Premier Value Fund
PROSPECTUS MARCH 1, 1996
AS REVISED, DECEMBER 1, 1996
Registration Mark
Premier Value Fund (the "Fund") is an open-end, non-diversified,
management investment company, known as a mutual fund.
The Fund's investment objective is capital growth. The Fund invests primarily
in equity securities of domestic and foreign issuers which would be
characterized as "value" companies according to criteria established by The
Dreyfus Corporation. In addition to usual investment practices, the Fund may
use speculative investment techniques such as short-selling, leveraging and
options transactions. The Fund also may engage in futures transactions.
By this Prospectus, the Fund is offering four classes of shares --
Class A, Class B, Class C and Class R -- which are described herein. See
"Alternative Purchase Methods."
You can purchase or redeem all Classes of shares by telephone using
the TELETRANSFER Privilege.
The Dreyfus Corporation professionally manages the Fund's portfolio.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated March 1, 1996, as
revised December 1, 1996 which may be revised from time to time, provides a
further discussion of certain areas in this Prospectus and other matters
which may be of interest to some investors. It has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.
For a free copy of the Statement of Additional Information, write to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-1044, or call
1-800-554-4611. When telephoning, ask for Operator 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Fee Table................................................. 3
Condensed Financial Information........................... 4
Alternative Purchase Methods.............................. 7
Description of the Fund................................... 8
Management of the Fund.................................... 11
How to Buy Shares ........................................ 13
Shareholder Services...................................... 19
How to Redeem Shares...................................... 24
Distribution Plan and Shareholder Services Plan........... 29
Dividends, Distributions and Taxes........................ 29
Performance Information................................... 32
General Information....................................... 33
Appendix.................................................. 34
</TABLE>
Page 2
<TABLE>
<CAPTION>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). 5.75% None None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) .None* 4.00% 1.00% None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.............. .75% .75% .75% .75%
12b-1 Fees................... None .75% .75% None
Other Expenses............... .52% .52% .52% .27%
Total Fund Operating Expenses 1.27% 2.02% 2.02% 1.02%
EXAMPLE:
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) except where noted,
redemption at the end of each time period: CLASS A CLASS B CLASS C CLASS R
1 YEAR. $ 70 $61/$21** $31/$21** $10
3 Years.. $ 95 $93/$63** $63 $32
5 Years.. $123 $129/$109** $109 $56
10 Years. $202 $198*** $235 $125
</TABLE>
* A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of Class A shares
purchased without an initial sales charge as part of an investment of $1
million or more.
**Assuming no redemption of shares.
*** Ten year figure assumes conversion of Class B shares to Class A shares
at the end of the sixth year following
the date of purchase.
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The amounts listed in the example should not be considered
as representative of past or future expenses and actual expenses may be
greater or less than those indicated. Moreover, while the example assumes
a 5% annual return, the Fund's actual performance will vary and may
result in an actual return greater or less than 5%.
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The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Other Expenses for
Class C and Class R are based on applicable amounts for Class A for the
Fund's last fiscal year. Long-term investors in Class B or Class C shares
could pay more in 12b-1 fees than the economic equivalent of paying a
front-end sales charge. Certain Service Agents (as defined below) may
charge their clients direct fees for effecting transactions in Fund
shares; such fees are not reflected in the foregoing table. See
"Management of the Fund," "How to Buy Shares" and "Distribution Plan and
Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
Class A share of beneficial interest outstanding, total investment
return, ratios to average net assets and other supplemental data for each
year indicated. This information has been derived from the Fund's
financial statements.
<TABLE>
<CAPTION>
Class A Shares
--------------------------------------------------------------------------------------------------------
Year Ended OCTOBER 31,
--------------------------------------------------------------------------------------------------------
PER SHARE DATA: 1986(1) 1987 1988 1989 1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year....... $12.50 $12.51 $15.79 $15.85 $18.73 $18.03 $22.12 $19.90 $23.77 $19.83
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income _net.... .06 .13 1.00 .48 .31 .21 .06 .03 .01 .31
Net realized and unrealized
gain (loss) on investment.... .01 3.15 (.52) 3.70 (.35) 5.77 (.46) 3.89 (1.54) 2.04
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS............... .07 3.28 .48 4.18 (.04) 5.98 (.40) 3.92 (1.53) 2.35
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from
investment income--net.... (.06) - (.20) (1.30) (.21) (.34) (.14) (.05) - (.05)
Dividends in excess of
investment income-net...... - - - - - - - - (.12) -
Dividends from net realized
gain on investments....... - - (.22) - (.45) (1.55) (1.68) - (2.29) (.54)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS..... (.06) - (.42) (1.30) (.66) (1.89) (1.82) (.05) (2.41) (.59)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of year............. $12.51 $15.79 $15.85 $18.73 $18.03 $22.12 $19.90 $23.77 $19.83 $21.59
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN (2).. .31%(3) 26.22% 2.88% 28.59% (.31%) 36.50% (2.04%) 19.71% (6.92%) 12.43%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net assets...... - 1.59% 1.48% 1.50% 1.50% 1.35% 1.30% 1.27% 1.29% 1.22%
Ratio of interest expense,
loan commitment fees and
dividends on securities sold
short to average net assets - .32% .60% .59% 1.39% .58% .38% .47% .25% .05%
Ratio of net investment
income to average
net assets... .50%(3) 1.14% 5.71% 2.63% 1.66% 1.07% .22% .16% .04% 1.51%
Decrease reflected in
above expense ratios due
to expense limitation 1.04%(3) .10% .19% .29% .08% - - - - -
Portfolio Turnover Rate - 321.23% 167.64% 228.12% 275.33% 207.10% 204.73% 237.14% 199.13% 244.82%
Net Assets, end of year
(000's omitted)........... $1,145 $111,896 $104,772 $106,180 $102,421 $145,717 $243,148 $276,022 $239,407 $208,786
(1)From October 1, 1986 (commencement of operations) to October 31, 1986.
(2)Exclusive of sales load.
(3)Not annualized.
</TABLE>
Page 4
Contained below is per share operating performance data
for a Class B, Class C and Class R share of beneficial interest,
respectively, total investment return, ratio to average net
assets and other supplemental data for each period indicated.
This information has been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
CLASS B SHARES Class C Shares Class R Shares
------------------------------ -------------------- --------------------
YEAR ENDED PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
------------------------------ -------------------- --------------------
PER SHARE DATA: 1993(1) 1994 1995 1995(2) 1995(2)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $21.38 $23.62 $19.58 $21.21 $21.60
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income (loss)-net..... (.07) (.04) .14 (.04) -
Net realized and unrealized gain
(loss) on investments........ 2.31 (1.62) 2.02 (.01) (.01)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS... 2.24 (1.66) 2.16 (.05) (.01)
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net... - - (.03) - -
Dividends in excess of
investment income-net............. - (.09) - - -
Dividends from net realized
gain on investments............... - (2.29) (.54) - -
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................ - (2.38) (.57) - -
------ ------ ------ ------ ------
Net asset value, end of period..... $23.62 $19.58 $21.17 $21.16 $21.60
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3)...... 10.48%(4) (7.58%) 11.50% (.24%)(4) (.05%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net assets.......... 1.65%(4) 1.84% 1.97% .36%(4) .17%(4)
Ratio of interest expense, loan
commitment fees and dividends on
securities sold short to
average net assets........ .44%(4) .24% .05% - -
Ratio of net investment income
(loss) to average net assets.... (.69%)(4) (.61%) .71% (.18%)(4) -
Portfolio Turnover Rate 237.14% 199.13% 244.82% 244.82% 244.82%
Net Assets, end of period
(000's omitted)............. $25,833 $40,864 $44,365 $1 $1
(1)From January 15, 1993 (commencement of initial offering) to October 31, 1993.
(2) From September 1, 1995 (commencement of initial offering) to October 31, 1995.
(3)Exclusive of sales load.
(4)Not annualized.
</TABLE>
Page 5
Further information about the Fund's performance is contained
in the Fund's annual report which may be obtained without charge by
writing to the address or calling the number set forth on the cover page
of this Prospectus.
<TABLE>
<CAPTION>
DEBT OUTSTANDING
Year Ended OCTOBER 31,
-------------------------------------------------------------------------------------------------------------
PER SHARE DATA: 1986(1) 1987 1988 1989 1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of debt outstanding at
end of year (in thousands).. - - - $18,350 $9,020 $23,994 $23,300 $35,100 - -
Average amount of debt
outstanding throughout
year (in thousands)(2)..... - $2,513 $6,145 $4,843 $10,388 $12,882 $5,102 $16,419 $11,097 -
Average number of shares
outstanding throughout
year (in thousands)(3)..... - 5,193 7,102 6,161 5,807 6,244 10,058 12,321 14,337 -
Average amount of debt per share
throughout year............. - $ .48 $ .87 $ .79 $ 1.79 $ .46 $ .51 $ 1.33 $ .77 -
(1) From October 1, 1986 (commencement of operations) to October 31, 1986.
(2) Based upon daily outstanding borrowings.
(3) Based upon month-end balances.
</TABLE>
Page 6
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares.
Orders for purchases of Class R shares, however, may be placed only for
certain eligible investors as described below. If you are not eligible to
purchase Class R shares, you may choose from Class A, Class B and Class C
the Class of shares that best suits your needs, given the amount of your
purchase, the length of time you expect to hold your shares and any other
relevant circumstances. Each Fund share represents an identical pro rata
interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 5.75% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Shares _ Class A
Shares." These shares are subject to an annual service fee at the rate of
.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan and Shareholder Services Plan _ Shareholder Services
Plan."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Shares _ Class B Shares" and "How to Redeem
Shares _Contingent Deferred Sales Charge _ Class B Shares." These shares
also are subject to an annual service fee at the rate of .25 of 1% of the
value of the average daily net assets of Class B. In addition, Class B
shares are subject to an annual distribution fee at the rate of .75 of 1%
of the value of the average daily net assets of Class B. See
"Distribution Plan and Shareholder Services Plan." The distribution fee
paid by Class B will cause such Class to have a higher expense ratio and
to pay lower dividends than Class A. Approximately six years after the
date of purchase, Class B shares automatically will convert to Class A
shares, based on the relative net asset values for shares of each such
Class, and will no longer be subject to the distribution fee. 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 are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class C shares are
subject to 1% CDSC, which is assessed only if you redeem such shares
within one year of their purchase. See "How to Buy Shares -- Class C
Shares" and "How to Redeem Shares -- Contingent Deferred Sales Charge --
Class C Shares." These shares also are subject to an annual service fee
at the rate of .25 of 1% of the value of the average daily net assets of
Class C and an annual distribution fee at the rate of .75 of 1% of the
value of the average daily net assets of Class C. See "Distribution Plan
and Shareholder Services Plan." The distribution fee paid by Class C
will cause such Class to have a higher expense ratio and to pay lower
dividends than Class A.
Page 7
Class R shares may not be purchased directly by individuals,
although eligible institutions may purchase Class R shares for accounts
maintained by individuals. Class R shares are sold at net asset value per
share only to institutional investors acting for themselves or in a
fiduciary, advisory, agency, custodial or similar capacity for qualified
or non-qualified employee benefit plans, including pension,
profit-sharing, SEP-IRAs and other deferred compensation plans, whether
established by corporations, partnerships, non-profit entities or state
and local governments, but not including IRAs or IRA "Rollover Accounts."
Class R shares are not subject to an annual service fee or distribution
fee.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
If you are not eligible to purchase Class R shares, you should consider
whether, during the anticipated life of your investment in the Fund, the
accumulated distribution fee and CDSC, if any, on Class B or Class C
shares would be less than the initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
would be offset by the return of Class A. Additionally, investors
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing Class
A shares because the accumulated distribution fees on Class B or Class C
shares may exceed the initial sales charge on Class A shares during the
life of the investment. Finally, you should consider the effect of the
CDSC 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 an ongoing distribution fee. 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 $100,000 or more in Fund
shares, but may not be appropriate for investors who invest less than
$50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with
capital growth. It cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund's outstanding voting shares. There can be
no assurance that the Fund's investment objective will be achieved.
MANAGEMENT POLICIES
The Fund invests primarily in equity securities of domestic
and foreign issuers which would be characterized as "value" companies
according to criteria established by The Dreyfus Corporation. There are no
limitations on the type, size, operating history or dividend paying
record of companies or industries in which the Fund may invest, the
principal criteria for investment being that the securities provide
opportunities for capital growth. Equity securities consist of common
stocks, convertible securities and preferred stocks. The Fund may invest
up to 30% of the value of its assets in the securities of foreign
companies which are not publicly traded in the United States and the debt
securities of foreign governments. The Fund may invest in convertible
securities, preferred stocks and debt securities without limitation when
management
Page 8
believes that such securities offer opportunities for capital
growth. The debt securities in which the Fund may invest must be rated at
least Caa by Moody's Investors Service, Inc. ("Moody's") or CCC by
Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies,
Inc. ("S&P") or if unrated, deemed to be of comparable quality by The
Dreyfus Corporation. Debt securities rated Caa by Moody's or CCC by S&P
are considered to have predominantly speculative characteristics with
respect to capacity to pay interest and repay principal and to be of poor
standing. See "Investment Considerations and Risks _ Lower Rated
Securities" below for a discussion of certain risks.
In general, The Dreyfus Corporation believes that companies
with relatively low price to book ratios, low price to earnings ratios or
higher than average dividend payments in relation to price should be
classified as value companies. Alternatively, companies which have above
average earnings or sales growth and retention of earnings and command
higher price to earnings ratios fit the more classic growth description.
The Fund's policy is to purchase marketable securities which
are not restricted as to public sale, subject to the limited exception
set forth under "Appendix -- Certain Portfolio Securities _ Illiquid
Securities." The Fund will be alert to favorable arbitrage opportunities
resulting from special situations such as those arising from corporate
takeovers.
While seeking desirable investments, the Fund may invest in
money market instruments consisting of U.S. Government securities,
certificates of deposit, time deposits, bankers' acceptances, short-term
investment grade corporate bonds and other short-term debt instruments,
and repurchase agreements, as set forth under "Appendix -- Certain
Portfolio Securities -- Money Market Instruments." Under normal market
conditions, the Fund does not expect to have a substantial portion of its
assets invested in money market instruments. However, when The Dreyfus
Corporation determines that adverse market conditions exist, the Fund may
adopt a temporary defensive posture and invest all of its assets in money
market instruments.
In an effort to increase returns, the Fund expects to trade
actively and that the annual portfolio turnover rate could exceed 200%.
Higher portfolio turnover rates usually generate additional brokerage
commissions and expenses and the short-term gains realized from these
transactions are taxable to shareholders as ordinary income. In addition,
the Fund may engage in various investment techniques, such as leveraging,
short-selling, options and futures transactions, foreign currency
transactions and lending of portfolio securities. See also "Investment
Considerations and Risks" and "Appendix -- Investment Techniques" below
and "Investment Objective and Management Policies _ Management Policies"
in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an
overall investment program and should invest only if they are willing to
undertake the risks involved. See "Investment Objective and Management
Policies_Management Policies" in the Statement of Additional Information
for a further discussion of certain risks.
Page 9
EQUITY SECURITIES -- Equity securities fluctuate in value, often
based on factors unrelated to the value of the issuer of the securities,
and such fluctuations can be pronounced. Changes in the value of the
Fund's investments will result in changes in the value of its shares and
thus the Fund's total return to investors.
The securities of the smaller companies in which the Fund may
invest may be subject to more abrupt or erratic market movements than
larger, more established companies, because these securities typically
are traded in lower volume and the issuers typically are subject to a
greater degree to changes in earnings and prospects.
FOREIGN SECURITIES -- Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually are
held outside the United States, the Fund will be subject to additional
possible risks which include: adverse political and economic
developments, seizure or nationalization of foreign deposits and adoption
of governmental restrictions which might adversely affect the payment of
principal and interest on the foreign securities or restrict the payment
of principal and interest to investors located outside the country of the
issuer, whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable
in currencies of foreign countries, the value of these assets as measured
in U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations.
FOREIGN CURRENCY TRANSACTIONS -- Currency exchange rates may
fluctuate significantly over short periods of time. They generally are
determined by the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different countries,
actual or perceived changes in interest rates and other complex factors,
as seen from an international perspective. Currency exchange rates also
can be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad. See
"Appendix _ Investment Techniques _ Foreign Currency Transactions."
FIXED-INCOME SECURITIES -- Even though interest-bearing securities
are investments which promise a stable stream of income, the prices of
such securities generally are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuer.
Certain securities that may be purchased by the Fund, such as those rated
Baa or lower by Moody's and BBB or lower by S&P may be subject to such
risk with respect to the issuing entity and to greater market fluctuations
than certain lower yielding, higher rated fixed-income securities. Once
the rating of a portfolio security has been changed, the fund will
consider all circumstances deemed relevant in determining whether to
continue to hold the security. See "Lower Rated Securities" and "Appendix
_ Certain Portfolio Securities _ Ratings" below and "Appendix" in the
Statement of Additional Information.
Page 10
LOWER RATED SECURITIES -- The Fund may invest up to 35% of its net
assets in higher yielding (and, therefore, higher risk) debt securities
such as those rated Ba by Moody's or BB by S&P or as low as Caa by
Moody's or CCC by S&P (commonly known as junk bonds). They generally are
not meant for short-term investing and may be subject to certain risks
with respect to the issuing entity and to greater market fluctuations
than certain lower yielding, higher rated fixed-income securities. The
retail secondary market for these securities may be less liquid than that
of higher rated securities; adverse conditions could make it difficult at
times for the Fund to sell certain securities or could result in lower
prices than those used in calculating the Fund's net asset value. See
"Appendix _ Certain Portfolio Securities _ Ratings."
USE OF DERIVATIVES -- The Fund may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying
asset, index, currency or interest rate. The Derivatives the Fund may use
include options and futures. While Derivatives can be used effectively in
furtherance of the Fund's investment objective, under certain market
conditions, they can increase the volatility of the Fund's net asset
value, can decrease the liquidity of the Fund's portfolio and make more
difficult the accurate pricing of the Fund's portfolio. See "Appendix _
Investment Techniques _ Use of Derivatives" below and "Investment
Objective and Management Policies _ Management Policies _ Derivatives" in
the Statement of Additional Information.
NON-DIVERSIFIED STATUS -- The classification of the Fund as a
"non-diversified" investment company means that the proportion of the
Fund's assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total
assets, to invest not more than 5% of such assets in the securities of a
single issuer. Since a relatively high percentage of the Fund's assets may
be invested in the securities of a limited number of issuers, some of
which may be in the same industry, the Fund's portfolio may be more
sensitive to changes in the market value of a single issuer or industry.
However, to meet Federal tax requirements, at the close of each quarter
the Fund may not have more than 25% of its total assets invested in any
one issuer and, with respect to 50% of total assets, not more than 5% of
its total assets invested in any one issuer. These limitations do not
apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are
made independently from those of the other investment companies advised
by The Dreyfus Corporation. If, however, such other investment companies
desire to invest in, or dispose of, the same securities as the Fund,
available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by
the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves as the
Fund's investment adviser. The Dreyfus Corporation is a wholly-owned
subsidiary of Mellon Bank, N.A., which a wholly-owned subsidiary of
Mellon Bank
Page 11
Corporation ("Mellon"). As of October 31, 1996, The Dreyfus
Corporation managed or administered approximately $82 billion in assets
for more than 1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the authority of the Fund's Board in accordance with
Massachusetts law. The Fund's primary portfolio manager is Timothy M.
Ghriskey. He has held that position since August 1995, and has been an
employee of The Dreyfus Corporation since July 1995. From 1985 to 1995,
Mr. Ghriskey was Vice President and Associate Managing Partner of Loomis,
Sayles & Company in New York. The Fund's other portfolio managers are
identified in the Statement of Additional Information. The Dreyfus
Corporation also provides research services for the Fund and for other
funds advised by The Dreyfus Corporation through a professional staff of
portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A.,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries,
including The Dreyfus Corporation, Mellon managed more than $226 billion
in assets as of September 30, 1996, including approximately $85 billion
in proprietary mutual fund assets. As of September 30, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $905 billion in
assets, including approximately $60 billion in mutual fund assets.
For the fiscal year ended October 31, 1995, the Fund paid The
Dreyfus Corporation a management fee at the annual rate of .75 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily
assume certain expenses of the Fund, which would have the effect of
lowering the Fund's overall expense ratio and increasing yield to
investors. The Fund will not pay The Dreyfus Corporation at a later time
for any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume.
In allocating brokerage transactions for the Fund, The
Dreyfus Corporation seeks to obtain the best execution of orders at the
most favorable net price. Subject to this determination, The Dreyfus
Corporation may consider, among other things, the receipt of research
services and/or the sale of shares of the Fund or other funds advised by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions"
in the Statement of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service
Agents in respect of these services.
Page 12
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at 60 State Street, Boston,
Massachusetts 02109. The Distributor's ultimate parent is Boston
Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's
Transfer and Dividend Disbursing Agent (the "Transfer Agent"). Mellon
Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, is
the Fund's Custodian.
HOW TO BUY SHARES
GENERAL -- Class A shares, Class B shares and Class C shares may be
purchased only by clients of certain financial institutions (which may
include banks), securities dealers ("Selected Dealers") and other
industry professionals (collectively, "Service Agents"), except that
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, 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. Subsequent
purchases may be sent directly to the Transfer Agent or your Service
Agent.
Class R shares are offered only to institutional investors
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity for qualified or non-qualified employee benefit plans,
including pension, profit-sharing, SEP-IRAs and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("Retirement Plans").
The term "Retirement Plans" does not include IRAs or IRA "Rollover
Accounts." Class R shares may be purchased for a Retirement Plan only by
a custodian, trustee, investment manager or other entity authorized to
act on behalf of such Plan. Institutions effecting transactions in Class
R shares for the accounts of their clients may charge their clients direct
fees in connection with such transactions.
When purchasing Fund shares, you must specify which Class is
being purchased. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and, to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Distribution Plan or Shareholder Services Plan. You
should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. However, the minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant is $750, with no minimum on subsequent
purchases. Individuals who open an IRA also may open a non-working
spousal IRA with a minimum initial investment of $250. Subsequent
investments in a spousal IRA must be at least $250.
Page 13
The initial investment must be accompanied by the Account Application.
The Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualified and
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 to
certain Retirement Plans. These limitations apply with respect to
participants at the plan level and, therefore, do not directly affect the
amount that may be invested in the Fund by a Retirement Plan.
Participants and plan sponsors should consult their tax advisers for
details.
You may purchase Fund shares by check or wire, or through the
TeleTransfer Privilege described below. Checks should be made payable to
"Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments which are mailed
should be sent to Premier Value Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. If you are opening a new account, please enclose your
Account Application indicating which Class of shares is being purchased.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed. For Dreyfus retirement
plan accounts, payments which are mailed should be sent to The Dreyfus
Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427. Neither initial nor subsequent investments should be made by
third party check.
The DDA number for payment transmitted by wire to The Bank of
New York for purchase of Class A, Class B, Class C or Class R shares of
the Fund in your name is as follows:
DDA# 8900119365
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City.
The wire must indicate the Class of shares being purchased
and must include your Fund account number (for new accounts your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase
of Fund shares is by wire, please call 1-800-645-6561 after completing
your wire payment to obtain your Fund account number. Please include your
Fund account number on the Account Application and promptly mail the
Account Application to the Fund, as no redemptions will be permitted
until the Account Application is received. You may obtain further
information about remitting funds in this manner from your bank. All
payments should be made in U.S. dollars and, to avoid fees and delays,
should be drawn only on U.S. banks. A charge will be imposed if any check
used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark, the Government Direct Deposit Privilege
and the Payroll Savings
Page 14
Plan described under "Shareholder Services." These services enable you to
make regularly scheduled investments and may provide you with a convenient
way to invest for long-term financial goals. You should be aware, however,
that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House member. You
must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and your Fund account number preceded by
the digits "1111."
Fund shares are sold on a continuous basis. Net asset value
per share is determined as of the close of trading on the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day the New York
Stock Exchange is open for business. For purposes of determining net
asset value, options and futures contracts will be valued 15 minutes
after the close of trading on the New York Stock Exchange. Net asset
value 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. The Fund's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the Fund's Board. For further information
regarding the methods employed in valuing Fund investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
If an order is received in proper form by the Transfer Agent
or other agent by the close of trading on the New York Stock Exchange
(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 New York Stock Exchange on that day. Otherwise, Fund
shares will be purchased at the public offering price determined as of
the close of trading on the New York Stock Exchange 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 the close
of trading on the floor of the New York Stock Exchange on a business day
and transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the
public offering price per share determined as of the close of trading on
the New York Stock Exchange on that day. Otherwise, the orders will be
based on the next determined public offering price. It is the dealer's
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.
Page 15
The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Fund shares by employees
participating in qualified or non-qualified employee benefit plans or
other programs where (i) the employers or affiliated employers
maintaining such plans or programs have a minimum of 250 employees
eligible for participation in such plans or programs or (ii) such plan's
or program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds
in the Dreyfus Family of Funds then held by Eligible Benefit Plans will
be aggregated to determine the fee payable. The Distributor reserves the
right to cease paying these fees at any time. The Distributor will pay
such fees from its own funds, other than amounts received from the Fund,
including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the 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
("IRS").
CLASS A SHARES -- The public offering price for Class A shares is the
net asset value per share of that Class, except for shareholders
beneficially owning Class A shares on November 30, 1996, plus a sales
load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
--------------------------------------
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
----------------------- ---------------- ---------------- --------------------------
<S> <C> <C> <C>
Less than $50,000......... 5.75 6.10 5.00
$50,000 to less than $100,000 4.50 4.70 3.75
$100,000 to less than $250,000 3.50 3.60 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more........ -0- -0- -0-
For shareholders who beneficially owned Class A shares on
November 30, 1996, the public offering price for Class A shares is the
net asset value per share of that Class plus a sales load as shown below:
Total Sales Load
--------------------------------------
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
----------------------- ---------------- ---------------- --------------------------
Less than $50,000......... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more........ 0 0 0
</TABLE>
A CDSC of 1% will 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
of purchase. The terms contained in the section of the Fund's
Prospectus entitled "How to Redeem Shares _ Contingent Deferred
Sales Charge" (other than the amount of the CDSC and
Page 16
time periods) 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 and minor children at net asset value, provided that they have
furnished the Distributor with such information that 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 net asset value. In addition, Class A shares
are offered at net asset value to full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing.
Class A shares are offered at net asset value without a sales
load to employees participating in Eligible Benefit Plans. Class A shares
also may be purchased (including by exchange) at net asset value 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
Premier Family of Funds or the Dreyfus Family of Funds or certain other
products made available by the Distributor to such plans, or (b) invested
all of its assets in certain funds in the Premier Family of Funds or the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans.
Class A shares may be purchased at net asset value 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 net asset value,
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 The
Dreyfus Corporation 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
contingent deferred sales charge 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 net asset value,
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
Page 17
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 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by The Dreyfus Corporation which are sold with a sales
load, such as the Fund. In some instances, these incentives may be
offered only to certain dealers who have sold or may sell significant
amounts of shares.
CLASS B SHARES -- The public offering price for Class B shares is the
net asset value 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 under "How to Redeem Shares."
The Distributor compensates certain Service Agents for selling Class B
and Class C shares at the time of purchase from the Distributor's own
assets. The proceeds of the CDSC and the distribution fee, in part, are
used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares"above and "How to Redeem Shares."
CLASS R SHARES -- The public offering price for Class R shares is the
net asset value per share of that Class.
RIGHT OF ACCUMULATION -- Class A Shares -- Reduced sales loads may
apply to any purchase of Class A shares, shares of other funds in the
Premier Family of Funds, shares of certain other funds advised by The
Dreyfus Corporation which are sold with a sales load and shares acquired
by a previous exchange of such shares (hereinafter referred to as
"Eligible Funds"), by you and any related "purchaser" as defined in the
Statement of Additional Information, 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 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 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. Class A Shares
purchased by Shareholders beneficially owning Fund shares on November 30,
1996 are subject to a different sales load structure, as described above
under "Class A Shares."
To qualify for reduced sales loads, at the time of a purchase
you or your Service 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 shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a
Page 18
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 such a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
so designated. The Fund may modify or terminate this Privilege at any
time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-221-4060 or,
if you are calling from overseas, call 401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES -- You may purchase, in exchange for shares of a Class,
shares of the same Class of certain other funds managed or administered by
The Dreyfus Corporation, to the extent such shares are offered for sale
in your state of residence. These Funds may have different investment
objectives which may be of interest to you. You also may
exchange your Fund shares that are subject to a CDSC for shares of
Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so purchased
will be held in a special account created solely for this purpose
("Exchange Account"). Exchanges of shares from an Exchange Account only
can be made into certain other funds managed or administered by The
Dreyfus Corporation. No CDSC is charged when an investor exchanges into
an Exchange Account; however, the applicable CDSC will be imposed when
shares are redeemed from an Exchange Account or other applicable fund
account. Upon redemption, the applicable CDSC will be calculated without
regard to the time such shares were held in an Exchange Account. See "How
to Redeem Shares." Redemption proceeds for Exchange Account shares are
paid by Federal wire or check only. Exchange Account shares also are
eligible for the Auto-Exchange Privilege, Dividend Sweep and the
Automatic Withdrawal Plan. To use this service, you should consult your
Service Agent or call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed on its use. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in case of personal retirement plans, shares being exchanged must
have a current value of at least $500; furthermore, when establishing a
new account by exchange, the shares being exchanged must have a value of
at least the minimum initial investment required for the fund into which
the exchange is being made. The ability to issue exchange instructions by
telephone is given to all fund shareholders auto-
Page 19
matically, unless you check the applicable "No" box on the Account
Application indicating that you specifically refuse this Privilege. The
Telephone Exchange Privilege may be established for an existing account by
written request, signed by all shareholders on the Account, by a separate
signed Shareholder Services Form, available by calling 1-800-645-6561 or,
by oral request from any of the authorized signatories on the account,
also by calling 1-800-645-6561. If you have established the Telephone
Exchange Privilege, you may telephone exchange instructions (including
over The Dreyfus TouchRegistration Mark Automated Telephone System) by
calling 1-800-645-6561. If you are calling from overseas, call
516-794-5452. See "How to Redeem Shares _ Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made: Telephone Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, TELETRANSFER
Privilege and the dividend/capital gain distribution option (except for
Dividend Sweep)selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged. If you are exchanging Class A
shares into a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced
sales load, if the shares you are exchanging were: (a) purchased with a
sales load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestments of dividends or
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange your Service Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder
Services" in the Statement of Additional Information. 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 Securities and Exchange Commission. The Fund reserves the right to
reject any exchange request in whole or in part. The availability of Fund
Exchanges may be modified or terminated at any time upon notice to
shareholders. See "Dividends, Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE -- Auto-Exchange Privilege permits you to
invest regularly (on a semi-monthly, monthly, quarterly or annual basis),
in exchange for shares of the Fund, in shares of the same Class of other
funds in the Premier Family of Funds or certain other funds in the
Dreyfus Family of Funds of which you are currently a shareholder. WITH
RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO
THE AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ANOTHER FUND. The
Page 20
amount you designate, which can be expressed either in terms of a specific
dollar or share amount ($100 minimum), will be exchanged automatically on
the first and or fifteenth of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges of Class A
shares into funds sold with a sales load. No CDSC will be imposed on
Class B or Class C shares at the time of an exchange; however, Class B or
Class C shares acquired through an exchange will be subject on redemption
to the higher CDSC applicable to the exchanged or acquired shares. The
CDSC applicable on redemption of the acquired Class B or Class C shares
will be calculated from the date of the initial purchase of the Class B or
Class C shares exchanged. See "Shareholder Services" in the Statement of
Additional Information. 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 Premier
Value Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The Fund
may charge a service fee for this Privilege. No such fee currently is
contemplated. For more information concerning this Privilege and the
funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Auto-Exchange Authorization Form, please call
toll free 1-800-645-6561. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark -- Dreyfus-AUTOMATIC
Asset Builder permits you to purchase Fund shares (minimum of $100 and
maximum of $150,000 per transaction) at regular intervals selected by
you. Fund shares are purchased by transferring funds from the bank
account designated by you. At your option, the bank account designated by
you will be debited in the specified amount, and Fund shares will be
purchased, once a month, on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so
designated. To establish a Dreyfus-AUTOMATIC Asset Builder account, you
must file an authorization form with the Transfer Agent. You may obtain
the necessary authorization form by calling 1-800-645-6561. You may
cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to Premier Value
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, or, if for
Dreyfus Retirement Plan accounts, to The Dreyfus Trust Company,
Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- The Government Direct Deposit
Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund account. You
may deposit as much of such payments as you elect. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate
Page 21
your participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate your participation upon 30 days'
notice to you.
PAYROLL SAVINGS PLAN -- The Payroll Savings Plan permits you to
purchase Fund shares (minimum of $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 Automated Clearing House
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 Premier Value Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. You may obtain the necessary authorization form by calling
1-800-645-6561. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the
sole responsibility of your employer, not the Distributor, The Dreyfus
Corporation, the Fund, the Transfer Agent or any other person, to arrange
for transactions under the 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.
DIVIDEND OPTIONS -- Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if
any, paid by the Fund in shares of the same Class of another fund in the
Premier Family of Funds or The Dreyfus Family of Funds of which you are
an investor. Shares of the other fund will be purchased at the
then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you
are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a
reduced sales load. If you are investing in a fund or class that charges
a CDSC, the shares purchased will be subject on redemption to the CDSC,
if any, applicable to the purchased shares. See "Shareholder Services" in
the Statement of Additional Information. 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
Automated Clearing House member may be so designated. Banks may charge a
fee for this service.
For more information concerning these privileges or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Value Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
To select a new fund after cancellation, you must submit a new
authorization 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 to Dividend Sweep.
The Fund may modify or terminate these privileges at any time or charge a
service fee. No such fee currently is contemplated. Shares held under
Keogh Plans, IRAs or other retirement plans are not eligible for Dividend
Sweep.
AUTOMATIC WITHDRAWAL PLAN -- The Automatic Withdrawal Plan permits
you to request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if you have a $5,000 minimum
account. Particular Retirement Plans, including Dreyfus sponsored
retirement plans,
Page 22
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 than the Automatic Withdrawal Plan. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have
been issued may not be redeemed through the Automatic Withdrawal Plan.
Class B shareholders may arrange for monthly or quarterly
withdrawals from their account without the imposition of a CDSC, provided
that the amounts withdrawn under the Automatic Withdrawal 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.
Amounts in excess of 12% will be subject to a CDSC.
Class C shares withdrawn pursuant to the Automatic Withdrawal
Plan will be subject to any applicable CDSC. Purchases of additional
Class A shares where the sales load is imposed concurrently with
withdrawals of Class A shares generally are undesirable.
RETIREMENT PLANS -- The Fund offers a variety of pension and
profit-sharing plans, including Keogh Plans, IRAs, SEP-IRAs and IRA
"Rollover Accounts," 401(k) Salary Reduction Plans and 403(b)(7) Plans.
Plan support services also are available. You can obtain details on the
various plans by calling the following numbers toll free: for Keogh
Plans, please call 1-800-358-5566; for IRAs and IRA "Rollover Accounts,"
please call 1-800-645-6561; or for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
LETTER OF INTENT -- Class A Shares -- By signing a Letter of Intent
form, available by calling 1-800-645-6561, 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 under the
conditions set forth in the Letter of Intent. A minimum initial purchase
of $5,000 is required. To compute the applicable sales load, the offering
price of shares you hold (on the date of submission of the Letter of
Intent) in any Eligible Fund that may be used toward "Right of
Accumulation" benefits described above may be used as a credit toward
completion of the Letter of Intent. However, the reduced sales load will
be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference.
Page 23
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 made pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the
redemption request. The value of the shares redeemed may be more or less
than their original cost, depending on the Fund's then-current net asset
value.
Distributions from qualified Retirement Plans, IRAs
(including IRA "Rollover Accounts") and certain non-qualified deferred
compensation plans, except distributions representing returns of
non-deductible contributions to the Retirement Plan or IRA, generally are
taxable income to the participant. Distributions from such a Retirement
Plan or IRA to a participant prior to the time the participant reaches
age 59-1/2 or becomes permanently disabled may subject the participant to
an additional 10% penalty tax imposed by the IRS. Participants should
consult their tax advisers concerning the timing and consequences of
distributions from a Retirement Plan. Participants in qualified
Retirement Plans will receive a disclosure statement describing the
consequences of a distribution from such a Plan from the administrator,
trustee or custodian of the Plan, before receiving the distribution. The
Fund will not report to the IRS redemptions of Fund shares by qualified
Retirement Plans, IRAs or certain non-qualified deferred compensation
plans. The administrator, trustee or custodian of such Retirement Plans
and IRAs will be responsible for reporting distributions from such Plans
and IRAs to the IRS.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY TELETRANSFER OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
Page 24
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT
BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED
BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption by a shareholder of Class B shares which reduces the current
net asset value 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 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 your 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 net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining *the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
----------------- ------------------------
<S> <C>
First.................................................... 4.00
Second................................................... 4.00
Third.................................................... 3.00
Fourth................................................... 3.00
Fifth.................................................... 2.00
Sixth.................................................... 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares
Page 25
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.
For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired 5
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 net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate on the second year after purchase) for a total CDSC
of $9.60.
CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge _ Class B Shares" above.
WAIVER OF CDSC -- The CDSC applicable to Class B and Class C shares
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, and (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. If the Fund's Board determines to discontinue the waiver of the
CDSC, the disclosure in the Fund's Prospectus will be appropriately
revised. Any Fund shares subject to a CDSC which were purchased prior to
the termination of such waiver will have the CDSC waived as provided in
the Fund's Prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, 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 Wire Redemption Privilege, the Telephone Redemption
Privilege or the TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. If
you have given your Service Agent authority to instruct the Transfer
Agent to redeem shares and to credit the proceeds of such redemptions to
a designated account at your Service Agent, you may redeem shares only in
this manner and
Page 26
in accordance with the regular redemption procedure described below.
If you wish to use the other redemption methods described below, you
must arrange with your Service Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents or
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
wire or 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.
You may redeem 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 a telephone
redemption privilege or telephone exchange privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to
act on telephone instructions (including over The Dreyfus TouchRegistration
Mark Automated Telephone System) from any person representing himself or
herself to be you, or a representative of your Service 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 exchange of Fund shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Premier Value Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587, or, if for Dreyfus retirement
plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Written redemption requests must
specify the Class of shares being redeemed. Redemption requests must be
signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program,
the Securities Transfer Agents Medallion Program ("STAMP"), and the Stock
Page 27
Exchanges Medallion Program. If you have any questions with respect to
signature-guarantees, please contact your Service Agent or call the
telephone number listed on the cover of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account at a
bank which is a member of the Federal Reserve System, or a correspondent
bank if your bank is not a member. You also may direct that redemption
proceeds be paid by check (maximum $150,000 per day)made out to the
owners of record and mailed to your address. Redemption proceeds of less
than $1,000 will be paid automatically by check. Holders of jointly
registered Fund or bank accounts may have redemption proceeds of not more
than $250,000 wired within any 30-day period. You may telephone
redemption requests by calling 1-800-645-6561 or, if you are calling from
overseas, call 516-794-5452. The Statement of Additional Information sets
forth instructions for transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone
(maximum $150,000 per day) that redemption proceeds be paid by check and
mailed to your address. You may telephone redemption instructions by
calling 1-800-645-6561 or, if you are calling from overseas, call
516-794-5452.
TELETRANSFER PRIVILEGE -- You may request by telephone (minimum $500
per day) that proceeds be transferred between your Fund account and your
bank account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000
per day) and mailed to your address. Holders of jointly registered Fund
or bank accounts may redeem through the TELETRANSFER Privilege for
transfer to their bank account not more than $250,000 within any 30-day
period.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a
Selected Dealer, you may make the redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the New York Stock Exchange (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 New York Stock Exchange, the redemption
request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor has sales
agreements for the repurchase of
Page 28
shares held by shareholders. Repurchase orders received by dealers by
the close of trading on the floor of the New York Stock Exchange 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 New York Stock Exchange on that day. Otherwise, the shares will
be redeemed at the next determined net asset value. 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 -- Class A and Class B -- You may reinvest up
to the number of Class A shares you have redeemed, within 45 days of
redemption, at the then-prevailing net asset value without a sales load,
or reinstate your account for the purpose of exercising the Exchange
Privilege. The Reinvestment Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
(CLASS A, CLASS B AND CLASS C ONLY)
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN -- Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an annual rate of
.75 of 1% of the value of the average daily net assets of Class B and
Class C.
SHAREHOLDER SERVICES PLAN -- Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of of each such
Class. 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 services
related to the maintenance of shareholder accounts. The Distributor may
make payments to Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from net investment income
and distributes net realized securities gains, if any, once a year, but
it may make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive dividends and distributions in cash or to reinvest in
additional shares of the same Class at net asset value. Dividends and
distributions paid in cash to Retirement Plans, however, may be subject
to additional tax as described below. All expenses are accrued daily and
deducted before declaration of dividends. Dividends paid by each Class
will be calculated at the same time and in the same manner and will be of
the same amount, except that the expenses attributable solely to a
particular Class will be borne exclusively by such Class. Class B and
Class C shares will receive lower per share dividends than Class A
shares, which will receive lower per share divi-
Page 29
dends than Class R shares, because of the higher expenses borne by the
relevant Class. See "Fee Table."
Dividends paid by the Fund to qualified Retirement Plans,
IRAs (including IRA "Rollover Accounts") or certain non-qualified
deferred compensation plans ordinarily will not be subject to taxation
until the proceeds are distributed from the Retirement Plan or IRA. The
Fund will not report dividends paid to such Plans and IRAs to the IRS.
Generally, distributions from such Retirement Plans and IRAs, except
those representing returns of non-deductible contributions thereto, will
be taxable as ordinary income and, if made prior to the time the
participant reaches age 591\2, generally will be subject to an additional
tax equal to 10% of the taxable portion of the distribution. If the
distribution from such a Retirement Plan (other than certain governmental
or church plans) or IRA for any taxable year following the year in which
the participant reaches age 701\2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or
custodian of such a Retirement Plan or IRA will be responsible for
reporting distributions from such Plans and IRAs to the IRS. Participants
in qualified Retirement Plans will receive a disclosure statement
describing the consequences of a distribution from such a Plan from the
administrator, trustee or custodian of the Plan prior to receiving the
distribution. Moreover, certain contributions to a qualified Retirement
Plan or IRA in excess of the amounts permitted by law may be subject to
an excise tax.
Dividends derived from net investment income, together with
distributions from any net realized short-term securities gains and all
or a portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders as ordinary income whether received in cash or reinvested in
Fund shares. Depending upon the composition of the Fund's income, a
portion of the dividends from net investment income may qualify for the
dividends received deduction allowable to certain U.S. corporations.
Distributions from net realized long-term securities gains of the Fund
will be taxable to U.S. shareholders as long-term capital gains for
Federal income tax purposes, regardless of how long shareholders have
held their Fund shares and whether such distributions are received in
cash or reinvested in Fund shares. The Code provides that the net capital
gain of an individual generally will not be subject to Federal income tax
at a rate in excess of 28%. Dividends and distributions also may be
subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate
of 30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from net realized long-term
securities gains paid by the Fund to a foreign investor as well as the
proceeds of any redemptions from a foreign investor's account, regardless
of the extent to which gain or loss may be realized, generally will not
be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Page 30
Notice as to the tax status of your dividends and
distributions is mailed to you annually. You also will receive periodic
summaries of your account which will include information as to income
dividends and distributions from securities gains, if any, paid during
the year. Participants in a Retirement Plan or IRA should receive
periodic statements from the trustee, custodian or administrator of their
Plan.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares, if you exchange your Class A shares
for shares of another fund advised by The Dreyfus Corporation within 91
days of purchase and such other fund reduces or eliminates its otherwise
applicable sales load charge for the purpose of the exchange. In this
case, the amount of your sales load charge for Class A shares, up to the
amount of the reduction of the sales load charge on the exchange, is not
included in the basis of your Class A shares for purposes of computing
gain or loss on the exchange, and instead is added to the basis of the
fund shares received on the exchange.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
With respect to individual investors and certain
non-qualified Retirement Plans, Federal regulations generally require the
Fund to withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends, distributions from net realized securities gains and
the proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from
the IRS of being subject to backup withholding as a result of a failure
to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines that a shareholder's TIN is
incorrect or if a shareholder has failed to properly report dividend and
interest income on such shareholder's Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that the Fund qualified for
the fiscal year ended October 31, 1995 as a "regulated investment
company" under the Code. The Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the Fund of any
liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The
Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable income and capital gains.
You should consult your tax adviser regarding specific
questions as to Federal, state and local taxes.
Page 31
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares will be calculated on the basis of average annual total return
and/or total return. These total return figures reflect changes in the
price of the shares and assume that any income dividends and or capital
gains distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and Class C should be expected to
be lower than that of Class A and the performance of Class A, Class B and
Class C should be expected to be lower than that of Class R. Performance
for each Class will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The
return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one,
five and ten year periods, or for shorter time periods depending upon the
length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (or maximum offering price in the case of Class A) per
share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return. Total return may also
be calculated by using the net asset value per share at the beginning of
the period instead of the maximum offering price per share at the
beginning of the period for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B and Class C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the applicable sales charge which, if reflected, would
reduce the performance quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's shares, including data from
Lipper Analytical Services, Inc., Standard & Poor's 500 Composite Stock
Price Index, the Dow Jones Industrial Average, Morningstar, Inc. and
other industry publications.
Page 32
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated July 24,
1985, and commenced operations on October 1, 1986. On September 1, 1995,
the Fund's name was changed from Dreyfus Strategic Investing to Premier
Strategic Investing, and, on August 5, 1996, to Premier Value Fund. The
Fund is authorized to issue an unlimited number of shares of beneficial
interest, par value $.001 per share. The Fund's shares are classified
into four classes _ Class A, Class B, Class C and Class R. Each share has
one vote and shareholders will vote in the aggregate and not by class
except as otherwise required by law or when class voting is permitted by
the Fund's Board. However, only holders of Class B and Class C shares
will be entitled to vote on matters submitted to shareholders pertaining
to the Distribution Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by the Fund or a Board member. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder personally held 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
management believes is remote. Upon payment of any liability incurred by
the Fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Fund intend to
conduct its operations in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
described under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove Board
members.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account. The Fund sends annual
and semi-annual financial statements to all its shareholders.
Shareholder inquiries may be made to your Service Agent or by
writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
Page 33
APPENDIX
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS -- Foreign currency transactions may be
entered into for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the
Fund has agreed to buy or sell; or to hedge the U.S. dollar value of
securities the Fund already owns, particularly 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 Dreyfus Corporation's ability to predict
accurately the future exchange rates between foreign currencies and the
U.S. dollar.
SHORT-SELLING -- In these transactions, the Fund sells a security it
does not own in anticipation of a decline in the market value of the
security. To complete the transaction, the Fund must borrow the security
to make delivery to the buyer. The Fund is obligated to replace the
security borrowed by purchasing it subsequently at the market price at
the time of replacement. The price at such time may be more or less than
the price at which the security was sold by the Fund, which would result
in a loss or gain, respectively.
Securities will not be sold short if, after effect is given
to any such short sale, the total market value of all securities sold
short would exceed 25% of the value of the Fund's net assets. The Fund
may not sell short the securities of any single issuer listed on a
national securities exchange to the extent of more than 5% of the value
of the Fund's net assets. The Fund may not make a short sale which
results in the Fund having sold short in the aggregate more than 5% of
the outstanding securities of any class of an issuer.
The Fund also may make short sales "against the box," in
which the Fund enters into a short sale of a security it owns in order to
hedge an unrealized gain on the security. At no time will more than 15%
of the value of the Fund's net assets be in deposits on short sales
against the box.
LEVERAGE -- Leveraging exaggerates the effect on net asset value of
any increase or decrease in the market value of the Fund's portfolio.
Money borrowed for leveraging will be limited to 331\3% of the value of
the Fund's total assets. These borrowings will be subject to interest
costs which may or may not be recovered by appreciation of the securities
purchased; in certain cases, interest costs may exceed the return
received on the securities purchased.
The Fund may enter into reverse repurchase agreements with
banks, brokers or dealers. This form of borrowing involves the transfer
by the Fund of an underlying debt instrument in return for cash proceeds
based on a percentage of the value of the security. The Fund retains the
right to receive interest and principal payments on the security. At an
agreed upon future date, the Fund
Page 34
repurchases the security at principal plus accrued interest. Except for
these transactions, the Fund's borrowings generally will be unsecured.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations
and Risks -- Use of Derivatives." These instruments and certain related
risks are described more specifically under "Investment Objective and
Management Policies _ Management Policies _ Derivatives" in the Statement
of Additional Information.
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.
If the Fund invests in Derivatives at inappropriate times or
judges market conditions incorrectly, such investments may lower the
Fund's return or result in a loss. The Fund also could experience losses
if its Derivatives were poorly correlated with its other investments, or
if the Fund were unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant, rapid
and unpredictable changes in the prices for Derivatives.
Although the Fund will not be a commodity pool, Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in certain
Derivatives. The Fund may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, the Fund may
not invest in such contracts and options for other purposes if the sum of
the amount of initial margin deposits and premiums paid for unexpired
options with respect to such contracts, other than for bona fide hedging
purposes, exceed 5% of the liquidation value of the Fund's assets, after
taking into account unrealized profits and unrealized losses on such
contracts and options; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5% limitation.
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 Securities and Exchange Commission, 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.
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, 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 income
on the loaned securities' collateral. Loans of portfolio securities may
not exceed 331\3% of the value of the Fund's total assets, and the Fund
will receive collateral consisting of cash, U.S.
Page 35
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.
FORWARD COMMITMENTS -- The Fund may purchase securities on a forward
commitment basis 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 that will be
received 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 cash, cash equivalents or U.S. Government securities
or other high quality liquid debt securities at least equal at all times
to the amount of the when-issued commitments will be established and
maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
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.
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.
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 amount of the
discount fluctuates with the market price of the security. 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.
Page 36
MONEY MARKET INSTRUMENTS -- The Fund may invest in the following
types of money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities include U.S.
Treasury securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S.
Government agencies and instrumentalities are supported by the full faith
and credit of the U.S. Treasury; others by the right of the issuer to
borrow from the Treasury; others by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or
instrumentality; and others only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates
of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance
can be given that it will always do so since it is not so obligated by
law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund
buys, and the seller agrees to repurchase, a security at a mutually
agreed upon time and price (usually within seven days). The repurchase
agreement thereby determines the yield during the purchaser's holding
period, while the seller's obligation to repurchase is secured by the
value of the underlying security. Repurchase agreements could involve
risks in the event of a default or insolvency of the other party to the
agreement, including possible delays or restrictions upon the Fund's
ability to dispose of the underlying securities. The Fund may enter into
repurchase agreements with certain banks or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by domestic banks, foreign subsidiaries or foreign
branches of domestic banks, domestic and foreign branches of foreign
banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign
subsidiaries or foreign branches of domestic banks, and domestic and
foreign branches of foreign banks, the Fund may be subject to additional
investment risks that are different in some respects from those incurred
by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund _ Investment Considerations and
Risks _ Foreign Securities."
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with it for
a specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer
than seven days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations bearing fixed,
floating or variable interest rates.
COMMERCIAL PAPER. Commercial paper consists of short-term,
unsecured promissory notes issued to finance short-term credit needs. 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 or
Page 37
A-1 by S&P, (b) issued by companies having an outstanding unsecured debt
issue currently rated at least A3 by Moody's or A- by S&P, or (c) if
unrated, determined by The Dreyfus Corporation to be of comparable quality
to those rated obligations which may be purchased by the Fund.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, repurchase agreements providing
for settlement in more than seven days after notice, and certain
privately negotiated, non-exchange traded options and securities used to
cover such options. As to these securities, the Fund is subject to a risk
that should the Fund desire to sell them when a ready buyer is not
available at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.
RATINGS -- Securities rated Ba by Moody's are judged to have
speculative elements; their future cannot be considered as well assured
and often the protection of interest and principal payments may be very
moderate. Securities rated BB by S&P are regarded as having predominantly
speculative characteristics and, while such obligations have less
near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity
to meet timely interest and principal payments. Securities rated Caa by
Moody's are of poor standing and may be in default or there may be
present elements of danger with respect to principal or interest. S&P
typically assigns a CCC rating to debt which has a current identifiable
vulnerability to default and is dependent upon favorable business,
financial and economic conditions to meet timely payments of interest and
repayment of principal. Such securities, though high yielding, are
characterized by great risk. See "Appendix" in the Statement of
Additional Information for a general description of securities ratings.
The ratings of Moody's and S&P represent their opinions as to
the quality of the obligations which they undertake to rate. Ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation also will evaluate these securities and the ability of the
issuers of such securities to pay interest and principal. The Fund's
ability to achieve its investment objective may be more dependent on The
Dreyfus Corporation's credit analysis than might be the case for a fund
that invested in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
037P120196
Page 38
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Page 40
PREMIER VALUE FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 1, 1996
AS REVISED,
DECEMBER 1, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Value Fund (the "Fund"), dated March 1, 1996, as revised
December 1, 1996. To obtain a copy of the Fund's Prospectus, please write
to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-11
Management Agreement. . . . . . . . . . . . . . . . . . . . B-15
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . B-17
Distribution Plan and Shareholder Services Plan . . . . . . B-18
Redemption of Shares. . . . . . . . . . . . . . . . . . . . B-20
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-22
Determination of Net Asset Value. . . . . . . . . . . . . . B-25
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-26
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-27
Performance Information . . . . . . . . . . . . . . . . . . B-28
Information About the Fund. . . . . . . . . . . . . . . . . B-30
Transfer and Dividend Disbursing Agent, Custodian, Counsel
and Independent Auditors. . . . . . . . . . . . . . . B-30
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . B-31
Financial Statements. . . . . . . . . . . . . . . . . . . . B-36
Report of Independent Auditors. . . . . . . . . . . . . . . B-48
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Depositary Receipts. These securities may be purchased through
"sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the underlying security and a
depositary, whereas a depositary may establish an unsponsored facility
without participation by the issuer of the underlying security and a
depositary, whereas a depositary may establish an unsponsored facility
without participation by the issuer of the deposited security. Holders of
unsponsored depositary receipts generally bear all the costs of such
facilities and the depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from
the issuer of the deposited security or to pass through voting rights to
the holders of such receipts in respect of the deposited securities.
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities acquired
by a Fund under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Fund. In an attempt to reduce the risk of incurring a loss on
a repurchase agreement, the Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of $1 billion, or primary
government securities dealers reporting to the Federal Reserve Bank of New
York, with respect to securities of the type in which the Fund may invest,
and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no established
secondary market for these obligations, although they are redeemable at
face value, plus accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies, and the Fund may invest
in them only if at the time of an investment the borrower meets the
criteria set forth in the Prospectus for other commercial paper issuers.
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.
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 the Manager to be of comparable
quality to the other obligations in which the Fund may invest. Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally,
there will be a lapse of time between the Fund's decision to sell any such
security and the registration of the security permitting sale. During any
such period, the price of the securities will be subject to market
fluctuations. However, where a substantial market of qualified
institutional buyers has developed for certain unregistered securities
purchased by the Fund pursuant to Rule 144A under the Securities Act of
1933, as amended, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Fund's Board.
Because it is not possible to predict with assurance how the market for
specific restricted securities sold pursuant to Rule 144A will develop, the
Fund's Board has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity in its investment portfolio during such period.
Management Policies
Leverage. For borrowings for investment purposes, the Investment
Company Act of 1940, as amended (the "1940 Act"), requires the Fund to
maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of
its portfolio holdings within three days to reduce the debt 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 to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowings over the
stated interest rate. To the extent the Fund enters into a reverse
repurchase agreement, the Fund will maintain in a segregated custodial
account cash or U.S. Government securities or other high quality liquid
debt securities 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 Securities and Exchange
Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund.
Short-Selling. Until the Fund closes its short position or replaces
the borrowed security, it will: (a) maintain a segregated account,
containing cash or U.S. Government securities, at such a level that the
amount deposited in the account plus the amount deposited with the broker
as collateral always equals the current value of the security sold short;
or (b) otherwise cover its short position.
Lending Portfolio Securities. In connection with the Fund's
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 Securities and Exchange Commission 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 Fund's Board must terminate the
loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs.
Derivatives. The Fund may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a 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.
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., 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,
the Manager 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--In General. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and
the International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited. Foreign markets may offer advantages such as trading
opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than
domestic markets. For example, some foreign exchanges are principal
markets so that no common clearing facility exists and an investor may look
only to the broker for performance of the contract. In addition, any
profits that the Fund might realize in trading could be eliminated by
adverse changes in the exchange rate, or the Fund could incur losses as a
result of those changes. Transactions on foreign exchanges may include
both commodities which are traded on domestic exchanges and those which are
not. Unlike trading on domestic commodity exchanges, trading on foreign
commodity exchanges is not regulated by the Commodity Futures Trading
Commission.
Engaging in these transactions involves risk of loss to the Fund
which could adversely affect the value of the Fund's net assets. Although
the Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the
Manager's ability to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for
hedging purposes, 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 Securities
and Exchange Commission, the Fund may be required to segregate cash or high
quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of limiting
the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or
receive an amount of cash equal to a fixed dollar amount specified in the
futures contract multiplied by the difference between the settlement price
of the contract on the contract's last trading day and the value of the
index based on the stock prices of the securities that comprise it at the
opening of trading in such securities on the next business day.
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 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.
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.
Specific Options Transactions. The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the
closing level of the stock index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. Thus, the effectiveness of purchasing or
writing stock index options will depend upon price movements in the level
of the index rather than the price of a particular stock.
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 may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps
in pursuit of its investment objective. 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) denominated in U.S. dollars or foreign currency.
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 the Manager to predict correctly movements in the prices of individual
stocks or the stock market generally. 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.
Forward Commitments. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in
the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception
of the creditworthiness of the issuer and changes, real or anticipated, in
the level of interest rates. Securities purchased on a forward commitment
or when-issued basis may expose the Fund to risks because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued basis can involve the additional risk that the
yield available in the market when the delivery takes place actually may be
higher than that obtained in the transaction itself. Purchasing securities
on a forward commitment or when-issued basis when the Fund is fully or
almost fully invested may result in greater potential fluctuation in the
value of the Fund's net assets and its net asset value per share.
Investment Considerations and Risks
Lower Rated Securities. The Fund is permitted to invest in
securities rated Ba by Moody's Investors Service, Inc. ("Moody's") and BB
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P" and with Moody's, the "Rating Agencies") and as low
as Caa by Moody's or CCC by S&P. Such securities, though higher yielding,
are characterized by risk. See "Description of the Fund--Investment
Considerations and Risks" in the Prospectus for a discussion of certain
risks and "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 Manager's judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These securities are
considered by the Ratings Agencies to be, on balance, 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
experience financial stress and 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 or the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss
because of default by the issuer is significantly greater for the holders
of these securities because such securities generally are unsecured and
often are subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Manager 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 bonds does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
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 persons concerning the acquisition of
such securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also
apply to lower rated zero coupon securities and pay-in-kind bonds in which
the Fund may invest up to 5% of its net assets. Pay-in-kind bonds pay
interest through the issuance of additional securities. Zero coupon
securities and pay-in-kind bonds carry an additional risk in that, unlike
bonds which pay interest throughout the period to maturity, the Fund will
realize no cash until the cash payment date unless a portion of such
securities is sold and, if the issuer defaults, the Fund may obtain no
return at all on its investment.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 13 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. Investment restriction number 14 is not a
fundamental policy and may be changed by a vote of a majority of the Fund's
Board members at any time. The Fund may not:
1. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
2. Purchase securities of closed-end investment companies except (a)
in the open market where no commission except the ordinary broker's
commission is paid, which purchases are limited to a maximum of (i) 3% of
the total voting stock of any one closed-end investment company, (ii) 5% of
its net assets with respect to any one closed-end investment company and
(iii) 10% of its net assets in the aggregate, or (b) those received as part
of a merger or consolidation. The Fund may not purchase the securities of
open-end investment companies other than itself.
3. Purchase or retain the securities of any issuer if the officers,
Trustees or Directors of the Fund or the Manager individually own
beneficially more than 1/2 of 1% of the securities of such issuer or
together own beneficially more than 5% of the securities of such issuer.
4. Invest in commodities, except that the Fund may purchase and sell
futures contracts, including those relating to indices, and options on
futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil and gas interests,
but the Fund may purchase and sell securities that are secured by real
estate and may purchase and sell securities issued by companies that invest
or deal in real estate.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33 1/3% of the value of the
Fund's total assets). For purposes of this investment restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or delayed-delivery
basis and collateral and initial or variation margin arrangements with
respect to options, futures contracts, including those relating to indices,
and options on futures contracts or indices.
8. Make loans to others, except through the purchase of debt
obligations. However, the Fund may lend its portfolio securities in an
amount not to exceed 33 1/3% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines established by
the Securities and Exchange Commission and the Fund's Trustees.
9. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
11. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
12. Invest more than 25% of its assets in investments in any
particular industry or industries (including banking), provided that, when
the Fund has adopted a temporary defensive posture, there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
13. Purchase warrants in excess of 2% of net assets. For purposes of
this restriction, such warrants shall be valued at the lower of cost or
market, except that warrants acquired by the Fund in units or attached to
securities shall not be included within this 2% restriction.
14. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15% of the value of the Fund's net assets would
be so invested.
If a percentage restriction is adhered to at the time an investment
is made, a later increase in percentage resulting from a change in values
or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Fund
*DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 through December 31,
1994, Mr. Burke was a Consultant to the Manager, and from October 1990
to August 1994, he was Vice President and Chief Administrative Officer
of the Manager. From 1977 to 1990, Mr. Burke was involved in the
management of national television news, as Vice President and
Executive Vice President of ABC News, and subsequently as President of
CBS News. Mr. Burke is 60 years old and his address is Box 654,
Eastham, Massachusetts 02642.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
Chairman of the Board of Noel Group, Inc., a venture capital company;
and a director of the Muscular Dystrophy Association, HealthPlan
Services Corporation, Belding Heminway Company, Inc., a manufacturer
and marketer of industrial threads, specialty yarns and home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals, and automotive and other
hardware; and Staffing Resources, Inc. For more than five years prior
to January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 24, 1994, the Fund's
distributor. From August 1994 to December 31, 1994, he was a director
of Mellon Bank Corporation. Mr. DiMartino is 52 years old and his
address is 200 Park Avenue, New York, New York 10166.
DIANE DUNST, Board Member. Since January 1992, President of Diane Dunst
Promotion, Inc., a full service promotion agency. From January 1989
to January 1992, Director of Promotion Services, Lear's Magazine.
From 1985 to January 1989, she was Sales Promotion Manager of ELLE
Magazine. Ms. Dunst is 56 years old and her address is 1172 Park
Avenue, New York, New York 10128.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a
merchandise and marketing consulting firm. Prior to 1974, she was
Vice President of Macy's, New York. Ms. Jacobs is 71 years old and
her address is c/o Corporate Property Investors, 305 East 47th Street,
New York, New York 10017.
JAY I. MELTZER, Board Member. Physician engaged in private practice
specializing in internal medicine. He is also a member of the
Advisory Board of the Section of Society and Medicine, College of
Physicians and Surgeons, Columbia University and Clinical Professor of
Medicine, Department of Medicine, Columbia University College of
Physicians and Surgeons; and Adjunct Clinical Professor of Medicine at
Cornell College of Medicine. Dr. Meltzer is 68 years old and his
address is 903 Park Avenue, New York, New York 10021.
DANIEL ROSE, Board Member. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. He is also Chairman of the Housing Committee of The
Real Estate Board of New York, Inc., and a Trustee of Corporate
Property Investors, a real estate investment company. Mr. Rose is 66
years old and his address is c/o Rose Associates, Inc., 380 Madison
Avenue, New York, New York 10017.
WARREN B. RUDMAN, Board Member. Since January 1993, Partner in the law
firm Paul, Weiss, Rifkind, Wharton & Garrison. From January 1981 to
January 1993, Mr. Rudman served as a United States Senator from the
state of New Hampshire. Also, since January 1993, Mr. Rudman has
served as Vice Chairman of the Federal Reserve Bank of Boston and as a
director of Chubb Corporation. Since 1988, Mr. Rudman has served as a
trustee of Boston College and, since 1986, as a member of the Senior
Advisory Board of the Institute of Politics of the Kennedy School of
Government at Harvard University. Mr. Rudman is 66 years old and his
address is c/o Paul, Weiss, Rifkind, Wharton & Garrison, 1615 L.
Street, N.W., Washington, D.C. 20036.
SANDER VANOCUR, Board Member. Since January 1994, a Visiting Professional
Scholar at the Freedom Forum First Amendment Center at Vanderbilt
University; since January 1992, President of Old Owl Communications, a
full-service communications firm; and since November 1989, a director
of the Damon Runyon-Walter Winchell Cancer Research Fund. From June
1986 to December 1991, he was a Senior Correspondent of ABC News and,
from October 1986 to December 31, 1991, he was Anchor of the ABC News
program "Business World," a weekly business program on the ABC
television network. Mr. Vanocur is 68 years old and his address is
2928 P Street, N.W., Washington, D.C. 20007.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount payable to Board members. The aggregate amount of
compensation paid by the Fund to each Board member for the fiscal year
ended October 31, 1995, and by 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 parentheses next to each Board member's total compensation) for
the calendar year ended December 31, 1995 is as follows:
Total Compensation
From Fund and
Aggregate Fund Complex
Name of Board Compensation from Paid to Board
Member the Fund* Member
David W. Burke $5,000 $253,654 (51)
Joseph S. DiMartino1 $4,778 $448,618 (94)
Diane Dunst $5,000 $ 39,000 (9)
Rosalind Gersten Jacobs $5,000 $ 92,500 (20)
Jay I. Meltzer $4,500 $ 37,500 (9)
Daniel Rose $5,000 $ 80,250 (21)
Warren B. Rudman $5,000 $ 85,500 (17)
Sander Vanocur $5,000 $ 79,750 (21)
___________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $514 for all Board members as a group.
1 Elected Chairman of the Board on February 8, 1995.
There ordinarily will be no meetings of shareholders for the purpose
of electing Board members unless and until such time as less than a
majority of the Board members holding office have been elected by
shareholders, at which time the Board members then in office will call a
shareholders' meeting for the election of Board members. Under the 1940
Act, shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board is required to call a meeting of shareholders for the
purpose of voting upon the question of removal of any such Board member
when requested in writing to do so by the shareholders of record of not
less than 10% of the Fund's outstanding shares.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Board members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board
members who are not "interested persons" of the Fund.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. Prior to December 1991, she served
as Vice President and Controller, and later as Senior Vice President,
of The Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray. He is 32 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, he was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company. He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company. She is 32 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston
Company. He is 27 years old.
ELIZABETH A. BACHMAN, Vice President and Assistant Secretary. Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
MARK A. KARPE, Vice President and Assistant Secretary. Vice President of
the Distributor and an officer of other investment companies advised
or administered by the Manager. He is 27 years old.
JOSEPH F. TOWER,III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 34 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on February 15, 1996.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994, as amended, with the
Fund which is subject to annual approval by (i) the Fund's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or the Manager, by vote
cast in person at a meeting called for the purpose of voting such approval.
The Agreement was approved by shareholders on August 3, 1994, and was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting
held on August 9, 1995. The Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board or by vote of the holders of a majority
of the Fund's shares or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
W. Keith Smith, Vice Chairman of the Board; Stephen E. Canter, Vice
Chairman, Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman--Distribution and a director; Philip L. Toia, Vice Chairman--
Operations and Administration and a director; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Elie M. Genadry, Vice
President--Institutional Sales; William F. Glavin, Jr., Vice President--
Corporate Development; Mark N. Jacobs, Vice President--Legal, General
Counsel and Secretary; Patrice M. Kozlowski, Vice-President--Corporate
Communications; Mary Beth Leibig, Vice President--Human Resources; Jeffrey
N. Nachman, Vice President--Mutual Fund Accounting; Andrew S. Wasser, Vice
President--Information Services; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides
the Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The Fund's portfolio managers are
Timothy M. Ghriskey, Richard B. Hoey and Wolodymyr Wronskyj. The Manager
also maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as for other funds advised by the Manager. All purchases and sales
are reported for the Board's review at the meeting subsequent to such
transactions.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: taxes, interest, loan commitment fees,
dividends and interest paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
meetings and any extraordinary expenses. Class B and Class C shares are
subject to an annual distribution fee and Class A, Class B and Class C
shares are subject to an annual service fee. See "Distribution Plan and
Shareholder Services Plan."
As compensation for its services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .75 of 1% of the
value of the Fund's average daily net assets. For the fiscal years ended
October 31, 1993, 1994 and 1995, the management fees paid by the Fund
amounted to $2,022,123, $2,259,762 and $1,953,914, respectively.
The Manager has agreed that if, in any fiscal year, the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for funds in the Dreyfus Family of Funds and for certain
other investment companies. In some states, certain financial institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
For the period from August 24, 1994 through October 31, 1994 and for
the fiscal year ended October 31, 1995, the Distributor retained $1,701 and
$8,880, respectively, from sales load on Fund shares. For the fiscal year
ended October 31, 1993 and for the period from November 1, 1993 through
August 23, 1994, Dreyfus Service Corporation, as the Fund's distributor
during such period, retained $561,439 and $297,139, respectively, from
sales loads on Fund shares.
Sales Loads -- Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to
a plan qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code")) although more than one beneficiary is involved; or a
group of accounts established by or on behalf of the employees of an
employer or affiliated employers pursuant to an employee benefit plan or
other program (including accounts established pursuant to Sections 403(b),
408(k), and 457 of the Code); or an organized group which has been in
existence for more than six months, provided that it is not organized for
the purpose of buying redeemable securities of a registered investment
company and provided that the purchases are made through a central
administration or a single dealer, or by other means which result in
economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of
Class A shares of the Fund aggregating less than $50,000 subject to the
current schedule of sales charges set forth in the Fund's Prospectus at a
price based upon the net asset value of the Fund's Class A shares on
October 31, 1995:
Net Asset Value per Share $21.59
Per Share Sales Charge - 5.75%
of offering price (6.10% of
net asset value per share) $ 1.32
Per share Offering Price to $22.91
the Public
TeleTransfer Privilege. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day that Dreyfus Transfer, Inc., the Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock Exchange
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 New York Stock Exchange are open for business, or orders made on
Saturday or any Fund holiday (e.g., when the New York Stock Exchange 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 TeleTransfer, payments for purchase of Fund shares must be drawn on,
and redemption proceeds paid to, the same bank and account as is 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
also "Redemption of Shares--TeleTransfer Privilege."
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
Class B and Class C shares are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the 1940 Act, provides, among other things,
that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. The Fund's
Board has adopted such a plan (the "Distribution Plan") with respect to
Class B and Class C shares, pursuant to which the Fund pays the Distributor
for distributing the Fund's Class B and Class C shares. The Fund's Board
believes that there is a reasonable likelihood that the Distribution Plan
will benefit the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Board for its review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of Class B or Class C shares may bear for distribution pursuant to
the Distribution Plan without the approval of such shares and that other
material amendments of the Distribution Plan must be approved by the Board,
and by the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund and have no direct or indirect financial interest
in the operation of the Distribution Plan or in any agreements entered into
in connection with the Distribution Plan by vote of the Board members 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 the Board members cast in person at a meeting called for the
purpose of voting on the Distribution Plan. The Distribution Plan was last
so approved by the Board at a meeting held on August 5, 1996. As to each
such Class of shares, the Distribution Plan may be terminated at any time
by vote of a majority of the Board members who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Distribution Plan or in any agreements entered into in connection with the
Distribution Plan or by vote of the holders of a majority of such Class of
shares.
For the fiscal year ended October 31, 1995, the Fund paid the
Distributor $315,491 with respect to Class B under the Distribution Plan.
For the period September 1, 1995 (commencement of limited offering) through
October 31, 1995, the Fund paid the Distributor $1 with respect to Class C
under the Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A, 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 services related to
the maintenance of such shareholder accounts. Under the Shareholder
Services Plan, the Distributor may make payments to certain financial
institutions, securities dealers and other financial industry professionals
(collectively, "Service Agents") in respect of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board for its review. In addition, the Shareholder
Services Plan provides that material amendments must be approved by the
Fund's Board, and by the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote of the Board members cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan.
The Shareholder Services Plan was last so approved on August 5, 1996. As
to each such class of shares, the Shareholder Services Plan is terminable
at any time by vote of a majority of the Board members who are not
"interested persons" and who have no direct or indirect financial interest
in the operation of the Shareholder Services Plan or in any agreements
entered into in connection with the Shareholder Services Plan.
For the fiscal year ended October 31, 1995, the Fund paid the
Distributor $546,140 with respect to Class A shares, and $105,163 with
respect to Class B shares, pursuant to the Shareholder Services Plan. For
the period September 1, 1995 (commencement of initial offering) through
October 31, 1995, the Fund paid the Distributor $1 with respect to Class C
shares pursuant to the Shareholder Services Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service 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 to a correspondent bank if the investor's bank is not a
member of the Federal Reserve System. 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 wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will
be effected as a TeleTransfer transaction through the Automated Clearing
House ("ACH") system unless more prompt transmittal is specifically
requested. Redemption proceeds will be on deposit in the investor's
account in an ACH member bank ordinarily two business days after receipt of
the redemption request. See "Purchase of Shares--TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each 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 New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please contact your Service Agent.
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 Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Fund's Board reserves the right to make payments in whole or
part in securities (which may include non-marketable securities) or other
assets of the Fund 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 Redemption. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange 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 Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by the Manager. Shares of the same Class of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Exchanges for shares of funds 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 distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods, if
any, will be deemed to have been held since the date the shares
being exchanged were initially purchased.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, the investor's Service 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,
indicated that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer
Agent to act on telephone exchange instructions (including over The Dreyfus
TouchRegistration Mark automated telephone system) from any person
representing himself or herself to be the investor, or a representative of
the investor's Service Agent, and reasonably believed by the Transfer Agent
to be genuine. Telephone exchanges may be subject to limitations as to the
amount involved or the number of telephone exchanges permitted. Shares
issued in certificate form are not eligible for telephone exchange.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for shares of the fund into which the exchange is being
made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with only one participant,
the minimum initial investment is $750. To exchange shares held in
corporate plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same Class of the funds in the
Premier Family of Fund or the Dreyfus Family of Funds. To exchange shares
held in a personal retirement plan account, the shares exchanged must have
a current value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares of the
same Class of another fund in the Premier Family of Funds or the Dreyfus
Family of Funds. This Privilege is available only for existing accounts.
With respect to Class R shares held by a Retirement Plan, exchanges may be
made only between the investor's Retirement Plan account in one fund and
such investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above under
"Fund Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following such notification by
the investor. An investor will be notified if his account falls below the
amount designated under this Privilege. In this case, an investor's
account will fall to zero unless additional investments are made in excess
of the designated amount prior to the next Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and
from regular accounts to IRA accounts, but not from IRA accounts to regular
accounts. With respect to all other retirement accounts, exchanges may be
made among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
the Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to invest
automatically their dividends or dividends and capital gains distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this Privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds
offered without a sales load.
B. Dividends and 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 distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a CDSC and the applicable CDSC,
if any, will be imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans, including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
are also available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity which acts as custodian may charge a fee for Keogh Plans,
403(b)(7) Plans or IRAs, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity which acts as custodian. Purchases for these
plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs, with more than one participant, is
$2,500, with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs, and 403(b)(7)
Plans with only one participant is ordinarily $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details as to
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
Valuation of Portfolio Securities. Portfolio securities, including
covered call options written by the Fund, 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, except in the case of open short positions where the asked price is
used for valuation purposes. Bid price is used when no asked price is
available. Market quotations for foreign securities in foreign currencies
are translated into U.S. dollars at the prevailing rates of exchange.
Short-term investments are carried at amortized cost, which approximates
value. Expenses and fees of the Fund, including the management fee paid by
the Fund and the distribution and shareholder services fees, as applicable,
are accrued daily and taken into account for the purpose of determining the
net asset value of the relevant Class' shares. Because of the differences
in operating expenses incurred by each Class, the per share net asset value
of each Class will differ.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Fund's Board, are valued at fair value as
determined in good faith by the Board. The Fund's Board will review the
method of valuation on a current basis. In making their good faith
valuation of restricted securities, the Board members generally will take
the following factors into consideration: restricted securities which are,
or are convertible into, securities of the same class of securities for
which a public market exists usually will be valued at market value less
the same percentage discount at which purchased. This discount will be
revised periodically by the Board if the Board members believe that it 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 Fund's
Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management of the Fund believes that the Fund has qualified for the
fiscal year ended October 31, 1995 as a "regulated investment company"
under the Code. The Fund intends to continue to so qualify, if such
qualification is in the best interests of its shareholders. As a regulated
investment company, the Fund will pay no Federal income tax on net
investment income and net realized capital gains to the extent that such
income and gains are distributed to shareholders in accordance with the
applicable provisions of the Code. As a regulated investment company, the
Fund will pay no Federal income tax on net investment income and net
realized securities gains to the extent that such income and gains are
distributed to shareholders in accordance with applicable provisions of the
Code. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
Depending upon the composition of the Fund's income, the entire amount
or a portion of the dividends paid by the Fund from net investment income
may qualify for the dividends received deduction allowable to qualifying
U.S. corporate shareholders ("dividends received deduction"). In general,
dividend income of the Fund distributed to qualifying corporate
shareholders will be eligible for the dividends received deduction only to
the extent that the Fund's income consists of dividends paid by U.S.
corporations. However, Section 246(c) of the Code provides that if a
qualifying corporate shareholder has disposed of Fund shares not held for
46 days or more and has received a dividend from net investment income with
respect to such shares, the portion designated by the Fund as qualifying
for the dividends received deduction will not be eligible for such
shareholder's dividends received deduction. In addition, the Code provides
other limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in connection with
holding Fund shares.
The Fund may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a
credit or deduction on their Federal income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid or incurred by the Fund to foreign
countries (which taxes relate primarily to investment income). The Fund
may make an election under Section 853, provided that more than 50% of the
value of the Fund's total assets at the close of the taxable year consists
of securities in foreign corporations, and the Fund satisfies the
applicable distribution provisions of the Code. The foreign tax credit
available to shareholders is subject to certain limitations imposed by the
Code.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains or losses. However, a portion of the gain or
loss realized from the disposition of non-U.S. dollar denominated
securities (including debt instruments, certain financial forwards, futures
and options, and certain preferred stock) may be treated as ordinary income
or loss under Section 988 of the Code. In addition, all or a portion of
the gain realized from the disposition of certain market discount bonds
will be treated as ordinary income under Section 1276 of the Code.
Finally, all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "Conversion transactions" are defined to include certain forward,
futures, option and straddle transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to
be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures or forward contracts and certain options
transactions (other than those taxed under Section 988 of the Code) 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
futures, forwards and options as well as from closing transactions. In
addition, any such futures, forwards or options remaining unexercised at
the end of the Fund's taxable year will be treated as sold for their then
fair market value, resulting in additional gain or loss to the Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving certain forwards or
futures contracts or options transactions may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Sections 988 and 1256 of the Code. As such, all or a portion of any short-
or long-term capital gain from certain "straddle" transactions may be
recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in financial forward or futures contracts or options transactions,
such "straddles" would be characterized as "mixed straddles" if the
futures, forwards or options comprising a part of such "straddles" were
governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." If no election is made, to
the extent the straddle rules apply to positions established by the Fund,
losses realized by the Fund will be deferred to the extent of unrealized
gain in any offsetting positions. Moreover, as a result of the straddle
and conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain may be recharacterized as short-term capital gain or ordinary
income.
Investment by the Fund in securities issued or acquired at a discount
or providing for deferred interest or for payment of interest in the form
of additional obligations could, under special tax rules, affect the
amount, timing and character of distributions to shareholders. For
example, the Fund could be required to take into account annually a portion
of the discount (or deemed discount) at which such securities were issued
and to distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
The Manager supervises the placement of orders on behalf of the Fund
for the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the best judgment of
the Manager and in a manner deemed fair and reasonable to shareholders.
The primary consideration is prompt execution of orders at the most
favorable net price. Subject to this consideration, the brokers selected
include those that supplement the Manager's research facilities with
statistical data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of services
required to be performed by the Manager and the fee of the Manager is not
reduced as a consequence of the receipt of such supplemental information.
Such information may be useful to the Manager in serving both the Fund and
other funds which it manages and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to the
Manager in carrying out its obligation to the Fund. Brokers also are
selected because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided the primary
consideration is met. Large block trades may, in certain cases, result
from two or more funds managed by the Manager being engaged simultaneously
in the purchase or sale of the same security. Certain of the Fund's
transactions in securities of foreign issuers may not benefit from the
negotiated commission rates available to the Fund for transactions in
securities of domestic issuers.
Portfolio turnover may vary from year to year, as well as within a
year. The Fund's portfolio turnover rate for the fiscal year ended October
31, 1995 was 244.82%. High turnover rates are likely to result in
comparatively greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated by the Manager based upon its
knowledge of available information as to the general level of commissions
paid by other institutional investors for comparable services. For the
fiscal years ended October 31, 1993, 1994 and 1995, the Fund paid total
brokerage commissions of $2,720,136, $2,132,968 and $1,606,070,
respectively, none of which was paid to the Distributor. The above figures
for brokerage commissions paid do not include gross spreads and concessions
on principal transactions which, where determinable, amounted to
$1,603,133, $1,381,585 and $1,460,787 in fiscal 1993, 1994 and 1995,
respectively, none of which was paid to the Distributor.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The average annual total returns for Class A shares for the 1- and 5-
year periods ended October 31, 1995, and for the period October 16, 1986
(inception) through October 31, 1995, were 7.40%, 9.83% and 11.48%,
respectively. The average annual total returns for Class B shares for the
1-year period ended October 31, 1995 and for the period January 15, 1993
(inception of Class B) through October 31, 1995, were 7.50% and 3.76%,
respectively. Average annual total return is calculated by determining the
ending redeemable value of an investment purchased with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and 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 one from the result. A
Class's average annual total return figures calculated in accordance with
such formula assume that in the case of Class A the maximum sales load
(which was 4.5% as of the fiscal year end) 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.
Total return is calculated by subtracting the amount of the Fund's net
asset value (maximum offering price in the case of Class A) per share at
the beginning of a stated period from the net asset value (maximum offering
price in the case of Class A) per share at the end of the period (after
giving effect to the reinvestment of dividends and distributions during the
period and any applicable CDSC), and dividing the result by the net asset
value (maximum offering price in the case of Class A) per share at the
beginning of the period. Total return also may be calculated based on the
net asset value per share at the beginning of the period instead of the
maximum offering price per share at the beginning of the period for Class A
shares or without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. In such cases, the calculation would
not reflect the deduction of the sales load with respect to Class A shares
or any applicable CDSC with respect to Class B or Class C shares, which, if
reflected, would reduce the performance quoted. The total return for Class
A for the period October 16, 1986 through October 31, 1995, based on the
maximum offering price per share of 4.5% as of the fiscal year end, was
167.14%. Based on net asset value per share, the total return for Class A
was 179.71% for this period. The total return for Class B for the period
January 15, 1993 through October 31, 1995, after giving effect to the
maximum applicable CDSC, was 10.88%. Without giving effect to the maximum
applicable CDSC, the total return for Class B was 13.85% for this period.
For Class C shares (after giving effect to the maximum applicable CDSC) and
Class R shares, respectively, for the period September 1, 1995 (inception
of Class C and Class R shares) through October 31, 1995, total return was
(1.23%) and (.05%). Without giving effect to the maximum applicable CDSC,
total return for Class C shares for this period was (.23%).
Comparative performance may be used from time to time in advertising
the Fund's shares, including data from Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, Money Magazine, Morningstar, Inc., Value Line, Inc., Ibbotson
Associates, and other industry publications. 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) and FDIC-insured bank money
market accounts. In addition, advertising for the Fund may indicate that
investors may consider diversifying their investment portfolios in order to
seek protection of the value of their assets against inflation.
Advertising materials for the Fund may include reference to the role
played by the Manager or Jack J. Dreyfus, Jr. in popularizing the concept
of mutual funds as an investment vehicle and may refer to the role The
Dreyfus Corporation and the Dreyfus Family of Funds play or have played in
the mutual fund industry, and the fact that the mutual fund industry, which
includes Dreyfus and the Dreyfus funds, has, through the wide variety of
innovative and democratic mutual fund products it has made available,
brought to the public investment opportunities once reserved for the few.
Advertising materials may also refer to various Dreyfus investor services,
including, for example, asset allocation, retirement planning, college
planning and IRA rollover services. From time to time advertising
materials for the Fund also may refer to Morningstar or Value Line ratings
and related analyses supporting the rating. In addition, advertising
material for the Fund may, from time to time, include biographical
information relating to its portfolio manager and may refer to, or include
commentary by the portfolio manager relating to investment strategy, value
investing generally, asset growth, current or past business, political,
economic or financial conditions and other matters of general interest to
investors.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares have no preemptive or subscription rights and
are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent 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, the Transfer Agent
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, N.A., One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's assets.
Neither the Transfer Agent nor Mellon Bank, N.A. has any part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Descriptions of Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. ("S&P") and Moody's Investors Service, Inc.
("Moody's") ratings.
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC, C
Bonds rated BB, B, CCC, CC and C are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- rating.
C
The rating C is typically applied to income bonds on which no interest
is being paid.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated "A-l."
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
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 are generally 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 in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security may appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
<PAGE>
Premier Strategic Investing
- --------------------------------------------------------------------------------
(formerly Dreyfus Strategic Investing)-See Note 1
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
Common Stocks-90.4% Shares Value
- ----------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Commercial
Services-2.2% American Greetings, Cl. A........... 175,000 $ 5,512,500
------------
Consumer
Durables-4.0% Eastman Kodak....................... 85,000 5,323,125
General Motors...................... 110,000 4,812,500
------------
10,135,625
Consumer
Non-Durables-7.5% First Brands........................ 115,000 5,261,250
Jones Apparel Group................. 100,000(a) 3,425,000
McCormick & Co...................... 225,000 5,568,750
Warnaco Group, Cl. A................ 205,000 4,766,250
------------
19,021,250
------------
Consumer
Services-4.5% Grand Casinos....................... 150,000(a) 5,962,500
Wendy's International............... 270,000 5,366,250
------------
11,328,750
------------
Consumer
Staples-2.0% Philip Morris Cos................... 60,000 5,070,000
------------
Energy-6.0% Amerada Hess........................ 105,000 4,738,125
Texaco............................ 155,000 10,559,375
------------
15,297,500
------------
Finance-9.2% Citicorp............................ 80,780 5,240,603
Duff & Phelps....................... 117,900 1,842,188
FINOVA Group........................ 115,000 5,203,750
PMI Group........................... 110,000 5,280,000
Prudential Reinsurance Holdings..... 278,000 5,664,250
------------
23,230,791
------------
Health Care-15.3% Baxter International................ 75,000 2,896,875
Guidant............................. 350,000(a) 11,200,000
McKesson............................ 119,000 5,682,250
Rhone-Poulenc Rorer................. 105,000 4,948,125
Sandoz AG........................... 8,220 6,783,038
Sofamor/Danek Group................. 85,000(a) 2,082,500
Warner-Lambert...................... 60,000 5,107,500
------------
38,700,288
------------
</TABLE>
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks-(continued) Shares Value
- ----------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
Process Industries-6.2% James River....................... 150,000 $4,818,750
Monsanto.......................... 55,000 5,761,250
Praxair........................... 195,000 5,265,000
------------
15,845,000
------------
Producer
Manufacturing-11.2% AlliedSignal...................... 114,000 4,845,000
General Electric.................. 90,000 5,692,500
Masco............................. 190,000 5,343,750
Philips Electronics, N.V. A.D.R... 115,000 4,441,875
TRINOVA........................... 100,000 2,812,500
Westinghouse Electric............. 370,000 5,226,250
------------
28,361,875
------------
Retail Trade-4.3% Dayton Hudson..................... 70,000 4,812,500
Intimate Brands................... 300,000(a) 5,025,000
Tandy............................. 22,500 1,110,937
------------
10,948,437
------------
Technology-9.0% Applied Materials................. 100,000(a) 5,012,500
Boeing............................ 75,000 4,921,875
Creative Technology............... 260,000(a) 3,022,500
Digital Equipment................. 95,000(a) 5,141,875
International Business Machines... 47,000 4,570,750
------------
22,669,500
------------
Transportation-2.0% Tidewater......................... 195,000 5,143,125
------------
Utilities-7.0% AT&T.............................. 100,000 6,400,000
Ameritech......................... 108,000 5,832,000
Entergy........................... 190,000 5,415,000
------------
17,647,000
------------
TOTAL COMMON STOCKS
(cost $216,545,699)............. $228,911,641
------------
------------
</TABLE>
<PAGE>
Premier Strategic Investing
- --------------------------------------------------------------------------------
(formerly Dreyfus Strategic Investing)-See Note 1
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Principal
Short-Term Investments-2.5% Amount Value
- ----------------------------------------------------------------------- ------------ ------------
<S> <C> <C> <C>
U.S. Treasury Bills: 6.15%, 11/16/1995................. $ 125,000(b) $ 124,730
6.52%, 12/14/1995................. 4,000 3,975
5.42%, 12/21/1995................. 6,240,000(c) 6,194,947
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,323,033)............... $ 6,323,652
------------
------------
TOTAL INVESTMENTS (cost $222,868,732).................................. 92.9% $235,235,293
------- ------------
------- ------------
CASH AND RECEIVABLES (NET)............................................. 7.1% $ 17,917,782
------- ------------
------- ------------
NET ASSETS............................................................. 100.0% $253,153,075
------- ------------
------- ------------
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a)Non-income producing.
(b)Partially held by custodian in a segregated account as collateral for open
futures positions.
(c)Partially held by brokers as collateral for open short positions.
</TABLE>
Statement of Financial Futures October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value Unrealized
Number of Covered Appreciation
Financial Futures Long; Contracts by Contracts Expiration at 10/31/95
--------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Standard & Poor's 500................... 11 $ 3,211,175 December '95 $46,475
-------------
-------------
Statement of Securities Sold Short October 31, 1995
- --------------------------------------------------------------------------------
Common Stocks Shares Value
---------- ----------
Caremark International.......................................................... 150,000 $3,093,750
Ventritex....................................................................... 10,000 196,250
----------
TOTAL SECURITIES SOLD SHORT (proceeds $3,256,943)............................... $3,290,000
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $222,868,732)-see statement $235,235,293
Cash............................................................... 724,301
Receivable for investment securities sold.......................... 23,248,527
Receivable from brokers for proceeds on securities sold short...... 3,256,943
Dividends and interest receivable.................................. 189,734
Receivable for shares of Beneficial Interest subscribed............ 2,848
Prepaid expenses................................................... 36,266
------------
262,693,912
LIABILITIES:
Due to The Dreyfus Corporation..................................... $ 164,058
Due to Distributor................................................. 83,382
Payable for investment securities purchased........................ 5,469,967
Securities sold short, at value (proceeds $3,256,943)-see statement 3,290,000
Net unrealized depreciation on forward currency exchange
contracts-Note 4(a).............................................. 320,942
Payable for shares of Beneficial Interest redeemed................. 32,886
Accrued expenses................................................... 179,602 9,540,837
---------- ------------
NET ASSETS............................................................. $253,153,075
------------
------------
REPRESENTED BY:
Paid-in capital.................................................... $213,976,231
Accumulated undistributed investment income-net.................... 1,567,646
Accumulated undistributed net realized gain on investments......... 25,550,161
Accumulated net unrealized appreciation on investments and foreign
currency transactions (including $46,475 net unrealized appreciation
on financial futures)-Note 4(b).................................. 12,059,037
------------
NET ASSETS at value.................................................... $253,153,075
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value authorized)................. 9,669,214
------------
------------
Class B Shares
(unlimited number of $.001 par value authorized)................. 2,095,628
------------
------------
Class C Shares
(unlimited number of $.001 par value authorized)................. 47
------------
------------
Class R Shares
(unlimited number of $.001 par value authorized)................. 46
------------
------------
NET ASSET VALUE per share:
Class A Shares ($208,785,984 / 9,669,214 shares)................... $21.59
------------
------------
Class B Shares ($44,365,093 / 2,095,628 shares).................... $21.17
------------
------------
Class C Shares ($998 / 47.16 shares)............................... $21.16
------------
------------
Class R Shares ($1,000 / 46.30 shares)............................. $21.60
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Statement of Operations year ended October 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest........................................................... $ 4,049,252
Cash dividends (net of $10,496 foreign taxes withheld at source)... 3,173,473
-----------
Total Income..................................................... $ 7,222,725
Expenses:
Management fee-Note 3(a)........................................... 1,953,914
Shareholder servicing costs-Note 3(c).............................. 1,000,964
Distribution fees-Note 3(b)........................................ 315,492
Professional fees.................................................. 71,993
Dividends on securities sold short................................. 70,017
Loan commitment fees-Note 2........................................ 64,583
Custodian fees..................................................... 56,598
Registration fees.................................................. 39,831
Trustees' fees and expenses-Note 3(d).............................. 39,744
Shareholders' reports.............................................. 10,951
Miscellaneous...................................................... 8,308
-----------
Total Expenses................................................. 3,632,395
-----------
INVESTMENT INCOME-NET.............................................. 3,590,330
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments-Note 4(a):
Long transactions (including options and foreign currency transactions) $27,043,597
Short sale transactions............................................ (2,453,670)
Net realized (loss) on financial futures-Note 4(a)................. (406,925)
Net realized (loss) on forward currency exchange transactions...... (49,555)
-----------
Net Realized Gain.................................................. 24,133,447
Net unrealized appreciation on investments, securities sold short and
translation of assets and liabilities in foreign currencies
(including $758,100 net unrealized appreciation on financial futures) 1,574,520
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.............. 25,707,967
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $29,298,297
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------
1994 1995
-------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net....................................... $ (115,350) $ 3,590,330
Net realized gain on investments................................... 8,966,398 24,133,447
Net unrealized appreciation (depreciation) on investments for the year (30,980,097) 1,574,520
-------------- -------------
Net Increase (Decrease) In Net Assets
Resulting From Operations...................................... (22,129,049) 29,298,297
-------------- -------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares................................................... - (595,707)
Class B shares................................................... - (52,362)
In excess of investment income-net:
Class A shares................................................... (1,425,741) -
Class B shares................................................... (116,253) -
From net realized gain on investments:
Class A shares................................................... (26,597,901) (6,469,383)
Class B shares................................................... (2,951,918) (1,137,286)
-------------- -------------
Total Dividends................................................ (31,091,813) (8,254,738)
-------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares................................................... 49,925,537 21,994,003
Class B shares................................................... 21,282,593 7,596,999
Class C shares................................................... - 1,000
Class R shares................................................... - 1,000
Dividends reinvested:
Class A shares................................................... 25,815,338 6,576,053
Class B shares................................................... 2,988,881 1,152,348
Cost of shares redeemed:
Class A shares................................................... (65,443,064) (76,782,353)
Class B shares................................................... (2,932,744) (8,700,597)
-------------- -------------
Increase (Decrease) In Net Assets
From Beneficial Interest Transactions........................ 31,636,541 (48,161,547)
-------------- -------------
Total (Decrease) In Net Assets............................... (21,584,321) (27,117,988)
NET ASSETS:
Beginning of year.................................................. 301,855,384 280,271,063
-------------- -------------
End of year [including distributions in excess of investment income-net;
($1,374,615) in 1994 and undistributed investment income-net;
$1,567,646 in 1995).............................................. $ 280,271,063 $ 253,153,075
-------------- -------------
-------------- -------------
</TABLE>
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Shares
------------------------------------------------------------------------------------
Class A Class B Class C Class R
------------------------- ----------------------- ------------ ------------
Period Ended Period Ended
Year Ended October 31, Year Ended October 31, October 31, October 31,
-------------------------- ----------------------
1994 1995 1994 1995 1995* 1995*
--------- ---------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............... 2,345,076 1,104,032 993,936 375,923 47 46
Shares issued for dividends
reinvested.............. 1,240,296 357,006 144,600 63,385 - -
Shares redeemed........... (3,127,724) (3,862,550) (144,563) (431,198) - -
---------- --------- -------- -------- ----------- ---------
Net Increase (Decrease)
In Shares Outstanding. 457,648 (2,401,512) 993,973 8,110 47 46
---------- --------- -------- -------- ----------- ---------
---------- --------- -------- -------- ----------- ---------
<FN>
- ----------------
* From September 1, 1995 (commencement of initial offering) to October 31,
1995.
</TABLE>
See notes to financial statements.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Financial Highlights
Reference is made to pages 4, 5 and 6 of the Fund's Prospectus
dated March 1, 1996 A Revised December 1, 1996.
See notes to financial statements.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Notes To Financial Statements
NOTE 1-Significant Accounting Policies:
The Fund is registered under the Investment Company Act of 1940
("Act") as a non-diversified open-end management investment company. Premier
Mutual Fund Services, Inc. (the "Distributor") acts as the distributor of the
Fund's shares. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which in
turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company
of which is Boston Institutional Group, Inc. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
Effective September 1, 1995, the Fund changed its name from Dreyfus
Strategic Investing to Premier Strategic Investing.
The Fund offers Class A, Class B, Class C and Class R shares. Class A
shares are subject to a sales charge imposed at the time of purchase, Class B
shares are subject to a contingent deferred sales charge imposed at the time
of redemption on redemptions made within six years of purchase, Class C
shares are subject to a contingent deferred sales charge imposed at the time
of redemption on redemptions made within one year of purchase and Class R
shares are sold at net asset value per share only to institutional investors.
Other differences between the four Classes include the services offered to
and the expenses borne by each Class and certain voting rights.
(a) Portfolio valuation: Investments in securities (including options
and financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Investments in forward currency exchange
contracts are valued at the offsetting rates.
(b) Foreign currency transactions: The Fund does not isolate that
portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
(c) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including, where applicable, amortization of discount on
investments, is recognized on the accrual basis.
(d) Dividends to shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the distributio
n requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-Bank Line of Credit:
In accordance with an agreement with a bank, the Fund could borrow up
to $60 million from November 1, 1994 through September 6, 1995 under a
short-term unsecured line of credit. In connection therewith, the Fund had
agreed to pay commitment fees at an annual rate of .125 of 1% on the total
line of credit. Interest on borrowings was charged at rates which are related
to the Federal Funds rate in effect from time to time.
During the year ended October 31, 1995, there were no borrowings
under the line of credit.
NOTE 3-Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .75 of 1% of
the average daily value of the Fund's net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Fund's aggregate expenses, exclusive of taxes, interest on borrowings (which,
in the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates loan commitment fees and dividends on securities sold short), bro
kerage and extraordinary expenses, exceed the expense limitation of any state
having jurisdiction over the Fund. The most stringent state expense
limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (excluding distribution
expenses and certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. There was no expense reimbursement for the
year ended October 31, 1995.
Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, retained $21,025 during the year ended October 31, 1995 from
commissions earned on sales of the Fund's shares.
(b) Under a Distribution Plan (the "Plan") adopted pursuant to Rule
12b1 under the Act, the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an annual rate of .75 of 1%
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
of the value of the average daily net assets of Class B and Class C shares,
respectively. During the year ended October 31, 1995, $315,491 and $1 were
charged to the Class B and Class C shares, respectively, by the Distributor
pursuant to the Plan.
(c) Under the Shareholder Services Plan, the Fund pays the
Distributor at an annual rate of .25 of 1% of the value of the average daily
net assets of Class A, Class B and Class C shares for provision of certain
services. 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 services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended October 31, 1995,
$546,140, $105,163 and $1 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(d) Each trustee who is not an "affiliated person" as defined in the
Act, receives from the Fund an annual fee of $2,500 and an attendance fee of
$500 per meeting. The Chairman of the Board receives an additional 25% of
such compensation.
NOTE 4-Securities Transactions:
(a) The following summarizes the aggregate amount of purchases and
sales of investment securities and securities sold short, excluding
short-term securities, financial futures, forward currency exchange contracts
and options transactions during the year ended October 31, 1995:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Long transactions................................... $517,800,727 $508,567,026
Short sale transactions............................. 63,368,304 28,252,372
------------ ------------
Total........................................... $581,169,031 $536,819,398
------------ ------------
------------ ------------
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to
replace the security borrowed by purchasing the security at current market
value. The Fund would incur a loss if the price of the security increases
between the date of the short sale and the date on which the Fund replaces
the borrowed security. The Fund would realize a gain if the price of the
security declines between those dates. Until the Fund replaces the borrowed
security, the Fund will maintain daily, a segregated account with a broker
and custodian, of cash and/or U.S. Government securities sufficient to cover
its short position. Securities sold short at October 31, 1995, and their
related market values and proceeds are set forth in the Statement of
Securities Sold Short.
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
The following summarizes open forward currency exchange contracts at
October 31, 1995:
<TABLE>
<CAPTION>
U.S. Dollar Unrealized
Forward Currency Contracts: Proceeds Value (Depreciation)
---------- ---------- --------------
<S> <C> <C> <C>
Sales:
Swiss Francs, expiring 12/18/95........ $4,900,000 $5,220,942 $(320,942)
---------
---------
</TABLE>
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency exchange
contracts, the Fund is obligated to buy or sell a foreign currency at a
specified rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract decreases between those dates. With respect to
purchases of forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the forward contract
is opened and the date the forward contract is closed. The Fund realizes a
gain if the value of the contract increases between those dates. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts which is typically limited to the
unrealized gains on such contracts that are recognized in the statement of
assets and liabilities.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments (see the Statement of Financial Futures). Investments in
financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in the market value of the contract at the close of
each day's trading. Accordingly, variation margin payments are made or
received to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments
require initial margin deposits with a custodian, which consist of cash or
cash equivalents, up to approximately 10% of the contract amount. The amount
of these deposits is determined by the exchange or Board of Trade on which
the contract is traded and is subject to change. Contracts open at October
31, 1995 and their related unrealized market appreciation are set forth in
the Statement of Financial Futures.
(b) At October 31, 1995, accumulated net unrealized appreciation on
investments was $12,059,037, consisting of $17,036,696 gross unrealized
appreciation and $4,977,659 gross unrealized depreciation.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Premier Strategic Investing
(formerly Dreyfus Strategic Investing)-See Note 1
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Premier Strategic Investing
We have audited the accompanying statement of assets and liabilities
of Premier Strategic Investing, including the statements of investments,
financial futures and securities sold short, as of October 31, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Strategic Investing at October 31, 1995, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
New York, New York
December 5, 1995
Important Tax Information (Unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates $.543 per share
as a long-term capital gain distribution paid on December 14, 1994.
<PAGE>
Premier Strategic Investing
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 037/632AR9510
