees who are not interested persons and
have no direct or indirect financial interest in the operation of the Class A
Plan or by vote of the holders of a majority of the outstanding shares of such
class of the Fund.
Distribution and Service Plans -- Class B and Class C Shares. In addition
to the above described current Class A Plan for Class A shares, the Board of
Directors has adopted a Service Plan (the "Service Plan") under the Rule for
Class B and Class C shares, pursuant to which the Fund pays the Distributor,
and/or any of its affiliates, a fee at the annual rate of 0.25% of the value of
the average daily net assets of Class B and Class C shares for the provision of
certain services to the holders of Class B and Class C shares. The services
provided may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and providing services related to the maintenance of such
shareholder accounts. With regard to such services, each Agent is required to
disclose to its clients any compensation payable to it by the Fund and any other
compensation payable by its clients in connection with the investment of their
assets in Class B and Class C shares. The Distributor may pay one or more Agents
in respect of services for these Classes of shares. The Distributor determines
the amounts, if any, to be paid to Agents under the Service Plan and the basis
on which such payments are made. The Trust's Board of Trustees has also adopted
a Distribution Plan pursuant to the Rule with respect to Class B and Class C
shares (the "Distribution Plan") pursuant to which the Fund pays the Distributor
for distributing the Fund's Class B and Class C shares at an aggregate annual
rate of 0.75% of the value of the average daily net assets of Class B and Class
C shares. The Trust's Board of Trustees believes that there is a reasonable
likelihood that the Distribution and Service Plans (the "Plans") will benefit
the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the Trustees
for their review. In addition, each Plan provides that it may not be amended to
increase materially the cost which holders of Class B or Class C shares may bear
pursuant to the Plan without the approval of the holders of such Classes and
that other material amendments of the Plan must be approved by the Board of
Trustees and by the Trustees who are not interested persons of the Fund and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. Each Plan is
subject to annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Plan. Each Plan may be
terminated at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in the
operation of the Plan or in any agreements entered into in connection with the
Plan or by vote of the holders of a majority of Class B and Class C shares.
An Agent entitled to receive compensation for selling and servicing the
Fund's shares may receive different compensation with respect to one class of
shares over another. Potential investors should read this Statement of
Additional Information in light of the terms governing Agreements with their
Agents. The fees payable under the Distribution and Service Plans are payable
without regard to actual expenses incurred. The Fund and the Distributor may
suspend or reduce payments under the Distribution and Service Plans at any time,
and payments are subject to the continuation of the Fund's Plans and the
Agreements described above. From time to time, the Agents, the Distributor and
the Fund may voluntarily agree to reduce the maximum fees payable under the
Plans.
From October 17, 1994 through March 21, 2000, Premier acted as the Fund's
distributor and received payments under the Class A Plan, Distribution Plan and
Service Plan. Set forth below are the total amounts paid by the Fund to Premier,
as the distributor, for shareholder servicing activities and expenses primarily
intended to result in the sale of Class A shares of the Fund, with respect to
the Class A Plan, for distributing the Fund's Class B and Class C shares, with
respect to the Distribution Plan, and for the provision of certain services to
the holders of Class B and Class C shares with respect to the Service Plan, for
the fiscal year ended December 31, 1999. Also set forth below are payments
received by the Distributor, prior to it becoming the fund's distributor, for
shareholder servicing activities and expenses primarily intended to result in
the sale of Class A shares of the Fund, with respect to the Class A Plan, and
for the provision of certain services to the holders of Class B and Class C
shares, with respect to the Service Plan, for the same time period.
For the fiscal year ended December 31, 1999, the Fund paid Premier and the
Distributor $32,293 and $133,712, respectively, pursuant to the Class A Plan.
For the fiscal year ended December 31, 1999, the Fund paid Premier $124,609 and
$36,656, pursuant to the Distribution plan with respect to Class B and Class C
shares, respectively, and paid Premier and the Distributor $8,936 and $32,600,
respectively, pursuant to the Service Plan with respect to Class B shares and
$214 and $12,005, respectively, pursuant to the Service Plan with respect to
Class C shares.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies," "Services
For Fund Investors," "Instructions for Regular Accounts" and "Instructions for
IRAs."
General. If you hold Fund shares of more than one class, any request for
redemption must specify the class of shares being redeemed. If you fail to
specify the class of shares to be redeemed or if you own fewer shares of the
class than specified to be redeemed, the redemption request may be delayed until
the Transfer Agent receives further instructions from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
NAV per share.
Procedures. You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or if you have checked the appropriate box
and supplied the necessary information on the Account Application or have filed
a Shareholder Services Form with the Transfer Agent, through the TeleTransfer
privilege. If you are a client of certain Agents ("Selected Dealers"), you may
redeem Fund shares through the Selected Dealer. Other redemption procedures may
be in effect for clients of other Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the right
to refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption privilege at any time
or charge a service fee upon notice to shareholders. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs, or other retirement plans,
and shares for which certificates have been issued, are not eligible for the
TeleTransfer Privilege.
You may redeem Fund shares by telephone if you have checked the appropriate
box on the Account Application or have filed a Shareholder Services Form with
the Transfer Agent. If you select the TeleTransfer privilege or telephone
exchange privilege, which is granted automatically unless you refuse it, you
authorize the Transfer Agent to act on telephone instructions (including The
Dreyfus Touch(R) automated telephone system) from any person representing
himself or herself to be you, or a representative of your Agent, and reasonably
believed by the Transfer Agent to be genuine. The Fund will require the Transfer
Agent to employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if it does not
follow such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a
TeleTransfer redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if TeleTransfer redemption had
been used. During the delay, the Fund's NAV may fluctuate.
Redemption Through a Selected Dealer. Customers of Selected Dealers may
make redemption requests to their Selected Dealer. If the Selected Dealer
transmits the redemption request so that it is received by the Transfer Agent
prior to the close of trading on the floor of the NYSE (currently 4:00 p.m., New
York time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of trading
on the floor of the NYSE, the redemption request will be effective on the next
business day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund shares held by shareholders. Repurchase orders received by
dealers by the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, the Fund shares will be redeemed at the next determined NAV per
share. It is the responsibility of the Selected Dealer to transmit orders on a
timely basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be withdrawn at
any time.
Reinvestment Privilege. Upon written request, you may reinvest up to the
number of Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing NAV without a sales load, or reinstate your
account for the purpose of exercising Fund Exchanges. Upon reinstatement, with
respect to Class B shares, or Class A shares if such shares were subject to a
CDSC, your account will be credited with an amount equal to the CDSC previously
paid upon redemption of the Class A or Class B shares reinvested. The
Reinvestment Privilege may be exercised only once.
TeleTransfer Privilege. You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an ACH member may be designated. Redemption proceeds will
be on deposit in your account at an ACH member bank ordinarily two days after
receipt of the redemption request. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will be
effected as a TeleTransfer transaction through the ACH system unless more prompt
transmittal specifically is requested. Holders of jointly registered Fund or
bank accounts may redeem through the TeleTransfer Privilege for transfer to
their bank account only up to $500,000 within any 30-day period. See "Purchase
of Shares--TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each holder of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations
as well as from participants in the NYSE Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges
Medallion Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular verification.
For more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record of the Fund, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. In the case of requests for
redemptions in excess of such amount, the Board of Trustees reserves the right
to make payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the Fund
to the detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the Fund's portfolio is valued. If the
recipient sold such securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the NYSE is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund ordinarily utilizes is restricted, or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments or
determination of its NAV is not reasonably practicable, or (c) for such other
periods as the SEC by order may permit to protect the Fund's shareholders.
Contingent Deferred Sales Charge - Class B Shares. A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current NAV of your Class B shares to an amount which is lower than the dollar
amount of all payments by you for the purchase of Class B shares of the Fund
held by you at the time of redemption. No CDSC will be imposed to the extent
that the NAV of the Class B shares redeemed does not exceed (i) the current NAV
of Class B shares acquired through reinvestment of dividends or other
distributions, plus (ii) increases in the NAV of Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the Fund held
by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be applied
to the then-current NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV of Class B shares above the
total amount of payments for the purchase of Class B shares made during the
preceding six years; then of amounts representing the cost of shares purchased
six years prior to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 per share for a
cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of his or her investment. Assuming at the time
of the redemption the NAV has appreciated to $12 per share, the value of the
investor's shares would be $1,260 (105 shares at $12 per share). The CDSC would
not be applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the applicable rate
in the second year after purchase) for a total CDSC of $9.60.
For purposes of determining the applicable CDSC payable with respect to
redemption of Class B shares of the Fund where such shares were acquired through
exchange of Class B shares of another fund advised by Dreyfus, the year since
purchase payment was made is based on the date of purchase of the original Class
B shares of the fund exchanged.
Contingent Deferred Sales Charge - Class C Shares. A CDSC of 1% payable to
the Distributor is imposed on any redemption of Class C shares within one year
of the date of purchase. The basis for calculating the payment of any such CDSC
will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge - Class B Shares" above.
Waiver of CDSC. The CDSC may be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70 1/2 in the case of an IRA
or Keogh plan or custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions pursuant to the Automatic Withdrawal Plan, as described below.
If the Trust's Board determines to discontinue the waiver of the CDSC, the
disclosure herein will be revised appropriately. Any Fund shares subject to a
CDSC which were purchased prior to the termination of such waiver will have the
CDSC waived as provided in the Prospectus or this Statement of Additional
Information at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your entitlement.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
Fund Exchanges. You may purchase, in exchange for shares of the Fund,
shares of the same Class of another fund in the Dreyfus Premier Family of Funds,
shares of the same Class of certain funds advised by Founders, or shares of
certain other funds in the Dreyfus Family of Funds, to the extent such shares
are offered for sale in your state residence. Shares of the same class of such
funds purchased by exchange will be purchased on the basis of relative NAV per
share as follows:
A. Exchanges for shares of funds that are offered without a sales load
will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable sales
load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without a
sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds acquired
by a previous exchange from shares purchased with a sales load and
additional shares acquired through reinvestment of dividends or other
distributions of any such funds (collectively referred to herein as
"Purchased Shares") may be exchanged for shares of other funds sold
with a sales load (referred to herein as "Offered Shares"), provided
that, if the sales load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference will be
deducted.
E. Shares of funds subject to a CDSC that are exchanged for shares of
another fund will be subject to the higher applicable CDSC of the two
funds, and for purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held since the date the
shares being exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Agent must
notify the Transfer Agent of the investor's prior ownership of shares with a
sales load and the investor's account number. Any such exchange is subject to
confirmation of an investor's holdings through a check of appropriate records.
To request an exchange, an investor, or an investor's Agent acting on the
investor's behalf, must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by telephone
is given to all Fund shareholders automatically, unless the investor checks the
applicable "No" box on the Account Application, indicating that the investor
specifically refuses this privilege. The Telephone Exchange Privilege may be
established for an existing account by written request signed by all
shareholders on the account, by a separate signed Shareholder Services Form,
available by calling 1-800-554-4611, or by oral request from any of the
authorized signatories on the account, also by calling 1-800-554-4611. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent to
act on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be the
investor, or a representative of the investor's Agent, and reasonably believed
by the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the SEC.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
you to purchase (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, shares of the same Class of another fund in the
Dreyfus Premier Family of Funds, shares of the same Class of certain funds
advised by Founders, or shares of certain other funds in the Dreyfus Family of
Funds, of which you are a shareholder. The amount the investor designates, which
can be expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth day of
the month according to the schedule the investor has selected. This Privilege is
available only for existing accounts. With respect to Class R shares held by a
Retirement Plan, exchanges may be made only between the investor's Retirement
Plan account in one fund and such investor's Retirement Plan account in another
fund. Shares will be exchanged on the basis of relative NAV per share as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if the investor's
account falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRAs and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA accounts to
regular accounts. With respect to all other retirement accounts, exchanges may
be made only among those accounts.
The right to exercise this Privilege may be modified or canceled by the
Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to Dreyfus Premier Managed
Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The Fund may
charge a service fee for the use of this Privilege. No such fee currently is
contemplated. For more information concerning this Privilege and the funds in
the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-554-4611.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations. The exchange of shares of
one fund for shares of another is treated for Federal income tax purposes as a
sale of the shares given in exchange and, therefore, an exchanging shareholder
(other than a tax-exempt Retirement Plan) may realize a taxable gain or loss.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund exchange service or the Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
Dreyfus-Automatic Asset Builder(R). Dreyfus-Automatic Asset Builder permits
you to purchase Fund shares (minimum of $100 and maximum of $150,000 per
transaction) at regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. Only an account
maintained at a domestic financial institution which is an ACH member may be so
designated. To establish a Dreyfus-Automatic Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-554-4611. You may cancel your participation
in this Privilege or change the amount of purchase at any time by mailing
written notification to Dreyfus Premier Managed Income Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587 and the notification will be effective three
business days following receipt. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and other
distributions, the investor's shares will be reduced and eventually may be
depleted. An Automatic Withdrawal Plan may be established by filing an Automatic
Withdrawal Plan application with the Transfer Agent or by oral request from any
of the authorized signatories on the account by calling 1-800-554-4611.
Automatic Withdrawal may be terminated at any time by the investor, the Fund or
the Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Particular Retirement Plans, including Dreyfus-sponsored Retirement Plans,
may permit certain participants to establish an automatic withdrawal plan from
such Retirement Plans. Participants should consult their Retirement Plan sponsor
and tax adviser for details. Such a withdrawal plan is different from the
Automatic Withdrawal Plan. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed on an annual basis 12% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 12% of the initial account
value. Class C shares, and Class A shares to which a CDSC applies, that are
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC. Purchases of additional Class A shares where the sales load is
imposed concurrently with withdrawals of Class A shares generally are
undesirable.
Dividend Options. Dreyfus Dividend Sweep allows you to invest automatically
your dividends or dividends and capital gain distributions, if any, from the
Fund in shares of the same Class of another fund in the Dreyfus Premier Family
of Funds, shares of the same Class of certain funds advised by Founders, or
shares of certain other funds in the Dreyfus Family of Funds, of which you are a
shareholder. Shares of the same Class of other funds purchased pursuant to this
privilege will be purchased on the basis of relative NAV per share as follows:
A. Dividends and other distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and other distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and other distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales load
(referred to hereinafter as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum sales
load charged by the fund from which dividends or other distributions
are being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and other distributions paid by a fund may be invested in
shares of other funds that impose a CDSC and the applicable CDSC, if
any, will be imposed upon redemption of such shares.
Dividend ACH permits you to transfer electronically dividends or dividends
and other distributions, if any, from the Fund to a designated bank account.
Only an account maintained at a domestic financial institution which is an ACH
member may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a Dividend
Options Form, please call toll free 1-800-554-4611. You may cancel these
Privileges by mailing written notification to Dreyfus Premier Managed Income
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a new fund
after cancellation, you must submit a new Dividend Options Form. Enrollment in
or cancellation of these privileges is effective three business days following
receipt. These privileges are available only for existing accounts and may not
be used to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these privileges at any time or
charge a service fee. No such fee currently is contemplated. Shares held under
Keogh Plans, IRAs or other retirement plans are not eligible for Dividend Sweep.
Dreyfus Government Direct Deposit Privilege. Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social Security or
certain veterans', military or other payments from the Federal government
automatically deposited into your Fund account. You may deposit as much of such
payments as you elect. You should consider whether Direct Deposit of your entire
payment into a fund with fluctuating NAV, such as the Fund, may be appropriate
for you. To enroll in Dreyfus Government Direct Deposit, you must file with the
Transfer Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this Privilege. The appropriate form may be
obtained from your Agent or by calling 1-800-554-4611. Death or legal incapacity
will terminate your participation in this Privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate your participation upon 30 days' notice
to you.
Letter of Intent--Class A Shares. By signing a Letter of Intent form, which
can be obtained by calling 1-800-554-4611, you become eligible for the reduced
sales load applicable to the total number of Eligible Fund shares purchased in a
13-month period pursuant to the terms and conditions set forth in the Letter of
Intent. A minimum initial purchase of $5,000 is required. To compute the
applicable sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Eligible Fund that may be used toward
"Right of Accumulation" benefits described above may be used as a credit toward
completion of the Letter of Intent. However, the reduced sales load will be
applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares of the Fund held in escrow to realize the
difference. Signing a Letter of Intent does not bind you to purchase, or the
Fund to sell, the full amount indicated at the sales load in effect at the time
of signing, but you must complete the intended purchase to obtain the reduced
sales load. At the time you purchase Class A shares, you must indicate your
intention to do so under a Letter of Intent. Purchases pursuant to a Letter of
Intent will be made at the then-current NAV plus the applicable sales load in
effect at the time such Letter of Intent was executed.
Retirement Plans. The Fund makes available a variety of pension and
profit-sharing plans, including Keogh Plans, IRAs (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and
Education IRAs), 401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support
services also are available. You can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call
1-800-358-5566; for IRAs and IRA "Rollover Accounts," please call
1-800-554-4611; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans,
please call 1-800-322-7880.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs may
charge a fee, payment of which could require the liquidation of shares. All fees
charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may not
be made in advance of receipt of funds.
Each investor should read the Prototype Retirement Plan and the appropriate
form of Custodial Agreement for further details on eligibility, service fees and
tax implications, and should consult a tax adviser.
ADDITIONAL INFORMATION ABOUT PURCHASES,
EXCHANGES AND REDEMPTIONS
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is engaged in excessive trading, the Fund, with or
without prior notice, may temporarily or permanently terminate the availability
of Fund exchanges, or reject in whole or part any purchase or exchange request,
with respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year or
who makes exchanges that appear to coincide with an active market-timing
strategy may be deemed to be engaged in excessive trading. Accounts under common
ownership or control will be considered as one account for purposes of
determining a pattern of excessive trading. In addition, the Fund may refuse or
restrict purchase or exchange requests by any person or group if, in the
judgment of the Fund's management, the Fund would be unable to invest the money
effectively in accordance with its investment objective and policies or could
otherwise be adversely affected or if the Fund receives or anticipates receiving
simultaneous orders that may significantly affect the Fund (e.g., amounts equal
to 1% or more of the Fund's total assets). If an exchange request is refused,
the Fund will take no other action with respect to the shares until it receives
further instructions from the investor. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the Fund.
The Fund's policy on excessive trading applies to investors who invest in the
Fund directly or through financial intermediaries, but does not apply to the
Dreyfus Auto-Exchange Privilege, to any automatic investment or withdrawal
privilege described herein, or to participants in employer-sponsored retirement
plans.
During times of drastic economic or market conditions, the Fund may suspend
Fund exchanges temporarily without notice and treat exchange requests based on
their separate components - redemption orders with a simultaneous request to
purchase the other fund's shares. In such a case, the redemption request would
be processed at the Fund's next determined NAV but the purchase order would be
effective only at the NAV next determined after the fund being purchased
receives the proceeds of the redemption, which may result in the purchase being
delayed.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Substantially all of the Fund's
investments (excluding short-term investments) are valued each business day by
an independent pricing service (the "Service") approved by the Fund's Board.
Securities valued by the Service for which quoted bid prices in the judgment of
the Service are readily available and are representative of the bid side of the
market are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices( as calculated by the
Service based upon its evaluation of the market for such securities). Other debt
securities valued by the Service are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. Short-term investments are
not valued by the Service and are carried at amortized cost, which approximates
value. Debt securities that are not valued by the Service are valued at the
average of the most recent bid and asked prices in the market in which such
investments are primarily traded, or at the last sales price for securities
traded primarily on an exchange. In the absence of reported sales of investments
traded primarily on an exchange, the average of the most recent bid and asked
prices is used. Bid price is used when no asked price is available. Investments
traded in foreign currencies are translated to U.S. dollars at the prevailing
rates of exchange. If the Fund has to obtain prices as of the close of trading
on various exchanges throughout the world, the calculation of NAV may not take
place contemporaneously with the determination of prices of certain of the
Fund's securities. Expenses and fees, including the management fee, are accrued
daily and are taken into account for the purpose of determining the NAV of Fund
shares.
NYSE Closings. The holidays (as observed) on which the NYSE is currently
scheduled to be closed are: New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distributions and Taxes."
General. The Fund ordinarily declares daily and pays monthly dividends from
its net investment income and distributes net realized capital gains and gains
from foreign currency transactions, if any, once a year, but it may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the 1940
Act. All expenses are accrued daily and deducted before declaration of dividends
to investors. The Fund will not make distributions from net realized capital
gains unless all capital loss carryovers, if any, have been utilized or have
expired. Shares begin accruing dividends on the day following the date of
purchase. The Fund's earnings for Saturdays, Sundays and holidays are declared
as dividends on the next business day. If you redeem all shares in your account
at any time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. Dividends paid by each
Class are calculated at the same time and in the same manner and are in the same
amount, except that the expenses attributable solely to a particular Class are
borne exclusively by that Class. Class B and Class C shares will receive lower
per share dividends than Class A shares, which will in turn receive lower per
share dividends than Class R shares, because of the higher expenses borne by the
relevant Classes.
Investors other than qualified retirement plans may choose whether to
receive dividends and other distributions in cash, to receive dividends in cash
and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment as a
regulated investment company ("RIC") under the Code so long as such
qualification is in the best interests of its shareholders. Such qualification
will relieve the Fund of any liability for federal income tax to the extent its
earnings and realized gains are distributed in accordance with applicable
provisions of the Code. To qualify for treatment as a RIC under the Code, the
Fund -- which is treated as a separate corporation for federal tax purposes --
(1) must distribute to its shareholders each year at least 90% of its investment
company taxable income (generally consisting of net investment income, net
short-term capital gains and net gains from certain foreign currency
transactions) ("Distribution Requirement"), (2) must derive at least 90% of its
annual gross income from specified sources ("Income Requirement"), and (3) must
meet certain asset diversification and other requirements. The term "regulated
investment company" does not imply the supervision of management or investment
practices or policies by any government agency. If the Fund failed to qualify
for treatment as a RIC for any taxable year, (1) it would be taxed at corporate
rates on the full amount of its taxable income for that year without being able
to deduct the distributions it makes to its shareholders and (2) the
shareholders would treat all those distributions, including distributions of net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), as dividends (that is, ordinary income) to the extent of the
Fund's earnings and profits. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying for RIC treatment. The Fund will
be subject to a non-deductible 4% excise tax ("Excise Tax") to the extent it
fails to distribute substantially all of its taxable investment income and
capital gains.
Distributions. If you elect to receive dividends and other distributions in
cash, and your distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest that
distribution and all future distributions payable to you in additional Fund
shares at NAV. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Dividends derived from net investment income, together with distributions
from net realized short-term capital gains, net realized gains from certain
foreign currency transactions and all or a portion of any gains realized from
the sale or other disposition of certain market discount bonds (collectively,
"dividend distributions"), will be taxable to U.S. shareholders, including
certain non-qualified retirement plans, as ordinary income to the extent of the
Fund's earnings and profits, whether received in cash or reinvested in
additional Fund shares. Distributions from net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are taxable to those
shareholders as long-term capital gains regardless of how long the shareholders
have held their Fund shares and whether the distributions are received in cash
or reinvested in additional Fund shares.
Dividend distributions paid by the Fund to a non-resident foreign investor
generally are subject to U.S. withholding tax at the rate of 30%, unless the
non-resident foreign investor claims the benefit of a lower rate specified in a
tax treaty. Capital gain distributions paid by the Fund to a non-resident
foreign investor, as well as the proceeds of any redemptions by such an
investor, regardless of the extent to which gain or loss may be realized,
generally are not subject to U.S. withholding tax. However, such distributions
may be subject to backup withholding, unless the foreign investor certifies his
or her non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions will
be mailed to you annually. You also will receive periodic summaries of your
account that will include information as to distributions paid during the year.
Dividends and other distributions paid by the Fund to qualified retirement
plans ordinarily will not be subject to taxation until the proceeds are
distributed from the plans. The Fund will not report to the IRS distributions
paid to such plans. Generally, distributions from qualified retirement plans,
except those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the participant
reaches age 59 1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. The administrator, trustee or
custodian of a qualified retirement plan will be responsible for reporting
distributions from the plan to the IRS. Moreover, certain contributions to a
qualified retirement plan in excess of the amounts permitted by law may be
subject to an excise tax. If a distributee of an "eligible rollover
distribution" from a qualified retirement plan does not elect to have the
distribution paid directly from the plan to an eligible retirement plan in a
"direct rollover," the distribution is subject to 20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is correct.
Backup withholding at that rate also is required from dividends and capital gain
distributions payable to such a shareholder if (1) the shareholder fails to
certify that he or she has not received notice from the IRS of being subject to
backup withholding as a result of a failure properly to report taxable dividend
or interest income on a federal income tax return or (2) the IRS notifies the
Fund to institute backup withholding because the IRS determines that the
shareholder's TIN is incorrect or that the shareholder has failed properly to
report such income. A TIN is either the Social Security number, IRS individual
taxpayer identification number or employer identification number of the record
owner of an account. Any tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the record owner and may be claimed as a
credit on his or her federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares below
the cost of his or her investment. Such a distribution would be a return on
investment in an economic sense, although taxable as discussed above. In
addition, if a shareholder sells shares of the Fund held for six months or less
and receives any capital gain distributions with respect to those shares, any
loss incurred on the sale of those shares will be treated as a long-term capital
loss to the extent of those distributions.
Dividends and other distributions declared by the Fund in October, November
or December of any year and payable to shareholders of record on a date in any
of those months are deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
Interest received by the Fund may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would reduce
the yield on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.
Foreign Currency and Hedging Transactions. Gains from the sale or other
disposition of foreign currencies (except certain gains that may be excluded by
future regulations), and gains from options, futures and forward contracts
derived by the Fund with respect to its business of investing in securities or
foreign currencies, will qualify as permissible income under the Income
Requirement.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gains or losses
from the disposition of foreign currencies and certain
foreign-currency-denominated instruments (including debt instruments and
financial forward, futures contracts and options) may be treated as ordinary
income or loss under Section 988 of the Code. In addition, all or a portion of
any gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that otherwise would be treated as capital
gain may be treated as ordinary income. "Conversion transactions" are defined to
include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund on
the exercise or lapse of, or closing transactions respecting, certain options,
futures and forward contracts ("Section 1256 Contracts") will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such contracts and options as well as
from closing transactions. In addition, any Section 1256 contracts remaining
unexercised at the end of the Fund's taxable year will be treated as sold for
their then fair market value (a process known as "marking-to-market"), resulting
in additional gain or loss to the Fund characterized in the same manner.
Offsetting positions held by the Fund involving certain options, futures or
forward contracts may constitute "straddles", which are defined to include
"offsetting positions" in actively traded personal property. Under Section 1092
of the Code, any loss from the disposition of a position in a straddle generally
may be deducted only to the extent the loss exceeds the unrealized gain on the
offsetting position(s) of the straddle. In addition, these rules may postpone
the recognition of loss that otherwise would be recognized under the
mark-to-market rule discussed above. The regulations under Section 1092 also
provide certain "wash sale" rules, which apply to transactions where a position
is sold at a loss and a new offsetting position is acquired within a prescribed
period, and "short sale" rules applicable to straddles. If the Fund makes
certain elections (including an election as to straddles that include a position
in one or more Section 1256 Contracts (so-called "mixed straddles")), the
amount, character, and timing of recognition of gains and losses from the
affected straddle positions would be determined under rules that vary according
to the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
Investment by the Fund in securities issued or acquired at a discount (for
example, zero coupon securities) could, under special tax rules, affect the
amount and timing of distributions to shareholders by causing the Fund to
recognize income prior to the receipt of cash payments. For example, the Fund
would be required to take into gross income annually a portion of the discount
(or deemed discount) at which the securities were issued and could need to
distribute that income to satisfy the Distribution Requirement and avoid
imposition of the 4% excise tax referred to in the Fund's Prospectus under
"Dividends, Other Distributions and Taxes." In that case, the Fund may have to
dispose of securities it might otherwise have continued to hold in order to
generate cash to satisfy these requirements.
State and Local Taxes. Depending upon the extent of its activities in
states and localities in which it is deemed to be conducting business, the fund
may be subject to the tax laws thereof. Shareholders are advised to consult
their tax advisers concerning the application of state and local taxes to them.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal income
taxation of a shareholder who, as to the United States, is a non-resident alien
individual, a foreign trust or estate, a foreign corporation or a foreign
partnership (a "foreign shareholder") depends on whether the income from the
Fund is "effectively connected" with a U.S. trade or business carried on by the
shareholder, as discussed below. Special U.S. federal income tax rules that
differ from those described below may apply to certain foreign persons who
invest in the Fund, such as a foreign shareholder entitled to claim the benefits
of an applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the foreign
shareholder generally will be subject to U.S. federal withholding tax of 30% (or
lower treaty rate). Capital gains realized by foreign shareholders on the sale
of Fund shares and distributions to them of net capital gain generally will not
be subject to U.S. federal income tax unless the foreign shareholder is a
non-resident alien individual and is physically present in the United States for
more than 182 days during the taxable year. In the case of certain foreign
shareholders, the Fund may be required to withhold U.S. Federal income tax at a
rate of 31% of capital gain distributions and of the gross proceeds from a
redemption of Fund shares unless the shareholder furnishes the Fund with a
certificate regarding the shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all distributions
to that shareholder and any gains realized by that shareholder on the
disposition of Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as the
case may be. Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are subject
to federal estate tax on their U.S. situs property, such as shares of the Fund,
that they own at the time of their death. Certain credits against that tax and
relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund by
Dreyfus. Debt securities purchased and sold by the Fund are generally traded on
a net basis (i.e., without commission) through dealers acting for their own
account and not as brokers, or otherwise involve transactions directly with the
issuer of the instrument. This means that a dealer (the securities firm or bank
dealing with the Fund) makes a market for securities by offering to buy at one
price and sell at a slightly higher price. The difference between the prices is
known as a spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection with
such transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to the
benefits received. Dreyfus also places transactions for other accounts that it
provides with investment advice.
Brokers and dealers involved in the execution of portfolio transactions on
behalf of the Fund are selected on the basis of their professional capability
and the value and quality of their services. In selecting brokers or dealers,
Dreyfus will consider various relevant factors, including, but not limited to,
the size and type of the transaction; the nature and character of the markets
for the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the Trust's
procedures adopted in accordance with Rule 17e-1 under the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or research
services to the Fund and/or other accounts over which Dreyfus or its affiliates
exercise investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its other
clients; and, conversely, such information provided by brokers or dealers who
have executed transaction orders on behalf of other clients of Dreyfus may be
useful to Dreyfus in carrying out its obligations to the Fund. The receipt of
such research services does not reduce 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 year ended December 31, 1999 the Fund paid brokerage
commissions amounting to $48,419. For the fiscal years ended December 31, 1997
and 1998 the Fund did not pay any brokerage commissions.
The aggregate amount of transactions during the fiscal year ended December
31, 1999 in securities effected on an agency basis through a broker-dealer for
research was $8,328,673.49, and the commissions and concessions related to such
transactions was $1,556.61.
Portfolio Turnover. While securities are purchased for the Fund on the
basis of potential for high current income and not for short-term trading
profits, the Fund's portfolio turnover rate may exceed 100%. A portfolio
turnover rate of 100% would occur, for example, if all the securities held by
the Fund were replaced once in a period of one year. A higher rate of portfolio
turnover involves correspondingly greater brokerage commissions and other
expenses that must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a higher rate of portfolio turnover may result in the
realization of larger amounts of short-term and/or long-term capital gains that,
when distributed to the Fund's shareholders, are taxable to them at the then
current rate. Nevertheless, securities transactions for the Fund will be based
only upon investment considerations and will not be limited by any other
considerations when Dreyfus deems its appropriate to make changes in the Fund's
assets. The portfolio turnover rate for the Fund is calculated by dividing the
lesser of the Fund's annual sales or purchases of portfolio securities
(exclusive of purchases and sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of securities in
the Fund during the year. Portfolio turnover may vary from year to year as well
as within a year. In periods in which extraordinary market conditions prevail,
Dreyfus will not be deterred from changing the Fund's investment strategy as
rapidly as needed, in which case higher turnover rates can be anticipated.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
The current yield for the 30-day period ended December 31, 1999 was 6.16%,
5.69%, 5.70% and 6.71% for Class A, Class B, Class C and Class R shares,
respectively. Current yield is computed pursuant to a formula which operates,
with respect to each Class, as follows: the amount of the Fund's expenses with
respect to such Class accrued for the 30-day period (net of reimbursements) is
subtracted from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) by the Fund with respect to such Class
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were entitled
to receive dividends, and (b) the maximum offering price per share in the case
of Class A or the NAV per share in the case of Class B, Class C and Class R on
the last day of the period less any undistributed earned income per share
reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying the
result by 2.
Average annual total returns (expressed as a percentage) for Class A, Class
B, and Class C and Class R shares of the Fund for the periods noted were:
<TABLE>
<CAPTION>
Average Annual Total Return for the
Period Ended December 31, 1999
1 Year 5 Years 10 Years Since Inception
------ ------- -------- ---------------
<S> <C> <C> <C> <C>
Class A shares (6.18)% 5.56% 6.59% -
Class B shares (6.18)% 5.42% - 5.44% (12/19/94)
Class C shares (3.40)% 5.74% - 5.61% (12/19/94)
Class R shares (1.57)% 6.79% - 5.92% (2/1/93)
</TABLE>
Inception date appears in parentheses following the average annual total return
since inception.
The foregoing chart assumes, where applicable, deduction of the maximum
sales load from the hypothetical initial investment at the time of purchase and
the assessment of the maximum CDSC.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at NAV (maximum offering price in
the case of Class A) per share with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and other
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result. A Class' average annual total return figures
calculated in accordance with such formula assume that in the case of Class A
the maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or in the case of Class B or C the maximum
applicable CDSC has been paid upon redemption at the end of the period.
Effective April 4, 1994, the Retail and Institutional Class of shares of
the Fund were reclassified as a single class of Shares known as "Investor
Shares" and the Investment Class of shares of the Fund was renamed as the Fund's
"Trust Shares." Effective October 17, 1994, the Fund redesignated the Investor
Shares as "Class A shares" and the Trust Shares as "Class R shares." The
following performance data for Class A shares is reflective of the Fund's Retail
Class of Shares' performance. In addition, the following performance data for
the Class R shares of the Fund reflects the Fund's former Investment Shares and
Trust Shares.
The Fund's total return for the period August 1, 1979 (commencement of
operations) to December 31, 1999 for Class A was 432.93%. Based on NAV per
share, the total return for Class A was 458% for this period. The Fund's total
return for Class B and Class C for the period from December 19, 1994 (inception
date of Class B and Class C) through December 31, 1999 was 30.56% and 31.58%,
respectively. Without giving effect to the applicable CDSC, the total return for
Class B and C was 31.54% and 31.58%, respectively, for this period. The Fund's
total return for the period February 1, 1993 (inception date of Class R) through
December 31, 1999 was 48.77%.
Total return is calculated by subtracting the amount of the Fund's NAV
(maximum offering price in the case of Class A) per share at the beginning of a
stated period from the NAV (maximum offering price in the case of Class A) per
share at the end of the period (after giving effect to the reinvestment of
dividends and other distributions during the period and any applicable CDSC),
and dividing the result by the NAV (maximum offering price in the case of Class
A) per share at the beginning of the period. Total return also may be calculated
based on the NAV per share at the beginning of the period instead of the maximum
offering price per share at the beginning of the period for Class A shares or
without giving effect to any applicable CDSC at the end of the period for Class
B or C shares. In such cases, the calculation would not reflect the deduction of
the sales load with respect to Class A shares or any applicable CDSC with
respect to Class B or C shares, which, if reflected would reduce the performance
quoted.
The Fund may compare the performance of its shares to that of other mutual
funds, relevant indices or rankings prepared by independent services or other
financial or industry publications that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load
Investor, Money Magazine, Morningstar Mutual Fund Values, U.S. News and World
Report, Forbes, Fortune, Barron's, Financial Planning, Financial Planning on
Wall Street, Certified Financial Planner Today, Investment Advisor, Kiplinger's,
Smart Money and similar publications may also be used in comparing the Fund's
performance. Furthermore, the Fund may quote its yields in advertisements or in
shareholder reports.
From time to time, Fund advertisements may include statistical data or
general discussions about the growth and development of Dreyfus Retirement
Services (in terms of new customers, assets under management, market share,
etc.) and its presence in the defined contribution plan market. From time to
time, advertising materials for the Fund may refer to Morningstar ratings and
related analyses supporting that rating.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer to or
include commentary by the portfolio manager relating to investment strategy,
asset growth, current or past business, political, economic or financial
conditions and other matters of general interest to investors.
From time to time, advertising materials may refer to studies performed by
Dreyfus or its affiliates, such as "The Dreyfus Tax Informed Investment Study"
or "The Dreyfus Gender Investment Comparison Study (1996 & 1997)" or other
studies.
Yield information is useful in reviewing the Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in the Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Fund's
portfolio, portfolio maturity, operating expenses and market conditions. The
Fund's yields and total returns will also be affected if Dreyfus waives its
investment management fees.
INFORMATION ABOUT THE FUND/TRUST
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "The Fund."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Fund shares
are without par value, have no preemptive or subscription rights, and are freely
transferable. The Fund is one of three portfolios of the Trust. Fund shares have
equal rights in liquidation.
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, or, where maters affect different classes of a portfolio differently,
by class.
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.
COUNSEL AND INDEPENDENT AUDITORS
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second Floor,
Washington, D.C. 20036-1800, has passed upon the legality of the shares offered
by the Prospectus and this Statement of Additional Information.
KPMG LLP, 757 Third Avenue, New York, New York 10017, was appointed by the
Trustees to serve as the Fund's independent auditors for the year ending
December 31, 2000, 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.
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 has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers.
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.
<PAGE>
APPENDIX
DESCRIPTION OF S&P, MOODY'S, FITCH
AND DUFF & PHELPS RATINGS
S&P
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation
is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues only
in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as
having significant speculative characteristics. `BB' indicates the
least degree of speculation and `C' the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions,
which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity to
meet its financial commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the
obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment and
is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the capacity to meet
its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D' rating
category is used when payments on a obligation are not made on the
date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The `D' rating also will be used upon the filing of
a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus
(+) or a minus (-) sign to show relative standing within the major
rating categories
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus
(+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than
365 days.
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high
as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
B Issues rated `B' are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is used
when interest payments of principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period.
MOODY'S
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked short-comings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within each generic rating classification from Aa through B.
The modifier 1 indicates a ranking for the security in the higher end
of a rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the lower end of a rating
category.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that
define an investment grade situation. These are designated Moody's
Investment Grade as MIG 1 (best quality) through MIG 4 (adequate
quality). Short-term obligations of speculative quality are designated
SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an
evaluation of the degree of risk associated with scheduled principal
and interest payments, and the other represents an evaluation of the
degree of risk associated with the demand feature. The short-term
rating assigned to the demand feature of VRDOs is designated as VMIG.
When either the long- or short-term aspect of a VRDO is not rated,
that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow
and market access for refinancing is likely to be less well
established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
Moody'semploys the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well-established industries. o High rates of
return on funds employed. o Conservative capitalization structure with moderate
reliance on debt and
ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternative liquidity is
maintained.
FITCH
Bond Ratings
AAA Highest credit quality. `AAA' ratings denote the lowest expectation
of credit risk. They are assigned only in case of exceptionally
strong capacity for timely payment of financial commitments. This
capacity is highly unlikely to be adversely affected by foreseeable
events.
AA Very high credit quality. `AA' ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely payment
of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more
vulnerable to changes in circumstances or in economic conditions than
is the case for higher ratings.
BBB Good credit quality. `BBB' ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair
this capacity. This is the lowest investment-grade category.
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse
economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit risk
is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and
economic environment.
CCC, CC, High default risk. Default is a real possibility. Capacity for
meeting financial
C 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
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 investment grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors fluctuate
according to
BB- industry conditions or company fortunes. Overall quality may move up
or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will
not be met
B when due. Financial protection factors will fluctuate widely
according to
B- economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financial requirements, access to capital markets is good. Risk
factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues as
to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
D-4 Speculative investment characteristics. Liquidity is not sufficient
to insure against disruption in debt service. Operating factors and
market access may be subject to a high degree of variation.
D-5 Issuer failed to meet scheduled principal and/or interest payments.
- ------------------------------------------------------------------------------
DREYFUS PREMIER LIMITED TERM HIGH INCOME FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 2000
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Dreyfus Premier Limited Term High Income Fund (the "Fund"), dated May 1, 2000,
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, that is registered with
the Securities and Exchange Commission ("SEC"). To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale,
New York 11556-0144, or call one of the following numbers:
Call Toll Free 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
The financial statements for the fiscal year ended December 31, 1999,
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.
TABLE OF CONTENTS
Page
Description of the Fund/Trust...................................B-2
Management of the Fund..........................................B-24
Management Arrangements.........................................B-28
Purchase of Shares..............................................B-30
Distribution and Service Plans..................................B-37
Redemption of Shares............................................B-39
Shareholder Services............................................B-44
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-56
Performance Information.........................................B-58
Information About the Fund/Trust................................B-60
Counsel and Independent Auditors................................B-61
Year 2000 Issues................................................B-62
Appendix........................................................B-63
<PAGE>
DESCRIPTION OF THE FUND/TRUST
The Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts on March 30, 1979. The Trust is an open-end
management investment company comprised of separate portfolios, including the
Fund, each of which is treated as a separate fund. The Fund is diversified,
which means that, with respect to 75% of its total assets, the Fund will not
invest more than 5% of its assets in the securities of any single issuer.
The Fund's investment objective is to provide high current income. This
objective cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of
the Fund's outstanding voting shares.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Dreyfus Service Corporation (the "Distributor") is the distributor of the
Fund's shares.
Certain Portfolio Securities
The following information regarding the securities that the Fund may
purchase supplements that found in the Fund's prospectus.
Investment Grade Obligations. Corporate obligations rated Baa or higher by
Moody's Investors Service, Inc. ("Moody's") or BBB or higher by Standard &
Poor's Rating Service, a division of McGraw-Hill Companies, Inc. ("S&P"), Fitch
IBCA, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") are considered
by those rating agencies to be "investment grade" securities. The Fund may
invest in investment grade securities (or if unrated, of comparable quality as
determined by Dreyfus) when the yield differential between below investment
grade and investment grade securities narrows and the risk of loss may be
reduced with only a relatively small reduction in yield. The Fund also may
invest in investment grade securities when Dreyfus determines that a defensive
investment position is appropriate in light of market or economic conditions.
Lower Rated Securities. The Fund generally will invest in securities rated
below investment grade such as those rated Ba or lower by Moody's or BB or lower
by S&P, Fitch and Duff & Phelps Credit Rating Co. ("Duff" and with Moody's, S&P
and Fitch, the "Rating Agencies") (commonly known as junk bonds). The Fund is
permitted to invest in securities assigned ratings as low as the lowest ratings
assigned by the Rating Agencies. Such securities, though higher yielding, are
characterized by risk. See the Appendix for a general description of the Rating
Agencies' ratings. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
these securities. The Fund will rely on the judgment, analysis and experience of
Dreyfus in evaluating the creditworthiness of an issuer. The Fund's ability to
achieve its investment objective may be more dependent on the credit analysis
undertaken by Dreyfus than might be the case for a fund that invests in higher
rated securities.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by the Rating
Agencies to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation and
generally will involve more credit risk than securities in the higher rating
categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with the higher rated securities.
For example, during an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations also may be affected adversely by
specific corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer. Bond
prices are inversely related to interest rate changes; however, bond price
volatility also is inversely related to coupon. Accordingly, below investment
grade securities may be relatively less sensitive to interest rate changes than
higher quality securities of comparable maturity, because of their higher
coupon. This higher coupon is what the investor receives in return for bearing
greater credit risk.
Because there is no established retail secondary market for many of these
securities, the Fund anticipates that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a secondary
trading market for these securities does exist, it generally is not as liquid as
the secondary market for higher rated securities. The lack of a liquid secondary
market may have an adverse impact on market price and yield and the Fund's
ability to dispose of particular issues when necessary to meet the Fund's
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of valuing the Fund's
portfolio and calculating its net asset value ("NAV"). Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns. It
is likely that an economic recession could disrupt severely the market for such
securities and may have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default for such securities.
The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund has
no arrangement with any person concerning the acquisition of such securities,
and Dreyfus will review carefully the credit and other characteristics pertinent
to such new issues.
The average distribution of investments of the Fund in corporate bonds by
ratings for the fiscal year ended December 31, 1999, calculated monthly on a
dollar weighted basis, was as follows:
Moody's S&P, Fitch or Duff Percentage
------- ------------------ ----------
Aaa AAA 1.5%
Baa BBB 1.1%
Ba BB 12.6%
B B 64.9%
Caa CCC 4.9%
Ca CC .8%
NR NR 4.2%*
----
90.0%**
The actual distribution of the Fund's corporate bond investments by
ratings on any given date will vary, and the distribution of the Fund's
investments by ratings as set forth above should not be considered as
representative of the Fund's future portfolio composition.
- -----------------------
* These unrated securities have been determined by Dreyfus to be of
comparable quality to securities rated as follows: BBB (.1%), BB (.4%), B
(1.5%) and CCC (2.2%).
** The Fund also owns equity securities as follows: (.1%), preferred stocks
rated BB (1.0%) preferred stocks rated CCC (2.6%), convertible bonds rated
BBB (.9%) and convertible bonds rated B (4.4%).
U.S. Government Securities. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
which differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law.
Municipal Obligations. Municipal obligations are debt obligations issued
by states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. Municipal obligations bear fixed, floating
or variable rates of interest. Certain municipal obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related municipal obligations and
purchased and sold separately. The Fund also may acquire call options on
specific municipal obligations. The Fund generally would purchase these call
options to protect the Fund from the issuer of the related municipal obligation
redeeming, or other holder of the call option from calling away, the municipal
obligation before maturity.
While, in general, municipal obligations are tax exempt securities having
relatively low yields as compared to taxable, non-municipal obligations of
similar quality, certain municipal obligations are taxable obligations, offering
yields comparable to, and in some cases greater than, the yields available on
other permissible Fund investments. Dividends received by shareholders on Fund
shares which are attributable to interest income received by the Fund from
municipal obligations generally will be subject to Federal income tax. The Fund
may invest in municipal obligations, the ratings of which correspond with the
ratings of other permissible Fund investments. The Fund currently intends to
invest no more than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.
Municipal obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds that generally do not carry
the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities.
Mortgage-Related Securities. The Fund may invest in various
mortgage-related securities. Mortgage backed securities may represent an
ownership interest in a pool of residential mortgage loans. These securities are
designed to provide monthly payments of interest and principal to the investor.
The mortgagor's monthly payments to his/her lending institution are "passed
through" to an investor. Most issuers or poolers provide guarantees of payments,
regardless of whether or not the mortgagor actually makes the payment. The
guarantees made by issuers or poolers are supported by various forms of credit,
collateral, guarantees or insurance, including individual loan, title, pool and
hazard insurance purchased by the issuer. There can be no assurance that the
private issuers or poolers can meet their obligations under the policies.
Mortgage backed securities issued by private issuers or poolers, whether or not
such securities are subject to guarantees, may entail greater risk than
securities directly or indirectly guaranteed by the U.S. Government.
The mortgage-related securities which may be purchased include those with
fixed, floating and variable interest rates, those with interest rates that
change based on multiples of changes in interest rates and those with interest
rates that change inversely to changes in interest rates, as well as stripped
mortgage-backed securities. Stripped mortgage-backed securities usually are
structured with two classes that receive different proportions of interest and
principal distributions on a pool of mortgage-backed securities or whole loans.
A common type of stripped mortgage-backed security will have one class receiving
some of the interest and most of the principal from the mortgage collateral,
while the other class will receive most of the interest and the remainder of the
principal. Although certain mortgage-related securities are guaranteed by a
third party or otherwise similarly secured, the market value of the security,
which may fluctuate, is not secured. If a mortgage-related security is purchased
at a premium, all or part of the premium may be lost if there is a decline in
the market value of the security, whether resulting from changes in interest
rates or prepayments on the underlying mortgage collateral.
As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest rates.
However, although the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the security are more likely
to be prepaid. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return to the Fund. Moreover, with respect to stripped
mortgage-backed securities, if the underlying mortgage securities experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment even if the securities rated in the highest rating
category by a nationally recognized statistical rating organization.
The mortgage-related securities in which the Fund may invest also include
multi-class pass-through certificates secured principally by mortgage loans on
commercial properties. These mortgage-related securities are structured
similarly to mortgage-related securities secured by pools of residential
mortgages. Commercial lending, however, generally is viewed as exposing the
lender to a greater risk of loss than one- to four-family residential lending.
Commercial lending, for example, typically involves larger loans to single
borrowers or groups of related borrowers than residential one- to four-family
mortgage loans. In addition, the repayment of loans secured by income producing
properties typically is dependent upon the successful operation of the related
real estate project and the cash flow generated therefrom. Consequently, adverse
changes in economic conditions and circumstances are more likely to have an
adverse impact on mortgage-related securities secured by loans on commercial
properties than on those secured by loans on residential properties.
During periods of rapidly rising interest rates, prepayments of
mortgage-backed securities may occur at slower than expected rates. Slower
prepayments effectively may change a mortgage-backed security that was
considered short- or intermediate-term at the time of purchase into a long-term
security. The values of long-term securities generally fluctuate more widely in
response to changes in interest rates than short- or intermediate-term
securities. Were the prepayments on the Fund's mortgage-backed securities to
decrease broadly, the Fund's average effective duration, and thus sensitivity to
increase rate fluctuations, would increase. Therefore, depending on the
circumstances, such an increase could result in an average effective duration of
more than 3.5 years.
Certificates of the Government National Mortgage Association ("GNMA") are
mortgage-backed securities representing part ownership of a pool of mortgage
loans. These loans are made by mortgage bankers, commercial banks, savings and
loan associations, and other lenders and are either insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. A "pool" or
group of such mortgages is assembled and, after being approved by GNMA, is
offered to investors through securities dealers. Once approved by GNMA, the
timely payment of interest and principal on each mortgage is guaranteed by the
full faith and credit of the U.S. Government. Although the mortgage loans in a
pool underlying a GNMA Certificate will have maturities of up to 30 years, the
average life of a GNMA Certificate will be substantially less because the
mortgages will be subject to normal principal amortization and also may be
prepaid prior to maturity. Prepayment rates vary widely and may be affected by
changes in mortgage interest rates. In periods of falling interest rates, the
rate of prepayment on higher interest mortgage rates tends to increase, thereby
shortening the actual average life of the GNMA Certificate. Conversely, when
interest rates are rising, the rate of prepayment tends to decrease, thereby
lengthening the average life of the GNMA Certificates. Reinvestment of
prepayments may occur at higher or lower rates than the original yield of the
Certificates. Due to the prepayment feature and the need to reinvest prepayments
of principal at current rates, GNMA Certificates with underlying mortgages
bearing higher interest rates can be less effective than typical non-callable
bonds of similar maturities at locking in yields during periods of declining
interest rates, although they may have comparable risks of decline in value
during periods of rising interest rates.
The Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") are Government sponsored corporations owned
by private stockholders. Each is subject to general regulation by an office
within HUD. FNMA and FHLMC purchase residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks, credit unions and
mortgage bankers. Pass through securities issued by FNMA and FHLMC are
guaranteed by FNMA or FHLMC as to payment of principal and interest.
Collateralized Mortgage Obligations ("CMOs") are generally issued as a
series of different classes. Interest and principal payments on the mortgages
underlying any series will first be applied to meet the interest payment
requirements of each class in the series other than any class in respect of
which interest accrues but is not paid or any principal only class. Then,
principal payments on the underlying mortgages are generally applied to pay the
principal amount of the class that has the earliest maturity date. Once that
class is retired, the principal payments on the underlying mortgages are applied
to the class with the next earliest maturity date. This is repeated until all
classes are paid. Therefore, while each class of CMOs remains subject to
prepayment as the underlying mortgages prepay, structuring several classes of
CMOs in the stream of principal payments allows one to more closely estimate the
period of time when any one class is likely to be repaid.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create mortgage backed securities in which the Fund can invest. Pools created by
such nongovernmental issuers generally offer a higher rate of interest than
Government and Government related pools because there are no direct or indirect
U.S. Government guarantees of payments in the former pools. However, timely
payment of interest and principal of these pools is supported by various forms
of insurance or guarantees, including individual loan, title, pool and hazard
insurance purchased by the issuer. The insurance and guarantees are issued by
U.S. Government entities, private insurers and the mortgage poolers. There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies.
The Fund expects that U.S. Government or private entities may create
mortgage loan pools offering pass through investments in addition to those
described above. The mortgages underlying these securities may be alternative
mortgage instruments, that is, mortgage instruments whose principal or interest
payment may vary or whose terms to maturity may be shorter than previously
customary. As new types of mortgage backed securities are developed and offered
to investors, the Fund will, consistent with its investment objective and
policies, consider making investments in such new types of securities.
Other Asset Backed Securities. The Fund may also invest in non-mortgage
asset backed securities. Some non-mortgage asset backed securities are forms of
derivatives. The securitization techniques used for non-mortgage asset backed
securities are similar to those used for mortgage-related securities. The
collateral for these securities has included home equity loans, automobile and
credit card receivables, boat loans, computer leases, airplane leases, mobile
home loans, recreational vehicle loans and hospital account receivables. The
Fund may invest in these and other types of non-mortgage asset backed securities
that may be developed in the future.
Non-mortgage asset backed securities present certain risks that are not
presented by mortgage-backed securities. Primarily, these securities may provide
the Fund with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available to
support payments on these securities.
The purchase of non-mortgage asset backed securities raises considerations
peculiar to the financing of the instruments underlying such securities. For
example, most organizations that issue non-mortgage asset backed securities
relating to motor vehicle installment purchase obligations perfect their
interests in their respective obligations only by filing a financing statement
and by having the servicer of the obligations, which is usually the originator,
take custody thereof. In such circumstances, if the servicer were to sell the
same obligations to another party, in violation of its duty not to do so, there
is a risk that such party could acquire an interest in the obligations superior
to that of the holders of the non-mortgage asset backed securities. Also,
although most such obligations grant a security interest in the motor vehicle
being financed, in most states the security interest in a motor vehicle must be
noted on the certificate of title to perfect such security interest against
competing claims of other parties. Due to the large number of vehicles involved,
however, the certificate of title to each vehicle financed, pursuant to the
obligations underlying the non-mortgage asset backed securities, usually is not
amended to reflect the assignment of the seller's security interest for the
benefit of the holders of the non-mortgage asset backed securities. Therefore,
there is the possibility that recoveries on repossessed collateral may not, in
some cases, be available to support payments on those securities. In addition,
various state and Federal laws give the motor vehicle owner the right to assert
against the holder of the owner's obligation certain defenses such owner would
have against the seller of the motor vehicle. The assertion of such defenses
could reduce payments on the related non-mortgage asset backed securities.
Insofar as credit card receivables are concerned, credit card holders are
entitled to the protection of a number of state and Federal consumer credit
laws, many of which give such holders the right to set off certain amounts
against balances owed on the credit card thereby reducing the amounts paid on
such receivables. In addition, unlike most other non-mortgage asset backed
securities, credit card receivables are unsecured obligations of the card
holder.
The development of non-mortgage asset backed securities is at an early
stage compared to mortgage backed securities. While the market for non-mortgage
securities is becoming increasingly liquid, the market for mortgage backed
securities issued by certain private organizations and non-mortgage asset backed
securities is not as well developed.
Senior-Subordinated Securities. Mortgage-related and non-mortgage asset
backed securities may be structured in multiple classes with one or more classes
subordinate to other classes as to payments of cash flow from, principal of
and/or interest on the underlying assets. In such a "senior/subordinated"
structure, defaults on the underlying assets are borne first by the holders of
the subordinated class or classes. The Fund may invest in such subordinated
securities, which typically entail greater credit risk but provide higher
yields.
Repurchase Agreements. The Fund may enter into repurchase agreements. In a
repurchase agreement, the Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. The
Fund's resale price will be in excess of the purchase price, reflecting an
agreed upon interest rate. This interest rate is effective for the period of
time the Fund is invested in the agreement and is not related to the coupon rate
on the underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will the Fund invest in repurchase agreements for more than one year.
The Fund will always receive as collateral securities whose market value
including accrued interest is, and during the entire term of the agreement
remains, at least equal to 100% of the dollar amount invested by the Fund in
each agreement, including interest, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer
to the account of the custodian. If the seller defaults, the Fund might incur a
loss if the value of the collateral securing the repurchase agreement declines
and might incur disposition costs in connection with liquidating the collateral.
In addition, if bankruptcy proceedings are commenced with respect to the seller
of a security which is the subject of a repurchase agreement, realization upon
the collateral by the Fund may be delayed or limited. The Fund seeks to minimize
the risk of loss through repurchase agreements by analyzing the creditworthiness
of the obligors under repurchase agreements, in accordance with the Fund's
credit guidelines.
Repurchase agreements are considered by the staff of the SEC to be loans
by the Fund. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Fund will enter into repurchase agreements only with
domestic banks with total assets in excess of $1 billion, or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Fund may invest, and will require
that additional securities be deposited with it if the value of the securities
purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are obligations
that permit the Fund to invest fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These notes permit daily changes in the amounts borrowed. Because these
obligations are direct lending arrangements between the lender and borrower, it
is not contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value, plus accrued interest, at any time.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies, and the Fund may
invest in them only if at the time of an investment the borrower meets the
criteria set forth below for other commercial paper issuers.
Commercial paper consists of short-term, unsecured obligations issued by
banks and corporations that have maturities ranging from two to 270 days. Each
instrument may be backed only by the credit of the issuer or may be backed by
some form of credit enhancement, typically in the form of a guarantee by a
commercial bank. Commercial paper backed by guarantees of foreign banks may
involve additional risk due to the difficulty of obtaining and enforcing
judgments against such banks and the generally less restrictive regulations to
which such banks are subject. The commercial paper purchased by the Fund will
consist only of direct obligations which, at the time of their purchase, are (a)
rated not lower than Prime-1 by Moody's, A-1 by S&P, F-1 by Fitch or Duff 1 by
Duff, (b) issued by companies having an outstanding unsecured debt issue
currently rated at least A3 by Moody's or A1 by S&P, Fitch or Duff or (c) if
unrated, determined to by Dreyfus to be of comparable quality to those rated
obligations which may be purchased by the Fund.
Bank Obligations. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time. Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven days)
at a stated interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Zero Coupon Securities. The Fund may invest in zero coupon U.S. Treasury
securities, which are Treasury notes and bonds that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. Zero
coupon securities also are issued by corporations and financial institutions
which constitute a proportionate ownership of the issuer's pool of underlying
U.S. Treasury securities. A zero coupon security pays no interest to its holder
during its life and is sold at a discount to its face value at maturity. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Convertible Securities. Convertible securities may be converted at either
a stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to common stock, of
the same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
Although to a lesser extent than with fixed-income securities, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable stream of
income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
Warrants. A warrant is an instrument issued by a corporation which gives
the holder the right to subscribe to a specified amount of the corporation's
capital stock at a set price for a specified period of time. The Fund may invest
up to 5% of its net assets in warrants, except that this limitation does not
apply to warrants purchased by the Fund that are sold in units with, or attached
to, other securities.
Common Stock. From time to time, the Fund may hold common stock sold in
units with, or attached to, debt securities purchased by the Fund. The Fund also
may hold common stock received upon the conversion of convertible securities.
Foreign Securities. The Fund may purchase securities of foreign issuers
and may invest in obligations of foreign branches of domestic banks and domestic
branches of foreign banks. Investment in foreign securities presents certain
risks, including those resulting from fluctuations in currency exchange rates,
revaluation of currencies, adverse political and economic developments, the
possible imposition of currency exchange blockages or other foreign governmental
laws or restrictions, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
Moreover, securities of many foreign issuers may be less liquid and their prices
more volatile than those of comparable domestic issuers. In addition, with
respect to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities may
be subject to foreign government taxes that would reduce the yield on such
securities.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Fund have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Foreign Government Obligations; Securities of Supranational Entities. The
Fund may invest in obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities that are determined by Dreyfus to be of comparable quality to
the other obligations in which the Fund may invest. Such securities also include
debt obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the International
Bank for Reconstruction and Development (the World Bank), the Asian Development
Bank and the InterAmerican Development Bank.
Illiquid Investments. The Fund may invest up to 15% of the value of its
net assets in illiquid securities, including repurchase agreements and time
deposits with maturities in excess of seven days, certain mortgage-backed
securities, securities involved in swap, collar and floor transactions, and
privately negotiated traded options and securities used to cover such options.
Securities that have readily available market quotations are not deemed illiquid
for purposes of this limitation (irrespective of any legal or contractual
restrictions on resale). The Fund may invest in commercial obligations issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). The Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but that can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Liquidity determinations with respect to Section 4(2) paper and
Rule 144A securities will be made by the Board of Trustees or by Dreyfus
pursuant to guidelines established by the Board. The Board or Dreyfus will
consider availability of reliable price information and other relevant
information in making such determinations. Section 4(2) paper is restricted as
to disposition under the federal securities laws, and generally is sold to
institutional investors, such as the Fund, that agree that they are purchasing
the paper for investment and not with a view to public distribution. Any resale
by the purchaser must be pursuant to registration or an exemption therefrom.
Section 4(2) paper normally is resold to other institutional investors like the
Fund through or with the assistance of the issuer or investment dealers who make
a market in the Section 4(2) paper, thus providing liquidity. Rule 144A
securities generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the percentage
limitation on investment in illiquid securities. The ability to sell Rule 144A
securities to qualified institutional buyers is a recent development and it is
not possible to predict how this market will mature. Investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity to
the extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities from the Fund or other holders.
When purchasing securities that have not been registered under the
Securities Act of 1933, as amended, and are not readily marketable, the Fund
will endeavor, to the extent practicable, to obtain the right to registration at
the expense of the issuer. Generally, there will be a lapse of time between the
Fund's decision to sell any such security and the registration of the security
permitting sale. During any such period, the price of securities will be subject
to market fluctuations. During this period, the Fund's NAV could be adversely
effected.
Participation Interests. The Fund may invest in short-term corporate
obligations denominated in U.S. and foreign currencies that are originated,
negotiated and structured by a syndicate of lenders ("Co-Lenders") consisting of
commercial banks or other institutions, one or more of which administers the
security on behalf of the syndicate (the "Agent Bank"). Co-Lenders may sell such
securities to third parties called "Participants." The Fund may invest in such
securities either by participating as a Co-Lender at origination or by acquiring
an interest in the security from a Co-Lender or a Participant (collectively,
"participation interests"). Co-Lenders and Participants interposed between the
Fund and the corporate borrower (the "Borrower"), together with Agent Banks, are
referred herein as "Intermediate Participants." The Fund also may purchase a
participation interest in a portion of the rights of an Intermediate
Participant, which would not establish any direct relationship between the Fund
and the Borrower. In such cases, the Fund would be required to rely on the
Intermediate Participant that sold the participation interest not only for the
enforcement of the Fund's rights against the Borrower but also for the receipt
and processing of payments due to the Fund under the security. Because it may be
necessary to assert through an Intermediate Participant such rights as may exist
against the Borrower, in the event the Borrower fails to pay principal and
interest when due, the Fund may be subject to delays, expenses and risks that
are greater than those that would be involved if the Fund would enforce its
rights directly against the Borrower. Moreover, under the terms of a
participation interest, the Fund may be regarded as a creditor of the
Intermediate Participant (rather than of the Borrower), so that the Fund may
also be subject to the risk that the Intermediate Participant may become
insolvent. Similar risks may arise with respect to the Agent Bank if, for
example, assets held by the Agent Bank for the benefit of the Fund were
determined by the appropriate regulatory authority or court to be subject to the
claims of the Agent Bank's creditors. In such case, the Fund might incur certain
costs and delays in realizing payment in connection with the participation
interest or suffer a loss of principal and/or interest. Further, in the event of
the bankruptcy or insolvency of the Borrower, the obligation of the Borrower to
repay the loan may be subject to certain defenses that can be asserted by such
Borrower as a result of improper conduct by the Agent Bank or Intermediate
Participant.
The Fund will not act as an Agent Bank, guarantor, sole negotiator or sole
structuror with respect to securities that are the subject of a participation
interest. A participation interest gives the Fund an undivided interest in the
security in the proportion that the Fund's participation interest bears to the
total principal amount of the security. These instruments may have fixed,
floating or variable rates of interest. For certain participation interests, the
Fund will have the right to demand payment, on not more than seven days' notice,
for all or any part of the Fund's participation interest in the security, plus
accrued interest. As to these instruments, the Fund intends to exercise its
right to demand payment only upon a default under the terms of the security, as
needed to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio. The Fund will not invest more than 15% of
the value of its net assets in participation interests maturing in more than
seven days that do not have this demand feature, and in other securities that
are illiquid.
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.
Investment Techniques
In addition to the principal investment strategies discussed in the Fund's
Prospectus, the Fund also may engage in the investment techniques described
below. The Fund might not use, or may not have the ability to use, any of these
strategies and there can be no assurance that any strategy that is used will
succeed.
Portfolio Maturity. Under normal market conditions, the average effective
portfolio maturity of the Fund is expected to be four years or less. For
purposes of calculating average effective portfolio maturity, a security that is
subject to redemption at the option of the issuer on a particular date (the
"call date") which is prior to the security's stated maturity may be deemed to
mature on the call date rather than on its stated maturity date. The call date
of a security will be used to calculate average effective portfolio maturity
when Dreyfus reasonably anticipates, based upon information available to it,
that the issuer will exercise its right to redeem the security. Dreyfus may base
its conclusion on such factors as the interest rate paid on the security
compared to prevailing market rates, the amount of cash available to the issuer
of the security, events affecting the issuer of the security, and other factors
that may compel or make it advantageous for the issuer to redeem a security
prior to its stated maturity.
Foreign Currency Transactions. Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by
intervention by U.S. or foreign governments or central banks, or the failure to
intervene, or by currency controls or political developments in the U.S. or
abroad.
Foreign currency transactions may be entered into for a variety of
purposes, including: to fix in U.S. dollars, between trade and settlement date,
the value of a security the Fund has agreed to buy or sell; to hedge the U.S.
dollar value of securities the Fund already owns, particularly if it expects a
decrease in the value of the currency in which the foreign security is
denominated; or to gain exposure to the foreign currency in an attempt to
realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another currency
at a future date in anticipation of a decline in the value of the currency sold
relative to the currency the Fund contracted to receive in the exchange. The
Fund's success in these transactions will depend principally on the ability of
Dreyfus to predict accurately the future exchange rates between foreign
currencies and the U.S. dollar.
Leverage. The Fund may borrow money for certain purposes. In addition to
borrowing for temporary or emergency purposes and in anticipation of share
redemptions, the Fund may borrow to facilitate trades in its portfolio
securities. This could occur, for example, when the Fund expects settlement on
its purchase of a security will occur within a shorter time than settlement on
its sale of a security. Borrowing exaggerates the effect on NAV of any increase
or decrease in the market value of the Fund's portfolio. Money borrowed will be
limited to 33 1/3% of the value of the Fund's total assets. These borrowings
will be subject to interest costs which may or may not be recovered by
appreciation of the securities purchased; in certain cases, interest costs may
exceed the return received on the securities purchased.
The Fund may enter into reverse repurchase agreements with banks, brokers
or dealers. This form of borrowing involves the transfer by the Fund of an
underlying debt instrument in return for cash proceeds based on a percentage of
the value of the security. The Fund retains the right to receive interest and
principal payments on the security. At an agreed upon future date, the Fund
repurchases the security at principal plus accrued interest. Except for these
transactions, the Fund's borrowings generally will be unsecured.
For borrowings for investment purposes, the 1940 Act requires the Fund to
maintain continuous asset coverage (that is, total assets including borrowings,
less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the
required coverage should decline as a result of market fluctuations or other
reasons, the Fund may be required to sell some of its portfolio securities
within three days to reduce the amount of its borrowings and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. The Fund also may be required to
maintain minimum average balances in connection with such borrowing or pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.
The SEC views reverse repurchase transactions as collateralized borrowings by
the Fund. To the extent the Fund enters into a reverse repurchase agreement, the
Fund will maintain in a segregated custodial account permissible liquid assets
at least equal to the aggregate amount of its reverse repurchase obligations,
plus accrued interest, in certain cases, in accordance with releases promulgated
by the SEC.
Forward Commitments. The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The payment
obligation and the interest rate receivable on a forward commitment or
when-issued security are fixed when the Fund enters into the commitment, but the
Fund does not make payment until it receives delivery from the counterparty. The
Fund will commit to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the Fund
consisting of permissible liquid assets at least equal at all times to the
amount of the commitments will be established and maintained at the Fund's
custodian bank.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a forward commitment or when-issued basis may expose the Fund to
risks because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when the Fund
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its NAV per share.
Short-Selling. In these transactions, the Fund sells a security it does
not own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement. The price at
such time may be more or less than the price at which the security was sold by
the Fund, which would result in a loss or gain, respectively. Until the Fund
closes its short position or replaces the borrowed security, it will: (a)
maintain a segregated account, containing permissible liquid assets, at a level
such that the amount deposited in the account plus the amount deposited with the
broker as collateral always equals the current value of the security sold short;
or (b) otherwise cover its short position.
Securities will not be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of the Fund's net assets. The Fund may not sell short the
securities of any single issuer listed on a national securities exchange to the
extent of more than 5% of the value of the Fund's net assets. The Fund may not
make a short sale which results in the Fund having sold short in the aggregate
more than 5% of the outstanding securities of any class of an issuer.
The Fund also may make short sales "against the box," in which the Fund
enters into a short sale of a security it owns in order to hedge an unrealized
gain on the security. At no time will more than 15% of the value of the Fund's
net assets be in deposits on short sales against the box.
Lending Portfolio Securities. The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest or other distributions payable on
the loaned securities which affords the Fund an opportunity to earn interest on
the amount of the loan and on the loaned securities' collateral. Loans of
portfolio securities may not exceed 33 1/3% of the value of the Fund's total
assets, and the Fund will receive collateral consisting of cash, U.S. government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. Such loans are terminable by the Fund at any time upon
specified notice. The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund.
In connection with its securities lending transactions, the Fund may
return to the borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned. The SEC currently
requires that the following conditions must be met whenever portfolio securities
are loaned: (1) the Fund must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the market
value of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) while voting rights on the loaned securities may pass to the
borrower, the Trust's Board must terminate the loan and regain the right to vote
the securities if a material event adversely affecting the investment occurs.
Derivatives. The Fund may invest, to a limited extent, in derivatives
("Derivatives"). These are financial instruments which derive their performance,
at least in part, from the performance of an underlying asset, index or interest
rate and include financial futures contracts (including interest rate, index and
foreign currency futures contracts), options (including options on securities,
indices, foreign currencies and futures contracts), forward currency contracts,
mortgage-related securities, asset-backed securities, and interest rate, equity
index and currency swaps, caps, collars and floors. The Fund may invest in
Derivatives for a variety of reasons, including to preserve a return or spread,
to lock in unrealized market value gains or losses, to facilitate or substitute
for the sale or purchase of securities, to manage the duration of securities, to
alter the exposure of a particular investment or portion of the Fund's portfolio
to fluctuations in interest rates or currency rates, to uncap a capped security
or to convert a fixed rate security into a variable rate security or a variable
rate security into a fixed rate security. The Fund does not intend to invest in
futures and options except for hedging purposes, which may include preserving a
return or spread or locking in unrealized market value gains or losses. The Fund
will not invest in mortgage-related or non-mortgage asset backed securities in
an amount exceeding, in the aggregate, 25% of its net assets.
Derivatives may provide a cheaper, quicker or more specifically focused
way for the Fund to invest than "traditional" securities would. Derivatives
permit the Fund to increase or decrease the level of risk, or change the
character of the risk, to which its portfolio is exposed in much the same way as
the Fund can increase or decrease the level of risk, or change the character of
the risk, of its portfolio by making investments in specific securities. While
Derivatives can be used effectively in furtherance of the Fund's investment
objective, under certain market conditions, they can increase the volatility of
the Fund's NAV, can decrease the liquidity of the Fund's portfolio and make more
difficult the accurate pricing of the Fund's portfolio. Derivatives may entail
investment exposures that are greater than their cost would suggest, meaning
that a small investment in Derivatives could have a large potential impact on
the Fund's performance.
The Fund's ability to use Derivatives may be limited by market conditions,
regulatory limits and tax considerations. The Fund might not use any of these
strategies and there can be no assurance that any strategy that is used will
succeed.
The use of Derivatives involves special risks, including: (1) possible
imperfect or no correlation between price movements of the portfolio investments
(held or intended to be purchased) involved in the transaction and price
movements of the Derivatives involved in the transaction; (2) possible lack of a
liquid secondary market for any particular Derivative at a particular time; (3)
the need for additional portfolio management skills and techniques; (4) losses
due to unanticipated market price movements and changes in liquidity; (5) the
fact that, while such strategies can reduce the risk of loss, they can also
reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in portfolio investments; (6) incorrect forecasts by
Dreyfus concerning interest or currency exchange rates or direction of price
fluctuations of the investment involved in the transaction, which may result in
the strategy being ineffective; (7) loss of premiums paid by the Fund on options
it purchases; and (8) the possible inability of the Fund to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the need to sell a portfolio security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to segregate securities in
connection with such transactions and the possible inability of the Fund to
close out or liquidate its positions.
Although the Fund will not be a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
("CFTC") which limit the extent to which the Fund can invest in such
Derivatives. The Fund may invest in futures contracts and options with respect
thereto or options on foreign currencies traded on an exchange regulated by the
CFTC for bona fide hedging purposes without limit. However, the Fund may not
invest in such contracts and options for other purposes if the aggregate initial
margin and premiums required to establish those positions (excluding the amount
by which options are "in-the-money") will exceed 5% of the liquidation value of
the Fund's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Fund has entered into.
The Fund may invest up to 5% of its assets, represented by the premium
paid, in the purchase of call and put options. The Fund may write (i.e., sell)
covered call and put option contracts to the extent of 20% of the value of its
net assets at the time such option contracts are written. When required by the
SEC, the Fund will set aside permissible liquid assets in a segregated account
to cover its obligations relating to its transactions in Derivatives. To
maintain this required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
Derivative position at a reasonable price.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, Dreyfus will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
Futures Transactions. The Fund may enter into futures contracts in U.S.
domestic markets, such as the Chicago Board of Trade and the International
Monetary Market of the Chicago Mercantile Exchange, or on exchanges located
outside the United States, such as the London International Financial Futures
Exchange and the Sydney Futures Exchange Limited. Foreign markets may offer
advantages such as trading opportunities or arbitrage possibilities not
available in the United States. Foreign markets, however, may have greater risk
potential than domestic markets. For example, some foreign exchanges are
principal markets so that no common clearing facility exists and an investor may
look only to the broker for performance of the contract. In addition, any
profits that the Fund might realize in trading could be eliminated by adverse
changes in the exchange rate, or the Fund could incur losses as a result of
those changes. Transactions on foreign exchanges may include both commodities
which are traded on domestic exchanges and those which are not. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the CFTC.
Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the Fund
intends to purchase or sell futures contracts only if there is an active market
for such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also depends on the ability of
Dreyfus to predict correctly movements in the direction of the relevant market
and to ascertain the appropriate correlation between the transaction being
hedged and the price movements of the futures contract. For example, if the Fund
uses futures to hedge against the possibility of a decline in the market value
of securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the SEC, the Fund
may be required to segregate cash or high quality money market instruments in
connection with its futures transactions in an amount generally equal to the
value of the underlying futures position exposure. The segregation of such
assets will have the effect of limiting the Fund's ability otherwise to invest
those assets.
The Fund may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price. The Fund may also
purchase and sell currency futures. A foreign currency future obligates the Fund
to purchase or sell an amount of a specific currency at a future date at a
specific price.
Interest Rate Swaps. Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest
(for example, an exchange of floating rate payments for fixed-rate payments).
The exchange commitments can involve payments to be made in the same currency or
in different currencies. The use of interest rate swaps is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If Dreyfus is
incorrect in its forecasts of market values, interest rates and other applicable
factors, the investment performance of the Fund would diminish compared with
what it would have been if these investment techniques were not used. Moreover,
even if Dreyfus is correct in its forecasts, there is a risk that the swap
position may correlate imperfectly with the price of the asset or liability
being hedged. There is no limit on the amount of interest rate swap transactions
that may be entered into by the Fund. These transactions do not involve the
delivery of securities or other underlying assets or principal. Accordingly, the
risk of loss with respect to interest rate swaps is limited to the net amount of
interest payments that the Fund is contractually obligated to make. If the other
party to an interest rate swap defaults, the Fund's risk of loss consists of the
net amount of interest payments that the Fund contractually is entitled to
receive.
Credit Derivatives. The Fund may engage in credit derivative transactions.
There are two broad categories of credit derivatives: default price risk
derivatives and market spread derivatives. Default price risk derivatives are
linked to the price of reference securities or loans after a default by the
issuer or borrower, respectively. Market spread derivatives are based on the
risk that changes in market factors, such as credit spreads, can cause a decline
in the value of a security, loan or index. There are three basic transactional
forms for credit derivatives: swaps, options and structured instruments. The use
of credit derivatives is a highly specialized activity which involves strategies
and risks different from those associated with ordinary portfolio security
transactions. If Dreyfus is incorrect in its forecasts of default risks, market
spreads or other applicable factors, the investment performance of the Fund
would diminish compared with what it would have been if these techniques were
not used. Moreover, even if Dreyfus is correct in its forecasts, there is a risk
that a credit derivative position may correlate imperfectly with the price of
the asset or liability being hedged. There is no limit on the amount of credit
derivative transactions that may be entered into by the Fund. The Fund's risk of
loss in a credit derivative transaction varies with the form of the transaction.
For example, if the Fund purchases a default option on a security, and if no
default occurs with respect to the security, the Fund's loss is limited to the
premium it paid for the default option. In contrast, if there is a default by
the grantor of a default option, the Fund's loss will include both the premium
that it paid for the option and the decline in value of the underlying security
that the default option hedged.
Options--In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date.
A covered call option written by the Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by the Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are placed in a segregated
account with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. The Fund receives a premium from writing covered
call or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
The Fund may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a price
which is expected to be lower or higher than the spot price of the currency at
the time the option is exercised or expires. The Fund also may purchase
cash-settled options on equity index swaps and interest rate swaps,
respectively, in pursuit of its investment objective. Equity index swaps involve
the exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of
Dreyfus to predict correctly movements in the prices of individual stocks, the
stock market generally, foreign currencies, or interest rates. To the extent
such predictions are incorrect, the Fund may incur losses.
Future Developments. The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and any
other Derivatives which are not presently contemplated for use by the Fund or
which are not currently available but which may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions or
making any such investment, the Fund will provide appropriate disclosure in its
Prospectus or Statement of Additional Information.
Master/Feeder Option. The Trust may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's net investable assets
in another investment Company having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. Shareholders of the Fund will be given at least 30 days' prior
notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Trustees will consider, among
other things, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiency. Although the Fund believes that the
Trustees will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
Investment Restrictions
Fundamental. The Fund has adopted the following restrictions as
fundamental policies, which cannot be changed without approval by the holders of
a majority (as defined in the 1940 Act) of the Fund's outstanding voting shares.
The Fund may not:
1. Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in the
same industry. (For purposes of this limitation, U.S. Government securities and
state or municipal governments and their political subdivisions are not
considered members of any industry.)
2. Borrow money or issue senior securities as defined in the 1940 Act,
except that (a) the Fund may borrow money in an amount not exceeding one third
of the Fund's total assets at the time of such borrowing, and (b) the Fund may
issue multiple classes of shares. The purchase or sale of options, forward
contacts, futures contracts, including those relating to indices, and options on
futures contracts or indices shall not be considered to involve the borrowing of
money or issuance of senior securities.
3. Purchase, with respect to 75% of the Fund's total assets, securities of
any issuer (other than securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that issuer, or (b)
the Fund would hold more than 10% of the outstanding voting securities of that
issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall not
be treated as loans.
5. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate, including
mortgage loans or securities of companies that engage in the real estate
business or invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the extent
that the purchase of securities and the later disposition of such securities in
accordance with the Fund's investment program may be deemed an underwriting.
7. Purchase or sell commodities, except that the Fund may enter into
options, forward contracts, and futures contracts, including those related to
indices, and options on futures contracts or indices.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single,
open-end management investment Trust with substantially the same fundamental
investment objective, policies, and limitations as the Fund.
Non-fundamental. The Fund has adopted the following
additional non-fundamental investment restrictions. These
non-fundamental restrictions may be changed without shareholder
approval, in compliance with applicable law and regulatory policy.
1. The Fund will not invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, time deposits with maturities in excess of
seven days, and other securities which are not readily marketable. For purposes
of this limitation, illiquid securities shall not include commercial paper
issued pursuant to Section 4(2) of the Securities Act of 1933 and securities
which may be resold under Rule 144A under the Securities Act of 1933, provided
that the Board of Trustees, or its delegate, determines that such securities are
liquid, based upon the trading markets for the specific security.
2. The Fund will not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or acquisition
of assets and except to the extent otherwise permitted by the 1940 Act.
3. The Fund will not purchase securities on margin, but the Fund may make
margin deposits in connection with transactions in options, forward contracts,
futures contracts, and options on futures contracts.
4. The Fund will not sell securities short, or purchase, sell or write
puts, calls or combinations thereof, except as described in the Fund's
Prospectus and this Statement of Additional Information.
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
Trustees and Officers
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
Dreyfus Service Corporaiton.......................Distributor
Dreyfus Transfer, Inc..........................Transfer Agent
Mellon Bank.........................................Custodian
The Trust has a Board composed of eight Trustees. The following lists the
Trustees and officers and their positions with the Trust and their present and
principal occupations during the past five years. Each Trustee who is an
"interested person" of the Trust (as defined in the 1940 Act) is indicated by an
asterisk(*). Each of the Trustees also serves as a Director of The
Dreyfus/Laurel Funds, Inc. and as a Trustee of The Dreyfus/Laurel Tax-Free
Municipal Funds and (collectively, with the Trust, the "Dreyfus/Laurel Funds")
and the Dreyfus High Yield Strategies Fund.
Trustees of the Trust
o+JOSEPH S. DIMARTINO. Chairman of the Board of the Trust. Since January 1995,
Mr. DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. He is also a Director of The 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
outsourcing functions for small and medium sized companies and QuikCat.com,
Inc., a private company engaged in the development of high speed movement,
routing, storage and encryption of data across cable, wireless and all
other modes of data transport. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus and until August
24, 1994, the Fund's distributor. From August 1994 until December 31, 1994,
he was a director of Mellon Financial Corporation. Age: 56 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; former Chairman of the Board and CEO of Fieldcrest Cannon,
Inc. Age: 65 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: 72 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: 78 years old. Address: Way Hollow Road
and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; President & CEO, The Palladium
Company; President & CEO, Himmel and Company, Inc.; CEO, American Food
Management; former Director, The Boston Company, Inc. ("TBC"), and Boston
Safe Deposit and Trust Company, each an affiliate of Dreyfus. Age: 53 years
old. Address: 625 Madison Avenue, New York, New York 10022.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; Chairman of the Board and CEO, LDG
Reinsurance Corporation; Vice Chairman, HCCH. Age 52 years old. Address:
401 Edgewater Place, Wakefield, Massachusetts 01880.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.;
Director, American Express Centurion Bank; Director, Ontario Hydro Services
Company; Trustee, the Hyams Foundation, Inc. Age: 50 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
STEPHEN E. CANTER. President of the Trust; President, Chief Operating Officer,
and Chief Investment Officer of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. Mr. Canter also is a
Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which is
an affiliate of Dreyfus. He is 54 years old.
MARK N. JACOBS. Vice President of the Trust; Vice President, Secretary, and
General Counsel to Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 54 years old.
JOSEPH CONNOLLY. Vice President and Treasurer of the Trust; Director - Mutual
Fund Accounting of Dreyfus; and an officer of other investment companies
advised and administered by Dreyfus. He is 42 years old.
STEVEN F. NEWMAN. Secretary of the Trust; Associate General Counsel and
Assistant Secretary of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 50 years old.
JEFF PRUSNOFSKY. Assistant Secretary of the Trust; Assistant General Counsel of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 34 years old.
MICHAEL A. ROSENBERG. Assistant Secretary of the Trust; Associate General
Counsel of Dreyfus; and an officer of other investment companies advised
and administered by Dreyfus. He is 40 years old.
WILLIAM MCDOWELL. Assistant Treasurer of the Trust; Senior Accounting Manager -
Taxable Fixed Income of Dreyfus; and an officer of other investment
companies advised and administered by Dreyfus. He is 41 years old.
JAMES WINDELS. Assistant Treasurer of the Trust; Senior Treasury Manager of
Dreyfus; and an officer of other investment companies advised and
administered by Dreyfus. He is 41 years old.
The address of each Fund officer 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. 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.
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.
The aggregate amounts of fees and expenses received by each current
Trustee from the Trust for the fiscal year ended December 31, 1999, and from all
other funds in the Dreyfus Family of Funds for which such person is a Board
member (the number of which is set forth in parenthesis next to each Board
members total compensation)* during the year ended December 31, 1999, 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** $25,000 $642,177 (189)
James M. Fitzgibbons $16,666 $74,989 (28)
J. Tomlinson Fort***. None none (28)
Arthur L. Goeschel $20,000 $80,989 (28)
Kenneth A. Himmel $16,666 $62,489 (28)
Stephen J. Lockwood $18,333 $68,989 (28)
Roslyn M. Watson $20,000 $80,989 (28)
Benaree Pratt Wiley $20,000 $80,989 (28)
- ----------------------------
# 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 $2,503.61 for the Trust.
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board member
serves.
** Mr. DiMartino became Chairman of the Board of the Dreyfus/Laurel Funds on
January 1, 1999.
*** J. Tomlinson Fort is paid directly by Dreyfus for serving as a
Board member of the Trust and the funds in the Dreyfus/Laurel Funds and
separately by the Dreyfus High Yield Strategies Fund. For the fiscal year
ended December 31, 1999, the aggregate amount of fees received by J. Tomlinson
Fort from Dreyfus for serving as a Board member of the Trust was $20,000. For
the year ended December 31, 1999, 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 $80,989. In addition, Dreyfus
reimbursed Mr. Fort a total of $1,447.60 for expenses attributable to the
Trust's Board meetings which is not included in the $2,503.61 amount in note #
above.
The officers and Trustees of the Trust as a group owned beneficially less
than 1% of the total shares of the Fund outstanding as of April 3, 2000.
As of April 3, 2000, the following shareholder(s) owned beneficially or of
record 5% or more of Class A shares of the Fund: MLPF & S For The Sole Benefit
Of Its Customers, 4800 Deer Lake Dr. E., Floor 3, Jacksonville, FL 32246-6484,
18.55% and First Union Securities, Inc., TIFKAT LP, 111 East Kilbourn Avenue,
Milwaukee, WI 53202, 9.97%; and Turner Corp., 901 Main Street, Suite 4900,
Dallas, TX 75202-3714, 5.22%.
As of April 3, 2000 the following shareholder(s) owned beneficially or of
record 5% or more of Class B shares of the Fund: MLPF & S For The Sole Benefit
Of Its Customers, 4800 Deer Lake Dr. E., Floor 3, Jacksonville, FL 32246-6484,
37.52%.
As of April 3, 2000 the following shareholder(s) owned beneficially or of
record 5% or more of Class R shares of the Fund: MBCIC, C/O Mellon Bank, 919 N.
Market Street, Wilmington, DE 19801-3023, 51.18% and Boston & Co., P.O. Box
534005, Pittsburgh, PA, 15253, 39.65%.
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, which is a
wholly-owned subsidiary of Mellon Financial 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 (the "Management
Agreement"), 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 (as defined in the 1940 Act) of all
Trustees or a majority of the shareholders of the Fund approve its continuance.
The Trust may terminate the Management Agreement upon the vote of a majority of
the Board of Trustees or upon the vote of a majority of the Fund's outstanding
voting securities on 60 days' written notice to Dreyfus. Dreyfus may terminate
the Management Agreement upon 60 days' written notice to the Trust. The
Management Agreement will terminate immediately and automatically upon its
assignment.
The following persons are officers and/or directors of Dreyfus: Christopher
M. Condron, Chairman of the Board and Chief Executive Officer; Stephen E.
Canter, President, Chief Operating Officer, Chief Investment Officer and a
director; Thomas F. Eggers, Vice-Chairman-Institutional and a director; Lawrence
S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice Chairman; J. David Officer,
Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior 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; Ray Van Cott,
Vice-President-Information Systems; Theodore A. Schachar, Vice President-Tax;
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.
Dreyfus' Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by Dreyfus. In that regard, portfolio managers and
other investment personnel of Dreyfus must preclear and report their personal
securities transactions and holdings, which are reviewed for compliance with the
Code of Ethics and are also subject to the oversight of Mellon's Investment
Ethics Committee. Portfolio managers and other investment personnel who comply
with the Code of Ethics's preclearance and disclosure procedures and the
requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 0.70 of 1% of the value of the
Fund's average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
Trustees (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and expenses
of the non-interested Trustees (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee by an amount
equal to the Fund's allocable share of such fees and expenses. From time to
time, Dreyfus may voluntarily waive a portion of the investment management fees
payable by the Fund, which would have the effect of lowering the expense ratio
of the Fund and increasing return to investors. Expenses attributable to the
Fund are charged against the Fund's assets; other expenses of the Trust are
allocated among its funds on the basis determined by the Trustees, including,
but not limited to, proportionately in relation to the net assets of each fund.
For the period from May 30, 1997 (the date the Fund commenced operations)
to December 31, 1997, the Fund paid Dreyfus a management fee of $595,072. For
the fiscal year ended December 31, 1998 and 1999, the Fund paid Dreyfus a
management fee of $4,630,486, and $6,557,372, respectively.
The Distributor. Effective March 22, 2000, Dreyfus Service Corporation
became the distributor to the Fund. The Distributor, located at 200 Park Avenue,
New York, New York 10166, 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.
From October 17, 1994 through March 21, 2000, the distributor of the
Fund's shares was Premier Mutual Fund Services, Inc. ("Premier"). Since the
Distributor was not the Fund's distributor as of the Fund's last fiscal year
end, the disclosure of amounts retained on the sale of shares of the Fund refers
to amounts retained by Premier.
For the fiscal year ended December 31, 1999, Premier retained $41,968.72
from the sales loads on the Fund's Class A shares. For the same period, Premier
retained $1,431,344 from the contingent deferred sales charge ("CDSC") on Class
B shares. For the same period, Premier retained $80,030 from the CDSC on Class C
shares. For the fiscal year ended December 31, 1998, Premier retained no sales
loads on the Fund's Class A shares. For the same period, Premier retained
$914,067 from the CDSC on Class B shares. For the same period, Premier retained
$182,439 from the CDSC on Class C shares. For the period from May 30, 1997 (the
date the Fund commenced operations) to December 31, 1997, Premier retained no
sales loads on the Fund's Class A shares. For the same period, Premier retained
$35,540 from the CDSC on Class B shares. For the same period, Premier retained
$10,967 from the CDSC on Class C shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund transfer and dividend disbursing agent. Under a
transfer agency agreement with the Trust, Dreyfus Transfer, Inc. arranges for
the maintenance of shareholder account records for the Fund, the handling of
certain communications between shareholders and the Fund, and the payment of
dividends and distributions payable by the Fund. For these services, Dreyfus
Transfer, Inc. receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's investments.
Under a custody agreement with the Trust, Mellon Bank holds the Fund's portfolio
securities and keeps all necessary accounts and records. Dreyfus Transfer, Inc.
and Mellon Bank, as custodian, have no part in determining the investment
policies of the Fund or which securities are to be purchased or sold by the
Fund.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. When purchasing Fund shares, you must specify which Class is
being purchased. The decision as to which Class of shares is most beneficial to
you depends on the amount and the intended length of your investment. You should
consider whether, during the anticipated life of your investment in the Fund,
the accumulated distribution fee, service fee and CDSC, if any, on Class B or
Class C shares would be less than the accumulated distribution fee and initial
sales charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return on Class A shares.
Additionally, investors qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution and
service fees on Class B or Class C shares may exceed the accumulated
distribution fees and initial sales charge on Class A shares during the life of
the investment. Finally, you should consider the effect of the CDSC period and
any conversion rights of the Classes in the context of your own investment time
frame. For example, while Class C shares have a shorter CDSC period than Class B
shares, Class C shares do not have a conversion feature and, therefore, are
subject to ongoing distribution and service fees. Thus, Class B shares may be
more attractive than Class C shares to investors with longer term investment
outlooks. Generally, Class A shares may be more appropriate for investors who
invest $1,000,000 or more in Fund shares, but will not be appropriate for
investors who invest less than $50,000 in Fund shares. The Fund reserves the
right to reject any purchase order.
Class A shares, Class B shares and Class C shares may be purchased only by
clients of Agents, except that full-time or part-time employees of Dreyfus or
any of its affiliates or subsidiaries, directors of Dreyfus, Board members of a
fund advised by Dreyfus, including members of the Trust's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Agent.
Class R shares are sold primarily to bank trust departments and other
financial service providers (including Mellon Bank and its affiliates) acting on
behalf of customers having a qualified trust or investment account or
relationship at such institution, or to customers who have received and hold
shares of the Fund distributed to them by virtue of such an account or
relationship. Class R shares may be purchased for a retirement plan only by a
custodian, trustee, investment manager or other entity authorized to act on
behalf of such a plan. Institutions effecting transactions in Class R shares for
the accounts of their clients may charge their clients direct fees in connection
with such transactions.
The minimum initial investment is $1,000. Subsequent investments must be
at least $100. The minimum initial investment for Dreyfus-sponsored
self-employed individual retirement plans ("Keogh Plans"), IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant is $750 and $500
for Dreyfus-sponsored Education IRAs, with no minimum on subsequent purchases
except that the no minimum on Education IRAs does not apply until after the
first year. The initial investment must be accompanied by the Fund's Account
Application. The Fund reserves the right to offer Fund shares without regard to
minimum purchase requirements to employees participating in certain qualified or
non-qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form acceptable to the
Fund. The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code") imposes various
limitations on the amount that may be contributed annually to certain qualified
or non-qualified employee benefit plans or other programs, including pension,
profit-sharing and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entities or state and local governments
("Retirement Plans"). These limitations apply with respect to participants at
the plan level and, therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors should
consult their tax advisers for details.
Fund shares are sold on a continuous basis. NAV per share is determined as
of the close of trading on the floor of the New York Stock Exchange ("NYSE")
(currently 4:00 p.m., New York time), on each day the NYSE is open for business.
For purposes of determining NAV, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the NYSE. NAV per share of
each class is computed by dividing the value of the Fund's net assets
represented by such class (i.e., the value of its assets less liabilities) by
the total number of shares of such class outstanding. For 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 (the "IRS").
Class A Shares. The public offering price for Class A shares is the NAV of
that Class, plus a sales load as shown below:
Total Sales Load as a % Dealers'Reallowance
Amount of Transaction of Offering Price Per Share as a % of Offering Price
- ---------------------- --------------------------- ------------------------
Less than $50,000 4.50 4.25
$50,000 to less than $100,000 4.00 3.75
$100,000 to less than $250,000 3.00 2.75
$250,000 to less than $500,000 2.50 2.25
$500,000 to less than $1,000,000 2.00 1.75
$1,000,000 or more -0- -0-
Sales Loads -- Class A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Code although more than one beneficiary
is involved; or a group of accounts established by or on behalf of the employees
of an employer or affiliated employers pursuant to an employee benefit plan or
other program (including accounts established pursuant to Sections 403(b),
408(k) and 457 of the Code); or an organized group which has been in existence
for more than six months, provided that it is not organized for the purpose of
buying redeemable securities of a registered investment company and provided
that the purchases are made through a central administration or a single dealer,
or by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth above and in the Fund's Prospectus at a price based upon
the NAV of a Class A share at the close of business on December 31, 1999.
NAV per Share $10.45
Per Share Sales Charge - 4.5% of offering price
(4.7% of NAV per share) $ .49
Per Share Offering Price to the Public $10.94
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. The Distributor may pay Agents an amount up
to 1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained below under "Redemption of Shares - Contingent
Deferred Sales Charge - Class B Shares" (other than the amount of the CDSC and
time periods) and "Redemption of Shares - Waiver of CDSC" are applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of Accumulation
apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of such shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children at NAV, provided that they have
furnished the Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at NAV. In addition, Class A shares are offered at NAV to full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of the
Trust's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan
(a) met the requirements of an Eligible Benefit Plan and all or a portion of
such plan's assets were invested in funds in the Dreyfus Premier Family of
Funds, the Dreyfus Family of Funds, certain funds advised by Founders Asset
Management LLC ("Founders"), an affiliate of Dreyfus, 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, the Dreyfus
Family of Funds, certain funds advised by Founders or certain other products
made available by the Distributor to such plans.
Class A shares may be purchased at NAV through certain broker-dealers and
other financial institutions which have entered into an agreement with the
Distributor, which includes a requirement that such shares be sold for the
benefit of clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with the
proceeds from the redemption of shares of a registered open-end management
investment company not managed by Dreyfus or its affiliates. The purchase of
Class A shares of the Fund must be made within 60 days of such redemption and
the shareholder must have either (i) paid an initial sales charge or a CDSC or
(ii) been obligated to pay at any time during the holding period, but did not
actually pay on redemption, a deferred sales charge with respect to such
redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or intrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000 or
more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 664 of the Code).
The dealer reallowance may be changed from time to time but will remain
the same for all dealers. The Distributor, at its own expense, may provide
additional promotional incentives to dealers that sell shares of funds advised
by Dreyfus which are sold with a sales load, such as Class A shares. In some
instances, these incentives may be offered only to certain dealers who have sold
or may sell significant amounts of such shares.
Class B Shares. The public offering price for Class B shares is the NAV
per share of that Class. No initial sales charge is imposed at the time of
purchase. A CDSC is imposed, however, on certain redemptions of Class B shares
as described in the Fund's Prospectus.
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 C Shares. The Distributor compensates certain Agents for
selling Class B and Class C shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution fee, in
part, are used to defray these expenses.
Class R Shares. The public offering price for Class R shares
is the NAV per share of that Class.
Right of Accumulation--Class A Shares. Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Dreyfus Premier Family
of Funds which are sold with a sales load, shares of certain other funds advised
by Dreyfus or Founders, which are sold with a sales load and shares acquired by
a previous exchange of such shares (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined above, where the
aggregate investment, including such purchase, is $50,000 or more. If, for
example, you previously purchased and still hold Class A shares of the Fund, or
shares of any other Eligible Fund or combination thereof, with an aggregate
current market value of $40,000 and subsequently purchase Class A shares of the
Fund or shares of an Eligible Fund having a current value of $20,000, the sales
load applicable to the subsequent purchase would be reduced to 4% of the
offering price. All present holdings of Eligible Funds may be combined to
determine the current offering price of the aggregate investment in ascertaining
the sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify the Distributor if orders are made by wire, or the Transfer
Agent if orders are made by mail. The reduced sales load is subject to
confirmation of your holdings through a check of appropriate records.
TeleTransfer Privilege. You may purchase Fund shares by telephone through
the TeleTransfer Privilege if you have checked the appropriate box and supplied
the necessary information on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution that is an
Automated Clearing House ("ACH") member may be so designated. TeleTransfer
purchase orders may be made at any time. Purchase orders received by 4:00 p.m.,
New York time, on any business day that the Transfer Agent and the NYSE are open
for business will be credited to the shareholder's Fund account on the next bank
business day following such purchase order. Purchase orders made after 4:00
p.m., New York time, on any business day the Transfer Agent and the NYSE are
open for business, or orders made on Saturday, Sunday or any Fund holiday (e.g.,
when the NYSE is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order. To
qualify to use the TeleTransfer Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares - TeleTransfer Privilege." The
Fund may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund may
at its discretion, permit the purchase of shares through an "in-kind" exchange
of securities. Any securities exchanged must meet the investment objective,
policies and limitations of the Fund, must have a readily ascertainable market
value, must be liquid and must not be subject to restrictions on resale. The
market value of any securities exchanged, plus any cash, must be at least equal
to $25,000. Shares purchased in exchange for securities generally cannot be
redeemed for fifteen days following the exchange in order to allow time for the
transfer to settle.
The basis of the exchange will depend upon the relative NAVs of the shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest earned on
the securities following their delivery to the Fund and prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. For further information about "in-kind"
purchases, call 1-800-554-4611.
Share Certificates. Share certificates are issued upon
written request only. No certificates are issued for fractional
shares.
DISTRIBUTION AND SERVICE PLANS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Your Investment."
Class A, Class B and Class C shares are subject to annual fees for
distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "Rule") regulating
the circumstances under which investment companies such as the Trust may,
directly or indirectly, bear the expenses of distributing their shares. The Rule
defines distribution expenses to include expenditures for "any activity which is
primarily intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only pursuant
to a plan adopted in accordance with the Rule.
Distribution Plan--Class A Shares. The Trust has adopted a Distribution
Plan pursuant to the Rule with respect to the Class A shares of the Fund ("Class
A Plan"), whereby Class A shares of the Fund may spend annually up to 0.25% of
the average of its net assets to compensate Mellon Bank and its affiliates
(including but not limited to Dreyfus and the Distributor) for shareholder
servicing activities and the Distributor for shareholder servicing activities
and expenses primarily intended to result in the sale of Class A shares of the
Fund. The Class A Plan allows the Distributor to make payments from the Rule
12b-1 fees it collects from the Fund to compensate Agents that have entered into
Selling Agreements ("Agreements") with the Distributor. Under the Agreements,
the Agents are obligated to provide distribution related services with regard to
the Fund and/or shareholder services to the Agent's clients that own Class A
shares of the Fund.
The Class A Plan provides that a report of the amounts expended under the
Class A Plan, and the purposes for which such expenditures were incurred, must
be made to the Trust's Trustees for their review at least quarterly. In
addition, the Class A Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to the
Class A Plan without approval of the Fund's shareholders, and that other
material amendments of the Class A Plan must be approved by the vote of a
majority of the Trustees and of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust or the Distributor and who do not have
any direct or indirect financial interest in the operation of the Class A Plan,
cast in person at a meeting called for the purpose of considering such
amendments. The Class A Plan is subject to annual approval by the entire Board
of Trustees and by the Trustees who are neither interested persons nor have any
direct or indirect financial interest in the operation of the Class A Plan, by
vote cast in person at a meeting called for the purpose of voting on the Class A
Plan. The Class A Plan is terminable, as to the Fund's Class A shares, at any
time by vote of a majority of the Trustees who are not interested persons and
have no direct or indirect financial interest in the operation of the Class A
Plan or by vote of the holders of a majority of the outstanding shares of such
class of the Fund.
Distribution and Service Plans -- Class B and Class C Shares.In addition
to the above described current Class A Plan for Class A shares, the Board of
Trustees has adopted a Service Plan (the "Service Plan") under the Rule for
Class B and Class C shares, pursuant to which the Fund pays the Distributor,
and/or any of its affiliates, a fee at the annual rate of 0.25% of the value of
the average daily net assets of Class B and Class C shares for the provision of
certain services to the holders of Class B and Class C shares. The services
provided may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and providing services related to the maintenance of such
shareholder accounts. With regard to such services, each Agent is required to
disclose to its clients any compensation payable to it by the Fund and any other
compensation payable by its clients in connection with the investment of their
assets in Class B and Class C shares. The Distributor may pay one or more Agents
in respect of services for these Classes of shares. The Distributor determines
the amounts, if any, to be paid to Agents under the Service Plan and the basis
on which such payments are made. The Trust's Board of Trustees has also adopted
a Distribution Plan pursuant to the Rule with respect to Class B and Class C
shares (the "Distribution Plan") pursuant to which the Fund pays the Distributor
for distributing the Fund's Class B and Class C shares at an aggregate annual
rate of 0.50% and 0.75% of the value of the average daily net assets of Class B
and Class C shares, respectively. The Trust's Board of Trustees believes that
there is a reasonable likelihood that the Distribution and Service Plans (the
"Plans") will benefit the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the Trustees
for their review. In addition, each Plan provides that it may not be amended to
increase materially the cost which holders of Class B or Class C shares may bear
pursuant to the Plan without the approval of the holders of such Classes and
that other material amendments of the Plan must be approved by the Board of
Trustees and by the Trustees who are not interested persons of the Fund and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. Each Plan is
subject to annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Plan. Each Plan may be
terminated at any time by vote of a majority of the Trustees who are not
interested persons and have no direct or indirect financial interest in the
operation of the Plan or in any agreements entered into in connection with the
Plan or by vote of the holders of a majority of Class B and Class C shares.
An Agent entitled to receive compensation for selling and servicing the
Fund's shares may receive different compensation with respect to one Class of
shares over another. Potential investors should read this Statement of
Additional Information in light of the terms governing Agreements with their
Agents. The fees payable under the Distribution and Service Plans are payable
without regard to actual expenses incurred. The Fund and the Distributor may
suspend or reduce payments under the Distribution and Service Plans at any time,
and payments are subject to the continuation of the Fund's Plans and the
Agreements described above. From time to time, the Agents, the Distributor and
the Fund may voluntarily agree to reduce the maximum fees payable under the
Plans.
From October 17, 1994 through March 21, 2000, Premier acted as the Fund's
distributor and received payments under the Class A Plan, Distribution Plan and
Service Plan. Set forth below are the total amounts paid by the Fund to Premier,
as the distributor, for shareholder servicing activities and expenses primarily
intended to result in the sale of Class A shares of the Fund, with respect to
the Class A Plan, for distributing the Fund's Class B and Class C shares, with
respect to the Distribution Plan, and for the provision of certain services to
the holders of Class B and Class C shares with respect to the Service Plan, for
the fiscal year ended December 31, 1999. Also set forth below are payments
received by the Distributor, prior to it becoming the fund's distributor, for
shareholder servicing activities and expenses primarily intended to result in
the sale of Class A shares of the Fund, with respect to the Class A Plan, and
for the provision of certain services to the holders of Class B and Class C
shares, with respect to the Service Plan, for the same time period.
For the fiscal year ended December 31, 1999, the Fund paid Premier and the
Distributor $294,733 and $40,328, respectively, pursuant to the Class A Plan.
For the fiscal year ended December 31, 1999, the Fund paid Premier $2,994,350
and $1,527,402, pursuant to the Distribution Plan with respect to Class B and
Class C shares, respectively, and paid Premier and the Distributor $221,668 and
$1,275,507, respectively, pursuant to the Service Plan with respect to Class B
shares and $42,057 and $467,077, respectively, pursuant to the Service Plan with
respect to Class C shares.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies," "Services
For Fund Investors," "Instructions for Regular Accounts" and "Instructions for
IRAs."
General. If you hold Fund shares of more than one class, any request for
redemption must specify the class of shares being redeemed. If you fail to
specify the class of shares to be redeemed or if you own fewer shares of the
class than specified to be redeemed, the redemption request may be delayed until
the Transfer Agent receives further instructions from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
NAV per share.
Procedures. You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or, through the Check Writing Privilege
with respect to Class A shares only, which is granted automatically (if you
invest in Class A shares) unless you specifically refuse it by checking the
applicable "No" box on the Account Application. The Check Writing Privilege may
be established for an existing account by a separate signed Shareholder Services
Form. You also may redeem shares through the TeleTransfer Privilege if you have
checked the appropriate box and supplied the necessary information on the
Account Application or have filed a Shareholders Services Form with the Transfer
Agent. If you are a client of certain Agents ("Selected Dealers"), you may
redeem Fund shares through the Selected Dealer. Other redemption procedures may
be in effect for clients of other Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the right
to refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption privilege at any time
or charge a service fee upon notice to shareholders. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs, or other retirement plans,
and shares for which certificates have been issued, are not eligible for the
Check Writing or TeleTransfer Privilege.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. If you select the TeleTransfer privilege or
telephone exchange privilege, which is granted automatically unless you refuse
it, you authorize the Transfer Agent to act on telephone instructions (including
The Dreyfus Touch(R) automated telephone system) from any person representing
himself or herself to be you, or a representative of your Agent, and reasonably
believed by the Transfer Agent to be genuine. The Fund will require the Transfer
Agent to employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if it does not
follow such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a
TeleTransfer redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if TeleTransfer redemption had
been used. During the delay, the Fund's NAV may fluctuate.
Check Writing Privilege - Class A. Investors may write Redemption Checks
("Checks") drawn on their Fund accounts. The Fund provides Checks to investors
in Class A shares automatically upon opening an account, unless such investors
specifically refuse the Check Writing Privilege by checking the applicable "No"
box on the Account Application. Checks will be sent only to the registered
owner(s) of the account and only to the address of record. The Check Writing
Privilege may be established for an existing account by a separate signed
Shareholder Services Form. The Account Application or Shareholder Services Form
must be manually signed by the registered owner(s). Checks are drawn on the
investor's Fund account and may be made payable to the order of any person in an
amount of $500 or more. When a Check is presented to the Transfer Agent for
payment, the Transfer Agent, as the investor's agent, will cause the Fund to
redeem a sufficient number of full and fractional Class A shares in the
investor's account to cover the amount of the Check. Potential fluctuations in
the NAV of Class A should be considered in determining the amount of a Check.
Dividends are earned until the Check clears. After clearance, a copy of the
Check will be returned to the investor. Investors generally will be subject to
the same rules and regulations that apply to checking accounts, although
election of this Privilege creates only a shareholder-transfer agent
relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in an
investor's account, the Check will be returned marked insufficient funds. Checks
should not be used to close an account. Checks are free but the Transfer Agent
will impose a fee for stopping payment of a Check upon request or if the
Transfer Agent cannot honor a Check because of insufficient funds or other valid
reason. Investors should date Checks with the current date when writing them.
Please do not postdate Checks. If Checks are postdated, the Transfer Agent will
honor, upon presentment, even if presented before the date of the Check, all
postdated Checks which are dated within six months of presentment for payment,
if they are otherwise in good order.
This privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding on
redemptions. Any Check written on an account which has become subject to backup
withholding on redemptions will not be honored by the Transfer Agent.
Redemption Through a Selected Dealer. Customers of Selected Dealers may
make redemption requests to their Selected Dealer. If the Selected Dealer
transmits the redemption request so that it is received by the Transfer Agent
prior to the close of trading on the floor of the NYSE (currently 4:00 p.m., New
York time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of trading
on the floor of the NYSE, the redemption request will be effective on the next
business day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of Fund shares held by shareholders. Repurchase orders received by
dealers by the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, the Fund shares will be redeemed at the next determined NAV per
share. It is the responsibility of the Selected Dealer to transmit orders on a
timely basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be withdrawn at
any time.
Reinvestment Privilege. Upon written request, you may reinvest up to the
number of Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing NAV without a sales load, or reinstate your
account for the purpose of exercising Fund Exchanges. Upon reinstatement, with
respect to Class B shares, or Class A shares if such shares were subject to a
CDSC, your account will be credited with an amount equal to the CDSC previously
paid upon redemption of the Class A or Class B shares reinvested. The
Reinvestment Privilege may be exercised only once.
TeleTransfer Privilege. You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an ACH member may be designated. Redemption proceeds will
be on deposit in your account at an ACH member bank ordinarily two days after
receipt of the redemption request. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will be
effected as a TeleTransfer transaction through the ACH system unless more prompt
transmittal specifically is requested. Holders of jointly registered Fund or
bank accounts may redeem through the TeleTransfer Privilege for transfer to
their bank account only up to $500,000 within any 30-day period. See "Purchase
of Shares--TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the NYSE Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges
Medallion Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular verification.
For more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the SEC. In the case of requests for redemptions in excess
of such amount, the Trustees reserve the right to make payments in whole or in
part in securities (which may include non-marketable securities) or other assets
in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In such
event, the securities would be valued in the same manner as the Fund's portfolio
is valued. If the recipient sold such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the NYSE is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund ordinarily utilizes is restricted, or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments or
determination of its NAV is not reasonably practicable, or (c) for such other
periods as the SEC by order may permit to protect the Fund's shareholders.
Contingent Deferred Sales Charge - Class B Shares. A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current NAV of your Class B shares to an amount which is lower than the dollar
amount of all payments by you for the purchase of Class B shares of the Fund
held by you at the time of redemption. No CDSC will be imposed to the extent
that the NAV of the Class B shares redeemed does not exceed (i) the current NAV
of Class B shares acquired through reinvestment of dividends or other
distributions, plus (ii) increases in the NAV of Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the Fund held
by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be applied
to the then-current NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV of Class B shares above the
total amount of payments for the purchase of Class B shares made during the
preceding six years; then of amounts representing the cost of shares purchased
six years prior to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 per share for
a cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of his or her investment. Assuming at the time
of the redemption the NAV has appreciated to $12 per share, the value of the
investor's shares would be $1,260 (105 shares at $12 per share). The CDSC would
not be applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the applicable rate
in the second year after purchase) for a total CDSC of $9.60.
For purposes of determining the applicable CDSC payable with respect to
redemption of Class B shares of the Fund where such shares were acquired through
exchange of Class B shares of another fund advised by Dreyfus, the year since
purchase payment was made is based on the date of purchase of the original Class
B shares of the fund exchanged.
Contingent Deferred Sales Charge - Class C Shares. A CDSC of 1% payable to
the Distributor is imposed on any redemption of Class C shares within one year
of the date of purchase. The basis for calculating the payment of any such CDSC
will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge - Class B Shares" above.
Waiver of CDSC. The CDSC applicable to Class B and Class C shares (and to
certain Class A shares) may be waived in connection with (a) redemptions made
within one year after the death or disability, as defined in Section 72(m)(7) of
the Code, of the shareholder, (b) redemptions by employees participating in
Eligible Benefit Plans, (c) redemptions as a result of a combination of any
investment company with the Fund by merger, acquisition of assets or otherwise,
(d) a distribution following retirement under a tax-deferred retirement plan or
upon attaining age 70 1/2 in the case of an IRA or Keogh plan or custodial
account pursuant to Section 403(b) of the Code, and (e) redemptions pursuant to
the Automatic Withdrawal Plan, as described below. If the Trust's Board
determines to discontinue the waiver of the CDSC, the disclosure herein will be
revised appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as provided in
the Prospectus or this Statement of Additional Information at the time of the
purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your entitlement.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
Fund Exchanges. You may purchase, in exchange for shares of the Fund,
shares of the same Class of another fund in the Dreyfus Premier Family of Funds,
shares of the same Class of certain funds advised by Founders, or shares of
certain other funds in the Dreyfus Family of Funds, to the extent such shares
are offered for sale in your state residence. Shares of the same Class of such
other funds purchased by exchange will be purchased on the basis of relative NAV
per share as follows:
A. Exchanges for shares of funds that are offered
without a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales
load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends
or other distributions of any such funds (collectively referred to
herein as "Purchased Shares") may be exchanged for shares of other
funds sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to the Offered
Shares exceeds the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any reduced loads,
the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for shares of
another fund will be subject to the higher applicable CDSC of the two
funds and, for purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held since the date the
shares being exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Agent must
notify the Transfer Agent of the investor's prior ownership of shares with a
sales load and the investor's account number. Any such exchange is subject to
confirmation of an investor's holdings through a check of appropriate records.
You also may exchange your Fund shares that are subject to a CDSC for
shares of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so
purchased will be held in a special account created solely for this purpose
("Exchange Account"). Exchanges of shares from an Exchange Account only can be
made into certain other funds managed or administered by Dreyfus. No CDSC is
charged when an investor exchanges into an Exchange Account; however, the
applicable CDSC will be imposed when shares are redeemed from an Exchange
Account or other applicable Fund account. Upon redemption, the applicable CDSC
will be calculated without regard to the time such shares were held in an
Exchange Account. See "Redemption of Shares." Redemption proceeds for Exchange
Account shares are paid by Federal wire or check only. Exchange Account shares
also are eligible for the Auto-Exchange Privilege, Dividend Sweep and the
Automatic Withdrawal Plan.
To request an exchange, an investor or an investor's Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by telephone
is given to all Fund shareholders automatically unless the investor checks the
applicable "No" box on the Account Application, indicating that the investor
specifically refuses this privilege. The Telephone Exchange Privilege may be
established for an existing account by written request signed by all
shareholders on the account, by a separate signed Shareholder Services Form,
available by calling 1-800-554-4611, or by oral request from any of the
authorized signatories on the account, also by calling 1-800-554-4611. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent to
act on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be the
investor or a representative of the investor's Agent, and reasonably believed by
the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the SEC.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
you to purchase (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, shares of the same Class of another fund in the
Dreyfus Premier Family of Funds, shares of the same Class of certain funds
advised by Founders, or shares of certain other funds in the Dreyfus Family of
Funds, of which you are a shareholder. The amount the investor designates, which
can be expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth day of
the month according to the schedule the investor has selected. This Privilege is
available only for existing accounts. With respect to Class R shares held by a
Retirement Plan, exchanges may be made only between the investor's Retirement
Plan account in one fund and such investor's Retirement Plan account in another
fund. Shares will be exchanged on the basis of relative NAV per share as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if the investor's
account falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRAs and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA accounts to
regular accounts. With respect to all other retirement accounts, exchanges may
be made only among those accounts.
The right to exercise this Privilege may be modified or canceled by the
Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to Dreyfus Premier Limited
Term High Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The
Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. For more information concerning this Privilege and
the funds in the Dreyfus Premier Family of Funds, the Dreyfus Family of Funds or
the Dreyfus Founders Family of Funds eligible to participate in this Privilege,
or to obtain an Auto-Exchange Authorization Form, please call toll free
1-800-554-4611.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations. The exchange of shares of
one fund for shares of another is treated for Federal income tax purposes as a
sale of the shares given in exchange and, therefore, an exchanging shareholder
(other than a tax-exempt Retirement Plan) may realize a taxable gain or loss.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund exchange service or the Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
Dreyfus-Automatic Asset Builder(R). Dreyfus-Automatic Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per
transaction) at regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. Only an account
maintained at a domestic financial institution which is an ACH member may be so
designated. To establish a Dreyfus-Automatic Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-554-4611. You may cancel your participation
in this Privilege or change the amount of purchase at any time by mailing
written notification to Dreyfus Premier Limited Term High Income Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587 and the notification will be effective
three business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and other
distributions, the investor's shares will be reduced and eventually may be
depleted. An Automatic Withdrawal Plan may be established by filing an Automatic
Withdrawal Plan application with the Transfer Agent or by oral request from any
of the authorized signatories on the account by calling 1-800-554-4611.
Automatic Withdrawal may be terminated at any time by the investor, the Fund or
the Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Particular Retirement Plans, including Dreyfus-sponsored Retirement Plans,
may permit certain participants to establish an automatic withdrawal plan from
such Retirement Plans. Participants should consult their Retirement Plan sponsor
and tax adviser for details. Such a withdrawal plan is different from the
Automatic Withdrawal Plan. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed on an annual basis 12% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 12% of the initial account
value. Class C shares, and Class A shares to which a CDSC applies, that are
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC. Purchases of additional Class A shares where the sales load is
imposed concurrently with withdrawals of Class A shares generally are
undesirable.
Dividend Options. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from the Fund in shares of the same Class of another fund in the Dreyfus
Premier Family of Funds, shares of the same Class of certain funds advised by
Founders, or shares of certain other funds in the Dreyfus Family of Funds, of
which you are a shareholder. Shares of certain other funds in other funds
purchased pursuant to this Privilege will be purchased on the basis of relative
NAV per share as follows:
A. Dividends and other distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and other distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds sold
with a sales load, and the applicable sales load will be deducted.
C. Dividends and other distributions paid by a fund which charges a
sales load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum sales
load charged by the fund from which dividends or other distributions
are being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and other distributions paid by a fund may be invested
in shares of other funds that impose a CDSC and the applicable CDSC,
if any, will be imposed upon redemption of such shares.
Dividend ACH permits you to transfer electronically dividends or dividends
and other distributions, if any, from the Fund to a designated bank account.
Only an account maintained at a domestic financial institution which is an ACH
member may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a Dividend
Options Form, please call toll free 1-800-554-4611. You may cancel these
Privileges by mailing written notification to Dreyfus Premier Limited Term High
Income Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a new
fund after cancellation, you must submit a new Dividend Options Form. Enrollment
in or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts and
may not be used to open new accounts. Minimum subsequent investments do not
apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans are
not eligible for Dreyfus Dividend Sweep.
Government Direct Deposit Privilege. Government Direct Deposit Privilege
enables you to purchase Fund shares (minimum of $100 and maximum of $50,000 per
transaction) by having Federal salary, Social Security or certain veterans',
military or other payments from the Federal government automatically deposited
into your Fund account. You may deposit as much of such payments as you elect.
You should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a completed
Direct Deposit Sign-Up Form for each type of payment that you desire to include
in this Privilege. The appropriate form may be obtained from your Agent or by
calling 1-800-554-4611. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency. Further,
the Fund may terminate your participation upon 30 days' notice to you.
Letter of Intent--Class A Shares. By signing a Letter of Intent form,
which can be obtained by calling 1-800-554-4611, you become eligible for the
reduced sales load applicable to the total number of Eligible Fund shares
purchased in a 13-month period pursuant to the terms and conditions set forth in
the Letter of Intent. A minimum initial purchase of $5,000 is required. To
compute the applicable sales load, the offering price of shares you hold (on the
date of submission of the Letter of Intent) in any Eligible Fund that may be
used toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced sales
load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares of the Fund held in escrow to realize the
difference. Signing a Letter of Intent does not bind you to purchase, or the
Fund to sell, the full amount indicated at the sales load in effect at the time
of signing, but you must complete the intended purchase to obtain the reduced
sales load. At the time you purchase Class A shares, you must indicate your
intention to do so under a Letter of Intent. Purchases pursuant to a Letter of
Intent will be made at the then-current NAV plus the applicable sales load in
effect at the time such Letter of Intent was executed.
Retirement Plans. The Fund makes available a variety of pension and
profit-sharing plans, including Keogh Plans, IRAs (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and
Education IRAs), 401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support
services also are available. You can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call
1-800-358-5566; for IRAs and IRA "Rollover Accounts," please call
1-800-554-4611; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans,
please call 1-800-322-7880.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares. All
fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may not
be made in advance of receipt of funds.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
ADDITIONAL INFORMATION ABOUT PURCHASES,
EXCHANGES AND REDEMPTIONS
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is engaged in excessive trading, the Fund, with or
without prior notice, may temporarily or permanently terminate the availability
of Fund exchanges, or reject in whole or part any purchase or exchange request,
with respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year or
who makes exchanges that appear to coincide with an active market-timing
strategy may be deemed to be engaged in excessive trading. Accounts under common
ownership or control will be considered as one account for purposes of
determining a pattern of excessive trading. In addition, the Fund may refuse or
restrict purchase or exchange requests by any person or group if, in the
judgment of the Fund's management, the Fund would be unable to invest the money
effectively in accordance with its investment objective and policies or could
otherwise be adversely affected or if the Fund receives or anticipates receiving
simultaneous orders that may significantly affect the Fund (e.g., amounts equal
to 1% or more of the Fund's total assets). If an exchange request is refused,
the Fund will take no other action with respect to the shares until it receives
further instructions from the investor. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the Fund.
The Fund's policy on excessive trading applies to investors who invest in
the Fund directly or through financial intermediaries, but does not apply to the
Dreyfus Auto-Exchange Privilege, to any automatic investment or withdrawal
privilege described herein, or to non-IRA plan accounts.
During times of drastic economic or market conditions, the Fund may
suspend Fund exchanges temporarily without notice and treat exchange requests
based on their separate components - redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Fund's next determined NAV but the purchase
order would be effective only at the NAV next determined after the fund being
purchased receives the proceeds of the redemption, which may result in the
purchase being delayed.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Substantially all of the Fund's
investments (excluding short-term investments) are valued each business day by
an independent pricing service (the "Service") approved by the Fund's Board.
Securities valued by the Service for which quoted bid prices in the judgment of
the Service are readily available and are representative of the bid side of the
market are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by the
Service based upon its evaluation of the market for such securities). Other debt
securities valued by the Service are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. Short-term investments are
not valued by the Service and are carried at amortized cost, which approximates
value. Debt securities that are not valued by the Service are valued at the
average of the most recent bid and asked prices in the market in which such
investments are primarily traded, or at the last sales price for securities
traded primarily on an exchange. In the absence of reported sales of investments
traded primarily on an exchange, the average of the most recent bid and asked
prices is used. Bid price is used when no asked price is available. Investments
traded in foreign currencies are translated to U.S. dollars at the prevailing
rates of exchange. If the Fund has to obtain prices as of the close of trading
on various exchanges throughout the world, the calculation of NAV may not take
place contemporaneously with the determination of prices of certain of the
Fund's securities. Expenses and fees, including the management fee, are accrued
daily and are taken into account for the purpose of determining the NAV of Fund
shares.
NYSE Closings. The holidays (as observed) on which the NYSE
-------------
is currently scheduled to be closed are: New Year's Day, Dr.
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distributions and Taxes."
General. The Fund ordinarily declares daily and pays monthly dividends
from its net investment income and distributes net realized capital gains and
gains from foreign currency transactions, if any, once a year, but it may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the 1940
Act. All expenses are accrued daily and deducted before declaration of dividends
to investors. The Fund will not make distributions from net realized capital
gains unless all capital loss carryovers, if any, have been utilized or have
expired. Shares begin accruing dividends on the day following the date of
purchase. The Fund's earnings for Saturdays, Sundays and holidays are declared
as dividends on the next business day. If you redeem all shares in your account
at any time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. Dividends paid by each
Class are calculated at the same time and in the same manner and are in the same
amount, except that the expenses attributable solely to a particular Class are
borne exclusively by that Class. Class B and Class C shares will receive lower
per share dividends than Class A shares, which will in turn receive lower per
share dividends than Class R shares, because of the higher expenses borne by the
relevant Classes.
Investors other than qualified retirement plans may choose whether to
receive dividends and other distributions in cash, to receive dividends in cash
and reinvest other distributions in additional Fund shares at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment as a
regulated investment company ("RIC") under the Code so long as such
qualification is in the best interests of its shareholders. Such qualification
will relieve the Fund of any liability for federal income tax to the extent its
earnings and realized gains are distributed in accordance with applicable
provisions of the Code. To qualify for treatment as a RIC under the Code, the
Fund -- which is treated as a separate corporation for federal tax purposes --
(1) must distribute to its shareholders each year at least 90% of its investment
company taxable income (generally consisting of net investment income, net
short-term capital gains and net gains from certain foreign currency
transactions) ("Distribution Requirement"), (2) must derive at least 90% of its
annual gross income from specified sources ("Income Requirement"), and (3) must
meet certain asset diversification and other requirements. The term "regulated
investment company" does not imply the supervision of management or investment
practices or policies by any government agency. If the Fund failed to qualify
for treatment as a RIC for any taxable year, (1) it would be taxed at corporate
rates on the full amount of its taxable income for that year without being able
to deduct the distributions it makes to its shareholders and (2) the
shareholders would treat all those distributions, including distributions of net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), as dividends (that is, ordinary income) to the extent of the
Fund's earnings and profits. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying for RIC treatment. The Fund will
be subject to a non-deductible 4% excise tax ("Excise Tax") to the extent it
fails to distribute substantially all of its taxable investment income and
capital gains.
Distributions. If you elect to receive dividends and other distributions
in cash, and your distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest that
distribution and all future distributions payable to you in additional Fund
shares at NAV. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Dividends derived from net investment income, together with distributions
from net realized short-term capital gains, net realized gains from certain
foreign currency transactions and all or a portion of any gains realized from
the sale or other disposition of certain market discount bonds (collectively,
"dividend distributions"), will be taxable to U.S. shareholders, including
certain non-qualified retirement plans, as ordinary income to the extent of the
Fund's earnings and profits, whether received in cash or reinvested in
additional Fund shares. Distributions from net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are taxable to those
shareholders as long-term capital gains regardless of how long the shareholders
have held their Fund shares and whether the distributions are received in cash
or reinvested in additional Fund shares.
Dividend distributions paid by the Fund to a non-resident foreign investor
generally are subject to U.S. withholding tax at the rate of 30%, unless the
non-resident foreign investor claims the benefit of a lower rate specified in a
tax treaty. Capital gain distributions paid by the Fund to a non-resident
foreign investor, as well as the proceeds of any redemptions by such an
investor, regardless of the extent to which gain or loss may be realized,
generally are not subject to U.S. withholding tax. However, such distributions
may be subject to backup withholding, unless the foreign investor certifies his
or her non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions will
be mailed to you annually. You also will receive periodic summaries of your
account that will include information as to distributions paid during the year.
Dividends and other distributions paid by the Fund to qualified retirement
plans ordinarily will not be subject to taxation until the proceeds are
distributed from the plans. The Fund will not report to the IRS distributions
paid to such plans. Generally, distributions from qualified retirement plans,
except those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the participant
reaches age 59 1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. The administrator, trustee or
custodian of a qualified retirement plan will be responsible for reporting
distributions from the plan to the IRS. Moreover, certain contributions to a
qualified retirement plan in excess of the amounts permitted by law may be
subject to an excise tax. If a distributee of an "eligible rollover
distribution" from a qualified retirement plan does not elect to have the
distribution paid directly from the plan to an eligible retirement plan in a
"direct rollover," the distribution is subject to 20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized,
payable to an individual or certain other non-corporate shareholder if the
shareholder fails to furnish a TIN to the Fund and certify that it is correct.
Backup withholding at that rate also is required from dividends and capital gain
distributions payable to such a shareholder if (1) the shareholder fails to
certify that he or she has not received notice from the IRS of being subject to
backup withholding as a result of a failure properly to report taxable dividend
or interest income on a federal income tax return or (2) the IRS notifies the
Fund to institute backup withholding because the IRS determines that the
shareholder's TIN is incorrect or that the shareholder has failed properly to
report such income. A TIN is either the Social Security number, IRS individual
taxpayer identification number or employer identification number of the record
owner of an account. Any tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the record owner and may be claimed as a
credit on his or her federal income tax return.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the NAV of the shares below
the cost of his or her investment. Such a distribution would be a return on
investment in an economic sense, although taxable as discussed above. In
addition, if a shareholder sells shares of the Fund held for six months or less
and receives any capital gain distributions with respect to those shares, any
loss incurred on the sale of those shares will be treated as a long-term capital
loss to the extent of those distributions.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a date
in any of those months are deemed to have been paid by the Fund and received by
the shareholders on December 31 of that year if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
Interest received by the Fund may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would reduce
the yield on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.
Foreign Currency and Hedging Transactions. Gains from the sale or other
disposition of foreign currencies (except certain gains that may be excluded by
future regulations), and gains from options, futures and forward contracts
derived by the Fund with respect to its business of investing in securities or
foreign currencies, will qualify as permissible income under the Income
Requirement.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gains or losses
from the disposition of foreign currencies and certain
foreign-currency-denominated instruments (including debt instruments and
financial forward, futures contracts and options) may be treated as ordinary
income or loss under Section 988 of the Code. In addition, all or a portion of
any gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that otherwise would be treated as capital
gain may be treated as ordinary income. "Conversion transactions" are defined to
include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund on
the exercise or lapse of, or closing transactions respecting, certain options,
futures and forward contracts ("Section 1256 Contracts") will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such contracts and options as well as
from closing transactions. In addition, any Section 1256 contracts remaining
unexercised at the end of the Fund's taxable year will be treated as sold for
their then fair market value (a process known as "marking-to-market"), resulting
in additional gain or loss to the Fund characterized in the same manner.
Offsetting positions held by the Fund involving certain options, futures
or forward contracts may constitute "straddles", which are defined to include
"offsetting positions" in actively traded personal property. Under Section 1092
of the Code, any loss from the disposition of a position in a straddle generally
may be deducted only to the extent the loss exceeds the unrealized gain on the
offsetting position(s) of the straddle. In addition, these rules may postpone
the recognition of loss that otherwise would be recognized under the
mark-to-market rule discussed above. The regulations under Section 1092 also
provide certain "wash sale" rules, which apply to transactions where a position
is sold at a loss and a new offsetting position is acquired within a prescribed
period, and "short sale" rules applicable to straddles. If the Fund makes
certain elections (including an election as to straddles that include a position
in one or more Section 1256 Contracts (so-called "mixed straddles")), the
amount, character, and timing of recognition of gains and losses from the
affected straddle positions would be determined under rules that vary according
to the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
Investment by the Fund in securities issued or acquired at a discount (for
example, zero coupon securities) could, under special tax rules, affect the
amount and timing of distributions to shareholders by causing the Fund to
recognize income prior to the receipt of cash payments. For example, the Fund
would be required to take into gross income annually a portion of the discount
(or deemed discount) at which the securities were issued and could need to
distribute that income to satisfy the Distribution Requirement and avoid
imposition of the 4% excise tax referred to in the Fund's Prospectus under
"Dividends, Other Distributions and Taxes." In that case, the Fund may have to
dispose of securities it might otherwise have continued to hold in order to
generate cash to satisfy these requirements.
State and Local Taxes. Depending upon the extent of its activities in
states and localities in which it is deemed to be conducting business, the fund
may be subject to the tax laws thereof. Shareholders are advised to consult
their tax advisers concerning the application of state and local taxes to them.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal income
taxation of a shareholder who, as to the United States, is a non-resident alien
individual, a foreign trust or estate, a foreign corporation or a foreign
partnership (a "foreign shareholder") depends on whether the income from the
Fund is "effectively connected" with a U.S. trade or business carried on by the
shareholder, as discussed below. Special U.S. federal income tax rules that
differ from those described below may apply to certain foreign persons who
invest in the Fund, such as a foreign shareholder entitled to claim the benefits
of an applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the foreign
shareholder generally will be subject to U.S. federal withholding tax of 30% (or
lower treaty rate). Capital gains realized by foreign shareholders on the sale
of Fund shares and distributions to them of net capital gain generally will not
be subject to U.S. federal income tax unless the foreign shareholder is a
non-resident alien individual and is physically present in the United States for
more than 182 days during the taxable year. In the case of certain foreign
shareholders, the Fund may be required to withhold U.S. Federal income tax at a
rate of 31% of capital gain distributions and of the gross proceeds from a
redemption of Fund shares unless the shareholder furnishes the Fund with a
certificate regarding the shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all distributions
to that shareholder and any gains realized by that shareholder on the
disposition of Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as the
case may be. Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares of
the Fund, that they own at the time of their death. Certain credits against that
tax and relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund by
Dreyfus. Debt securities purchased and sold by the Fund are generally traded on
a net basis (i.e., without commission) through dealers acting for their own
account and not as brokers, or otherwise involve transactions directly with the
issuer of the instrument. This means that a dealer (the securities firm or bank
dealing with the Fund) makes a market for securities by offering to buy at one
price and sell at a slightly higher price. The difference between the prices is
known as a spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection with
such transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to the
benefits received. Dreyfus also places transactions for other accounts that it
provides with investment advice.
Brokers and dealers involved in the execution of portfolio transactions on
behalf of the Fund are selected on the basis of their professional capability
and the value and quality of their services. In selecting brokers or dealers,
Dreyfus will consider various relevant factors, including, but not limited to,
the size and type of the transaction; the nature and character of the markets
for the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the Trust's
procedures adopted in accordance with Rule 17e-1 under the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or research
services to the Fund and/or other accounts over which Dreyfus or its affiliates
exercise investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its other
clients; and, conversely, such information provided by brokers or dealers who
have executed transaction orders on behalf of other clients of Dreyfus may be
useful to Dreyfus in carrying out its obligations to the Fund. The receipt of
such research services does not reduce Dreyfus' normal independent research
activities; however, it enables Dreyfus to avoid the additional expenses which
might otherwise be incurred if it were to attempt to develop comparable
information through its own staff.
Dreyfus may use research services of and place brokerage transactions with
broker-dealers affiliated with it or Mellon Bank if the commissions are
reasonable, fair and comparable to commissions charged by non-affiliated
brokerage firms for similar services. For the period from May 30, 1997 (the date
the Fund commenced operations ) to December 31, 1997 and for the fiscal year
ended December 31, 1998 and December 31, 1999 the Fund did not pay any brokerage
commissions.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made for
these other accounts. It sometimes happens that the same security is held by
more than one of the accounts managed by Dreyfus. Simultaneous transactions may
occur when several accounts are managed by the same investment manager,
particularly when the same investment instrument is suitable for the investment
objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated in
accordance with a formula considered by Dreyfus to be equitable to each account.
In some cases this system could have a detrimental effect on the price or volume
of the investment instrument as far as the Fund is concerned. In other cases,
however, the ability of the Fund to participate in volume transactions will
produce better executions for the Fund. While the Trustees will continue to
review simultaneous transactions, it is their present opinion that the
desirability of retaining Dreyfus as investment manager to the Fund out weighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
Portfolio Turnover. While securities are purchased for the Fund on the
basis of potential for high current income and not for short-term trading
profits, the portfolio turnover rate of the Fund may exceed 100%. A portfolio
turnover rate or 100% would occur, for example, if all the securities held by
the Fund were replaced once in a period of one year. A higher rate of portfolio
turnover (100% or greater) involves correspondingly greater brokerage
commissions and other expenses that must be born directly by the Fund and, thus,
indirectly by its shareholders. In addition, a high rate of portfolio turnover
may result in the realization of larger amounts of short-term capital gains
that, when distributed to the Fund's shareholder, are taxable to them as
ordinary income. Nevertheless, security transactions will be based only upon
investment considerations and will not be limited by any other considerations
when Dreyfus deems it appropriate to make changes in the Fund's assets. The
portfolio turnover rate for the Fund is calculated by dividing the lesser of the
Fund's annual sales or purchases of portfolio securities (exclusive of purchases
and sales of securities whose maturities at the time of acquisition were one
year or less) by the monthly average value of securities in the Fund during the
year. Portfolio turnover may vary from year to year as well as within a year. In
periods in which extraordinary market conditions prevail, Dreyfus will not be
deterred from changing the Fund's investment strategy as rapidly as needed, in
which case higher turnover rates can be anticipated.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
The Fund's current yield for the 30-day period ended December 31, 1999 was
9.95%, 9.91%, 9.66% and 10.69% for its Class A, Class B, Class C and Class R
shares, respectively. Current yield is computed pursuant to a formula which
operates, with respect to each Class of shares, as follows: the amount of the
Fund's expenses with respect to such Class of shares accrued for the 30-day
period (net of reimbursements) is subtracted from the amount of the dividends
and interest earned (computed in accordance with regulatory requirements) by the
Fund with respect to such Class of shares during the period. That result is then
divided by the product of: (a) the average daily number of shares outstanding
during the period that were entitled to receive dividends, and (b) the maximum
offering price per share in the case of Class A shares or the NAV per share in
the case of Class B, Class C and Class R shares on the last day of the period
less any undistributed earned income per share reasonably expected to be
declared as a dividend shortly thereafter. The quotient is then added to 1, and
that sum is raised to the 6th power, after which 1 is subtracted. The current
yield is then arrived at by multiplying the result by 2.
Average annual total returns (expressed as a percentage) for Class A,
Class B, Class C and Class R shares of the Fund for the periods noted were:
Average Annual Total Return for the
Period Ended December 31, 1999
1 Year Since Inception
------ ---------------
Class A shares (2.56)% 0.97% (6/2/97)
Class B shares (2.21)% 1.32% (6/2/97)
Class C shares 0.31% 2.01% (6/2/97)
Class R shares 2.24% 3.01% (6/2/97)
Inception date appears in parentheses following the average annual total return
since inception.
The foregoing chart assumes, where applicable, deduction of the maximum
sales load from the hypothetical initial investment at the time of purchase and
the assessment of the maximum CDSC.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at NAV per share (maximum offering
price in the case of Class A) with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and other
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result. The average annual total return figures
calculated in accordance with such formula assumes that, in the case of Class A
shares, the maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or, in the case of Class B or C shares the
maximum applicable CDSC has been paid upon redemption at the end of the period.
The Fund's total return for Class A shares for the period June 2, 1997
(inception date of Class A shares) to December 31, 1999 was 2.53%. Based on NAV
per share, the total return for Class A was 7.37% for this period. The Fund's
total return for Class B and Class C shares for the period from June 2, 1997
(inception date of Class B and Class C shares) to December 31, 1999 was 3.44%
and 5.28%, respectively. Without giving effect to the applicable CDSC, the total
return for Class B and Class C shares for this period was 5.95% and 5.28%,
respectively. The Fund's total return for Class R shares for the period from
June 2, 1997 (inception date of Class R shares) to December 31, 1999 was 7.95%.
Total return is calculated by subtracting the amount of a Fund's NAV
(maximum offering price in the case of Class A shares) per share at the
beginning of a stated period from the NAV (maximum offering price in the case of
Class A shares) per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period and any
applicable CDSC), and dividing the result by the NAV (maximum offering price in
the case of Class A shares) per share at the beginning of the period. Total
return also may be calculated based on the NAV per share at the beginning of the
period instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC at the
end of the period for Class B or C shares. In such cases, the calculation would
not reflect the deduction of the sales load with respect to Class A shares or
any applicable CDSC with respect to Class B or C shares, which, if reflected
would reduce the performance quoted.
From time to time, advertising materials for the Fund may include (i)
biographical information relating to its portfolio manager, including honors or
awards received, and may refer to or include commentary by the Fund's portfolio
manager relating to investment strategy, asset growth, current or past business,
political, economic or financial conditions and other matters of general
interest to investors; (ii) information concerning retirement and investing for
retirement, including statistical data or general discussions about the growth
and development of Dreyfus Retirement Services (in terms of new customers,
assets under management, market share, etc.) and its presence in the defined
contribution plan market; (iii) the approximate number of then-current Fund
shareholders; and (iv) discussions of the risk and reward potential of the high
yield securities markets and its comparative performance in the overall
securities markets.
From time to time, the Fund's advertising materials may refer to Lipper,
Morningstar, or Value Line Rankings or ratings, and the related analyses
supporting such rankings or ratings.
From time to time, the Fund may compare its performance against inflation
with the performance of other instruments against inflation, such as short-term
Treasury Bills (which are direct obligations of the U.S. Government), bonds,
stocks, and FDIC-insured bank money market accounts.
INFORMATION ABOUT THE FUND/TRUST
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "The Fund."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Fund shares
are without par value, have no preemptive or subscription rights, and are freely
transferable. The Fund is one of three portfolios of the Trust. Fund shares have
equal rights in liquidation.
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, or, where matters affect different classes of a portfolio
differently, by class.
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.
COUNSEL AND INDEPENDENT AUDITORS
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, 2000, 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.
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 has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers.
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.
<PAGE>
APPENDIX
DESCRIPTION OF S&P'S, MOODY'S, FITCH
AND DUFF RATINGS
S&P's
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation
is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues only in
small degree. The obligors capacity to meet its financial commitment on
the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
significant speculative characteristics. `BB' indicates the least
degree of speculation and `C' the highest. While such obligations will
likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse
conditions.
BB An obligation rated `BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity to
meet its financial commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the
obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions
for the obligor to meet its financial commitment on the obligation. In
the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial
commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments
on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D'
rating category is used when payments on a obligation are
not made on the date due even if the applicable grace
period has not expired, unless S&P believes that such
payments will be made during such grace period. The `D'
rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on
an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus
(+) or a minus (-) sign to show relative standing within the major
rating categories.
Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term of
the notes.
SP-3 Speculative capacity to pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days.
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
B Issues rated `B' are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is used
when interest payments of principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period.
Moody's
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment
risk and generally are referred to as "gilt edge."
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they
comprise what generally are known as high-grade bonds.
They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in
Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor
poorly secured). Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
short-comings.
C Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative standing
within each generic rating classification from Aa through B. The
modifier 1 indicates a ranking for the security in the higher end of a
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of a rating category.
Notes and other Short-Term Obligations
There are four rating categories for short-term obligations that define
an investment grade situation. These are designated Moody's Investment
Grade as MIG 1 (best quality) through MIG 4 (adequate quality).
Short-term obligations of speculative quality are designated SG.
In the case of variable rate demand obligations (VRDOs), a two
component rating is assigned. The first element represents an
evaluation of the degree of risk associated with scheduled principal
and interest payments, and the other represents an evaluation of the
degree of risk associated with the demand feature. The short-term
rating assigned to the demand feature of VRDOs is designated as VMIG.
When either the long- or short-term aspect of a VRDO is not rated, that
piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
Commercial Paper Rating
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to
a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternative liquidity is
maintained.
Fitch
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
Long-Term Ratings
AAA Highest credit quality. The risks factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk
is modest but
AA may vary slightly from time to time because of economic conditions.
AA-
A+ Protection factors are average but adequate. However,
risk factors are
A more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered
sufficient for prudent
BBB investment. Considerable variability in risk during
economic cycles.
BBB-
BB+ Below investments grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors
fluctuate according to
BB- industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.
B+ Below investment grade and possessing risk that
obligations will not be met
B when due. Financial protection factors will fluctuate
widely according to
B- economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
Short-Term and Commercial Paper Ratings
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainly of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financial requirements, access to capital markets is good. Risk
factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues as
to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
D-4 Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service. Operating factors and market
access may be subject to a high degree of variation.
D-5 Issuer failed to meet scheduled principal and/or interest payments.
THE DREYFUS/LAUREL FUNDS TRUST
(formerly The Laurel Funds Trust)
PART C
OTHER INFORMATION
Item 23. Exhibits
A(1) Second Amended and Restated Agreement and Declaration of Trust.
Incorporated by reference to Post-Effective Amendment No. 87 to the
Registrant's Registration Statement on Form N-1A.
A(2) Amendment No. 1 to Registrant's Second Amended and Restated
Agreement and Declaration of Trust filed on February 7, 1994.
Incorporated by reference to Post-Effective Amendment No. 90 to the
Registrant's Registration Statement on Form N-1A ("Post Effective
Amendment No. 90").
A(3) Amendment No. 2 to Registrant's Second Amended and Restated
Agreement and Declaration of Trust filed on March 31, 1994.
Incorporated by reference to Post-Effective Amendment No. 90.
A(4) Amendment No. 3 to Registrant's Second Amended and Restated
Agreement and Declaration of Trust. Incorporated by reference to
Post-Effective Amendment No. 93 to the Registrant's Registration
Statement on Form N-1A, filed on December 13, 1994 ("Post-Effective
Amendment No. 93").
A(5) Amendment No. 4 to Registrant's Second Amended and Restated
Agreement and Declaration. Incorporated by reference to
Post-Effective Amendment No. 93.
A(6) Amendment No.8 to Registrant's Second Amended and Restated Agreement
and Declaration of Trust. Filed herewith.
B Amended and Restated By-Laws. Incorporated by reference to
Post-Effective Amendment No. 75 to the Registrant's Registration
Statement on Form N-1A.
D(1) Investment Management Agreement between the Registrant and Mellon
Bank, N.A., dated April 4, 1994. Incorporated by Reference to
Post-Effective Amendment No. 90.
D(2) Assignment Agreement among the Registrant, Mellon Bank, N.A. and The
Dreyfus Corporation, dated as of October 17, 1994, (relating to
Investment Management Agreement dated April 4, 1994). Incorporated
by reference to Post-Effective Amendment No. 93.
E Form of Distribution Agreement. Filed herewith.
F Not applicable.
G(1) Custody and Fund Accounting Agreement between the Registrant and
Mellon Bank, N.A., dated April 4, 1994. Incorporated by reference to
Post-Effective Amendment No. 102 to the Registration Statement on
Form N-1A, filed on April 23, 1997 ("Post-Effective Amendment No.
102").
G(2) Amendment to Custody and Fund Accounting Agreement, dated August 1,
1994. Incorporated by reference to Post-Effective Amendment No. 93.
H(1) Transfer Agent Agreement between the Registrant and Boston Safe
Deposit and Trust Company (currently known as The Shareholder
Services Group, Inc.) Incorporated by reference to Post-Effective
Amendment No. 102.
H(2) Supplement to Transfer Agent Agreement for the Registrant, dated
June 1, 1989. Incorporated by reference to Post-Effective Amendment
No. 78 to the Registrant's Registration Statement on Form N-1A.
H(3) Supplement to Transfer Agent Agreement for the Registrant, dated
April 4, 1994. Incorporated by reference to Post-Effective Amendment
No. 93.
I(1) Opinion of counsel is incorporated by reference to the Registration
Statement and to Post-Effective Amendment No. 93 filed on December
13, 1994.
I(2) Consent of Counsel. Filed herewith.
J Consent of KPMG. Filed herewith.
K Not Applicable.
M(1) Form of Distribution Plan (relating to Class B Shares and Class C
Shares). Incorporated by reference to Post-Effective Amendment No.
93.
M(2) Amended and Restated Distribution Plan (relating to Class A Shares
and Institutional Shares). Filed herewith.
M(3) Amended and Restated Service Plan (relating to Class B, Class C, and
Class T Shares). Filed herewith.
N(1) Rule 18f-3 Plans. Incorporated by reference to Post-Effective
Amendment No. 110.
N(2) Amended Rule 18f-3 Plans. Filed herewith.
O Code of Ethics adopted by the Registrant. Filed herewith.
Other Exhibits
- --------------
(a) Power of Attorney of Benaree Pratt Wiley dated May 28, 1998.
Incorporated by reference to Post-Effective Amendment No. 110.
(b) Powers of attorney of the Trustees dated June 15, 1998.
Incorporated by reference to Post-Effective Amendment No. 110.
Powers of attorney of the Trustees dated June 1, 1999.
Incorporated by reference to Post-Effective Amendment No. 111.
(c) Power of Attorney of Marie E. Connolly dated July 6, 1998.
Incorporated by reference to Post-Effective Amendment No. 110.
(d) Power of Attorney of Stephen E. Canter and Joseph W. Connolly
dated March 22, 2000. Filed herewith.
(e) Power of Attorney of the Trustees dated March 16, 2000. Filed
herewith.
(f) Certificate of Incumbency dated April 25, 2000. Filed
herewith.
Item 24. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
Not applicable.
Item 25. Indemnification
---------------
Under a provision of the Registrant's Second Amended and Restated
Agreement and Declaration of Trust (the "Declaration of Trust"), any past or
present Trustee or officer of the Registrant is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably incurred
by him/her in connection with any action, suit or proceeding to which he/she may
be a party or otherwise involved by reason of his/her being or having been a
Trustee or officer of the Registrant.
This provision does not authorize indemnification against any
liability to the Registrant or its shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his/her duties. Moreover, this provision
does not authorize indemnification where such Trustee or officer is finally
adjudicated not to have acted in good faith in the reasonable belief that
his/her actions were in or not opposed to the best interests of the Registrant.
Expenses may be paid by the Registrant in advance of the final disposition of
any action, suit or proceeding upon receipt of an undertaking by such Trustee or
officer to repay such expenses to the Registrant if it is ultimately determined
that indemnification of such expenses is not authorized under the Declaration of
Trust.
Item 26 Business and Other Connections of Investment Adviser
----------------------------------------------------
Investment Adviser -- The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists primarily of
providing investment management services as the investment adviser and manager
for sponsored investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or administrator of other
investment companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer. Dreyfus Investment
Advisors, Inc., another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
ITEM 26. Business and Other Connections of Investment Adviser (continued)
- -------------------------------------------------------------------------------
Officers and Directors of Investment Adviser
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
CHRISTOPHER M. CONDRON Franklin Portfolio Director 1/97 - Present
Chairman of the Board and Associates,
Chief Executive Officer LLC*
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Holdings, Director 1/97 - Present
Inc.*
Certus Asset Advisors Corp.** Director 6/95 - Present
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, Executive Committee 1/98 - Present
LLP+ Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Financial Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Founders Asset Management, Chairman 12/97 - Present
LLC**** Director 12/97 - Present
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Executive Committee 1/98 - 8/98
Member
CHRISTOPHER M. CONDRON Laurel Capital Advisors+ Trustee 10/93 - 1/98
Chairman and Chief
Executive Officer Boston Safe Deposit and Trust Director 5/93 - Present
(Continued) Company*
The Boston Company Financial President 6/89 - 1/97
Strategies, Inc. * Director 6/89 - 1/97
MANDELL L. BERMAN Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN R. BYERS Dreyfus Service Corporation++ Senior Vice President 3/00 - Present
Director of Investments
Gruntal & Co., LLC Executive Vice President 5/97 - 11/99
New York, NY Partner 5/97 - 11/99
Executive Committee 5/97 - 11/99
Member
Board of Directors 5/97 - 11/99
Member
Treasurer 5/97 - 11/99
Chief Financial Officer 5/97 - 6/99
STEPHEN E. CANTER Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, Executive Committee 1/99 - Present
LLP+ Member
Franklin Portfolio Director 2/99 - Present
Associates,
LLC*
Franklin Portfolio Holdings, Director 2/99 - Present
Inc.*
STEPHEN E. CANTER The Boston Company Asset Director 2/99 - Present
President, Chief Operating Management, LLC*
Officer, Chief Investment
Officer, and Director TBCAM Holdings, Inc.* Director 2/99 - Present
(Continued)
Mellon Capital Management Director 1/99 - Present
Corporation***
Founders Asset Management, Member, Board of 12/97 - Present
LLC**** Managers
Acting Chief Executive 7/98 - 12/98
Officer
The Dreyfus Trust Company+++ Director 6/95 - Present
Chairman 1/99 - Present
President 1/99 - Present
Chief Executive Officer 1/99 - Present
THOMAS F. EGGERS Dreyfus Service Corporation++ Chief Executive Officer 3/00 - Present
Vice Chairman - and Chairman of the
Institutional Board
And Director Executive Vice President 4/96 - 3/00
Director 9/96 - Present
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Advisors, Director 1/00 - Present
Inc.
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 3/99 - Present
Massachusetts, Inc. +++
Dreyfus Brokerage Services, Director 11/97 - 6/98
Inc.
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Financial Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Director 10/98 - Present
Corporation
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
STEVEN G. ELLIOTT Boston Group Holdings, Inc.* Vice President 5/93 - Present
Director (Continued)
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Controller 10/90 - 2/99
Corporation Director 9/88 - 2/99
500 Grant Street Vice President 9/88 - 2/99
Pittsburgh, PA 15258 Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Executive Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Director 1/99 - Present
Inc.+
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Services, Chairman 11/97 - 2/99
Inc. Chief Executive Officer 11/97 - 2/98
401 North Maple Ave.
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Director 3/96 - 12/98
Inc.+++ President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Inc. Director 1/97 - 4/99
++
LAWRENCE S. KASH Dreyfus Insurance Agency of Chairman 5/97 - 3/99
Vice Chairman Massachusetts, Inc.++++ President 5/97 - 3/99
(Continued) Director 5/97 - 3/99
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - 6/99
Corporation++ President 5/97 - 6/99
Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Advisors, Chairman 12/95 - 1/99
Inc. Chief Executive Officer 12/95 - 1/99
Wilmington, DE President 12/95 - 1/99
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice 6/92 - Present
President
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Laurel Capital Advisors, Trustee 12/91 - 1/98
Inc. + Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Boston Safe Deposit & Trust Director 6/93 - 1/99
Co.+ Executive Vice President 6/93 - 4/98
MARTIN G. MCGUINN Mellon Financial Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
MARTIN G. MCGUINN Mellon Bank (MD) National Director 1/96 - 4/98
Director Association
(Continued) Rockville, Maryland
J. DAVID OFFICER Dreyfus Service Corporation++ President 3/00 - Present
Vice Chairman Executive Vice President 5/98 - 3/00
And Director Director 3/99 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Dreyfus Brokerage Services, Chairman 3/99 - Present
Inc.
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Director 10/98 - Present
Inc.++
Mellon Residential Funding Director 4/97 - Present
Corp. +
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice 7/96 - Present
President
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - 6/99
Services, Inc.* Director 8/96 - 6/99
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
J. DAVID OFFICER Dreyfus Financial Services Director 9/96 - Present
Vice Chairman and Corp. +
Director (Continued)
Dreyfus Investment Services Director 4/96 - Present
Corporation+
RICHARD W. SABO Founders Asset Management President 12/98 - Present
Director LLC**** Chief Executive Officer 12/98 - Present
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive Officer 6/99 - Present
Waltham, MA 02454-9046
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive Officer 4/94 - 6/99
New York, NY 10006
RONALD P. O'HANLEY Franklin Portfolio Holdings, Director 3/97 - Present
Vice Chairman Inc.*
Franklin Portfolio Director 3/97 - Present
Associates,
LLC*
Boston Safe Deposit and Trust Executive Committee 1/99 - Present
Company* Member
Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management LTD Executive Committee 10/98 - Present
(UK) Member
London, England Director 10/98 - Present
Mellon Asset Management Non-Resident Director 11/98 - Present
(Japan) Co., LTD
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
RONALD P. O'HANLEY Mellon Capital Management Director 2/97 -Present
Vice Chairman (Continued) Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates; LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon Equity Associates; Trustee 1/98 - Present
LLP+ Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Company+++ Chief Financial Officer 3/99 - Present
Controller Treasurer 9/98 - Present
Director 3/97 - Present
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Treasurer 10/98 - Present
Corp. ++
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Treasurer 10/98 - 12/98
Inc. +++
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Vice President 10/98 - Present
Corporation++
Trotwood Hunters Site A Vice President 10/98 - Present
Corp. ++
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant Treasurer 3/93 - 3/99
WILLIAM H. MARESCA Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Controller Massachusetts, Inc.++++
(Continued)
WILLIAM T. SANDALLS, JR. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97 - 12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Director 1/96 - 10/98
Inc.++ Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company +++ Director 1/96 - Present
Dreyfus Service Organization, Treasurer 10/96 - 3/99
Inc.++
Dreyfus Insurance Agency of Director 5/97 - 3/99
Massachusetts, Inc.++++ Treasurer 5/97 - 3/99
Executive Vice 5/97 - 3/99
President
DIANE P. DURNIN Dreyfus Service Corporation++ Senior Vice President- 5/95 - 3/99
Vice President - Product Marketing and
Development Advertising Division
PATRICE M. KOZLOWSKI NONE
Vice President - Corporate
Communications
MARY BETH LEIBIG NONE
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
The Dreyfus Consumer Credit Chairman 6/99 - Present
Corporation ++ President 6/99 - Present
Dreyfus Investment Advisors, Vice President - Tax 10/96 - Present
Inc.++
Dreyfus Precious Metals, Vice President - Tax 10/96 - 12/98
Inc. +++
THEODORE A. SCHACHAR Dreyfus Service Vice President - Tax 10/96 - Present
Vice President - Tax Organization,
(Continued) Inc.++
WENDY STRUTT None
Vice President
RICHARD TERRES None
Vice President
RAYMOND J. VAN COTT Mellon Financial Corporation+ Vice President 7/98 - Present
Vice-President -
Information Systems
Computer Sciences Corporation Vice President 1/96 - 7/98
El Segundo, CA
JAMES BITETTO The TruePenny Corporation++ Secretary 9/98 - Present
ASSISTANT SECRETARY
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. Principal Underwriters
- -------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Tax-Free Municipal Funds
38) Dreyfus LifeTime Portfolios, Inc.
39) Dreyfus Liquid Assets, Inc.
40) Dreyfus Massachusetts Intermediate Municipal Bond Fund
41) Dreyfus Massachusetts Municipal Money Market Fund
42) Dreyfus Massachusetts Tax Exempt Bond Fund
43) Dreyfus MidCap Index Fund
44) Dreyfus Money Market Instruments, Inc.
45) Dreyfus Municipal Bond Fund, Inc.
46) Dreyfus Municipal Cash Management Plus
47) Dreyfus Municipal Money Market Fund, Inc.
48) Dreyfus New Jersey Intermediate Municipal Bond Fund
49) Dreyfus New Jersey Municipal Bond Fund, Inc.
50) Dreyfus New Jersey Municipal Money Market Fund, Inc.
51) Dreyfus New Leaders Fund, Inc.
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus U.S. Treasury Intermediate Term Fund
57) Dreyfus U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Premier California Municipal Bond Fund
63) Dreyfus Premier Equity Funds, Inc.
64) Dreyfus Premier International Funds, Inc.
65) Dreyfus Premier GNMA Fund
66) Dreyfus Premier Worldwide Growth Fund, Inc.
67) Dreyfus Premier Municipal Bond Fund
68) Dreyfus Premier New York Municipal Bond Fund
69) Dreyfus Premier State Municipal Bond Fund
70) Dreyfus Premier Value Equity Funds
71) Dreyfus Short-Intermediate Government Fund
72) Dreyfus Short-Intermediate Municipal Bond Fund
73) The Dreyfus Socially Responsible Growth Fund, Inc.
74) Dreyfus Stock Index Fund
75) Dreyfus Tax Exempt Cash Management
76) The Dreyfus Premier Third Century Fund, Inc.
77) Dreyfus Treasury Cash Management
78) Dreyfus Treasury Prime Cash Management
79) Dreyfus Variable Investment Fund
80) Dreyfus Worldwide Dollar Money Market Fund, Inc.
81) General California Municipal Bond Fund, Inc.
82) General California Municipal Money Market Fund
83) General Government Securities Money Market Funds, Inc.
84) General Money Market Fund, Inc.
85) General Municipal Bond Fund, Inc.
86) General Municipal Money Market Funds, Inc.
87) General New York Municipal Bond Fund, Inc.
88) General New York Municipal Money Market Fund
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
Positions and
Name and principal offices with
business address Positions and offices with the Distributor Registrant
- ---------------- ------------------------------------------ ----------
Thomas F. Eggers * Chief Executive Officer and Chairman of the Board None
J. David Officer * President and Director None
Stephen Burke * Executive Vice President None
Charles Cardona * Executive Vice President None
Anthony DeVivio ** Executive Vice President None
David K. Mossman ** Executive Vice President None
Jeffrey N. Nachman *** Executive Vice President and Chief Operations Officer None
William T. Sandalls, Jr. * Executive Vice President and Director None
Wilson Santos ** Executive Vice President and Director of Client None
Services
William H. Maresca * Chief Financial Officer None
Ken Bradle ** Senior Vice President None
Stephen R. Byers * Senior Vice President None
Frank J. Coates * Senior Vice President None
Joseph Connolly * Senior Vice President Vice President
and Treasurer
William Glenn * Senior Vice President None
Michael Millard ** Senior Vice President None
Mary Jean Mulligan ** Senior Vice President None
Bradley Skapyak * Senior Vice President None
Jane Knight * Chief Legal Officer and Secretary None
Stephen Storen * Chief Compliance Officer None
Jeffrey Cannizzaro * Vice President - Compliance None
Maria Georgopoulos * Vice President - Facilities Management None
William Germenis Vice President - Compliance None
Walter T. Harris * Vice President None
Janice Hayles * Vice President None
Hal Marshall * Vice President - Compliance None
Paul Molloy * Vice President None
Theodore A. Schachar * Vice President - Tax None
James Windels * Vice President Assistant
Treasurer
James Bitetto * Assistant Secretary None
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY 11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills, CA 90210.
</TABLE>
Item 28. Location of Accounts and Records
- ------- --------------------------------
1. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
2. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
- ------- -------------------
Not Applicable
Item 30. Undertakings
- ------- ------------
None
SIGNATURES
-------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 28th day of April, 2000.
THE DREYFUS/LAUREL FUNDS TRUST
BY: /s/Stephen E. Canter*
Stephen E. Canter, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated.
Signatures Title Date
/s/ Stephen E. Canter* President (Chief Operative Officer April 28, 2000
- ------------------------- and Chief Investment Officer)
Stephen E. Canter
/s/Joseph W. Connolly* Vice President and Treasurer April 28, 2000
- -------------------------
Joseph W. Connolly
/s/Joseph S. DiMartino* Chairman of the Board April 28, 2000
- -------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee April 28, 2000
- -------------------------
James M. Fitzgibbons
/s/J. Tomlinson Fort* Trustee April 28, 2000
- -------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel * Trustee April 28, 2000
- -------------------------
Arthur L. Goeschel
/s/Kenneth A. Himmel * Trustee April 28, 2000
- -------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood * Trustee April 28, 2000
- -------------------------
/s/Stephen J. Lockwood
/s/Roslyn M. Watson * Trustee April 28, 2000
- -------------------------
Roslyn M. Watson
/s/Benaree Pratt Wiley * Trustee April 28, 2000
- -------------------------
Benaree Pratt Wiley
*BY: /s/ Jeff Prusnofsky
Jeff Prusnofsky
Attorney-in-Fact
THE DREYFUS/LAUREL FUNDS TRUST
AMENDMENT NO. 8 TO THE SECOND AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
The undersigned, the Vice President of The Dreyfus/Laurel Funds Trust (the
"Trust"), does hereby certify that, pursuant to Article VII, Section 7.3 of the
Trust's Second Amended and Restated Agreement and Declaration of Trust dated
December 9, 1992, as amended (the "Trust Instrument"), the following votes were
duly adopted by at least a majority of the Trustees of the Trust at a meeting
held on July 29, 1999, at which meeting a quorum was present and acting
throughout.
WHEREAS: The Trustees of the Trust have heretofore established the following
Classes of shares of the following respective Series of the Trust:
Dreyfus Premier Core Value Fund, Class A
Dreyfus Premier Core Value Fund, Class B
Dreyfus Premier Core Value Fund, Class C
Dreyfus Premier Core Value Fund, Class R
Dreyfus Premier Core Value Fund, Institutional Class
Dreyfus Premier Limited Term High Income Fund, Class A
Dreyfus Premier Limited Term High Income Fund, Class B
Dreyfus Premier Limited Term High Income Fund, Class C
Dreyfus Premier Limited Term High Income Fund, Class R
Dreyfus Premier Managed Income Fund, Class A
Dreyfus Premier Managed Income Fund, Class B
Dreyfus Premier Managed Income Fund, Class C
Dreyfus Premier Managed Income Fund, Class R
IT IS
HEREBY
VOTED: Pursuant to the authority expressly vested in the Trustees of the
Trust by Article IV, Section 4.1 of the Trust Instrument, the
Trustees hereby establish and designate the following Class of
shares, unlimited in number, of Dreyfus Premier Core Value Fund
effective August 14, 1999:
Dreyfus Premier Core Value Fund, Class T
FURTHER
VOTED: The Class T shares of Dreyfus Premier Core Value Fund, effective,
August 16, 1999, shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
as set forth in the Trust Instrument, except for certain differences
attributable to such Class as described in the Trust's Rule 18f-3
Plan.
FURTHER
VOTED: The assets of the Trust attributable to Institutional Class, Class A,
Class B, Class C, Class R and Class T shares of Dreyfus Premier
Core Value Fund shall be invested in the same investment portfolio
of such Series of the Trust, and the proceeds of the redemption
of a share (including a fractional share) of such Series of the Trust
to be paid to the holder thereof shall be reduced by the amount of
any contingent deferred sales charge payable on such redemption
pursuant to the terms of issuance of such share.
FURTHER
VOTED: Any officer of the Trust be, and each of them hereby is, authorized
to prepare, execute, seal and deliver any and all documents,
instruments, certificates, papers and writings; to file the same with
any public official including, without limitation, the Secretary
of State of The Commonwealth of Massachusetts and the Boston City
Clerk; and to do any and all other acts, in the name of the Trust or
on its behalf, as may be necessary or advisable in connection with or
in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
9th day of August 1999.
/s/ Stephanie D. Pierce
Name: Stephanie D. Pierce
Title: Vice President
DISTRIBUTION AGREEMENT
[NAME OF FUND]
200 Park Avenue
New York, New York 10166
March 22, 2000
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that you
shall be, for the period of this agreement, the distributor of (a) shares of
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series are set forth
on such Exhibit, shares of the Fund. For purposes of this agreement the term
"Shares" shall mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by, and in
accordance with, the registration statement and prospectus then in effect under
the Securities Act of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you will enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market, economic
or political conditions, or by abnormal circumstances of any kind, the Fund's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all expenses which may be
incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.7 The Fund shall furnish you from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as you may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
you upon request with: (a) semi-annual reports and annual audited reports of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as you may reasonably request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Fund may
but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form furnished to
you from time to time, in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and directors, and any
person who controls you within the meaning of Section 15 of the Securities Act
of 1933, as amended, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling person, may incur under the Securities Act of 1933, as amended, or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph
1.9. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Fund and approved
by you. In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by you or them. The Fund's indemnification agreement
contained in this paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Fund or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several officers
and Board members, and any person who controls the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers or
Board members, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its officers or
Board members, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the benefit of the
Fund's officers and Board members, and their respective estates, and to the
benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any litigation
or proceedings against you or any of your officers or directors in connection
with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any of the
provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and
Exchange Commission for amendments to the registration
statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the
Securities and Exchange Commission of any stop order
suspending the effectiveness of the registration
statement or prospectus then in effect or the
initiation of any proceeding for that purpose;
(c) of the happening of any event which
makes untrue any statement of a material fact made in
the registration statement or prospectus then in
effect or which requires the making of a change in
such registration statement or prospectus in order to
make the statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may
from time to time be filed with the Securities and
Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be offered
for sale at a price per share (the "offering price") approximately equal to (a)
their net asset value (determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those persons set forth
in the then-current prospectus, which shall be the percentage of the offering
price of such Shares as set forth in the Fund's then-current prospectus. The
offering price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund offered for sale by
you may be subject to a contingent deferred sales charge as set forth in the
Fund's then-current prospectus. You shall be entitled to receive any sales
charge or contingent deferred sales charge in respect of the Shares. Any
payments to dealers shall be governed by a separate agreement between you and
such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date") set
forth on Exhibit A hereto (and, if the Fund has Series, a separate Reapproval
Date shall be specified on Exhibit A for each Series), and thereafter shall
continue automatically for successive annual periods ending on the day (the
"Reapproval Day") of each year set forth on Exhibit A hereto, provided such
continuance is specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may be, provided that
in either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any party
to this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable without penalty, on 60
days' notice, (a) by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities, or (b) by the
Fund's Board as to the Fund or the relevant Series, as the case may be, or (c)
by you. This agreement also will terminate automatically, as to the Fund or
relevant Series, as the case may be, in the event of its assignment (as defined
in said Act).
4. Miscellaneous
[4.1] The Fund recognizes that from time to time your directors, officers,
and employees may serve as trustees, directors, partners, officers, and
employees of other business trusts, corporations, partnerships, or other
entities (including other investment companies) and that such other entities may
include the name "Dreyfus" as part of their name, and that your corporation or
its affiliates may enter into distribution or other agreements with such other
entities. If you cease to act as the distributor of the Fund's shares or if The
Dreyfus Corporation or any of its affiliates ceases to act as the Fund's
investment adviser, the Fund agrees that, at the request of The Dreyfus
Corporation, the Fund will take all necessary action to change the name of the
Fund to a name not including "Dreyfus" in any form or combination of words.
4.2 (For MBTs only) This agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with your understanding
and indicate your any acceptance hereof by signing below, whereupon it shall
become a binding agreement between us.
Very truly yours,
[NAME OF FUND]
By: _______________________
Accepted:
DREYFUS SERVICE CORPORATION
By:_______________________________
EXHIBIT A**
Reapproval Date Reapproval Day
[Name of Series] [Reapproval Date] [Reapproval Day]
**No changes will be made to a Fund's current Reapproval Date or Day.
Independent Auditors' Consent
To the Trustees and Shareholders
The Dreyfus/Laurel Funds Trust
We consent to the use of our reports dated February 9, 2000
with respect to the Dreyfus Premier Limited Term High Income
Fund, Dreyfus Premier Core Value Fund, and Dreyfus Premier
Managed Income Fund of The Dreyfus/Laurel Funds Trust (the
"Trust"), incorporated herein by reference and to the
references to our Firm under the headings "Financial
Highlights" in the Prospectuses and "Counsel and Independent
Auditors" in the Statements of Additional Information.
KPMG LLP
New York, New York
April 26, 2000
THE DREYFUS/LAUREL FUNDS TRUST
AMENDED AND RESTATED SERVICE PLAN
Introduction: It has been proposed that the above- captioned investment
company (the "Trust"), consisting of distinct portfolios of shares, amend and
restate its Service Plan relating to Class B shares, Class C shares and Class T
shares, respectively, of the portfolios set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (individually, a "Fund" and
collectively, the "Funds"), in accordance with Rule 12b-1 promulgated under the
Investment Company Act of 1940, as amended (the "Act"). Under the Amended and
Restated Service Plan (the "Plan"), a Fund would pay for the provision of
services to shareholders of Class B shares, Class C shares and Class T shares,
respectively, of the Fund. The Distributor would be permitted to pay certain
financial institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. The fee under the
Plan with respect to a particular Class of a Fund is intended to be a "service
fee" as defined in Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc. Pursuant to the Act and said Rule 12b-1, this written
plan describing all material aspects of the proposed financing is being adopted
by the Trust, on behalf of each Fund.
The Trust's Board, in considering whether a Fund should implement a written
plan with respect to its Class B shares, Class C shares and Class T shares,
respectively, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should be
implemented and has considered such pertinent factors as it deemed necessary to
form the basis for a decision to use Fund assets attributable to its Class B
shares, Class C shares and Class T shares, respectively, for such purposes.
In voting to approve the implementation of such a plan with respect to a
Fund's Class B shares, Class C shares and Class T shares, respectively, the
Board members have concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is a
reasonable likelihood that the plan set forth below will benefit the Fund and
the holders of its Class B shares, Class C shares and Class T shares,
respectively.
The Plan: The material aspects of this Plan as it relates to a particular
Class of a Fund are as follows:
1. A Fund shall pay to the Distributor, or any affiliate thereof designated
by it, an amount equal to an annual rate of 0.25 of 1% of the value of the
Fund's average daily net assets attributable to its Class B shares, Class C
shares and Class T shares, respectively. Such payments shall be for the
provision of personal services to shareholders of and/or the maintenance of
shareholder accounts in a particular Class of a Fund. The Distributor shall
determine the amounts to be paid to Service Agents and the basis on which such
payments will be made. Payments to a Service Agent are subject to compliance by
the Service Agent with the terms of any related Plan agreement between the
Service Agent and the Distributor.
2. For purposes of determining the fee payable under this Plan with respect
to a particular Class of a Fund to which it relates, the value of the Fund's net
assets attributable to its Class B shares, Class C shares and Class T shares,
respectively, shall be computed in the manner specified in the Trust's charter
documents as then in effect or in the Trust's then current Prospectus and
Statement of Additional Information for the computation of the value of the
Fund's net assets attributable to Class B shares, Class C shares and Class T
shares, respectively.
3. The Trust's Board shall be provided, at least quarterly, with a written
report of all amounts expended pursuant to this Plan with respect to a
particular Class of a Fund to which it relates. The report shall state the
purpose for which the amounts were expended.
4. This Plan shall become effective with respect to a particular Class of a
Fund at such time as is specified by the Board in approving the amendments and
restatement made by this Plan; provided, however, that the Plan is approved by:
(a) the holders of at least a majority of the Fund's outstanding voting shares
of that Class if adopted after the public offering of such shares or the sale of
such shares to persons who are not affiliated persons of the Trust, affiliated
persons of such persons, promoters of the Trust, or affiliated persons of such
promoters (as such terms are defined in the Act); and (b) a majority of the
Board members, including a majority of the Board members who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements entered
into in connection with this Plan, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the approval of this Plan.
5. This Plan shall continue with respect to a particular Class of a Fund to
which it relates for a period of one year from its effective date, unless
earlier terminated in accordance with its terms, and thereafter shall continue
with respect to that Class automatically for successive annual periods, provided
such continuance is approved at least annually in the manner provided in
paragraph 4(b) hereof.
6. This Plan may be amended, with respect to a particular Class of a Fund
to which it relates, at any time by the Trust's Board, provided that (a) any
amendment to increase materially the costs that a particular Class of a Fund may
bear pursuant to this Plan shall be effective only upon approval by a vote of
the holders of a majority of the Fund's outstanding voting shares of that Class,
and (b) any material amendments of the terms of this Plan as it relates to a
particular Class of a Fund shall become effective only upon approval as provided
in paragraph 4(b) hereof.
7. This Plan may be terminated, with respect to a particular Class of a
Fund to which it relates, without penalty at any time by (a) a vote of a
majority of the Board members who are not "interested persons" (as defined in
the Act) of the Trust and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection with
this Plan, or (b) a vote of the holders of a majority of the Fund's outstanding
voting shares of that Class. This Plan may remain in effect with respect to a
particular Class of a Fund even if the Plan has been terminated in accordance
with this paragraph 7 with respect to any other Class.
8. While this Plan is in effect, the selection and nomination of Board
members who are not "interested persons" (as defined in the Act) of the Trust
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this Plan shall be
committed to the discretion of the Board members who are not "interested
persons".
9. The Trust will preserve copies of this Plan, any related agreements and
any report made pursuant to paragraph 3 hereof, for a period of not less than
six (6) years from the date of this Plan, such agreements or report, as the case
may be, the first two (2) years of such period in an easily accessible place.
10. A copy of the Second Amended and Restated Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that the obligations of the Trust
hereunder and under any related Plan agreement shall not be binding upon any of
the Trustees, shareholders, nominees, officers, agents or employees of the
Trust, personally, but shall bind only the trust property of the Trust, as
provided in the Second Amended and Restated Agreement and Declaration of Trust
of the Trust.
IN WITNESS WHEREOF, the Trust has adopted this Plan as of this 27th day of
January, 2000, to be effective as of the 22 day of March, 2000.
EXHIBIT A
Class B and Class C Shares
Dreyfus Premier Managed Income Fund
Dreyfus Premier Limited Term High Income Fund
Class B, Class C and Class T Shares
Dreyfus Premier Core Value Fund
****insert
THE DREYFUS FAMILY OF FUNDS
(Dreyfus Premier Family of Funds - Funds Included in Exhibit I)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"), requires that the Board of an investment company desiring to offer
multiple classes of shares pursuant to said Rule adopt a plan setting forth the
differences among the classes with respect to shareholder services, distribution
arrangements, expense allocations and any related conversion features or
exchange privileges.
The Board, including a majority of the non-interested Board members,
of each of the investment companies, or series thereof, listed on Exhibit I
attached hereto as the same may be revised from time to time (each, a "Fund"),
which desires to offer multiple classes has determined that the following plan
is in the best interests of each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class A,
Class B, Class C and Class R.
2. Differences in Availability: Class A shares, Class B shares
and Class C shares shall be available only to clients of banks, brokers,
dealers and other financial institutions, except that full-time or
part-time employees or directors of The Dreyfus Corporation ("Dreyfus") or
any of its affiliates or subsidiaries, Board members or a fund advised by
Dreyfus, including members of the Fund's Board, or the spouse or minor
child of any of the foregoing may purchase Class A shares directly through
the Distributor.
Class R shares shall be sold primarily to bank trust departments and
other financial service providers 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.
3. Differences in Services: Other than shareholder services provided under
the Distribution Plan for Class A shares and the Service Plans for Class B and
Class C shares, the services offered to shareholders of each Class shall be
substantially the same, except that Right of Accumulation and Letter of Intent
shall be applicable only to holders of Class A shares and Reinvestment Privilege
shall be applicable only to holders of Class A and Class B shares.
4. Differences in Distribution Arrangements: Class A shares shall be offered
with a front-end sales charge, as such term is defined in Rule 2830(b) of the
Conduct Rules of the National Association of Securities Dealers, Inc. ("Rule
2830(b)"), and a deferred sales charge (a "CDSC"), as such term is defined in
Rule 2830(b), may be assessed on certain redemptions of Class A shares purchased
without an initial sales charge as part of an investment of $1 million or more.
The amount of the sales charge and the amount of and provisions relating to the
CDSC pertaining to the Class A shares are set forth on Schedule A hereto. Class
A shares shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan for Class A shares allows the Fund to
spend annually up to 0.25% of its average daily net assets attributable to Class
A shares to compensate Dreyfus Service Corporation, an affiliate of Dreyfus, for
shareholder servicing activities, and the Fund's Distributor for shareholder
servicing activities and for activities or expenses primarily intended to result
in the sale of Class A shares.
Class B shares shall not be subject to a front-end sales charge, but
shall be subject to a CDSC. The amount of and provisions relating to the CDSC
are set forth on Schedule B hereto. Class B shares shall be subject to a
Distribution Plan and Service Plan each adopted pursuant to Rule 12b-1 under the
1940 Act. Under the Distribution Plan for Class B shares, the Fund pays the
Distributor for distributing the Fund's Class B shares at an aggregate annual
rate of .75 of 1% of the value of the average daily net assets of Class B. Under
the Service Plan for Class B shares, the Fund pays Dreyfus Service Corporation
or the Distributor for the provision of certain services to the holders of Class
B shares a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B.
Class C shares shall not be subject to a front-end sales charge, but
shall be subject to a CDSC. The amount of and provisions relating to the CDSC
are set forth on Schedule C hereto. Class C shares shall be subject to a
Distribution Plan and Service Plan each adopted pursuant to Rule 12b-1 under the
1940 Act. Under the Distribution Plan for Class C shares, the Fund pays the
Distributor for distributing the Fund's Class C shares at an aggregate annual
rate of .75 of 1% of the value of the average daily net assets of Class C. Under
the Service Plan for Class C shares, the Fund pays Dreyfus Service Corporation
or the Distributor for the provision of certain services to the holders of Class
C shares a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class C.
Class A, Class B and Class C shares shall vote separately with
respect to any matter relating to the Plan or Plans that effect them.
Class R shares shall not be subject to a front-end sales charge,
CDSC, distribution plan or service plan.
5. Expense Allocation: The following expenses shall be allocated, to the
extent practicable, on a Class-by-Class basis: (a) fees under the Distribution
Plans and Service Plan; (b) printing and postage expenses payable by the Fund
related to preparing and distributing materials, such as proxies, to current
shareholders of a specific Class; and (c) litigation or other legal expenses
relating solely to a specific Class.
6. Conversion Features: Class B shares shall automatically convert to Class A
shares after a specified period of time after the date of purchase, based on the
relative net asset value of each such Class without the imposition of any sales
charge, fee or other charge, as set forth on Schedule D hereto. No other Class
shall be subject to any automatic conversion feature.
7. Exchange Privileges: Class A shares shall be exchangeable only for (a) Class
A shares (however the same may be named) of certain other funds managed or
administered by Dreyfus or managed by Founders Asset Management LLC
("Founders"), an affiliate of Dreyfus; (b) Investor shares (however the same may
be named) of other funds managed or administered by Dreyfus; (c) BASIC shares
(however the same may be named) of other funds managed or administered by
Dreyfus (subject to the minimum investment amount applicable to such shares);
(d) shares of funds managed or administered by Dreyfus which do not have
separate share classes; and (e) shares of certain other funds, as specified from
time to time.
Class B shares shall be exchangeable only for (a) Class B shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders with the same CDSC structure as the Fund; and
(b) shares of certain other funds, as specified from time to time.
Class C shares shall be exchangeable only for (a) Class C shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders with the same CDSC structure as the Fund; and
(b) shares of certain other funds, as specified from time to time.
Class R shares shall be exchangeable only for (a) Class R shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders; (b) Restricted shares (however the same may
be named) of other funds managed or administered by Dreyfus; (c) BASIC shares
(however the same may be named) of other funds managed or administered by
Dreyfus (subject to the minimum investment amount applicable to such shares);
(d) shares of funds managed or administered by Dreyfus which do not have
separate share classes; and (e) shares of certain other funds, as specified from
time to time.
Dated: April 26, 1995
Revised as of August 15, 1997 and amended as of December 31, 1999
EXHIBIT I
The Dreyfus/Laurel Funds Trust -
Dreyfus Premier Managed Income Fund
SCHEDULE A
Front-End Sales Charge--Class A Shares--The public offering price for Class A
shares shall be the net asset value per share of that Class plus a sales load as
shown below:
Total Sales Load
---------------------------------
Amount of Transaction As a % of As a % of
offering net asset
price per value per
share share
-------------- --------------
Less than $50,000......................... 4.50 4.70
$50,000 to less than $100,000............. 4.00 4.20
$100,000 to less than $250,000............ 3.00 3.10
$250,000 to less than $500,000............ 2.50 2.60
$500,000 to less than $1,000,000.......... 2.00 2.00
$1,000,000 or more........................ -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1% shall be assessed
at the time of redemption of Class A shares purchased without an initial sales
charge as part of an investment of at least $1,000,000 and redeemed within one
year after purchase. The terms contained in Schedule B pertaining to the CDSC
assessed on redemptions of Class B shares (other than the amount of the CDSC and
its time periods), including the provisions for waiving the CDSC, shall be
applicable to the Class A shares subject to a CDSC. Letter of Intent and Right
of Accumulation shall apply to such purchases of Class A shares.
SCHEDULE B
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the Fund's
Distributor shall be imposed on any redemption of Class B shares which reduces
the current net asset value of such Class B shares to an amount which is lower
than the dollar amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder at the time of
redemption. No CDSC shall be imposed to the extent that the net asset value of
the Class B shares redeemed does not exceed (i) the current net asset value of
Class B shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of the shareholder's
Class B shares above the dollar amount of all payments for the purchase of Class
B shares of the Fund held by such shareholder 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 net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge
shall depend on the number of years from the time the shareholder 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 shall be aggregated and deemed to
have been made on the first day of the month. The following table sets forth the
rates of the CDSC:
CDSC as a % of
Year Since Amount Invested or
Purchase Payment Redemption
Was Made Proceeds
- ---------------- -----------
First.............................. 4.00
Second............................. 4.00
Third.............................. 3.00
Fourth............................. 3.00
Fifth.............................. 2.00
Sixth.............................. 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible rate.
Therefore, it shall 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 net asset value 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.
Waiver of CDSC--The CDSC shall 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 Internal Revenue Code of 1986, as amended (the "Code"), of the shareholder,
(b) redemptions 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 Fund's Distributor exceeds one million dollars,
(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) redemption pursuant to the Automatic Withdrawal Plan, as
described in the Fund's Prospectus. Any Fund shares subject to a CDSC which were
purchased prior to the termination of such waiver shall have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1.00% payable to the
Fund's Distributor shall be imposed on any redemption of Class C shares within
one year of the date of purchase. The basis for calculating the payment of any
such CDSC shall be the method used in calculating the CDSC for Class B shares.
In addition, the provisions for waiving the CDSC shall be those set forth for
Class B shares.
SCHEDULE D
Conversion of Class B Shares--Class B shares shall automatically convert to
Class A shares on the first Fund business day of the month in which the sixth
anniversary of the date of purchase occurs (unless otherwise specified by the
Board), based on the relative net asset values for shares of each such Class,
and shall be subject to the Distribution Plan for Class A shares but shall no
longer be subject to the Distribution Plan and Service Plan applicable to Class
B shares. (Such conversion is subject to suspension by the Board members if
adverse tax consequences might result.) At that time, Class B shares that have
been acquired through the reinvestment of dividends and distributions ("Dividend
Shares") shall be converted in the proportion that a shareholder's Class B
shares (other than Dividend Shares) converting to Class A shares bears to the
total Class B shares then held by the shareholder which were not acquired
through the reinvestment of dividends and distributions.
THE DREYFUS FAMILY OF FUNDS
(Dreyfus Premier Family of Funds - Funds Included in Exhibit I)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"), requires that the Board of an investment company desiring to offer
multiple classes of shares pursuant to said Rule adopt a plan setting forth the
differences among the classes with respect to shareholder services, distribution
arrangements, expense allocations and any related conversion features or
exchange privileges.
The Board, including a majority of the non-interested Board members,
of each of the investment companies, or series thereof, listed on Exhibit I
attached hereto as the same may be revised from time to time (each, a "Fund"),
which desires to offer multiple classes has determined that the following plan
is in the best interests of each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class A,
Class B, Class C and Class R.
2. Differences in Availability: Class A shares, Class B shares and
Class C shares shall be available only to clients of banks, brokers, dealers
and other financial institutions, except that full-time or part-time
employees or directors of The Dreyfus Corporation ("Dreyfus") or any of its
affiliates or subsidiaries, Board members of a fund advised by Dreyfus,
including members of the Fund's Board, or the spouse or minor child of any of
the foregoing, may purchase Class A shares directly through the Fund's
Distributor.
Class R shares shall be sold primarily to bank trust departments and
other financial service providers 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.
3. Differences in Services: Other than shareholder services provided under the
Distribution Plan for Class A shares and the Service Plan for Class B and Class
C shares, the services offered to shareholders of each Class shall be
substantially the same, except that Right of Accumulation, Letter of Intent and
Check Redemption Privilege shall be applicable only to holders of Class A shares
and Reinvestment Privilege shall be applicable only to holders of Class A and
Class B shares.
4. Differences in Distribution Arrangements: Class A shares shall be offered
with a front-end sales charge, as such term is defined in Rule 2830(b) of the
Conduct Rules of the National Association of Securities Dealers, Inc. ("Rule
2830(b)"), and a deferred sales charge (a "CDSC"), as such term is defined in
Rule 2830(b), may be assessed on certain redemptions of Class A shares purchased
without an initial sales charge as part of an investment of $1 million or more.
The amount of the sales charge and the amount of and provisions relating to the
CDSC pertaining to the Class A shares are set forth on Schedule A hereto. Class
A shares shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan for Class A shares allows the Fund to
spend annually up to 0.25% of its average daily net assets attributable to Class
A shares to compensate Dreyfus Service Corporation, an affiliate of Dreyfus, for
shareholder servicing activities, and the Fund's Distributor for shareholder
servicing activities and for activities or expenses primarily intended to result
in the sale of Class A shares.
Class B shares shall not be subject to a front-end sales charge, but
shall be subject to a CDSC. The amount of and provisions relating to the CDSC
are set forth on Schedule B hereto. Class B shares shall be subject to a
Distribution Plan and Service Plan each adopted pursuant to Rule 12b-1 under the
1940 Act. Under the Distribution Plan for Class B shares, the Fund pays the
Distributor for distributing the Fund's Class B shares at an aggregate annual
rate of .50 of 1% of the value of the average daily net assets of Class B. Under
the Service Plan for Class B shares, the Fund pays Dreyfus Service Corporation
or the Distributor for the provision of certain services to the holders of Class
B shares a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B.
Class C shares shall not be subject to a front-end sales charge, but
shall be subject to a CDSC. The amount of and provisions relating to the CDSC
are set forth on Schedule C hereto. Class C shares shall be subject to a
Distribution Plan and Service Plan each adopted pursuant to Rule 12b-1 under the
1940 Act. Under the Distribution Plan for Class C shares, the Fund pays the
Distributor for distributing the Fund's Class C shares at an aggregate annual
rate of .75 of 1% of the value of the average daily net assets of Class C. Under
the Service Plan for Class C shares, the Fund pays Dreyfus Service Corporation
or the Distributor for the provision of certain services to the holders of Class
C shares a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class C.
Class A, Class B and Class C shares shall vote separately with
respect to any matter relating to the Plan or Plans that effect them.
Class R shares shall not be subject to a front-end sales charge,
CDSC, distribution plan or service plan.
5. Expense Allocation: The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a) fees under
the Distribution Plans and Service Plan; (b) printing and postage expenses
payable by the Fund related to preparing and distributing materials, such as
proxies, to current shareholders of a specific Class; and (c) litigation or
other legal expenses relating solely to a specific Class.
6. Conversion Features: Class B shares shall automatically convert
to Class A shares after a specified period of time after the date of purchase,
based on the relative net asset value of each such Class without the imposition
of any sales charge, fee or other charge, as set forth on Schedule D hereto. No
other Class shall be subject to any automatic conversion feature.
7. Exchange Privileges: Class A shares shall be exchangeable only
for (a) Class A shares (however the same may be named) of certain other funds
managed or administered by Dreyfus or managed by Founders Asset Management LLC
("Founders"), an affiliate of Dreyfus; (b) Investor shares (however the same may
be named) of other funds managed or administered by Dreyfus; (c) BASIC shares
(however the same may be named) of other funds managed or administered by
Dreyfus; (subject to the minimum investment amount applicable to such shares);
(d) shares of funds managed or administered by Dreyfus which do not have
separate share classes; and (e) shares of certain other funds, as specified from
time to time.
Class B shares shall be exchangeable only for (a) Class B shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders with the same CDSC structure as the Fund; and
(b) shares of certain other funds, as specified from time to time.
Class C shares shall be exchangeable only for (a) Class C shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders with the same CDSC structure as the Fund; and
(b) shares of certain other funds, as specified from time to time.
Class R shares shall be exchangeable only for (a) Class R shares
(however the same may be named) of certain other funds managed or administered
by Dreyfus or managed by Founders; (b) Restricted shares (however the same may
be named) of other funds managed or administered by Dreyfus; (c) BASIC shares
(however the same may be named) of other funds managed or administered by
Dreyfus (subject to the minimum investment amount applicable to such shares);
(d) shares of funds managed or administered by Dreyfus which do not have
separate share classes; and (e) shares of certain other funds, as specified from
time to time.
Fund shares that are subject to a CDSC may be exchanged for shares
of Dreyfus Worldwide Dollar Money Market Fund, Inc. on the terms provided in the
Fund's then-current Prospectus.
Dated: April 24, 1997
Revised as of August 15, 1997 and amended as of December 31, 1999
EXHIBIT I
The Dreyfus/Laurel Funds Trust -
Dreyfus Premier Limited Term High Income Fund
SCHEDULE A
Front-End Sales Charge--Class A Shares--The public offering price for Class A
shares shall be the net asset value per share of that Class plus a sales load as
shown below:
Total Sales Load
---------------------------------
Amount of Transaction As a % of As a % of
offering net asset
price per value per
share share
-------------- --------------
Less than $50,000......................... 4.50 4.70
$50,000 to less than $100,000............. 4.00 4.20
$100,000 to less than $250,000............ 3.00 3.10
$250,000 to less than $500,000............ 2.50 2.60
$500,000 to less than $1,000,000.......... 2.00 2.00
$1,000,000 or more........................ -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1% shall be assessed
at the time of redemption of Class A shares purchased without an initial sales
charge as part of an investment of at least $1,000,000 and redeemed within one
year after purchase. The terms contained in Schedule B pertaining to the CDSC
assessed on redemptions of Class B shares (other than the amount of the CDSC and
its time periods), including the provisions for waiving the CDSC, shall be
applicable to the Class A shares subject to a CDSC. Letter of Intent and Right
of Accumulation shall apply to such purchases of Class A shares.
SCHEDULE B
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the Fund's
Distributor shall be imposed on any redemption of Class B shares which reduces
the current net asset value of such Class B shares to an amount which is lower
than the dollar amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder at the time of
redemption. No CDSC shall be imposed to the extent that the net asset value of
the Class B shares redeemed does not exceed (i) the current net asset value of
Class B shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of the shareholder's
Class B shares above the dollar amount of all payments for the purchase of Class
B shares of the Fund held by such shareholder 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 net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge
shall depend on the number of years from the time the shareholder 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 shall be aggregated and deemed to
have been made on the first day of the month. The following table sets forth the
rates of the CDSC:
CDSC as a % of
Year Since Amount Invested or
Purchase Payment Redemption
Was Made Proceeds
- ---------------- -----------
First.............................. 4.00
Second............................. 4.00
Third.............................. 3.00
Fourth............................. 3.00
Fifth.............................. 2.00
Sixth.............................. 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible rate.
Therefore, it shall 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 net asset value 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.
Waiver of CDSC--The CDSC shall 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 Internal Revenue Code of 1986, as amended (the "Code"), of the shareholder,
(b) redemptions 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 Fund's Distributor exceeds one million dollars,
(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 in the Fund's Prospectus. Any Fund shares subject to a CDSC which were
purchased prior to the termination of such waiver shall have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1.00% payable to the
Fund's Distributor shall be imposed on any redemption of Class C shares within
one year of the date of purchase. The basis for calculating the payment of any
such CDSC shall be the method used in calculating the CDSC for Class B shares.
In addition, the provisions for waiving the CDSC shall be those set forth for
Class B shares.
SCHEDULE D
Conversion of Class B Shares--Class B shares shall automatically convert to
Class A shares on the first Fund business day of the month in which the sixth
anniversary of the date of purchase occurs (unless otherwise specified by the
Board), based on the relative net asset values for shares of each such Class,
and shall be subject to the Distribution Plan for Class A shares but shall no
longer be subject to the Distribution Plan and Service Plan applicable to Class
B shares. (Such conversion is subject to suspension by the Board members if
adverse tax consequences might result.) At that time, Class B shares that have
been acquired through the reinvestment of dividends and distributions ("Dividend
Shares") shall be converted in the proportion that a shareholder's Class B
shares (other than Dividend Shares) converting to Class A shares bears to the
total Class B shares then held by the shareholder which were not acquired
through the reinvestment of dividends and distributions.
CONFIDENTIAL INFORMATION AND
SECURITIES TRADING POLICY
<TABLE>
<CAPTION>
<S> <C> <C>
CONTENTS
Page
- ------------------------------
INTRODUCTION .................................................... 1
PART I
APPLICABLE TO ALL ASSOCIATES
SECTION ONE
CONFIDENTIAL INFORMATION............................ 2
-Types of Confidential Information.................. 2
-Rules for Protecting Confidential Information...... 3
-Supplemental Procedures............................ 4
SECTION TWO
INSIDER TRADING AND TIPPING......................... 5
-Legal Prohibitions................................. 5
-Mellon's Policy.................................... 6
SECTION THREE
RESTRICTIONS ON THE FLOW OF INFORMATION
WITHIN MELLON (THE "CHINESE WALL").................. 7
-Rules for Maintaining the Chinese Wall............. 7
-Reporting Receipt of Material Nonpublic
Information........................................ 8
-Functions "Above the Wall"......................... 9
-Supplemental Procedures............................ 9
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS IN MELLON
SECURITIES..........................................10
-Beneficial Ownership...............................11
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS IN OTHER
SECURITIES..........................................12
SECTION SIX
CLASSIFICATION OF ASSOCIATES........................14
-Insider Risk Associate.............................14
-Investment Associate...............................15
-Other Associate....................................15
PART II
APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY ....................................................16
-Prohibition on Investments in Securities of
Financial Services Organizations...................16
-Conflict of Interest...............................17
-Preclearance for Personal Securities
Transactions.......................................17
-Personal Securities Transactions Reports...........19
-Confidential Treatment.............................19
PART III
APPLICABLE TO INVESTMENT
ASSOCIATES ONLY ....................................................20
-Special Standards of Conduct for
Investment Associates..............................20
-Preclearance for Personal Securities
Transactions.......................................21
-Personal Securities Transactions Reports...........23
-Confidential Treatment.............................24
PART IV
APPLICABLE TO OTHER
ASSOCIATES ONLY ....................................................25
-Preclearance for Personal Securities
Transactions.......................................25
-Personal Securities Transactions Reports...........25
-Restrictions on Transactions in Other
Securities.........................................25
-Confidential Treatment.............................26
PART V
APPLICABLE TO NONMANAGEMENT
BOARD MEMBERS ....................................................27
-Nonmanagement Board Member.........................27
-Standards of Conduct for Nonmanagement
Board Member.......................................27
-Preclearance for Personal Securities
Transactions.......................................28
-Personal Securities Transactions Reports...........29
-Confidential Treatment.............................29
GLOSSARY Definitions.........................................30
INDEX OF EXHIBITS ....................................................33
</TABLE>
INTRODUCTION
- ------------------------------
Mellon Bank Corporation ("Mellon") and its associates, and
the registered investment companies for which The Dreyfus
Corporation ("Dreyfus") and/or Mellon serves as investment
adviser, sub-investment adviser or administrator, are
subject to certain laws and regulations governing the use
of confidential information and personal securities
trading. Mellon has developed this Confidential Information
and Securities Trading Policy (the "Policy") to establish
specific standards to promote compliance with applicable
laws. Further, the Policy is intended to protect Mellon's
business secrets and proprietary information as well as
that of its customers and any entity for which it acts in a
fiduciary capacity.
The Policy set forth procedures and limitations which
govern the personal securities transactions of every Mellon
associate and certain other individuals associated with the
registered investment companies for which Dreyfus and/or
Mellon serves as investment adviser, sub-investment adviser
or administrator. The Policy is designed to reinforce
Mellon's reputation for integrity by avoiding even the
appearance of impropriety in the conduct of Mellon's
business.
Associates should be aware that they may be held personally
liable for any improper or illegal acts committed during
the course of their employment, and that "ignorance of the
law" is not a defense. Associates may be subject to civil
penalties such as fines, regulatory sanctions including
suspensions, as well as criminal penalties.
Associates outside the United States are also subject to
applicable laws of foreign jurisdictions, which may differ
substantially from U.S. law and which may subject such
associates to additional requirements. Such associates must
comply with applicable requirements of pertinent foreign
laws as well as with the provisions of the Policy. To the
extent any particular portion of the Policy is inconsistent
with foreign law, associates should consult the General
Counsel or the Manager of Corporate Compliance.
Any provision of this Policy may be waived or exempted at
the discretion of the Manager of Corporate Compliance. Any
such waiver or exemption will be evidenced in writing and
maintained in the Risk Management and Compliance
Department.
Associates must read the Policies and MUST COMPLY
with them. Failure to comply with the provisions
of the Policies may result in the imposition of
serious sanctions, including but not limited to
disgorgement of profits, dismissal, substantial
personal liability and referral to law enforcement
agencies or other regulatory agencies. Associates
should retain the Policies in their records for
future reference. Any questions regarding the
Policies should be referred to the Manager of
Corporate Compliance or his/her designee.
PART I - APPLICABLE TO ALL ASSOCIATES
- ------------------------------
SECTION ONE
CONFIDENTIAL INFORMATION
As an associate you may receive information about Mellon,
its customers and other parties that, for various reasons,
should be treated as confidential. All associates are
expected to strictly comply with measures necessary to
preserve the confidentiality of information.
TYPES OF CONFIDENTIAL INFORMATION - Although it is
impossible to provide an exhaustive list of information
that should remain confidential, the following are examples
of the general types of confidential information that
associates might receive in the ordinary course of carrying
out their job responsibilities.
o Information Obtained from Business Relations - An associate
might receive confidential information regarding customers
or other parties with whom Mellon has business
relationships. If released, such information could have a
significant effect on their operations, their business
reputations or the market price of their securities.
Disclosing such information could expose both the associate
and Mellon to liability for damages.
o Mellon Financial Information - An associate might receive
financial information regarding Mellon before such
information has been disclosed to the public. It is the
policy of Mellon to disclose all material corporate
information to the public in such a manner that all those
who are interested in Mellon and its securities have equal
access to the information. Disclosing such information to
unauthorized persons could subject both the associate and
Mellon to liability under the federal securities laws.
o Mellon Proprietary Information - Certain nonfinancial
information developed by Mellon - such as business plans,
customer lists, methods of doing business, computer
software, source codes, databases and related documentation
- constitutes valuable Mellon proprietary information.
Disclosure of such information to unauthorized persons
could harm, or reduce a benefit to, Mellon and could result
in liability for both the associate and Mellon.
o Mellon Examination Information - Banks and certain other
Mellon subsidiaries are periodically examined by regulatory
agencies. Certain reports made by those regulatory agencies
are the property of those agencies and are strictly
confidential. Giving information from these reports to
anyone not officially connected with Mellon is a criminal
offense.
o Portfolio Management Information - Portfolio management
information relating to investment accounts or funds
managed by Mellon or Dreyfus, including investment
decisions or strategies developed for the benefit of
investment companies advised by Dreyfus, is for the benefit
of such account or fund. Disclosure or exploitation of such
information by an associate in an unauthorized manner may
cause detriment to such accounts or funds and may subject
the associate to liability under the federal securities
laws.
RULES FOR PROTECTING CONFIDENTIAL INFORMATION - The
following are some basic rules to follow to protect
confidential information.
o Limited Communication to Outsiders - Confidential
information should not be communicated to anyone outside
Mellon, except to the extent they need to know the
information in order to provide necessary services to
Mellon.
o Limited Communication to Insiders - Confidential
information should not be communicated to other associates,
except to the extent they need to know the information to
fulfill their job responsibilities and their knowledge of
the information is not likely to result in misuse or a
conflict of interest. In this regard, Mellon has
established specific restrictions with respect to material
nonpublic information in order to separate and insulate
different functional areas and personnel within Mellon.
Please refer to Section Three, "Restrictions on The Flow of
Information Within Mellon" (The "Chinese Wall").
o Corporate Use Only - Confidential information should be
used only for Corporate purposes. Under no circumstances
may an associate use it, directly or indirectly, for
personal gain or for the benefit of any outside party who
is not entitled to such information.
o Other Customers - Where appropriate, customers should be
made aware that associates will not disclose to them other
customers' confidential information or use the confidential
information of one customer for the benefit of another.
o Notification of Confidentiality - When confidential
information is communicated to any person, either inside or
outside Mellon, they should be informed of the
information's confidential nature and the limitations on
its further communication.
o Prevention of Eavesdropping - Confidential matters should
not be discussed in public or in places, such as in
building lobbies, restaurants or elevators, where
unauthorized persons may overhear. Precautions, such as
locking materials in desk drawers overnight, stamping
material "Confidential" and delivering materials in sealed
envelopes, should be taken with written materials to ensure
they are not read by unauthorized persons.
o Data Protection - Data stored on personal computers and
diskettes should be properly secured to ensure they are not
accessed by unauthorized persons. Access to computer files
should be granted only on a need-to-know basis. At a
minimum, associates should comply with applicable Mellon
policies on electronic data security.
o Confidentiality Agreements - Confidentiality agreements to
which Mellon is a party must be complied with in addition
to, but not in lieu of, this Policy. Confidentiality
agreements that deviate from commonly used forms should be
reviewed in advance by the Legal Department.
o Contact with the Public - All contacts with institutional
shareholders or securities analysts about Mellon must be
made through the Investor Relations Division of the Finance
Department. All contacts with the media and all speeches or
other public statements made on behalf of Mellon or about
Mellon's businesses must be cleared in advance by Corporate
Affairs. In speeches and statements not made on behalf of
Mellon, care should be taken to avoid any implication that
Mellon endorses the views expressed.
SUPPLEMENTAL PROCEDURES - Mellon entities, departments,
divisions and groups should establish their own
supplemental procedures for protecting confidential
information, as appropriate. These procedures may include:
o establishing records retention and destruction policies;
o using code names;
o limiting the staffing of confidential matters (for example,
limiting the size of working groups and the use of
temporary employees, messengers and word processors); and
o requiring written confidentiality agreements from certain
associates.
Any supplemental procedures should be used only to protect
confidential information and not to circumvent appropriate
reporting and recordkeeping requirements.
SECTION TWO
INSIDER TRADING AND TIPPING
LEGAL PROHIBITIONS - Federal securities laws generally
prohibit the trading of securities while in possession of
"material nonpublic" information regarding the issuer of
those securities (insider trading). Any person who passes
along the material nonpublic information upon which a trade
is based (tipping) may also be liable.
"Material" - Information is material if there is a
substantial likelihood that a reasonable investor would
consider it important in deciding whether to buy, sell or
hold securities. Obviously, information that would affect
the market price of a security would be material. Examples
of information that might be material include:
o a proposal or agreement for a merger, acquisition or
divestiture, or for the sale or purchase of substantial
assets;
o tender offers, which are often material for the party
making the tender offer as well as for the issuer of the
securities for which the tender offer is made;
o dividend declarations or changes;
o extraordinary borrowings or liquidity problems;
o defaults under agreements or actions by creditors,
customers or suppliers relating to a company's credit
standing;
o earnings and other financial information, such as large
or unusual write-offs, write-downs, profits or losses;
o pending discoveries or developments, such as new products,
sources of materials, patents, processes, inventions or
discoveries of mineral deposits;
o a proposal or agreement concerning a financial
restructuring;
o a proposal to issue or redeem securities, or a
development with respect to a pending issuance or
redemption of securities;
o a significant expansion or contraction of operations;
o information about major contracts or increases or
decreases in orders;
o the institution of, or a development in, litigation or a
regulatory proceeding;
o developments regarding a company's senior management;
o information about a company received from a director of
that company; and
o information regarding a company's possible noncompliance
with environmental protection laws.
This list is not exhaustive. All relevant circumstances
must be considered when determining whether an item of
information is material.
"Nonpublic" - Information about a company is nonpublic if
it is not generally available to the investing public.
Information received under circumstances indicating that it
is not yet in general circulation and which may be
attributable, directly or indirectly, to the company or its
insiders is likely to be deemed nonpublic information.
If an associate can refer to some public source to show
that the information is generally available (that is,
available not from inside sources only) and that enough
time has passed to allow wide dissemination of the
information, the information is likely to be deemed public.
While information appearing in widely accessible sources -
such as newspapers - becomes public very soon after
publication, information appearing in less accessible
sources - such as regulatory filings - may take up to
several days to be deemed public. Similarly, highly complex
information might take longer to become public than would
information that is easily understood by the average
investor.
MELLON'S POLICY - Associates who possess material nonpublic
information about a company - whether that company is
Mellon, another Mellon entity, a Mellon customer or
supplier, or other company - may not trade in that
company's securities, either for their own accounts or for
any account over which they exercise investment discretion.
In addition, associates may not recommend trading in those
securities and may not pass the information along to
others, except to associates who need to know the
information in order to perform their job responsibilities
with Mellon. These prohibitions remain in effect until the
information has become public.
Associates who have investment responsibilities should take
appropriate steps to avoid receiving material nonpublic
information. Receiving such information could create severe
limitations on their ability to carry out their
responsibilities to Mellon's fiduciary customers.
Associates managing the work of consultants and temporary
employees who have access to the types of confidential
information described in this Policy are responsible for
ensuring that consultants and temporary employees are aware
of Mellon's policy and the consequences of noncompliance.
Questions regarding Mellon's policy on material nonpublic
information, or specific information that might be subject
to it, should be referred to the General Counsel.
SECTION THREE
RESTRICTIONS ON THE FLOW OF
INFORMATION WITHIN MELLON
(THE "CHINESE WALL")
As a diversified financial services organization, Mellon
faces unique challenges in complying with the prohibitions
on insider trading and tipping of material nonpublic
information and misuse of confidential information. This is
because one Mellon unit might have material nonpublic
information about a company while other Mellon units may
have a desire, or even a fiduciary duty, to buy or sell
that company's securities or recommend such purchases or
sales to customers. To engage in such broad-ranging
financial services activities without violating laws or
breaching Mellon's fiduciary duties, Mellon has established
a "Chinese Wall" policy applicable to all associates. The
"Chinese Wall" separates the Mellon units or individuals
that are likely to receive material nonpublic information
(Potential Insider Functions) from the Mellon units or
individuals that either trade in securities - for Mellon's
account or for the accounts of others - or provide
investment advice (Investment Functions).
Examples of Potential Insider Functions - Potential Insider
Functions include, among others, certain commercial
lending, corporate finance, and credit policy areas.
Insider Risk Associates (see Section Six, "Insider Risk
Associates") should consider themselves to be in Potential
Insider Functions unless their particular job
responsibilities clearly indicate otherwise.
Examples of Investment Functions - Investment Functions
include, among others, securities sales and trading,
investment management and advisory services, investment
research and various trust or fiduciary functions.
RULES FOR MAINTAINING THE "CHINESE WALL" - Without the
prior approval of the General Counsel, material nonpublic
information obtained by anyone in a Potential Insider
Function should not be communicated to anyone in an
Investment Function. To reduce the risk of material
nonpublic information being communicated, communications
between these associates in these functions must be limited
to the maximum extent consistent with valid business needs.
Particular rules -
o File Restrictions - Associates in Investment Functions must
not have access to commercial credit files, corporate
finance files, or any other Potential Insider Function
files that might contain material nonpublic information.
All such files that contain material nonpublic information
should be marked as "Confidential" and, if feasible,
segregated from nonconfidential files.
o Electronic Data - Associates in Investment Functions must
not have access to personal computer or word processing
files of associates in Potential Insider Functions.
o Meetings - Associates in Investment Functions must not
attend meetings between customers and associates in
Potential Insider Functions unless appropriate steps have
been taken to ensure that material nonpublic information
will not be disclosed or discussed.
o Committee Service - Without the prior approval of the
General Counsel, associates other than those "Above the
Wall" (see page 9) must not serve simultaneously on a
committee having responsibility for any Investment Function
and a committee having responsibility for any Potential
Insider Function.
o Information Requests - Requests for nonmaterial information
or public information across the "Chinese Wall" should be
made in writing to an appropriate associate in the
applicable area. Associates sending or receiving such a
request should resolve any questions regarding the
materiality or nonpublic nature of the requested
information by consulting their department head, who will
contact the General Counsel, as appropriate.
o Information Backflow - Associates should take care to avoid
inadvertent backflow of information that may be interpreted
as the prohibited communication of material nonpublic
information. For example, the mere fact that someone in a
Potential Insider Function, such as a mergers and
acquisitions specialist, requests information from an
associate in an Investment Function could give the latter
person a clue as to possible material developments
affecting a customer.
o Customers - Associates in Investment Functions must not
state or imply to customers that associates making
decisions or recommendations will have the benefit of
information from Mellon's Potential Insider Functions. When
appropriate, associates should inform customers of Mellon's
"Chinese Wall" policy.
o Conflicts of Interest - Associates should not receive or
pass on any information that would create an undue risk of
Mellon or any associate having a conflict of interest or
breaching a fiduciary obligation.
REPORTING RECEIPT OF MATERIAL NONPUBLIC INFORMATION -
Associates in Investment Functions who receive any
suspected material nonpublic information must report such
receipt promptly to their department or entity head. A
department or entity head who receives information believed
to be material and nonpublic should report the matter
promptly to the General Counsel. If the General Counsel
determines that the information is material and nonpublic,
the affected department or entity will:
o immediately suspend all trading in the securities of the
issuer to which the information applies, as well as all
recommendations with respect to such securities. The
suspension will remain in effect as long as the information
remains both material and nonpublic.
O notify the General Counsel before resuming transactions or
recommendations in the affected securities. The General
Counsel will advise as to possible further steps, including
ascertaining the validity and nonpublic nature of the
information with the issuer of the securities; requesting
the issuer of the securities, or other appropriate parties,
to disseminate the information promptly to the public if
the information is valid and nonpublic; and publishing the
information.
In certain circumstances, the department or entity head may
be able to demonstrate conclusively that the receipt of the
material nonpublic information has been confined to an
individual or small group of individuals and that measures
other than those described above will comparably reduce the
likelihood of trading on the basis of the information.
These measures might include temporarily relieving
individuals of responsibility for any Investment Functions
and preventing any contact between those individuals and
associates in Investment Functions. In these circumstances,
the department head, with the approval of the General
Counsel, may take those measures rather than the measures
described above.
FUNCTIONS "ABOVE THE WALL" - Some functions at Mellon are
deemed to be "Above the Wall." For example, members of
senior management, Auditing, Risk Management and
Compliance, and the Legal Department will typically need to
have access to information on both sides of the "Chinese
Wall" to carry out their job responsibilities. These
individuals cannot rely on the procedural safeguards of the
"Chinese Wall" and, therefore, need to be particularly
careful to avoid any improper use or dissemination of
material nonpublic information.
SUPPLEMENTAL PROCEDURES - As appropriate, certain Mellon
departments or areas, such as Mellon Trust, should
establish their own procedures to reduce the possibility of
information being communicated to associates who should not
have access to that information.
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS
IN MELLON SECURITIES
Associates who engage in transactions involving Mellon
securities should be aware of their unique responsibilities
with respect to such transactions arising from the
employment relationship and should be sensitive to even the
appearance of impropriety.
The following restrictions apply to all transactions in
Mellon's publicly traded securities occurring in the
associate's own account and in all other accounts over
which the associate could be expected to exercise influence
or control (see provisions under "Beneficial Ownership"
below for a more complete discussion of the accounts to
which these restrictions apply). These restrictions are to
be followed in addition to any restrictions that apply to
particular officers or directors (such as restrictions
under Section 16 of the Securities Exchange Act of 1934).
o Short Sales - Short sales of Mellon securities by
associates are prohibited.
o Sales Within 60 Days of Purchase - Sales of Mellon
securities within 60 days of acquisition are prohibited.
For purposes of the 60-day holding period, securities will
be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the
other, or if the value of one is expressly dependent on the
value of the other (e.g., derivative securities).
In cases of extreme hardship, associates (other than senior
management) may obtain permission to dispose of Mellon
securities acquired within 60 days of the proposed
transaction, provided the transaction is pre-cleared with
the Manager of Corporate Compliance and any profits earned
are disgorged in accordance with procedures established by
senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period
restriction in the event of severe market disruption.
o Margin Transactions - Purchases on margin of Mellon's
publicly traded securities by associates is prohibited.
Margining Mellon securities in connection with a cashless
exercise of an employee stock option through the Human
Resources Department is exempt from this restriction.
Further, Mellon securities may be used to collateralize
loans or the acquisition of securities other than those
issued by Mellon.
o Option Transactions - Option transactions involving
Mellon's publicly traded securities are prohibited.
Transactions under Mellon's Long-Term Incentive Plan or
other associate option plans are exempt from this
restriction.
o Major Mellon Events - Associates who have knowledge of
major Mellon events that have not yet been announced are
prohibited from buying and selling Mellon's publicly traded
securities before such public announcements, even if the
associate believes the event does not constitute material
nonpublic information.
o Mellon Blackout Period - Associates are prohibited from
buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter. In cases of extreme hardship, associates
(other than senior management) may request permission from
the Manager of Corporate Compliance to dispose of Mellon
securities during the blackout period.
BENEFICIAL OWNERSHIP - The provisions discussed above apply
to transactions in the associate's own name and to all
other accounts over which the associate could be expected
to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom
substantial support is contributed;
o accounts of any other member of the associate's household
(e.g., a relative living in the same home);
o trust accounts for which the associate acts as trustee or
otherwise exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by
the associate;
o arrangements similar to trust accounts that are established
for bona fide financial purposes and benefit the associate;
and
o any other account for which the associate is the beneficial
owner (see Glossary for a more complete legal definition of
"beneficial owner").
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS
IN OTHER SECURITIES
Purchases or sales by an associate of the securities of
issuers with which Mellon does business, or other third
party issuers, could result in liability on the part of
such associate. Associates should be sensitive to even the
appearance of impropriety in connection with their personal
securities transactions. Associates should refer to the
provisions under "Beneficial Ownership" (Section Four,
"Restrictions on Transactions in Mellon Securities"), which
are equally applicable to the following provisions.
The Mellon Code of Conduct contains certain restrictions on
investments in parties that do business with Mellon.
Associates should refer to the Code of Conduct and comply
with such restrictions in addition to the restrictions and
reporting requirements set forth below.
The following restrictions apply to all securities
transactions by associates:
o Credit or Advisory Relationship - Associate may not buy or
sell securities of a company if they are considering
granting, renewing or denying any credit facility to that
company or acting as an adviser to that company with
respect to its securities. In addition, lending associates
who have assigned responsibilities in a specific industry
group are not permitted to trade securities in that
industry. This prohibition does not apply to transactions
in securities issued by open-end investment companies.
o Customer Transactions - Trading for customers and Mellon
accounts should always take precedence over associates'
transactions for their own or related accounts.
o Front Running - Associates may not engage in "front
running," that is, the purchase or sale of securities for
their own accounts on the basis of their knowledge of
Mellon's trading positions or plans.
o Initial Public Offerings - Mellon prohibits its associates
from acquiring any securities in an initial public offering
("IPO").
o Margin Transactions - Margin trading is a highly leveraged
and relatively risky method of investing that can create
particular problems for financial services employees. For
this reason, all associates are urged to avoid margin
trading.
Prior to establishing a margin account, the associate must
obtain the written permission of the Manager of Corporate
Compliance. Any associate having a margin account prior to
the effective date of this Policy must notify the Manager
of Corporate Compliance of the existence of such account.
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on that account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the account directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of employee stock options. In
addition, products may be offered by a broker/dealer that,
because of their characteristics, are considered margin
accounts but have been determined by the Manager of
Corporate Compliance to be outside the scope of this Policy
(e.g., a Cash Management Account which provides overdraft
protection for the customer). Any questions regarding the
establishment, use and reporting of margin accounts should
be directed to the Manager of Corporate Compliance.
Examples of an instruction letter to a broker are shown in
Exhibits B1 and B2.
o Material Nonpublic Information - Associates possessing
material nonpublic information regarding any issuer of
securities must refrain from purchasing or selling
securities of that issuer until the information becomes
public or is no longer considered material.
o Naked Options, Excessive Trading - Mellon discourages all
associates from engaging in short-term or speculative
trading, in trading naked options, in trading that could be
deemed excessive or in trading that could interfere with an
associate's job responsibilities.
o Private Placements - Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Preclearance
Compliance Officer (applicable only to Investment
Associates), the Manager of Corporate Compliance and the
associate's department head. Approval must be given by all
appropriate aforementioned persons for the acquisition to
be considered approved. After receipt of the necessary
approvals and the acquisition, associates are required to
disclose that investment when they participate in any
subsequent consideration of an investment in the issuer for
an advised account. Final decision to acquire such
securities for an advised account will be subject to
independent review.
o Scalping - Associates may not engage in "scalping," that
is, the purchase or sale of securities for their own or
Mellon's accounts on the basis of knowledge of customers'
trading positions or plans or Mellon's forthcoming
investment recommendations.
o Short-Term Trading - Associates are discouraged from
purchasing and selling, or from selling and purchasing, the
same (or equivalent) securities within 60 calendar days.
With respect to Investment Associates only, any profits
realized on such short-term trades must be disgorged in
accordance with procedures established by senior
management.
SECTION SIX
CLASSIFICATION OF ASSOCIATES
Associates are engaged in a wide variety of activities for
Mellon. In light of the nature of their activities and the
impact of federal and state laws and the regulations
thereunder, the Policy imposes different requirements and
limitations on associates based on the nature of their
activities for Mellon. To assist the associates in
complying with the requirements and limitations imposed on
them in light of their activities, associates are
classified into one of three categories: Insider Risk
Associate, Investment Associate and Other Associate.
Appropriate requirements and limitations are specified in
the Policy based upon the associate's classification.
INSIDER RISK ASSOCIATE -
You are considered to be an Insider Risk Associate if you
are:
o employed in any of the following departments or functional
areas, however named, of a Mellon entity other than Dreyfus
(see Glossary for definition of "Dreyfus"):
<TABLE>
<CAPTION>
<S> <C>
- Auditing - International
- Capital Markets - Leasing
- Corporate Affairs - Legal
- Credit Policy - Mellon Business Credit
- Credit Recovery - Middle Market
- Credit Review - Portfolio and Funds Management
- Domestic Corporate Banking - Risk Management and Compliance
- Finance - Strategic Planning
- Institutional Banking - Wholesale, Administration and
Operations
</TABLE>
O a member of the Mellon Senior Management Committee,
provided that those members of the Mellon Senior Management
Committee who have management responsibility for fiduciary
activities or who routinely have access to information
about customers' securities transactions are considered to
be Investment Associates and are subject to those
provisions of the Policy pertaining to Investment
Associates;
o employed by a broker/dealer subsidiary of a Mellon
entity other than Dreyfus;
o an associate in the Stock Transfer business unit and have
been specifically designated as an Insider Risk Associate
by the Manager of Corporate Compliance; or
o an associate specifically designated as an Insider Risk
Associate by the Manager of Corporate Compliance.
INVESTMENT ASSOCIATE -
You are considered to be an Investment Associate if you
are:
o a member of Mellon's Senior Management Committee who, as
part of his/her usual duties, has management responsibility
for fiduciary activities or routinely has access to
information about customers' securities transactions;
o a Dreyfus associate;
o an associate of a Mellon entity registered under the
Investment Advisers Act of 1940;
o employed in the trust area of Mellon and:
- have the title of Vice President, First Vice President
or Senior Vice President; or
- have access to material, confidential information
regarding securities transactions by or on behalf of
Mellon customers; or
o an associate specifically designated as an Investment
Associate by the Manager of Corporate Compliance.
OTHER ASSOCIATE -
You are considered to be an Other Associate if you are an
associate of Mellon Bank Corporation or any of its direct
or indirect subsidiaries who is not either an Insider Risk
Associate or an Investment Associate.
PART II - APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY
- ------------------------------
PROHIBITION ON INVESTMENTS IN SECURITIES OF FINANCIAL
SERVICES ORGANIZATIONS
You are prohibited from acquiring any security issued by a
financial services organization if you are:
o a member of the Mellon Senior Management Committee. For
purposes of this restriction only, this prohibition also
applies to those members of the Mellon Senior Management
Committee who are considered Investment Associates.
o employed in any of the following departments of a Mellon
entity other than Dreyfus (see Glossary for definition of
"Dreyfus"):
- Strategic Planning - Finance
- Institutional Banking - Legal
o an associate specifically designated by the Manager of
Corporate Compliance and informed that this prohibition is
applicable to you.
Financial Services Organizations - The term "security
issued by a financial services organization" includes any
security issued by:
<TABLE>
<CAPTION>
<S> <C>
- Commercial Banks - Bank Holding Companies
(other than Mellon) (other than Mellon)
- Thrifts - Savings and Loan Associations
- Insurance Companies - Broker/Dealers
- Investment Advisory Companies - Transfer Agents
- Shareholder Servicing - Other Depository
Companies Institutions
</TABLE>
The term "securities issued by a financial services
organization" DOES NOT INCLUDE securities issued by mutual
funds, variable annuities or insurance policies. Further,
for purposes of determining whether a company is a
financial services organization, subsidiaries and parent
companies are treated as separate issuers.
Effective Date - The foregoing restrictions will be
effective upon adoption of this Policy. Securities of
financial services organizations properly acquired before
the later of the effective date of this Policy or the date
of hire may be maintained or disposed of at the owner's
discretion.
Additional securities of a financial services organization
acquired through the reinvestment of the dividends paid by
such financial services organization through a dividend
reinvestment program (DRIP) are not subject to this
prohibition, provided your election to participate in the
DRIP predates the later of the effective date of this
Policy or date of hire. Optional cash purchases through a
DRIP are subject to this prohibition.
Within 30 days of the later of the effective date of this
Policy or date of becoming subject to this prohibition, all
holdings of securities of financial services organizations
must be disclosed in writing to the Manager of Corporate
Compliance. Periodically, you will be asked to file an
updated disclosure of all your holdings of securities of
financial services organizations.
CONFLICT OF INTEREST - No Insider Risk Associate may engage
in or recommend any securities transaction that places, or
appears to place, his or her own interests above those of
any customer to whom investment services are rendered,
including mutual funds and managed accounts, or above the
interests of Mellon.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Insider Risk Associates must notify the Manager of
Corporate Compliance in writing and receive preclearance
before they engage in any purchase or sale of a security.
Insider Risk Associates should refer to the provisions
under "Beneficial Ownership" (Section Four, "Restrictions
on Transactions in Mellon Securities"), which are equally
applicable to these provisions.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
O purchases or sales of Exempt Securities (see Glossary);
o purchases or sales of municipal bonds;
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (e.g., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Manager of Corporate Compliance, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
o transactions that are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the Manager of
Corporate Compliance);
o the automatic reinvestment of dividends under a DRIP
(preclearance is required for optional cash purchases under
a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
O those situations where the Manager of Corporate Compliance
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Manager of Corporate Compliance by completing a
Preclearance Request Form (see Exhibit C1).
The Manager of Corporate Compliance will notify the Insider
Risk Associate whether the request is approved or denied,
without disclosing the reason for such approval or denial.
Notifications may be given in writing or verbally by the
Manager of Corporate Compliance to the Insider Risk
Associate. A record of such notification will be maintained
by the Manager of Corporate Compliance. However, it shall
be the responsibility of the Insider Risk Associate to
obtain a written record of the Manager of Corporate
Compliance's notification within 24 hours of such
notification. The Insider Risk Associate should retain a
copy of this written record.
As there could be many reasons for preclearance being
granted or denied, Insider Risk Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Insider Risk Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
O preclearance requests should not be made for a
transaction that the Insider Risk Associate does not
intend to make; and
o Insider Risk Associates should not discuss with anyone
else, inside or outside Mellon, the response they received
to a preclearance request.
Every Insider Risk Associate must follow these procedures
or risk serious sanctions, including dismissal. If you have
any questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - The Manager of Corporate Compliance will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Insider Risk Associates.
Restricted List(s) will not be distributed outside of the
Risk Management and Compliance Department. From time to
time, such trading restrictions may be appropriate to
protect Mellon and its Insider Risk Associates from
potential violations, or the appearance of violations, of
securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information to avoid unwarranted
inferences.
To assist the Manager of Corporate Compliance in
identifying companies that may be appropriate for inclusion
on the Restricted List, the department heads of sections in
which Insider Risk Associates are employed will inform the
Manager of Corporate Compliance in writing of any companies
they believe should be included on the Restricted List,
based upon facts known or readily available to such
department heads. Although the reasons for inclusion on the
Restricted List may vary, they could typically include the
following:
o Mellon is involved as a lender, investor or adviser in a
merger, acquisition or financial restructuring involving
the company;
o Mellon is involved as a selling shareholder in a public
distribution of the company's securities;
o Mellon is involved as an agent in the distribution of the
company's securities;
o Mellon has received material nonpublic information on the
company;
o Mellon is considering the exercise of significant
creditors' rights against the company; or
o The company is a Mellon borrower in Credit Recovery.
Department heads of sections in which Insider Risk
Associates are employed are also responsible for notifying
the Manager of Corporate Compliance in writing of any
change in circumstances making it appropriate to remove a
company from the Restricted List.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Insider Risk Associates are
required to instruct their brokers to submit directly to
the Manager of Corporate Compliance copies of all trade
confirmations and statements relating to their account. An
example of an instruction letter to a broker is contained
in Exhibit B1.
o Report of Transactions in Mellon Securities - Insider Risk
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
PART III - APPLICABLE TO
INVESTMENT ASSOCIATES ONLY
- ------------------------------
Because of their particular responsibilities, Investment
Associates are subject to different preclearance and
personal securities reporting requirements as discussed
below.
SPECIAL STANDARDS OF CONDUCT FOR INVESTMENT ASSOCIATES
Conflict of Interest - No Investment Associate may
recommend a securities transaction for a Mellon customer to
whom a fiduciary duty is owed, or for Mellon, without
disclosing any interest he or she has in such securities or
issuer (other than an interest in publicly traded
securities where the total investment is equal to or less
than $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Investment Associate in
such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Investment Associate or
any party in which the Investment Associate has a
beneficial ownership interest (see "Beneficial Ownership"
in Section Four, "Restrictions On Transactions in Mellon
Securities").
Portfolio Information - No Investment Associate may divulge
the current portfolio positions, or current or anticipated
portfolio transactions, programs or studies, of Mellon or
any Mellon customer to anyone unless it is properly within
his or her job responsibilities to do so.
Material Nonpublic Information - No Investment Associate
may engage in or recommend a securities transaction, for
his or her own benefit or for the benefit of others,
including Mellon or its customers, while in possession of
material nonpublic information regarding such securities.
No Investment Associate may communicate material nonpublic
information to others unless it is properly within his or
her job responsibilities to do so.
Short-Term Trading - Any Investment Associate who purchases
and sells, or sells and purchases, the same (or equivalent)
securities within any 60-calendar-day period is required to
disgorge all profits realized on such transaction in
accordance with procedures established by senior
management. For this purpose, securities will be deemed to
be equivalent if one is convertible into the other, if one
entails a right to purchase or sell the other, or if the
value of one is expressly dependent on the value of the
other (e.g., derivative securities).
Additional Restrictions For Dreyfus Associates and
Associates of Mellon Entities Registered Under The
Investment Advisers Act of 1940 ONLY ("40 Act
Associates")
o Outside Activities - No 40 Act associate may serve on the
board of directors/trustees or as a general partner of any
publicly traded company (other than Mellon) without the
prior approval of the Manager of Corporate Compliance.
o Gifts - All 40 Act associates are prohibited from accepting
gifts from outside companies, or their representatives,
with an exception for gifts of (1) a de minimis value and
(2) an occasional meal, a ticket to a sporting event or the
theater, or comparable entertainment for the 40 Act
associate and, if appropriate, a guest, which is neither so
frequent nor extensive as to raise any question of
impropriety. A gift shall be considered de minimis if it
does not exceed an annual amount per person fixed
periodically by the National Association of Securities
Dealers, which is currently $100 per person.
o Blackout Period - 40 Act associates will not be given
clearance to execute a transaction in any security that is
being considered for purchase or sale by an affiliated
investment company, managed account or trust, for which a
pending buy or sell order for such affiliated account is
pending, and for two business days after the transaction in
such security for such affiliated account has been
effected. This provision does not apply to transactions
effected or contemplated by index funds.
In addition, portfolio managers for the investment
companies are prohibited from buying or selling a security
within seven calendar days before and after such investment
company trades in that security. Any violation of the
foregoing will require the violator to disgorge all profit
realized with respect to such transaction.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Investment Associates must notify the Preclearance
Compliance Officer (see Glossary) in writing and receive
preclearance before they engage in any purchase or sale of
a security.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
o purchases or sales of "Exempt Securities" (see Glossary);
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (i.e., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Preclearance Compliance Officer, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
O transactions which are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an
associate stock option if the sale is part of a "netting of
shares" or "cashless exercise" administered by the Human
Resources Department (for which the Human Resources
Department will forward information to the manager of
Corporate Compliance);
o purchases which are part of an automatic reinvestment of
dividends under a DRIP (Preclearance is required for
optional cash purchases under a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described
above; and/or
o those situations where the Preclearance Compliance Officer
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Preclearance Compliance Officer by completing a
Preclearance Request Form. (Investment Associates other
than Dreyfus associates are to use the Preclearance Request
Form shown as Exhibit C1. Dreyfus associates are to use the
Preclearance Request Form shown as Exhibit C2.)
The Preclearance Compliance Officer will notify the
Investment Associate whether the request is approved or
denied without disclosing the reason for such approval or
denial.
Notifications may be given in writing or verbally by the
Preclearance Compliance Officer to the Investment
Associate. A record of such notification will be maintained
by the Preclearance Compliance Officer. However, it shall
be the responsibility of the Investment Associate to obtain
a written record of the Preclearance Compliance Officer's
notification within 24 hours of such notification. The
Investment Associate should retain a copy of this written
record.
As there could be many reasons for preclearance being
granted or denied, Investment Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Investment Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
day on which preclearance is given;
o preclearance requests should not be made for a transaction
that the Investment Associate does not intend to make; and
o Investment Associates should not discuss with anyone else,
inside or outside Mellon, the response the Investment
Associate received to a preclearance request.
Every Investment Associate must follow these procedures or
risk serious sanctions, including dismissal. If you have
any questions about these procedures, consult the
Preclearance Compliance Officer. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - Each Preclearance Compliance Officer will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Investment Associates in their
area. From time to time, such trading restrictions may be
appropriate to protect Mellon and its Investment Associates
from potential violations, or the appearance of violations,
of securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information in order to avoid
unwarranted inferences.
In order to assist the Preclearance Compliance Officer in
identifying companies that may be appropriate for inclusion
on the Restricted List, the head of the
entity/department/area in which Investment Associates are
employed will inform the appropriate Preclearance
Compliance Officer in writing of any companies that they
believe should be included on the Restricted List based
upon facts known or readily available to such department
heads.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Investment Associates are required
to instruct their brokers to submit directly to the Manager
of Corporate Compliance copies of all trade confirmations
and statements relating to their account. Examples of
instruction letters to a broker are contained in Exhibits
B1 and B2.
o Report of Transactions in Mellon Securities - Investment
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan, and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
o Statement of Securities Holdings - Within ten days of
receiving this Policy and on an annual basis thereafter,
all Investment Associates must submit to the Manager of
Corporate Compliance a statement of all securities in which
they presently have any direct or indirect beneficial
ownership other than Exempt Securities, as defined in the
Glossary. Investment Associates should refer to "Beneficial
Ownership" in Section Four, "Restrictions on Transactions
in Mellon Securities," which is also applicable to
Investment Associates. Such statements should be in the
format shown in Exhibit D. The annual report must be
submitted by January 31 and must report all securities
holdings other than Exempt Securities. The annual statement
of securities holdings contains an acknowledgment that the
Investment Associate has read and complied with this
Policy.
o Special Requirement with Respect to Affiliated Investment
Companies - The portfolio managers, research analysts and
other Investment Associates specifically designated by the
Manager of Corporate Compliance are required within ten
calendar days of receiving this Policy (and by no later
than ten calendar days after the end of each calendar
quarter) to report every transaction in the securities
issued by an affiliated investment company occurring in an
account in which the Investment Associate has a beneficial
ownership interest. The quarterly reporting requirement may
be satisfied by notifying the Manager of Corporate
Compliance of the name of the investment company, account
name and account number for which such quarterly reports
must be submitted.
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES, AND BY
OTHER PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
DOCUMENTS RECEIVED FROM DREYFUS ASSOCIATES ARE ALSO
AVAILABLE FOR INSPECTION BY THE BOARDS OF DIRECTORS OF
DREYFUS AND BY THE BOARDS OF DIRECTORS (OR TRUSTEES OR
MANAGING GENERAL PARTNERS, AS APPLICABLE) OF THE INVESTMENT
COMPANIES MANAGED OR ADMINISTERED BY DREYFUS.
PART IV - APPLICABLE TO
OTHER ASSOCIATES ONLY
- ------------------------------
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - Except
for private placements, Other Associates are permitted to
engage in personal securities transactions without
obtaining prior approval from the Manager of Corporate
Compliance (for preclearance of private placements, use the
Preclearance Request Form shown as Exhibit C1.)
PERSONAL SECURITIES TRANSACTIONS REPORTS - Other Associates
are not required to report their personal securities
transactions other than margin transactions and
transactions involving Mellon securities as discussed
below. Other Associates are required to instruct their
brokers to submit directly to the Manager of Corporate
Compliance copies of all confirmations and statements
pertaining to margin accounts. Examples of an instruction
letter to a broker are shown in Exhibit B1.
Report of Transactions in Mellon Securities - Other
Associates must report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities. Purchases and sales of
Mellon securities include the following:
o DRIP Optional Cash Purchases - Optional cash purchases
under Mellon's Dividend Reinvestment and Common Stock
Purchase Plan (the "Mellon DRIP").
o Stock Options - The sale of stock received upon the
exercise of an associate stock option unless the sale is
part of a "netting of shares" or "cashless exercise"
administered by the Human Resources Department (for which
the Human Resources Department will forward information to
the Manager of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's
Restricted Stock Award Plan and the receipt or exercise of
options under Mellon's Long-Term Profit Incentive Plan are
not considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
RESTRICTIONS ON TRANSACTIONS IN OTHER SECURITIES
Margin Transactions - Prior to establishing a margin
account, Other Associates must obtain the written
permission of the Manager of Corporate Compliance. Other
Associates having a margin account prior to the effective
date of this Policy must notify the Manager of Corporate
Compliance of the existence of such account.
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance
as an interested party on each account. Associates must
ensure that the Manager of Corporate Compliance promptly
receives copies of all trade confirmations and statements
relating to the accounts directly from the broker. If
requested by a brokerage firm, please contact the Manager
of Corporate Compliance to obtain a letter (sometimes
referred to as a "407 letter") granting permission to
maintain a margin account. Trade confirmations and
statements are not required on margin accounts established
at Dreyfus Investment Services Corporation for the sole
purpose of cashless exercises of Mellon employee stock
options. In addition, products may be offered by a
broker/dealer that, because of their characteristics, are
considered margin accounts but have been determined by the
Manager of Corporate Compliance to be outside the scope of
this Policy (e.g., a Cash Management account which provides
overdraft protection for the customer). Any questions
regarding the establishment, use and reporting of margin
accounts should be directed to the Manager of Corporate
Compliance. An example of an instruction letter to a broker
is shown in Exhibit B1.
Private Placements - Other Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Manager of
Corporate Compliance and the Associate's department head.
Approval must be given by both of the aforementioned
persons for the acquisition to be considered approved.
As there could be many reasons for preclearance being
granted or denied, Other Associates should not infer from
the preclearance response anything regarding the security
for which preclearance was requested.
Although making a preclearance request does not obligate an
Other Associate to do the transaction, it should be noted
that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
o preclearance requests should not be made for a transaction
that the Other Associate does not intend to make; and
o Other Associates should not discuss with anyone else,
inside or outside Mellon, the response they received to a
preclearance request.
Every Other Associate must follow these procedures or risk
serious sanctions, including dismissal. If you have any
questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE,
ALL PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS
OF SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
PART V - APPLICABLE TO
NONMANAGEMENT BOARD MEMBER
- ------------------------------
NONMANAGEMENT BOARD MEMBER -
You are considered to be a Nonmanagement Board Member if
you are:
o a director of Dreyfus who is not also an officer or
employee of Dreyfus ("Dreyfus Board Member"); or
o a director, trustee or managing general partner of any
investment company who is not also an officer or employee
of Dreyfus ("Mutual Fund Board Member").
The term "Independent" Mutual Fund Board Member means those
Mutual Fund Board Members who are not deemed "interested
persons" of an investment company, as defined by the
Investment Company Act of 1940, as amended.
STANDARDS OF CONDUCT FOR NONMANAGEMENT BOARD MEMBER
Outside Activities - Nonmanagement Board Members are
prohibited from:
o accepting nomination or serving as a director, trustee or
managing general partner of an investment company not
advised by Dreyfus, without the express prior approval of
the board of directors of Dreyfus and the board of
directors/trustees or managing general partners of the
pertinent Dreyfus-managed fund(s) for which a Nonmanagement
Board Member serves as a director, trustee or managing
general partner;
o accepting employment with or acting as a consultant to any
person acting as a registered investment adviser to an
investment company without the express prior approval of
the board of directors of Dreyfus;
o owning Mellon securities if the Nonmanagement Board Member
is an "Independent" Mutual Fund Board Member, (since that
would destroy his or her "independent" status); and/or
o buying or selling Mellon's publicly traded securities
during a blackout period, which begins the 16th day of the
last month of each calendar quarter and ends three business
days after Mellon publicly announces the financial results
for that quarter.
Insider Trading and Tipping - The provisions set forth in
Section Two, "Insider Trading and Tipping," are applicable
to Nonmanagement Board Members.
Conflict of Interest - No Nonmanagement Board Member may
recommend a securities transaction for Mellon, Dreyfus or
any Dreyfus-managed fund without disclosing any interest he
or she has in such securities or issuer thereof (other than
an interest in publicly traded securities where the total
investment is less than or equal to $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Nonmanagement Board
Member in such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Nonmanagement Board Member
or any party in which the Nonmanagement Board Member has a
beneficial ownership interest (see "Beneficial Ownership",
Section Four, "Restrictions on Transaction in Mellon
Securities").
Portfolio Information - No Nonmanagement Board Member may
divulge the current portfolio positions, or current or
anticipated portfolio transactions, programs or studies, of
Mellon, Dreyfus or any Dreyfus-managed fund, to anyone
unless it is properly within his or her responsibilities as
a Nonmanagement Board Member to do so.
Material Nonpublic Information - No Nonmanagement Board
Member may engage in or recommend any securities
transaction, for his or her own benefit or for the benefit
of others, including Mellon, Dreyfus or any Dreyfus-managed
fund, while in possession of material nonpublic
information. No Nonmanagement Board Member may communicate
material nonpublic information to others unless it is
properly within his or her responsibilities as a
Nonmanagement Board Member to do so.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS -
Nonmanagement Board Members are permitted to engage in
personal securities transactions without obtaining prior
approval from the Preclearance Compliance Officer.
PERSONAL SECURITY TRANSACTIONS REPORTS -
o "Independent" Mutual Fund Board Members - Any "Independent"
Mutual Fund Board Members, as defined above, who effects a
securities transaction where he or she knew, or in the
ordinary course of fulfilling his or her official duties
should have known, that during the 15-day period
immediately preceding or after the date of such
transaction, the same security was purchased or sold, or
was being considered for purchase or sale by Dreyfus
(including any investment company or other account managed
by Dreyfus), are required to report such personal
securities transaction. In the event a personal securities
transaction report is required, it must be submitted to the
Preclearance Compliance Officer not later than ten days
after the end of the calendar quarter in which the
transaction to which the report relates was effected. The
report must include the date of the transaction, the title
and number of shares or principal amount of the security,
the nature of the transaction (e.g., purchase, sale or any
other type of acquisition or disposition), the price at
which the transaction was effected and the name of the
broker or other entity with or through whom the transaction
was effected. This reporting requirement can be satisfied
by sending a copy of the confirmation statement regarding
such transactions to the Preclearance Compliance Officer
within the time period specified. Notwithstanding the
foregoing, personal securities transaction reports are not
required with respect to any securities transaction
described in "Exemption from the Requirement to Preclear"
in Part III.
o Dreyfus Board Members and "Interested" Mutual Fund Board
Members - Dreyfus Board Members and Mutual Fund Board
Members who are "interested persons" of an investment
company, as defined by the Investment Company Act of 1940,
are required to report their personal securities
transactions. Personal securities transaction reports are
required with respect to any securities transaction other
than those described in "Exemptions from Requirement to
Preclear" on Page 21. Personal securities transaction
reports are required to be submitted to the Preclearance
Compliance Officer not later than ten days after the end of
the calendar quarter in which the transaction to which the
report relates was effected. The report must include the
date of the transaction, the title and number of shares or
principal amount of the security, the nature of the
transaction (e.g., purchase, sale or any other type of
acquisition or disposition), the price at which the
transaction was effected and the name of the broker or
other entity with or through whom the transaction was
effected. This reporting requirement can be satisfied by
sending a copy of the confirmation statement regarding such
transactions to the Preclearance Compliance Officer within
the time period specified.
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER
BEST EFFORTS TO ASSURE THAT ALL PERSONAL SECURITIES
TRANSACTION REPORTS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE
FOR INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
GLOSSARY
- ------------------------------
DEFINITIONS
o APPROVAL - written consent or written notice of
nonobjection.
o ASSOCIATE - any employee of Mellon Bank Corporation or its
direct or indirect subsidiaries; does not include outside
consultants or temporary help.
o BENEFICIAL OWNERSHIP - securities owned of record or held
in the associate's name are generally considered to be
beneficially owned by the associate.
Securities held in the name of any other person are deemed
to be beneficially owned by the associate if by reason of
any contract, understanding, relationship, agreement or
other arrangement, the associate obtains therefrom benefits
substantially equivalent to those of ownership, including
the power to vote, or to direct the disposition of, such
securities. Beneficial ownership includes securities held
by others for the associate's benefit (regardless of record
ownership), e.g. securities held for the associate or
members of the associate's immediate family, defined below,
by agents, custodians, brokers, trustees, executors or
other administrators; securities owned by the associate,
but which have not been transferred into the associate's
name on the books of the company; securities which the
associate has pledged; or securities owned by a corporation
that should be regarded as the associate's personal holding
corporation. As a natural person, beneficial ownership is
deemed to include securities held in the name or for the
benefit of the associate's immediate family, which includes
the associate's spouse, the associate's minor children and
stepchildren and the associate's relatives or the relatives
of the associate's spouse who are sharing the associate's
home, unless because of countervailing circumstances, the
associate does not enjoy benefits substantially equivalent
to those of ownership. Benefits substantially equivalent to
ownership include, for example, application of the income
derived from such securities to maintain a common home,
meeting expenses that such person otherwise would meet from
other sources, and the ability to exercise a controlling
influence over the purchase, sale or voting of such
securities. An associate is also deemed the beneficial
owner of securities held in the name of some other person,
even though the associate does not obtain benefits of
ownership, if the associate can vest or revest title in
himself at once, or at some future time.
In addition, a person will be deemed the beneficial owner
of a security if he has the right to acquire beneficial
ownership of such security at any time (within 60 days)
including but not limited to any right to acquire: (1)
through the exercise of any option, warrant or right; (2)
through the conversion of a security; or (3) pursuant to
the power to revoke a trust, nondiscretionary account or
similar arrangement.
With respect to ownership of securities held in trust,
beneficial ownership includes ownership of securities as a
trustee in instances where either the associate as trustee
or a member of the associate's "immediate family" has a
vested interest in the income or corpus of the trust, the
ownership by the associate of a vested beneficial interest
in the trust and the ownership of securities as a settlor
of a trust in which the associate as the settlor has the
power to revoke the trust without obtaining the consent of
the beneficiaries. Certain exemptions to these trust
beneficial ownership rules exist, including an exemption
for instances where beneficial ownership is imposed solely
by reason of the associate being settlor or beneficiary of
the securities held in trust and the ownership, acquisition
and disposition of such securities by the trust is made
without the associate's prior approval as settlor or
beneficiary. "Immediate family" of an associate as trustee
means the associate's son or daughter (including any
legally adopted children) or any descendant of either, the
associate's stepson or stepdaughter, the associate's father
or mother or any ancestor of either, the associate's
stepfather or stepmother and his spouse.
To the extent that stockholders of a company use it as a
personal trading or investment medium and the company has
no other substantial business, stockholders are regarded as
beneficial owners, to the extent of their respective
interests, of the stock thus invested or traded in. A
general partner in a partnership is considered to have
indirect beneficial ownership in the securities held by the
partnership to the extent of his pro rata interest in the
partnership. Indirect beneficial ownership is not, however,
considered to exist solely by reason of an indirect
interest in portfolio securities held by any holding
company registered under the Public Utility Holding Company
Act of 1935, a pension or retirement plan holding
securities of an issuer whose employees generally are
beneficiaries of the plan and a business trust with over 25
beneficiaries.
Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any
other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership as
part of a plan or scheme to evade the reporting
requirements of the Securities Exchange Act of 1934 shall
be deemed the beneficial owner of such security.
The final determination of beneficial ownership is a
question to be determined in light of the facts of a
particular case. Thus, while the associate may include
security holdings of other members of his family, the
associate may nonetheless disclaim beneficial ownership of
such securities.
o "CHINESE WALL" POLICY - procedures designed to restrict the
flow of information within Mellon from units or individuals
who are likely to receive material nonpublic information to
units or individuals who trade in securities or provide
investment advice. (see pages 12-14).
o CORPORATION - Mellon Bank Corporation.
o DREYFUS - The Dreyfus Corporation and its subsidiaries.
o DREYFUS ASSOCIATE - any employee of Dreyfus; does not
include outside consultants or temporary help.
o EXEMPT SECURITIES - Exempt Securities are defined as:
- securities issued or guaranteed by the United States
government or agencies or instrumentalities;
- bankers' acceptances;
- bank certificates of deposit and time deposits;
- commercial paper;
- repurchase agreements; and
- securities issued by open-end investment companies.
o GENERAL COUNSEL - General Counsel of Mellon Bank
Corporation or any person to whom relevant authority is
delegated by the General Counsel.
o INDEX FUND - an investment company which seeks to mirror
the performance of the general market by investing in the
same stocks (and in the same proportion) as a broad-based
market index.
o INITIAL PUBLIC OFFERING (IPO) - the first offering of a
company's securities to the public.
o INVESTMENT COMPANY - a company that issues securities that
represent an undivided interest in the net assets held by
the company. Mutual funds are investment companies that
issue and sell redeemable securities representing an
undivided interest in the net assets of the company.
o MANAGER OF CORPORATE COMPLIANCE - - the associate within
the Risk Management and Compliance Department of Mellon
Bank Corporation who is responsible for administering the
Confidential Information and Securities Trading Policy, or
any person to whom relevant authority is delegated by the
Manager of Corporate Compliance.
o MELLON - Mellon Bank Corporation and all of its direct and
indirect subsidiaries.
o NAKED OPTION - an option sold by the investor which
obligates him or her to sell a security which he or she
does not own.
o NONDISCRETIONARY TRADING ACCOUNT - an account over which
the associated person has no direct or indirect control
over the investment decision-making process.
o OPTION - a security which gives the investor the right but
not the obligation to buy or sell a specific security at a
specified price within a specified time.
o PRECLEARANCE COMPLIANCE OFFICER - a person designated by
the Manager of Corporate Compliance, to administer, among
other things, associates' preclearance request for a
specific business unit.
o PRIVATE PLACEMENT - an offering of securities that is
exempt from registration under the Securities Act of 1933
because it does not constitute a public offering.
o SENIOR MANAGEMENT COMMITTEE - the Senior Management
Committee of Mellon Bank Corporation.
o SHORT SALE - the sale of a security that is not owned by
the seller at the time of the trade.
INDEX OF EXHIBITS
- ------------------------------
EXHIBIT A SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
EXHIBIT B SAMPLE INSTRUCTION LETTER TO BROKER
EXHIBIT C PRECLEARANCE REQUEST FORM
EXHIBIT D PERSONAL SECURITIES HOLDINGS FORM
<PAGE>
EXHIBIT A
- ------------------------------
SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
- --------------------------------------------------------------------------------
MELLON INTEROFFICE
MEMORANDUM
Date: From: Associate
To: Manager, Corporate Compliance Dept:
Aim #:
Aim #: 151-4342 Phone:
Fax:
- --------------------------------------------------------------------------------
RE: REPORT OF SECURITIES TRADE
Type of Associate: ____________ Insider Risk
____________ Investment
____________ Other
Type of Security: ____________ Mellon Bank Corporation
____________ Mellon Bank Corporation - optional
cash purchases under Dividend
Reinvestment and Common Stock
Purchase Plan
____________ Mellon Bank Corporation - exercise
of an employee stock option
Attached is a copy of the confirmation slip for a securities trade I
engaged in on _____________________, 19xx.
or
On _____________________, 19xx, I (purchased/sold)__________________
shares of ___________________________ through (broker). I will
arrange to have a copy of the confirmation slip for this trade
delivered to you as soon as possible.
<PAGE>
EXHIBIT B1
- ------------------------------
FOR NON-DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Mellon Bank should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Manager, Corporate Compliance (151-4342)
<PAGE>
EXHIBIT B2
- ------------------------------
FOR DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm
noted above, please be advised that the Risk Management and
Compliance Department of Dreyfus Corporation should be noted as an
"Interested Party" with respect to my accounts. They should,
therefore, be sent copies of all trade confirmations and account
statements relating to my account.
Please send the requested documentation ensuring the account
holder's name appears on all correspondence to:
Compliance Officer at The Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Dreyfus Compliance
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EXHIBIT C1
- ------------------------------
PRECLEARANCE REQUEST FORM Non Dreyfus Associates
====================================================================================================
To: Manager, Corporate Compliance 151-4342 (All Insider and Other Associates)
Designated Preclearance Compliance Officer (All Investment Associates excluding Dreyfus)
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: No. of Shares:
- ----------------------------------------------------------------------------------------------------
If sale, date acquired: Margin Transaction: Initial Public Offering: Private Placement:
/ / Yes / / Yes / / Yes
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
<PAGE>
EXHIBIT C2
- ------------------------------
PRECLEARANCE REQUEST FORM Dreyfus Associates Only
====================================================================================================
To: Dreyfus Compliance Officer
- ----------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
- ----------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
ACCOUNT INFORMATION
- ----------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
- ----------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
- ----------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
====================================================================================================
TRANSACTION DETAIL
- ----------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: Symbol:
- ----------------------------------------------------------------------------------------------------
Amount: Current Market Price: If sale, date acquired: Margin Transaction:
- ----------------------------------------------------------------------------------------------------
Is this a New Issue? Is this a Private Placement?
/ / Yes / / No / / Yes / / No
- ----------------------------------------------------------------------------------------------------
Reason for Transaction, identify source:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
DISCLOSURE STATEMENT
- ----------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is
(1) attempting to benefit personally from any existing business relationship between the issuer and
Mellon or any Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive
trading activity; (3) in possession of any material non-public information concerning the security
to which is request relates.
- ----------------------------------------------------------------------------------------------------
Associate Signature: Date:
- ----------------------------------------------------------------------------------------------------
====================================================================================================
COMPLIANCE OFFICER USE ONLY
- ----------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
- ----------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on __________________, 19__.
If you decide not to effect the trade, please notify me.
- ----------------------------------------------------------------------------------------------------
Date: By:
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT D1
- ------------------------------
Return to: Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial ownership - (see Glossary in Policy). If none, write NONE.
Securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, bankers' acceptances, bank certificates of deposit and
time deposits, commercial paper, repurchase agreements and shares of
registered investment companies need not be listed. IF YOUR LIST IS
EXTENSIVE, PLEASE ATTACH A COPY OF THE MOST RECENT STATEMENT FROM YOUR
BROKER(S), RATHER THAN LIST THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
<PAGE>
EXHIBIT D2
- ------------------------------
Return to: Compliance Officer at the Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
STATEMENT OF SECURITY HOLDINGS
As of
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you
or your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a
beneficial interest. If none, write NONE. Securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities, bankers'
acceptances, bank certificates of deposit and time deposits, commercial
paper, repurchase agreements and shares of registered investment
companies need not be listed. IF YOUR LIST IS EXTENSIVE, PLEASE ATTACH A
COPY OF THE MOST RECENT STATEMENT FROM YOUR BROKER(S), RATHER THAN LIST
THEM ON THIS FORM.
-----------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your
registered representative (if applicable), the account registration and
the relevant account numbers. If none, write NONE.
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
-----------------------------------------------------------------------------
Date: Printed Name:
-----------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------------
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Mark N. Jacobs, Steven F.
Newman, Michael A. Rosenberg, Jeff Prusnofsky, Robert R. Mullery, Janette
Farragher, Mark Kornfeld, and John B. Hammalian, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her, and
in his or her name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration Statement of each
Fund enumerated on Exhibit A hereto (including post-effective amendments and
amendments thereto), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
------------------------ March 16, 2000
/s/Joseph S. DiMartino
------------------------ March 16, 2000
/s/James M. Fitzgibbons
------------------------ March 16, 2000
/s/J. Tomlinson Fort
------------------------ March 16, 2000
/s/ Arthur L. Goeschel
------------------------ March 16, 2000
/s/ Kenneth A. Himmel
------------------------ March 16, 2000
/s/ Stephen J. Lockwood
------------------------ March 16, 2000
/s/ Roslyn Watson
------------------------ March 16, 2000
/s/ Benaree Pratt Wiley
EXHIBIT A
The Dreyfus/Laurel Funds, Inc.
The Dreyfus/Laurel Funds Trust
The Dreyfus/Laurel Tax-Free Municipal Funds
Dreyfus High Yield Strategies Fund
POWER OF ATTORNEY
The undersigned hereby each constitute and appoint Mark
N. Jacobs, Steven F. Newman, Michael A. Rosenberg, Jeff
Prusnofsky, Robert R. Mullery, Janette Farragher, Mark
Kornfeld, and John B. Hammalian, and each of them, with full
power to act without the other, her true and lawful attorney-
in-fact and agent, with full power of substitution and
resubstitution, for her, and in her name, place and stead,
in any and all capacities (until revoked in writing) to sign
any and all amendments to the Registration Statement of each
Fund enumerated on Exhibit A hereto (including post-
effective amendments and amendments thereto), and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
/s/ Stephen E. Canter March 22, 2000
Stephen E. Canter
President
/s/ Joseph W. Connolly March 22, 2000
Joseph W. Connolly
Vice President and Treasurer
EXHIBIT A
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Funds, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Equity Funds
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Premier Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Funds, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Funds, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
CERTIFICATE OF INCUMBENCY
I, Jeff Prusnofsky, Assistant Secretary of The Dreyfus/Laurel
Funds Trust, (the "Fund") do hereby certify that the following
resolution was duly adopted by the Board of Trustees of the Fund
by written consent dated March 7, 2000 as if adopted by the
affirmative vote of the Board of Trustees at a duly constituted
meeting and that such resolution has not been modified or
rescinded and remains in full force and effect on the date
hereof, with the exception that Mark Kornfeld, Assistant General
Counsel, resigned his position as of April 10, 2000:
RESOLVED, that the persons listed on Appendix A hereto
are hereby elected to the offices set forth opposite
their respective names, to serve as officers for the
Funds indicated thereon, at the pleasure of the Board;
and it is further,
RESOLVED, that such persons shall begin to
serve as officers of each Fund effective on
the date that the Distribution Agreement
between each Fund that is executing such an
agreement with Dreyfus Service Corporation
becomes effective; and it is further,
RESOLVED, that the Registration Statement and
any and all amendments and supplements
thereto may be signed by any one of Mark N.
Jacobs, Steven F. Newman, Michael A.
Rosenberg, John B. Hammalian, Jeff
Prusnofsky, Robert R. Mullery, Janette
Farragher, and Mark Kornfeld, as the attorney-
in-fact for the proper officers of the Fund,
with full power of substitution and
resubstitution; and that the appointment of
each of such persons as such attorney-in-fact
hereby is authorized and approved; and that
such attorneys-in-fact, and each of them,
shall have full power and authority to do and
perform each and every act and thing
requisite and necessary to be done in
connection with such Registration Statements
and any and all amendments and supplements
thereto, as whom he or she is acting as
attorney-in-fact, might or could do in
person.
IN WITNESS WHEREOF, the undersigned have executed this
Consent as of the 25th day of April, 2000.
/s/Jeff Prusnofsky
Assistant Secretary
[SEAL]
APPENDIX A
President Stephanie E. Canter
Vice President Mark N. Jacobs
Vice President and Treasurer Joseph Connolly
Vice President, Assistant Treasurer and Frederick C. Dey
Secretary Steven F. Newman
Assistant Secretary Jeff Prusnofsky
Vice President and Assistant Secretary Christopher J. Kelley
Assistant Secretary Michael A. Rosenberg
Assistant Treasurer William McDowell
Assistant Treasurer James Windels
