File No. 33-7172
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [ X]
Amendment No. 10 [ X]
(Check appropriate box or boxes.)
DREYFUS STRATEGIC INCOME
(fund name)
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212)
922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on March 1, 1995 pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new
---- effective date for a previously filed post-effective
amendment.
Registrant has registered an indefinite number of shares of
its beneficial interest under the Securities Act of 1933 pursuant
to Section 24(f) of the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended October
31, 1994 was filed on December 22, 1994.
DREYFUS STRATEGIC INCOME
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 3
4 General Description of Registrant 4
5 Management of the Fund 16
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 29
7 Purchase of Securities Being Offered 17
8 Redemption or Repurchase 23
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-27
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
15 Control Persons and Principal B-14
Holders of Securities
16 Investment Advisory and Other B-15
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS STRATEGIC INCOME
Cross-Reference Sheet Pursuant to Rule 495(a)
(continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-25
18 Capital Stock and Other Securities B-27
19 Purchase, Redemption and Pricing B-17, B-19,
of Securities Being Offered B-23
20 Tax Status *
21 Underwriters B-17
22 Calculations of Performance Data B-26
23 Financial Statements B-35
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
- -------------------
NOTE: * Omitted since answer is negative or inapplicable.
<PAGE>
PROSPECTUS March 1, 1995
DREYFUS STRATEGIC INCOME
Dreyfus Strategic Income (the "Fund") is an open-end,
diversified, management investment company, known as a mutual
fund. It seeks to maximize current income by investing
principally in debt securities of domestic and foreign issuers.
The Dreyfus Corporation professionally manages the Fund's
portfolio.
The Fund's shares are sold with a sales load. The Fund
also bears certain costs of advertising, administration and/or
distribution pursuant to a plan adopted in accordance with Rule
12b-1 under the Investment Company Act of 1940.
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,
1995, 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. For a free copy, write to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-645-6561. When telephoning, ask for Operator 666.
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. The net asset value
of funds of this type will fluctuate from time to time.
TABLE OF CONTENTS
Page
Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Financial Information. . . . . . . . . . . . . . . . 4
Description of the Fund. . . . . . . . . . . . . . . . . . . . 7
Management of the Fund . . . . . . . . . . . . . . . . . . . .26
How to Buy Fund Shares . . . . . . . . . . . . . . . . . . . .28
Shareholder Services . . . . . . . . . . . . . . . . . . . . .33
How to Redeem Fund Shares. . . . . . . . . . . . . . . . . . .38
Service Plan . . . . . . . . . . . . . . . . . . . . . . . . .42
Dividends, Distributions and Taxes . . . . . . . . . . . . . .44
Performance Information. . . . . . . . . . . . . . . . . . . .46
General Information. . . . . . . . . . . . . . . . . . . . . .47
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . .49
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.
FEE TABLE
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . 3.00%
Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Management Fees . . . . . . . . . . . . . . . . . . . ..60%
12b-1 Fees (distribution and servicing) . . . . . . . ..25%
Other Expenses. . . . . . . . . . . . . . . . . . . . ..20%
Total Fund Operating Expenses . . . . . . . . . . . . 1.05%
Example:
You would pay the following expenses
on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period:
1 Year 3 Years 5 Years 10 Years
$40 $62 $86 $154
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%.
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will
bear, directly or indirectly, the payment of which will reduce
investors' return on an annual basis. Long-term investors could
pay more in 12b-1 fees than the economic equivalent of paying a
front-end sales charge. The information in the foregoing table
does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. 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 Fund Shares" and "Service Plan."
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 Fund's Statement of Additional
Information. Further financial data and related notes are
included in the Fund's Statement of Additional Information,
available upon request.
Financial Highlights
Contained below is per share operating performance data for
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>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------------
1986<F1> 1987 1988 1989 1990 1991 1992 1993 1994
--------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of year....................... $13.50 $13.51 $12.57 $12.94 $13.37 $12.35 $13.44 $14.02 $15.36
INVESTMENT OPERATIONS:
Investment income-net.......... .06 1.19 1.24 1.21 1.18 1.16 1.07 1.01 .95
Net realized and unrealized
gain (loss) on investments.... -- (.95) .74 .44 (1.02) 1.09 .58 1.41 2.04
TOTAL FROM INVESTMENT OPERATIONS .06 .24 1.98 1.65 .16 2.25 1.65 2.42 (1.09)
--------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from investment
income-net.................... (.05) (1.18) (1.24) (1.22) (1.18) (1.16) (1.07) (1.01) (.95)
Dividends from net realized gain
on investments................ -- -- (.37) -- -- -- -- (.07) (.37)
Dividends in excess of net realized
gain on investments -- -- -- -- -- -- -- -- --
TOTAL DISTRIBUTIONS (.05) (1.18) (1.61) (1.22) (1.18) (1.16) (1.07) (1.08) (1.32)
--------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of year.... $13.51 $12.57 $12.94 $13.37 $12.35 $13.44 $14.02 $15.36 $12.95
========= ======== ======== ======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN<F2>...... 5.03%<F3> 1.74% 16.71% 13.44% 1.32% 18.94% 12.64% 17.93% (7.44%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses
to average net assets......... -- .26% .49% .50% .50% .72% .85% .84% .94%
Ratio of interest expense,
and dividends on securities
sold short to average net
assets........................ -- .15% .17% .34% .32% .15% -- -- --
Ratio of net investment income
to average net assets......... 5.64%<F3> 9.40% 9.72% 9.34% 9.24% 8.93% 7.58% 6.83% 6.84%
Decrease reflected in above
expense ratios due to under-
takings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement)...... 1.50%<F3> 1.24% 1.01% 1.00% 1.00% .78% .40% .24% .11%
Portfolio Turnover Rate......... -- 76.01% 154.73% 93.41% 16.40% 16.08% 72.82% 118.38% 161.35%
Net Assets, end of year
(000's Omitted)................ $1,525 $31,809 $39,058 $41,679 $41,927 $57,336 $149,801 $375,459 $322,487
--------- -------- -------- -------- -------- -------- -------- -------- --------
_______________________
<FN> From October 1, 1986 (commencement of operations to
October 31, 1986.
<FN> Exclusive of sales charge.
<FN> Annualized.
</TABLE>
<TABLE>
<CAPTION>
DEBT OUTSTANDING
Year Ended October 31,
-------------------------------------------------------------------------
1986<F1> 1987 1988 1989 1990 1991 1992 1993 1994
------- ------ ----- ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of debt outstanding at end of year (in thousands) -- -- -- $ 650 -- -- -- -- --
Average amount of debt outstanding throughout year
(in thousands)<F2> -- $ 460 $ 739 $1,321 $1,408 $1,011 -- -- --
Average number of shares outstanding throughout year
(in thousands)<F3> -- 2,077 2,737 3,093 3,260 3,661 -- -- --
Average amount of debt per share throughout year -- $ .22 $ .27 $ .43 $ .43 $ .28 -- -- --
_______________________
<FN> From October 1, 1986 (commencement of operations) to
October 31, 1986.
<FN> Based upon daily outstanding borrowings.
<FN> Based upon month-end balances.
</TABLE>
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.
DESCRIPTION OF THE FUND
Investment Objective
The Fund seeks to maximize current income by investing
principally in debt securities of domestic and foreign issuers.
The Fund's investment objective cannot be changed without
approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
shares. There can be no assurance that the Fund's investment
objective will be achieved.
Management Policies
At least 65% of the Fund's total assets ordinarily will be
invested in debt securities, such as bonds, debentures, notes,
mortgage-related securities, convertible debt obligations and
convertible preferred stocks, of domestic and foreign issuers.
See "Certain Portfolio Securities" below. The issuers of these
obligations include governments, their political subdivisions,
agencies or municipalities, and corporations. It is a
fundamental policy of the Fund that at least 95% of these
obligations when purchased by the Fund will have a rating of at
least Caa by Moody's Investors Service, Inc. ("Moody's") or CCC
by Standard & Poor's Corporation ("Standard & Poor's") or will
be of comparable quality as determined by The Dreyfus
Corporation. Debt securities rated Baa by Moody's and BBB by
Standard & Poor's Corporation are considered investment grade
obligations which lack outstanding investment characteristics
and may have speculative characteristics as well. Debt
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. Standard & Poor's 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. See "Appendix"
in the Fund's Statement of Additional Information. The Fund may
invest up to 5% of its total assets in lower rated securities
but may not invest in obligations rated lower than Ca by Moody's
or C by Standard & Poor's which indicates that no interest is
being paid and that the obligations are in default or have other
marked shortcomings. The Fund intends to invest less than 35%
of its net assets in debt securities rated Ba or lower by
Moody's and BB or lower by Standard & Poor's. See "Risk
Factors--Lower Rated Securities" below for a discussion of
certain risks. The Fund may hold securities with ratings higher
than those set forth above when the yield differential between
lower rated and higher rated fixed-income securities narrows and
the risk of loss may be reduced substantially with only a
relatively small reduction in yield and also when market or
economic conditions dictate a more defensive strategy. The Fund
will be particularly alert to favorable arbitrage opportunities
(such as those resulting from favorable interest rate
differentials) arising from the relative yields of the various
types of securities in which the Fund may invest and market
conditions generally.
The Fund may invest up to 25% of its total assets in the
securities of issuers having their principal business activities
in the same industry. The Fund may invest up to 5% of its total
assets in securities of companies that have been in continuous
operation for fewer than three years.
The Fund may invest up to 30% of its total assets in debt
securities of foreign companies and foreign governments. Among
the foreign securities in which the Fund may invest are the
foreign bank obligations described under "Certain Portfolio
Securities," as well as Eurodollar debt obligations, which are
U.S. dollar-denominated debt obligations issued by foreign
issuers, often guaranteed by subsidiaries of domestic companies.
In connection with its purchases of convertible securities,
the Fund from time to time may hold common stock received upon
the conversion of the security. The Fund does not intend to
retain the common stock in its portfolio and will sell it as
promptly as it can and in a manner which it believes will reduce
the risk to the Fund of loss in connection with the sale.
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 described below under "Certain
Portfolio Securities." Under normal market conditions, the Fund
may invest up to 35% of its assets 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 its entire portfolio in money
market instruments. To the extent the Fund is so invested, the
Fund's investment objective may not be achieved.
In an effort to increase total return, the Fund may engage
in various investment techniques such as leveraging,
short-selling, options and futures transactions, currency
transactions and lending portfolio securities, each of which
involves risk. See "Risk Factors-Other Investment
Considerations" below.
Investment Techniques
Leverage Through Borrowing -- The Fund may borrow for investment
purposes up to 33 1/3% of the value of its total assets. This
borrowing, which is known as leveraging, generally will be
unsecured, except to the extent the Fund enters into the reverse
repurchase agreements described below. Leveraging will
exaggerate 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 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.
Among the forms of borrowing in which the Fund may engage
is the entry into reverse repurchase agreements with banks,
brokers or dealers. These transactions involve the transfer by
the Fund of an underlying debt instrument in return for cash
proceeds based on a percentage of the value of the security.
The Fund retains the right to receive interest and principal
payments on the security. At an agreed upon future date, the
Fund repurchases the security at principal, plus accrued
interest.
Short-Selling -- The Fund may make short sales, which are
transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that
security. To complete such a transaction, the Fund must borrow
the security to make delivery to the buyer. The Fund then is
obligated to replace the security borrowed by purchasing it 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.
The Fund will incur a loss as a result of the short sale 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 will realize a gain if the security declines
in price between those dates.
No securities will 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 sell short the securities of any class of an
issuer to the extent, at the time of the transaction, of more
than 5% of the outstanding securities of that class.
In addition to the short sales discussed above, the Fund
also may make short sales "against the box," a transaction in
which the Fund enters into a short sale of a security which the
Fund owns. The Fund at no time will have more than 15% of the
value of its net assets in deposits on short sales against the
box.
Call and Put Options on Specific Securities -- The Fund may
invest up to 5% of its assets, represented by the premium paid,
in the purchase of call and put options in respect of specific
securities (or groups or "baskets" of specific securities) in
which the Fund may invest. The Fund may write 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. A
call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security at the
exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the
right to sell, and obligates the writer to buy, the underlying
security at the exercise price at any time during the option
period. A covered call option sold by the Fund, which is a call
option with respect to which the Fund owns the underlying
security, exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the
market price of the underlying security or to possible continued
holding of a security which might otherwise have been sold to
protect against depreciation in its market price. The principal
reason for writing covered call options is to realize, through
the receipt of premiums, a greater return than would be realized
on the Fund's portfolio securities alone. A covered put option
sold by the Fund exposes the Fund during the term of the option
to a decline in price of the underlying security. Similarly,
the principal reason for writing covered put options is to
realize income in the form of premiums. A put option sold by
the Fund is covered when, among other things, cash or liquid
securities are placed in a segregated account with the Fund's
custodian to fulfill the obligation undertaken.
To close out a position when writing covered options, the
Fund may make a "closing purchase transaction" by purchasing an
option on the same security with the same exercise price and
expiration date as the option it has previously written. To
close out the position as a purchaser of an option, the Fund may
make a "closing sale transaction," which involves liquidating
the Fund's position by selling the option previously purchased.
The Fund will realize a profit or loss from a closing purchase
or sale transaction depending upon the difference between the
amount paid to purchase an option and the amount received from
the sale thereof.
The Fund intends to treat options in respect of specific
securities that are not traded on a national securities exchange
and the securities underlying covered call options written by
the Fund as illiquid securities. See "Certain Portfolio
Securities--Illiquid Securities" below.
The Fund will purchase options only to the extent permitted
by the policies of state securities authorities in states where
shares of the Fund are qualified for offer and sale.
Futures Transactions--In General--The Fund is not a commodity
pool. However, as a substitute for a comparable market position
in the underlying securities or for hedging purposes, the Fund
may engage, in futures and options on futures transactions, as
described below.
The Fund may trade futures contracts and options on 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, to the extent permitted under
applicable law, 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 in commodities that are not currently
traded in the United States or arbitrage possibilities not
available in the United States. Foreign markets, however, may
have greater risk potential than domestic markets. See "Risk
Factors--Foreign Commodity Transactions."
The Fund's commodities transactions must constitute bona
fide hedging or other permissible transactions pursuant to
regulations promulgated by the Commodity Futures Trading
Commission (the "CFTC"). In addition, the Fund may not engage
in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options,
other than for bona fide hedging transactions, would exceed 5%
of the liquidation value of the Fund's assets, after taking into
account unrealized profits and unrealized losses on such
contracts it has entered into; 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%.
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. To
the extent the Fund engages in the use of futures and options on
futures for other than bona fide hedging purposes, the Fund may
be subject to additional risk.
Initially, when purchasing or selling futures contracts the
Fund will be required to deposit with its custodian in the
broker's name an amount of cash or cash equivalents up to
approximately 10% of the contract amount. This amount is
subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of
trade may impose their own higher requirements. This amount is
known as "initial margin" and is in the nature of a performance
bond or good faith deposit on the contract which is returned to
the Fund upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker
will be made daily as the price of the index or securities
underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the
expiration of a futures contract, the Fund may elect to close
the position by taking an opposite position at the then
prevailing price, which will operate to terminate the Fund's
existing position in the contract.
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. If it is not possible or the Fund determines not to
close a futures position in anticipation of adverse price
movements, the Fund will be required to make daily cash payments
of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may
offset partially or completely losses on the futures contract.
However, no assurance can be given that the price of the
securities being hedged will correlate with the price movements
in a futures contract and thus provide an offset to losses on
the futures contract.
To the extent the Fund is engaging in a futures transaction
as a hedging device, because of the risk of an imperfect
correlation between securities in the Fund's portfolio that are
the subject of a hedging transaction and the futures contract
used as a hedging device, it is possible that the hedge will not
be fully effective if, for example, losses on the portfolio
securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities that
were the subject of the hedge. In futures contracts based on
indexes, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition
of the index. In an effort to compensate for the imperfect
correlation of movements in the price of the securities being
hedged and movements in the price of futures contracts, the Fund
may buy or sell futures contracts in a greater or lesser dollar
amount than the dollar amount of the securities being hedged if
the historical volatility of the futures contract has been less
or greater than that of the securities. Such "over hedging" or
"under hedging" may adversely affect the Fund's net investment
results if the market does not move as anticipated when the
hedge is established.
Successful use of futures by the Fund also is subject to
The Dreyfus Corporation's ability to predict correctly movements
in the direction of the market or interest rates. For example,
if the Fund has hedged against the possibility of a decline in
the market adversely affecting the value of securities held in
its portfolio and prices increase instead, 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.
An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise
price at any time during the option exercise period. The writer
of the option is required upon exercise to assume an offsetting
futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the
option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin
account which represents the amount by which the market price of
the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price
of the option on the futures contract.
Call options sold by the Fund with respect to futures
contracts will be covered by, among other things, entering into
a long position in the same contract at a price no higher than
the strike price of the call option, or by ownership of the
instruments underlying, or instruments the prices of which are
expected to move relatively consistently with the instruments
underlying, the futures contract. Put options sold by the Fund
with respect to futures contracts will be covered in the same
manner as put options on specific securities as described above.
Interest Rate Futures Contracts and Options on Interest Rate
Futures Contracts -- The Fund may invest in interest rate
futures contracts and options on interest rate futures contracts
as a substitute for a comparable market position or to hedge
against adverse movements in interest rates.
To the extent the Fund has invested in interest rate
futures contracts or options on interest futures contracts as a
substitute for a comparable market position, the Fund will be
subject to the investment risks of having purchased the
securities underlying the contract.
The Fund may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may
purchase put options on interest rate futures contracts to hedge
its portfolio securities against the risk of rising interest
rates.
The Fund may sell call options on interest rate futures
contracts to partially hedge against declining prices of
portfolio securities. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The Fund may sell put options on interest
rate futures contracts to hedge against increasing prices of the
securities which are deliverable upon exercise of the futures
contract. If the futures price at expiration of the option is
higher than the exercise price, the Fund will retain the full
amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Fund
intends to purchase. If a put or call option sold by the Fund
is exercised, the Fund will incur a loss which will be reduced
by the amount of the premium it receives. Depending on the
degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures
positions, the Fund's losses from existing options on futures
may to some extent be reduced or increased by changes in the
value of its portfolio securities.
The Fund also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate
its options positions. No assurance can be given that such
closing transactions can be effected or that there will be a
correlation between price movements in the options on interest
rate futures and price movements in the Fund's portfolio
securities which are the subject of the hedge. In addition, the
Fund's purchase of such options will be based upon predictions
as to anticipated interest rate trends, which could prove to be
inaccurate.
Futures Contracts Based on an Index of Debt Securities and
Options on such Futures Contracts -- The Fund may purchase and
sell futures contracts based on an index of debt securities and
options on such futures contracts to the extent they currently
exist and, in the future, may be developed. At least one
exchange trades futures contracts on an index of long-term
municipal bonds, and the Fund reserves the right to conduct
futures and options transactions based on an index which may be
developed in the future to correlate with price movements in
certain categories of debt securities.
The Fund's investment strategy in employing futures
contracts based on an index of debt securities will be similar
to that used by it in other financial futures transactions. The
Fund also may purchase and write put and call options on such
index futures and enter into closing transactions with respect
to such options.
Currency Futures -- The Fund may purchase and sell currency
futures contracts. By selling foreign currency futures, the
Fund can establish the number of U.S. dollars it will receive in
the delivery month for a certain amount of a foreign currency.
In this way, if the Fund anticipates a decline of a foreign
currency against the U.S. dollar, the Fund can attempt to fix
the U.S. dollar value of some or all of the securities held in
its portfolio that are denominated in that currency. By
purchasing foreign currency futures, the Fund can establish the
number of dollars it will be required to pay for a specified
amount of a foreign currency in the delivery month. Thus, if
the Fund intends to buy securities in the future and expects the
U.S. dollar to decline against the relevant foreign currency
during the period before the purchase is effected, the Fund can
attempt to fix the price in U.S. dollars of the securities it
intends to acquire.
Foreign Currency Transactions -- The Fund may engage in currency
exchange transactions either on a spot (i.e., cash) basis at the
rate prevailing in the currency exchange market, or through
entering into forward contracts to purchase or sell currencies.
A forward currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which
must be more than two days from the date of the contract, at a
price set at the time of the contract. These contracts are
entered into in the interbank market conducted directly between
currency traders (typically commercial banks or other financial
institutions) and their customers.
Options on Foreign Currency -- The Fund may purchase and sell
call and put options on foreign currency for the purpose of
hedging against changes in future currency exchange rates. Call
options convey the right to buy the underlying currency at a
price which is expected to be lower than the spot price of the
currency at the time the option expires. Put options convey the
right to sell the underlying currency at a price which is
anticipated to be higher than the spot price of the currency at
the time the option expires. The Fund may use foreign currency
options under the same circumstances that it could use currency
forward and futures transactions as described above. See also
"Call and Put Options on Specific Securities" above.
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 derivative investment
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.
Lending Portfolio Securities -- From time to time, the Fund may
lend securities from its portfolio to brokers, dealers and other
financial institutions needing to borrow securities to complete
certain transactions. Such loans may not exceed 331/3% of the
value of the Fund's total assets. In connection with such
loans, the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which
will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. The
Fund can increase its income through the investment of such
collateral. The Fund continues to be entitled to payments in
amounts equal to the interest or other distributions payable on
the loaned security and receives interest on the amount of the
loan. Such loans will be terminable 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
when-issued or forward commitment basis, which means that the
price is fixed at the time of commitment, but delivery and
payment ordinarily take place a number of days after the date of
the commitment to purchase. The Fund will make commitments to
purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities
before the settlement date if it is deemed advisable. The Fund
will not accrue income in respect of a security purchased on a
when-issued or forward commitment basis prior to its stated
delivery date.
Securities purchased on a when-issued or forward commitment
basis and certain other securities held in the Fund's portfolio
are subject to changes in value (both 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 when-issued or forward commitment basis may
expose the Fund to risk because they may experience such
fluctuations prior to their actual delivery. Purchasing
securities on a when-issued or forward commitment 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. 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 or forward commitments will be established and
maintained at the Fund's custodian bank. Purchasing securities
on a when-issued or forward commitment basis when the Fund is
fully or almost fully invested may result in greater potential
fluctuations in the value of the Fund's net assets and its net
asset value per share.
Certain Portfolio Securities
Convertible Securities -- The Fund may purchase convertible
securities, which are fixed-income securities, such as bonds or
preferred stock, that may be converted at either a stated price
or stated rate into underlying shares of common stock.
Convertible securities have general characteristics similar to
both fixed-income and equity securities. Although to a lesser
extent than with fixed-income securities generally, 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,
and, therefore, also will react to variations in the general
market for equity securities. 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.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with
generally higher yields than common stocks. Of course, like all
fixed-income securities, there can be no assurance of current
income because the issuers of the convertible securities may
default on their obligations. Convertible securities, however,
generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the
potential for capital appreciation. 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 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.
U.S. Government Securities -- The Fund may purchase securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by
U.S. Government agencies and instrumentalities, for example,
Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury;
others, such as those issued by the Federal National Mortgage
Association, by discretionary authority of the U.S. Government
to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may
fluctuate based on generally recognized reference rates or the
relationship of rates. 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. The Fund will invest
in such securities only when it is satisfied that the credit
risk with respect to the issuer is minimal.
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. The
Fund also may invest in zero coupon securities 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.
Repurchase Agreements -- Repurchase agreements involve the
acquisition by the Fund of an underlying debt instrument,
subject to an obligation of the seller to repurchase, and the
Fund to resell, the instrument at a fixed price, usually not
more than one week after its purchase. Certain costs may be
incurred by the Fund in connection with the sale of the
securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be
delayed or limited.
Bank Obligations -- The Fund may purchase certificates of
deposit, time deposits, bankers' acceptances and other
short-term obligations issued by domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks,
domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign
branches of domestic banks, foreign subsidiaries 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. Such
risks include possible future political and economic
developments, the possible imposition of foreign withholding
taxes on interest income payable on the securities, the possible
establishment of exchange controls or the adoption of other
foreign governmental restrictions which might adversely affect
the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
See "Risk Factors--Investing in Foreign Securities" below.
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 at a stated
interest rate. Time deposits which may be held by the Fund will
not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. The Fund will not invest more
than 15% of the value of its net assets in time deposits that
are illiquid and in other illiquid securities.
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 of
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 A-l by
Standard & Poor's, (b) issued by companies having an outstanding
unsecured debt issue currently rated at least Aa3 by Moody's or
AA by Standard & Poor's, 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.
Mortgage-Related Securities -- The Fund may invest in
mortgage-related securities which are collateralized by pools of
mortgage loans assembled for sale to investors by various
governmental agencies, such as the Government National Mortgage
Association and government-related organizations such as the
Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, as well as by private issuers such as
commercial banks, savings and loan institutions, mortgage banks
and private mortgage insurance companies, and similar foreign
entities. The mortgage-related securities in which the Fund may
invest include those with fixed, floating and variable interest
rates, those with interest rates that change based on multiples
of changes in interest rates and those with interest rates that
change inversely to changes in interest rates, as well as
stripped mortgage-backed securities which are derivative
multiclass mortgage securities. Stripped mortgage-backed
securities usually are structured with two classes that receive
different proportions of interest and principal distributions on
a pool of mortgage-backed securities or whole loans. A common
type of stripped mortgage-backed security will have one class
receiving some of the interest and most of the principal from
the mortgage collateral, while the other class will receive most
of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest (the
interest-only or "IO" class), while the other class will receive
all of the principal (the principal-only or "PO" class).
Although certain mortgage-related securities are guaranteed by a
third party or otherwise similarly secured, the market value of
the security, which may fluctuate, is not so secured. If the
Fund purchases a mortgage-related security at a premium, all or
part of the premium may be lost if there is a decline in the
market value of the security, whether resulting from changes in
interest rates or prepayments in the underlying mortgage
collateral. As with other interest-bearing securities, the
prices of certain mortgage-backed securities are inversely
affected by changes in interest rates, while others may not be.
However, though the value of a mortgage-related security may
decline when interest rates rise, the converse is not
necessarily true, since in periods of declining interest rates
the mortgages underlying the security are more likely to prepay.
For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the
underlying mortgages, and, therefore, it is not possible to
predict accurately the security's return to the Fund. Moreover,
with respect to stripped mortgage-backed securities, if the
underlying mortgage securities experience greater than
anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities even if the
securities are rated in the highest rating category by a
nationally recognized statistical rating organization. In
addition, regular payments received in respect of
mortgage-related securities include both interest and principal.
No assurance can be given as to the return the Fund will receive
when these amounts are reinvested. The Fund also may invest in
collateralized mortgage obligations structured on pools of
mortgage pass-through certificates or mortgage loans.
Collateralized mortgage obligations will be purchased only if
rated in one of the two highest rating categories by Moody's or
Standard & Poor's, or, if unrated, deemed to be of comparable
quality by The Dreyfus Corporation. For further discussion
concerning the investment considerations involved see "Risk
Factors--Other Investment Considerations" below, and "Investment
Objective and Management Policies--Portfolio Securities--
Mortgage-Related Securities" in the Fund's Statement of
Additional Information.
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,
certain options traded in the over-the-counter market and
securities used to cover such options, and certain
mortgage-backed securities, such as certain collateralized
mortgage obligations and stripped mortgage-backed securities.
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.
Certain Fundamental Policies -- The Fund may: (i) with respect
to 75% of the Fund's assets, invest up to 5% of the value of its
total assets in securities of any one issuer or purchase up to
10% of the voting securities of any one issuer; (ii) purchase
securities of any company having less than three years'
continuous operation (including operations of any predecessors)
if such purchase does not cause the value of the Fund's
investments in all such companies to exceed 5% of the value of
its assets; (iii) borrow money to the extent permitted under the
Investment Company Act of 1940; and (iv) invest up to 25% of its
total assets in securities of issuers in a single industry,
provided that, when the Fund has adopted a temporary defensive
posture, there shall be no such limitation on investments in
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed without approval by
the holders of a majority (as defined in the Investment Company
Act of 1940) of the Fund's outstanding voting shares.
Certain Additional Non-Fundamental Policies -- The Fund may (i)
pledge, mortgage, hypothecate or otherwise encumber its assets,
to the extent necessary to secure permitted borrowings; and (ii)
invest up to 15% of the value of its net assets in repurchase
agreements providing for settlement in more than seven days
after notice and in other illiquid securities. See "Investment
Objective and Management Policies--Investment Restrictions" in
the Fund's Statement of Additional Information.
Risk Factors
Certain Investment Techniques -- The use of speculative
investment techniques such as leveraging, short-selling,
short-term trading, engaging in futures and options and currency
transactions and lending portfolio securities involves greater
risk than that incurred by many other funds with a similar
objective. These risks are described above under "Investment
Techniques." In addition, using these techniques may produce
higher than normal portfolio turnover and may affect the degree
to which the Fund's net asset value fluctuates. Higher
portfolio turnover rates are likely to result in comparatively
greater brokerage commissions or transaction costs. Short-term
gains realized from portfolio transactions are taxable to
shareholders as ordinary income. You should purchase Fund
shares only as a supplement to an overall investment program and
only if you are willing to undertake the risks involved in
speculative investing.
The Fund's ability to engage in certain short-term
transactions may be limited by the requirement that, to qualify
as a regulated investment company, the Fund must earn less than
30% of its gross income from the disposition of securities held
for less than three months. This 30% test limits the extent to
which the Fund may sell securities held for less than three
months, write options expiring in less than three months and
invest in certain futures contracts, among other strategies.
However, portfolio turnover will not otherwise be a limiting
factor when making investment decisions. Under normal market
conditions, the Fund's portfolio turnover rate will not exceed
150%. See "Portfolio Transactions" in the Statement of
Additional Information.
Lower Rated Securities -- You should carefully consider the
relative risks of investing in the higher yielding (and,
therefore, higher risk) debt securities in which the Fund may
invest. These are securities such as those rated Ba by Moody's
or BB by Standard & Poor's or as low as those rated Ca by
Moody's or C by Standard & Poor's. 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. 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 Standard & Poor's 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. Debt securities rated Ca by Moody's are
regarded as speculative in a high degree and are often in
default or have other marked shortcomings. Standard & Poor's
typically assigns a C rating to income bonds on which no
interest is being paid. Such securities, though high yielding,
are characterized by great risk. See "Appendix" in the Fund's
Statement of Additional Information for a general description of
Moody's and Standard & Poor's ratings of debt obligations. The
ratings of Moody's and Standard & Poor's represent their
opinions as to the quality of the securities which they
undertake to rate. It should be emphasized, however, that
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 these
securities. Therefore, 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. 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.
The market price and yield of bonds rated Ba or lower by
Moody's and BB or lower by Standard & Poor's are more volatile
than those of higher rated bonds. Factors adversely affecting
the market price and yield of these securities will adversely
affect the Fund's net asset value. In addition, the retail
secondary market for these bonds may be less liquid than that of
higher rated bonds; 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.
The market values of certain lower rated debt securities
tend to reflect individual corporate developments to a greater
extent than do higher rated securities, which react primarily to
fluctuations in the general level of interest rates, and tend to
be more sensitive to economic conditions than are higher rated
securities. Companies that issue such bonds 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 higher rated securities.
The Fund may invest in zero coupon securities and
pay-in-kind bonds (bonds which pay interest through the issuance
of additional bonds), rated as low as Ca by Moody's and as low
as C by Standard & Poor's, which involve special considerations.
These securities may be subject to greater fluctuations in value
due to changes in interest rates than interest-bearing
securities and thus may be considered more speculative than
comparably rated interest-bearing securities. See "Other
Investment Considerations" below, and "Investment Objective and
Management Policies--Risk Factors--Lower Rated Securities" and
"Dividends, Distributions and Taxes" in the Fund's Statement of
Additional Information.
Investing in Foreign Securities -- In making foreign
investments, the Fund will give appropriate consideration to the
following factors, among others.
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. The issuers of some of these
securities, such as foreign bank obligations, may be subject to
less stringent or different regulation than are U.S. issuers.
In addition, there may be less publicly available information
about a non-U.S. issuer, and non-U.S. issuers generally are not
subject to uniform accounting and financial reporting standards,
practices and requirements comparable to those applicable to
U.S. issuers.
Because evidences of ownership of such securities usually
are held outside the United States, the Fund will be subject to
additional risks which include possible adverse political and
economic developments, possible seizure or nationalization of
foreign deposits and possible adoption of governmental
restrictions which might adversely affect the payment of
principal and interest on the foreign securities or might
restrict the payment of principal and interest to investors
located outside the country of the issuer, whether from currency
blockage or otherwise. Custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of
U.S. securities.
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. Some currency exchange costs may be incurred when
the Fund changes investments from one country to another.
Furthermore, some of these securities may be subject to
brokerage taxes levied by foreign governments, which have the
effect of increasing the cost of such investment and reducing
the realized gain or increasing the realized loss on such
securities at the time of sale. Income received by the Fund
from sources within foreign countries may be reduced by
withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States,
however, may reduce or eliminate such taxes. All such taxes
paid by the Fund will reduce its net income available for
distributions to investors.
Foreign Currency Exchange -- Currency exchange rates may
fluctuate significantly over short periods of time. They
generally are determined by the forces of supply and demand in
the foreign exchange markets and the relative merits of
investments in different countries, actual or perceived changes
in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be
affected unpredictably by intervention by U.S. or foreign
governments or central banks or the failure to intervene or by
currency controls or political developments in the U.S. or
abroad.
The foreign currency market offers less protection against
defaults in the forward trading of currencies than is available
when trading in currencies occurs on an exchange. Since a
forward currency contract is not guaranteed by an exchange or
clearinghouse, a default on the contract would deprive the Fund
of unrealized profits or force the Fund to cover its commitments
for purchase or resale, if any, at the current market price.
Foreign Commodity Transactions -- Unlike trading on domestic
commodity exchanges, trading on foreign commodity exchanges is
not regulated by the CFTC and may be subject to greater risks
than trading on domestic exchanges. For example, some foreign
exchanges are principal markets so that no common clearing
facility exists and a trader may look only to the broker for
performance of the contract. In addition, unless the Fund
hedges against fluctuations in the exchange rate between the
U.S. dollar and the currencies in which trading is done on
foreign exchanges, 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.
Other Investment Considerations -- The Fund's net asset value is
not fixed and should be expected to fluctuate.
Investors should be aware that equity securities fluctuate
in value, often based on factors unrelated to the value of the
issuer of the securities, and that fluctuations can be
pronounced. Changes in the value of the Fund's securities will
result in changes in the value of the Fund's shares and thus the
Fund's yield and total return to investors.
No assurance can be given as to the liquidity of the market
for certain mortgage-backed securities, such as collateralized
mortgage obligations and stripped mortgage-backed securities.
Determination as to the liquidity of such securities are made in
accordance with guidelines established by the Fund's Board of
Trustees. In accordance with such guidelines, The Dreyfus
Corporation monitors the Fund's investments in such securities
with particular regard to trading activity, availability of
reliable price information and other relevant information.
Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash
payments. To maintain its qualification as a regulated
investment company and avoid liability for Federal income taxes,
the Fund may be required to distribute such income accrued with
respect to these securities and may have to dispose of portfolio
securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Investment decisions for the Fund are made independently
from those of the other investment companies advised by The
Dreyfus Corporation. However, if such other investment
companies are prepared to invest in, or desire to dispose of,
securities of the type in which the Fund invests at the same
time 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
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 is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
As of November 30, 1994, The Dreyfus Corporation managed or
administered approximately $71 billion in assets for
approximately 1.9 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 overall authority of the
Fund's Trustees in accordance with Massachusetts law. The
Fund's primary portfolio manager is Garitt Kono. He has held
that position since June 1994 and has been employed by The
Dreyfus Corporation since September, 1992. For more than five
years prior to joining The Dreyfus Corporation, Mr. Kono was
Vice President-Fixed Income at The First Boston Corporation.
The Fund's other portfolio managers are identified under
"Management of the Fund" in the Fund's Statement of Additional
Information. The Dreyfus Corporation also provides research
services for the Fund as well as 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
approximately $201 billion in assets as of September 30, 1994,
including $76 billion in mutual fund assets. As of September
30, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration
services, for approximately $659 billion in assets, including
approximately $108 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the
annual rate of .60 of 1% of the value of the Fund's average
daily net assets. For the fiscal year ended October 31, 1994,
the Fund paid The Dreyfus Corporation a monthly fee at the
effective annual rate of .60 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 at the time such amounts are waived or
assumed, as the case may be. 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. The Dreyfus Corporation or its affiliates may
pay certain entities, including banks, an account fee and also a
fee in connection with the servicing of Fund shareholders.
The Fund bears certain costs of distributing Fund shares in
accordance with a plan (the "Service Plan") adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940. See "Fee
Table" and "Service Plan."
The Fund's distributor is Premier Mutual Fund Services,
Inc. (the "Distributor"), located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a
provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First
Data Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671, is the Fund's Transfer and Dividend Disbursing Agent
(the "Transfer Agent"). The Bank of New York, 110 Washington
Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
You can purchase Fund shares through the Distributor or
certain financial institutions (which may include banks),
securities dealers and other industry professionals
(collectively, "Service Agents") that have entered into service
agreements with the Distributor. 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.
The minimum initial purchase is $2,500, or $1,000 if you
are a client of a Service Agent which has made an aggregate
minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $500. The initial
investment must be accompanied by the Fund's Account
Application. For 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, the minimum initial investment is $1,000. For
full-time or part-time employees of The Dreyfus Corporation or
any of its affiliates or subsidiaries who elect to have a
portion of their pay directly deposited into their Fund account,
the minimum initial investment is $50. 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.
You may purchase Fund shares by check or wire, or through
the Dreyfus TeleTransfer Privilege described below. Checks
should be made payable to "The Dreyfus Family of Funds," or, if
for Dreyfus retirement plan accounts, to "The Dreyfus Trust
Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your
Account Application. For subsequent investments, your Fund
account number should appear on the check and an investment slip
should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement
plan accounts, both initial and subsequent investments 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.
Purchase orders may be delivered in person only to a Dreyfus
Financial Center. These orders will be forwarded to the Fund
and will be processed only upon receipt thereby. For the
location of the nearest Dreyfus Financial Center, please call
one of the telephone numbers listed under "General Information."
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.
Immediately available funds may be transmitted by wire to The
Bank of New York, DDA #8900119330/Dreyfus Strategic Income, for
purchase of Fund shares in your name. The wire 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 Fund's 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.
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."
If an order is received by the Transfer Agent or other
agent by the close of trading on the floor of 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
(i.e., net asset value plus the applicable sales load set forth
below) determined as of the close of trading on the floor of 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 floor of 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 dealers
by the close of trading on the Floor of the New York Stock
Exchange on a business day and transmitted to the Distributor by
the close of its business day (normally 5:15 p.m., New York
time) will be based on the public offering price per share
determined as of the close of trading on the floor of the New
York Stock Exchange on that day. Otherwise, the orders will be
based on the next determined public offering price. It is the
dealers' responsibility to transmit orders so that they will be
received by the Distributor before the close of its business
day.
The public offering price is the net asset value per share
plus a sales load as shown below:
Total Sales Load
As a % of As a % of
offering price net asset value
per share per share
Amount of Transaction
Less than $100,000 3.00 3.10
$100,000 to less than $250,000 2.75 2.80
$250,000 to less than $500,000 2.25 2.30
$500,000 to less than $1,000,000 2.00 2.00
$1,000,000 and over 1.00 1.00
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 otherwise have a brokerage-related or clearing
arrangement with an NASD member firm or other financial
institution with respect to the sale of Fund shares) may
purchase Fund shares for themselves, directly or pursuant to an
employee benefit plan or other program, or for their spouses or
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 Fund
shares at net asset value. In addition, Fund 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. Fund shares purchased in connection with the Dreyfus
Managed Portfolio program will be purchased at net asset value.
Fund shares will be offered at net asset value without a
sales load to employees participating in qualified or
nonqualified 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 one million dollars ("Eligible Benefit
Plans"). Plan sponsors, administrators or trustees, as
applicable, are responsible for notifying the Distributor when
the relevant requirement is satisfied. The Distributor may pay
dealers a fee of up to .5% of the amount invested through such
dealers in Fund shares at net asset value by employees
participating in Eligible Benefit Plans. All present holdings
of shares of funds in the Dreyfus Family of Funds by an Eligible
Benefit Plan will be aggregated to determine the fee payable
with respect to each such purchase of Fund shares. 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.
Fund 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)
satisfied the requirements set forth under either clause (i) or
clause (ii) in the preceding paragraph and all or a portion of
such plan's assets were invested in funds in 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
funds in the Dreyfus Family of Funds or certain other products
made available by the Distributor to such plans which funds or
other products were sold with a sales load.
For the period November 1, 1993 through August 24, 1994,
Dreyfus Service Corporation, a wholly-owned subsidiary of The
Dreyfus Corporation and the Fund's distributor during such
period, retained $369,215 from sales loads on Fund shares. 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.
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 for Servicing (as defined under "Service Plan").
These fees would be in addition to any amounts which might be
received under the Service Plan. Each Service Agent has agreed
to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard.
Fund shares are sold on a continuous basis. Net asset
value per share is determined as of the close of trading on the
floor of 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 per
share, options and futures contracts will be valued 15 minutes
after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share is computed by dividing the
value of the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares 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 Board of Trustees. For
further information regarding the methods employed in valuing
Fund investments, see "Determination of Net Asset Value" in the
Fund's Statement of Additional Information.
Federal regulations require that you provide a certified
TIN upon opening or reopening an account. See "Dividends,
Distributions and Taxes" and the Fund's Account Application for
further information concerning this requirement. Failure to
furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Right of Accumulation -- Reduced sales loads apply to any
purchase of Fund shares, shares of other funds advised by The
Dreyfus Corporation which are sold with a sales load or shares
acquired by a previous exchange of shares purchased with a sales
load (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 $100,000 or more. If, for example,
you previously purchased and still hold shares of the Fund, or
of any other Eligible Fund, or combination thereof, with an
aggregate current market value of $90,000 and subsequently
purchase shares of the Fund or an Eligible Fund having a current
value of $20,000, the sales load applicable to the subsequent
purchase would be reduced to 2.75% of the offering price. All
present holdings of Eligible Funds may be combined to determine
the current offering price of the aggregate investment in
ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of 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.
Dreyfus TeleTransfer Privilege -- You may purchase Fund shares
(minimum $500, maximum $150,000 per day) by telephone if you
have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed an
Optional Services Form with the Transfer Agent. The proceeds
will be transferred between the bank account designated in one
of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution 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 Dreyfus TeleTransfer Privilege,
you may request a Dreyfus TeleTransfer purchase of Fund shares
by telephoning 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306.
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
the Fund, shares 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 have
different investment objectives which may be of interest to you.
Fund exchanges may be exercised twice during the calendar year
as described below. If you desire 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 other conditions
are imposed on its use.
To request an exchange, you or 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 the case of
Personal Retirement Plans, the 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 automatically, unless you check the relevant "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, or by a separate signed
Shareholder Services Form, also available by calling
1-800-645-6561. If you established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund 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, Dreyfus TeleTransfer Privilege and the
dividend/capital gain distribution option (except for the
Dreyfus 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 into funds sold with a sales load. If you are
exchanging 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 of the Fund
from which 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 your exchange
you must notify the Transfer Agent or 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 Fund's 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.
With respect to any investor who has exchanged out of the
Fund twice during the calendar year, further purchase orders
(including those pursuant to exchange instructions) relating to
any shares of the Fund will be rejected for the remainder of the
calendar year. Management believes that this policy will enable
shareholders to change their investment program, while
protecting the Fund against disruptions in portfolio management
resulting from frequent transactions by those seeking to time
market fluctuations. Exchanges made through omnibus accounts
for various retirement plans are not subject to such limit on
exchanges.
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 a taxable gain or loss.
Dreyfus Auto-Exchange Privilege -- Dreyfus Auto-Exchange
Privilege enables you to invest regularly (on a semi-monthly,
monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of other funds in the Dreyfus Family of
Funds of which you are currently an investor. The 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 into funds sold
with a sales load. See "Shareholder Services" in the Statement
of Additional Information. The right to exercise this Privilege
may be modified or cancelled by the Fund or the Transfer Agent.
You may modify or cancel your exercise of this Privilege at any
time by writing to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a
service fee for the use of this Privilege. No such fee
currently is contemplated. 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 a taxable
gain or loss. 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 Dreyfus
Auto-Exchange Authorization Form, please call toll free
1-800-645-6561.
Dreyfus-Automatic Asset Builder -- 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 The Dreyfus
Family of Funds, P.O. Box 6527, Providence, Rhode Island
02940-6527, 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.
Dreyfus Dividend Options -- Dreyfus Dividend Sweep enables you
to invest automatically dividends or dividends and capital gain
distributions, if any, paid by the Fund in shares of another
fund in the Dreyfus Family of Funds of which you are a
shareholder. 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 that charges a contingent
deferred sales charge, the shares purchased will be subject on
redemption to the contingent deferred sales charge, if any,
applicable to the purchased shares. See "Shareholder Services"
in the Statement of Additional Information. Dreyfus 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 such 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 this
privilege and the funds in the Dreyfus Family of Funds eligible
to participate in 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 The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671. To select a new fund after cancellation, you must
submit a new Dividend Options Form. Enrollment in or
cancellation of these privileges is effective three business
days following receipt. These privileges are available only for
existing accounts and may not be used to open new accounts.
Minimum subsequent investments do not apply for Dreyfus Dividend
Sweep. The Fund may modify or terminate these privileges at any
time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for Dreyfus Dividend Sweep.
Dreyfus Payroll Savings Plan -- Dreyfus 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 The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You
may obtain the necessary authorization form by calling
1-800-645-6561. 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
Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs
or other retirement plans are not eligible for this Privilege.
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. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561.
There is a service charge of 50 cents* for each withdrawal
check. 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.
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; for SEP-IRAs, 401(k) Salary Reduction Plans and
403(b)(7) Plans, please call 1-800-322-7880.
Letter of Intent -- By signing a Letter of Intent form,
available from the Distributor, 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 shares held in escrow to realize the difference. Signing a
Letter of Intent does not bind you to purchase, or the Fund to
sell, the full amount indicated at the sales load in effect at
the time of signing, but you must complete the intended purchase
to obtain the reduced sales load. At the time you purchase Fund
shares, you must indicate your intention to do so under a Letter
of Intent. Purchases pursuant to a Letter of Intent will be
made at the then-current net asset value plus the applicable
sales load in effect at the time such Letter of Intent was
executed.
HOW TO REDEEM FUND 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.
The Fund imposes no charges when shares are redeemed
directly through the Distributor. Service Agents may charge 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.
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 Dreyfus
TeleTransfer or through Dreyfus-Automatic Asset Builder and
subsequently submit a written redemption request to the Transfer
Agent, the redemption proceeds will be transmitted to you
promptly upon bank clearance of your purchase check, Dreyfus
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 Dreyfus TeleTransfer Privilege for
a period of eight business days after receipt by the Transfer
Agent of the purchase check, the Dreyfus TeleTransfer purchase
or the 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.
Procedures -- You may redeem shares by using the regular
redemption procedure through the Transfer Agent or through the
Wire Redemption Privilege, the Telephone Redemption Privilege,
or Dreyfus TeleTransfer Privilege. Other redemption procedures
may be in effect for investors who effect transactions in Fund
shares through Service Agents. The Fund makes available to
certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
In addition, the Distributor will accept orders from
dealers with which it has sales agreements for the repurchase of
shares held by shareholders. Repurchase orders received by the
dealer prior to the close of trading on the New York Stock
Exchange on a business day and transmitted to the Distributor
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
dealer to transmit orders on a timely basis. The dealer may
charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at
any time.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. If
you select the Dreyfus TeleTransfer Privilege, the 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 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 Dreyfus TeleTransfer 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 Dreyfus TeleTransfer 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 The Dreyfus
Family of Funds, P.O. Box 6527, Providence, Rhode Island
02940-6527. Redemption requests for Dreyfus Retirement Plan
accounts should be sent to The Dreyfus Trust Company, Custodian,
P.O. Box 6427, Providence, Rhode Island 02940-6427. Redemption
requests may be delivered in person only to a Dreyfus Financial
Center. These requests will be forwarded to the Fund and will
be processed only upon receipt thereby. For the location of the
nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." 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 Exchanges Medallion
Program.. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers
listed under "General Information."
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.
To establish the Wire Redemption Privilege, you must check the
appropriate box and supply the necessary information on the
Fund's Account Application or file a Shareholder Services Form
with the Transfer Agent. You 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 1-800-221-4060 or, if you are calling from overseas,
call 1-401-455-3306. The Fund reserves the right to refuse any
redemption request, including requests made shortly after a
change of address, and may limit the amount involved or the
number of such requests. This Privilege may be modified or
terminated at any time by the Transfer Agent or the Fund. The
Fund's Statement of Additional Information sets forth
instructions for transmitting redemption requests by wire.
Shares held under Keogh Plans, IRAs or other retirement plans,
and shares for which certificates have been issued, are not
eligible for this Privilege.
Telephone Redemption Privilege -- You may redeem Fund shares
(maximum $150,000 per day) by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed
a Shareholder Services Form with the Transfer Agent. The
redemption proceeds will be paid by check and mailed to your
address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. The Fund reserves the right to refuse any
request made by telephone, including requests made shortly after
a change of address, and may limit the amount involved or the
number of telephone redemption requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the
Fund. Shares held under Keogh Plans, IRAs or other retirement
plans, and shares for which certificates have been issued, are
not eligible for this Privilege.
Dreyfus TeleTransfer Privilege -- You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the
Fund's Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred
between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a
domestic financial institution which is an Automated Clearing
House member may be so 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 Dreyfus TeleTransfer
Privilege for transfer to their bank account not more than
$250,000 within any 30-day period. The Fund reserves the right
to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or
terminate 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 Dreyfus TeleTransfer Privilege,
you may request a Dreyfus TeleTransfer redemption of Fund shares
by telephoning 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. Shares held under Keogh Plans,
IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
Reinvestment Privilege -- You may reinvest up to the number of
shares you have redeemed, within 30 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.
SERVICE PLAN
Under the Service Plan, adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, the Fund has
undertaken to pay the Distributor for advertising, marketing and
distributing the Fund's shares and for servicing Fund
shareholders at an annual rate of .25 of 1% of the value of the
Fund's average daily net assets. Under the Service Plan, the
Distributor may make payments to Service Agents for
administration, for servicing Fund shareholders who are also
their clients and/or for distribution. The Distributor
determines the amounts to be paid to Service Agents. Service
Agents receive such fees in respect of the average daily value
of the Fund's shares owned by shareholders for whom the Service
Agent performs Servicing (as defined below) or for whom the
Service Agent is the dealer or holder of record. The Service
Plan also provides that The Dreyfus Corporation may pay Service
Agents for servicing out of its management fee, its past profits
or any other sources available to it. From time to time, the
Distributor may defer or waive receipt of fees under the Service
Plan while retaining the ability to be paid by the Fund under
the Service Plan thereafter. The fees payable to the
Distributor under the Service Plan for advertising, marketing
and distributing the Fund's shares and payments to Service
Agents are payable without regard to actual expenses incurred.
The Fund also bears the costs of preparing and printing
prospectuses and statements of additional information used for
regulatory purposes and for distribution to existing
shareholders. Under the Service Plan, the Fund bears (a) the
costs of preparing, printing and distributing prospectuses and
statements of additional information used for other purposes and
(b) the costs associated with implementing and operating the
Service Plan (such as costs of printing and mailing service
agreements), the aggregate of such amounts not to exceed in any
fiscal year of the Fund the greater of $100,000 or .005 of 1% of
the value of the Fund's average daily net assets for such fiscal
year. Each item for which a payment may be made under the
Service Plan may constitute an expense of distributing Fund
shares as the Securities and Exchange Commission construes such
term under Rule 12b-1.
Expenses under the Service Plan may be carried forward from
one year to another to the extent they remain unpaid. All or a
part of any such amount carried forward will be paid at such
time, if ever, as the Board determines to pay it. The Fund will
not be charged for interest, carrying or other finance charges
on any unreimbursed distribution or other expense incurred and
not paid in a prior year.
Servicing may include, among other things, one or more of
the following: answering client inquiries regarding the Fund;
assisting clients in changing dividend options, account
designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; investing
client cash account balances automatically in Fund shares;
providing periodic statements showing a client's account balance
and integrating such statements with those of other transactions
and balances in the client's other accounts serviced by the
Service Agent; arranging for bank wires; and such other services
as the Fund may request, to the extent the Service Agent is
permitted by applicable statute, rule or regulation.
The Glass-Steagall Act and other applicable laws prohibit
Federally chartered or supervised banks from engaging in certain
aspects of the business of issuing, underwriting, selling and/or
distributing securities. Accordingly, banks will be engaged to
act as Service Agents only to perform administrative and
shareholder servicing functions. While the matter is not free
from doubt, the Fund's Board of Trustees believe that such laws
should not preclude a bank from acting as a Service Agent.
However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state
statutes or regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, could prevent a
bank from continuing to perform all or a part of its Servicing
activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain Fund
shareholders and alternative means for continuing the Servicing
of such shareholders would be sought. In such event, changes in
the operation of the Fund might occur and shareholders serviced
by such bank might no longer be able to avail themselves of any
automatic investment or other services then being provided by
such bank. The Fund does not expect that shareholders would
suffer any adverse financial consequences as a result of any of
these occurrences.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net
investment income on each day that the New York Stock Exchange
is open for business. The Fund's earnings for Saturdays,
Sundays and holidays are declared as dividends on the preceding
business day. Dividends usually are paid on the last business
day of each month and automatically reinvested in additional
Fund shares at net asset value, without a sales load, unless you
elect payment in cash. If you redeem all shares in your account
at any time during the month, all dividends to which you are
entitled will be paid to you along with the proceeds of the
redemption. Distributions of net realized securities gains, if
any, generally are declared and paid once a year, but the Fund
may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of
1986, as amended (the "Code"), in all events in a manner
consistent with the Investment Company Act of 1940. 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 distributions
in cash or to reinvest such amounts in additional Fund shares at
net asset value without a sales load. All expenses are accrued
daily and deducted before declaration of dividends.
Fund shares begin earning income dividends on the day
immediately available funds ("Federal Funds" (monies of member
banks within the Federal Reserve System which are held on
deposit at a Federal Reserve Bank)) are received by the Transfer
Agent in written or telegraphic form. If a purchase order is
not accompanied by remittance in Federal Funds, there may be a
delay between the time the purchase order becomes effective and
the time the shares purchased start earning dividends. If your
payment is not made in Federal Funds, it must be converted into
Federal Funds. This usually occurs within one business day of
receipt of a bank wire and within two business days of receipt
of a check drawn on a member bank of the Federal Reserve System.
Checks drawn on banks which are not members of the Federal
Reserve System may take considerably longer to convert into
Federal Funds.
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
will be taxable to U.S. shareholders as ordinary income whether
received in cash or reinvested in additional Fund shares.
Distributions from net realized long-term capital gains of the
Fund to U.S. shareholders generally are taxable 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 additional
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 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.
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 dividends and distributions from securities
gains, if any, paid during the year.
The Code provides for the "carryover" of some or all of the
sales load imposed on Fund shares, if you exchange your Fund
shares for shares of another fund advised by The Dreyfus
Corporation within 91 days 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 Fund shares, up to the amount of the reduction
of the sales load charge on the exchange, is not included in the
basis of your Fund 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.
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 of
the Fund 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 your 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 has qualified
for the fiscal year ended October 31, 1994 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. Such qualification 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. In addition, the Fund is subject to a
non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital
gains.
You should consult your tax adviser regarding specific
questions as to Federal, state and local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated
on several bases, including current yield, average annual total
return, and/or total return.
Current yield refers to the Fund's annualized net
investment income per share over a 30-day period, expressed as a
percentage of the maximum offering price per share at the end of
the period. For purposes of calculating current yield, the
amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate
over a six-month period. An identical result is then assumed to
have occurred during a second six-month period which, when added
to the result for the first six months, provides an "annualized"
yield for an entire one-year period. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to expense
limitations in effect. See "Management of the Fund."
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 maximum offering price 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.
Calculations based on the net asset value per share do not
reflect the deduction of the sales load 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. Investors
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., Moody's Bond Survey
Bond Index, Lehman Brothers Municipal Bond Index, Morningstar,
Inc., Value Line Mutual Fund Survey and other industry
publications.
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. The Fund is authorized to issue an unlimited number of
shares of beneficial interest, par value $.001 per share. Each
share has one vote.
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 Trustee.
The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held
personally liable for the obligations of the Fund. Thus, the
risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a
possibility which 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 Trustees intend to conduct the
operations of the Fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities
of the Fund. As described under "Management of the Fund" in the
Fund's 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 Trustees.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or
by calling toll free 1-800-645-6561. In New York City, call
1-718-895-1206; on Long Island, call 794-5452.
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.
<PAGE>
APPENDIX
The average distribution of investments in corporate bonds
by ratings for the fiscal year ended October 31, 1994,
calculated monthly on a dollar weighted basis, was as follows:
Moody's Investors Standard & Poor's
Service, Inc. or Corporation Percentage
Aaa AAA 20.49%
Aa AA 10.17
A A 25.68
Baa BBB 30.47
Ba BB 10.42
B B .95
Caa CCC .13
Unrated Unrated 1.69*
100.00%
The actual distribution of the Fund's corporate bond
investments by ratings on any given date will vary. In
addition, the distribution of the Fund's investments by ratings
as set forth above should not be considered as representative of
the Fund's future portfolio composition.
* Included under the Unrated category are securities
comprising 1.69%, while unrated, have been determined by The
Dreyfus Corporation to be of comparable quality to securities
rated Ba/BB.
<PAGE>
DREYFUS STRATEGIC INCOME
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 1, 1995
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with
the current Prospectus of Dreyfus Strategic Income (the "Fund"),
dated March 1, 1995, as it may be revised from time to time. To
btain a copy of the Fund's Prospectus, please write to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or call the following numbers:
Outside New York State -- Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
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-15
Management Agreement. . . . . . . . . . . . . . . . . . . .B-19
Purchase of Fund Shares . . . . . . . . . . . . . . . . . .B-21
Service Plan. . . . . . . . . . . . . . . . . . . . . . . .B-22
Redemption of Fund Shares . . . . . . . . . . . . . . . . .B-23
Shareholder Services. . . . . . . . . . . . . . . . . . . .B-25
Determination of Net Asset Value. . . . . . . . . . . . . .B-29
Dividends, Distributions and Taxes. . . . . . . . . . . . .B-29
Portfolio Transactions. . . . . . . . . . . . . . . . . . .B-31
Performance Information . . . . . . . . . . . . . . . . . .B-32
Information About the Fund. . . . . . . . . . . . . . . . .B-34
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . .B-34
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . .B-35
Financial Statements. . . . . . . . . . . . . . . . . . . .B-42
Report of Independent Auditors. . . . . . . . . . . . . . .B-54
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"DESCRIPTION OF THE FUND."
PORTFOLIO SECURITIES
MORTGAGE-RELATED SECURITIES
GOVERNMENT AGENCY SECURITIES. Mortgage-related securities
issued by the Government National Mortgage Association ("GNMA")
include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the timely payment of
principal and interest by GNMA and such guarantee is backed by
the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the Department of
Housing and Urban Development. Ginnie Maes also are supported by
the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee.
Government-Related Securities. Mortgage-related securities
issued by the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also
known as "Fannie Maes") which are solely the obligations of FNMA
and are not backed by or entitled to the full faith and credit of
the United States. FNMA is a government-sponsored organization
owned entirely by private stockholders. Fannie Maes are
guaranteed as to timely payment of principal and interest by
FNMA.
Mortgage-related securities issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or
"Pcs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States
or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by
FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage
loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one
year after it becomes payable.
Bank Obligations
Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency and
are required to be members of the Federal Reserve System and to
be insured by the Federal Deposit Insurance Corporation (the
"FDIC"). Domestic banks organized under state law are supervised
and examined by state banking authorities but are members of the
Federal Reserve System only if they elect to join. In addition,
state banks whose certificates of deposit ("Cds") may be
purchased by the Fund are insured by the Bank Insurance Fund
administered by the FDIC (although such insurance may not be of
material benefit to the Fund, depending upon the principal amount
of the Cds of each bank held by the Fund) and are subject to
Federal examination and to a substantial body of Federal law and
regulation. As a result of Federal or state laws and
regulations, domestic branches of domestic banks generally are
required, among other things, to maintain specified levels of
reserves, and are limited in the amounts which they can loan to a
single borrower and are subject to other regulation designed to
promote financial soundness. However, not all such laws and
regulations apply to foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and foreign branches of foreign
banks, such as Cds and time deposits ("Tds"), may be general
obligations of the parent banks in addition to the issuing
branches, or may be limited by the terms of a specific obligation
and governmental regulation. Such obligations are subject to
different risks than are those of domestic banks. These risks
include foreign economic and political developments, foreign
governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign exchange
controls and foreign withholding and other taxes on interest
income. Foreign branches and subsidiaries are not necessarily
subject to the same or similar regulatory requirements that apply
to domestic banks, such as mandatory reserve requirements, loan
limitations, and accounting, auditing and financial recordkeeping
requirements. In addition, less information may be publicly
available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may
be general obligations of the parent banks in addition to the
issuing branches or may be limited by the terms of a specific
obligation and by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with assets
in excess of $1 billion may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed in
that state.
In addition, Federal branches licensed by the Comptroller of
the Currency and branches licensed by certain states ("State
Branches") may be required to: (1) pledge to the regulator, by
depositing assets with a designated bank within the state, a
certain percentage of its assets as fixed from time to time by
the appropriate regulatory authority; and (2) maintain assets
within the state in an amount equal to a specified percentage of
the aggregate amount of liabilities of the foreign bank payable
at or through all of its agencies or branches within the state.
The deposits of Federal and State Branches generally must be
insured by the FDIC if such branches take deposits of less than
$100,000.
In view of the foregoing factors associated with the
purchase of Cds and Tds issued by foreign branches of domestic
banks, foreign subsidiaries of domestic banks, foreign branches
of foreign banks or domestic branches of foreign banks, the
Manager carefully evaluates such investments on a case-by-case
basis.
The Fund may purchase Cds issued by banks, savings and loan
associations and similar institutions with less than $1 billion
in assets, whose deposits are insured by the FDIC, provided the
Fund purchases any such CD in a principal amount of not more than
$100,000, which amount would be fully insured by the Bank
Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC. Interest payments on such a CD are not
so insured. The Fund will not own more than one such CD per such
issuer.
Municipal Obligations
Municipal obligations are debt obligations issued by states,
territories and possessions of the United States and the District
of Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities. While
in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-
municipal obligations of similar quality, certain issues of
municipal obligations, both taxable and non-taxable, offer yields
comparable and in some cases greater than the yields available on
other permissible Fund investments. Municipal obligations
generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal
obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds are payable
from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from the general
taxing power. Industrial development bonds, in most cases, are
revenue bonds and generally do not carry the pledge of the credit
of the issuing municipality, but generally are guaranteed by the
corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond
sale, collection of taxes or receipt of other revenues.
Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property
or equipment issued by municipalities. Municipal obligations
bear fixed, variable or floating rates of interest, which are
determined in some instances by formulas under which the
municipal obligation's interest rate will change directly or
inversely to changes in interest rates or an index, or multiples
thereof, in many cases subject to a maximum and minimum. Certain
municipal obligations are subject to redemption at a date earlier
than their stated maturity pursuant to call options, which may be
separated from the related municipal obligation and purchased and
sold separately. Dividends received by shareholders on Fund
shares which are attributable to interest income received by the
Fund from municipal obligations generally will be subject to
Federal income tax. It is currently the Fund's intention to
invest no more than 25% of its assets in municipal obligations.
However, this percentage may be varied from time to time without
shareholder approval.
Investment Techniques
Leverage Through Borrowing. The Fund may borrow for
investment purposes. The Investment Company Act of 1940 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 borrowing 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 equivalents 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. These agreements, which are treated as
if reestablished each day, are expected to provide the Fund with
a flexible borrowing tool.
Short Sales. Until the Fund replaces a borrowed security in
connection with a short sale, the Fund will: (a) maintain daily
a segregated account, containing cash or U.S. Government
securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral
will equal the current value of the security sold short and (ii)
the amount deposited in the segregated account plus the amount
deposited with the broker as collateral will not be less than the
market value of the security at the time it was sold short; or
(b) otherwise cover its short position.
Options Transactions. The Fund may engage in options
transactions, such as purchasing or writing covered call or put
options. In return for a premium, the writer of a covered call
option forfeits the right to any appreciation in the value of the
underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected).
Nevertheless, the call writer retains the risk of a decline in
the price of the underlying security. The writer of a covered
put option accepts the risk of a decline in the price of the
underlying security. The size of the premiums that the Fund may
receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or
increase their option-writing activities.
Options written ordinarily will have expiration dates
between one and nine months from the date written. The exercise
price of the options may be below, equal to or above the market
values of the underlying securities at the times the options are
written. In the case of call options, these exercise prices are
referred to as "in-the-money," "at-the-money" and "out-of-the-
money," respectively. The Fund may write (a) in-the-money call
options when the Manager expects that the price of the underlying
security will remain stable or decline moderately during the
option period, (b) at-the-money call options when the Manager
expects that the price of the underlying security will remain
stable or advance moderately during the option period and (c)
out-of-the-money call options when the Manager expects that the
premiums received from writing the call option plus the ap-
preciation in market price of the underlying security up to the
exercise price will be greater than the appreciation in the price
of the underlying security alone. In these circumstances, if the
market price of the underlying security declines and the security
is sold at this lower price, the amount of any realized loss will
be offset wholly or in part by the premium received.
Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to
market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.
So long as the Fund's obligation as the writer of an option
continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the
Fund to deliver, in the case of a call, or take delivery of, in
the case of a put, the underlying security against payment of the
exercise price. This obligation terminates when the option
expires or the Fund effects a closing purchase transaction. The
Fund can no longer effect a closing purchase transaction with
respect to an option once it has been assigned an exercise
notice.
An option position may be closed out only where there exists
a secondary market for an option of the same series on a
recognized national securities exchange or in the over-the
counter market. Because of this fact and current trading
conditions, the Fund expects to purchase only call or put options
issued by the Options Clearing Corporation. The Fund expects to
write options on national securities exchanges and in the
over-the-counter market.
While it may choose to do otherwise, the Fund generally will
purchase or write only those options for which the Manager
believes there is an active secondary market so as to facilitate
closing transactions. 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
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.
Futures Contracts and Options on Futures Contracts. Upon
exercise of an option, the writer of the option delivers to the
holder of the option the futures position and the accumulated
balance in the writer's futures margin account, which represents
the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures
contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at
the time of sale, there are no daily cash payments to reflect
changes in the value of the underlying contract; however, the
value of the option does change daily and that change would be
reflected in the net asset value of the Fund.
Foreign Currency Transactions. If the Fund enters into a
currency transaction, the Fund will deposit, if so required by
applicable regulations with its custodian or subcustodian cash or
readily marketable securities in a segregated account of the Fund
in an amount at least equal to the value of the Fund's total
assets committed to the consummation of the forward contract. If
the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the
account so that the value of the account will equal the amount of
the Fund's commitment with respect to the contract.
At or before the maturity of a forward contract, the Fund
either may sell a portfolio security and make delivery of the
currency, or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second
contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is
obligated to deliver. If the Fund retains the portfolio security
and engages in an offsetting transaction, the Fund, at the time
of execution of the offsetting transaction, will incur a gain or
a loss to the extent that movement has occurred in forward
contract prices. Should forward prices decline during the period
between the Fund's entering into a forward contract for the sale
of a currency and the date it enters into an offsetting contract
for the purchase of the currency, the Fund will realize a gain to
the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Fund will suffer a loss to
the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.
The cost to the Fund of engaging in currency transactions
varies with factors such as the currency involved, the length of
the contract period and the market conditions then prevailing.
Because transactions in currency exchange usually are conducted
on a principal basis, no fees or commissions are involved. The
use of forward currency contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish
a rate of exchange that can be achieved in the future. If a
devaluation generally is anticipated, the Fund may not be able to
contract to sell the currency at a price above the devaluation
level it anticipates. The requirements for qualification as a
regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), may cause the Fund to restrict the
degree to which it engages in currency transactions. See
"Dividends, Distributions and Taxes."
Lending Portfolio Securities. To a limited extent, the Fund
may lend its portfolio securities to brokers, dealers and other
financial institutions, provided it receives cash collateral
which at all times is maintained in an amount equal to at least
100% of the current market value of the securities loaned. By
lending its portfolio securities, the Fund can increase its
income through the investment of the cash collateral. For the
purposes of this policy, the Fund considers collateral consisting
of U.S. Government securities or irrevocable letters of credit
issued by banks whose securities meet the standards for
investment by the Fund to be the equivalent of cash. From time
to time, 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. Such
loans may not exceed 33/% of the value of the Fund's total
assets.
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; and (5) the Fund may pay only
reasonable custodian fees in connection with the loan. These
conditions may be subject to future modification.
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 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, if a substantial market
of qualified institutional buyers develops pursuant to Rule 144A
under the Securities Act of 1933, as amended, for certain
unregistered securities held by the Fund, the Fund intends to
treat such securities as liquid securities in accordance with
procedures approved by the Fund's Board of Trustees. Because it
is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the
Fund's Board of Trustees has directed The Dreyfus Corporation 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 the Fund's portfolio
during such period.
Risk Factors
Lower Rated Securities. The Fund is permitted to invest in
securities rated below Baa by Moody's Investors Service, Inc.
("Moody's") and below BBB by Standard & Poor's Corporation
("S&P") and as low as Ca by Moody's or C by S&P. Such
securities, though higher yielding, are characterized by risk.
See "Description of the Fund -- Risk Factors -- Lower Rated
Securities" in the Prospectus for a discussion of certain risks
and "Appendix" for a general description of Moody's and S&P
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. In this evaluation, the Manager
will take into consideration, among other things, the issuer's
financial resources, its sensitivity to economic conditions and
trends, its operating history, the quality of the issuer's
management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular
issue to reflect subsequent events. Once the rating of a
security in the Fund's portfolio has been changed, the Manager
will consider all circumstances deemed relevant in determining
whether the Fund should continue to hold the security.
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 S&P and Moody's, on balance,
as 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 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.
These securities may be particularly susceptible to economic
downturns. It is likely that any economic recession could
disrupt severely the market for such securities and may have an
adverse impact on the value of such securities. In addition, it
is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal
and pay interest thereon and increase the incidence of default
for such securities.
The Fund may acquire these securities during an initial
offering. Such securities may involve special risks because they
are new issues. The Fund has no arrangement with the Distributor
or any other persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and
other characteristics pertinent to such new issues.
Lower rated zero coupon securities involve special
considerations. The credit risk factors pertaining to lower
rated securities also apply to lower rated zero coupon
securities. Such zero coupon securities carry an additional risk
in that, unlike securities 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 are sold and, if
the issuer defaults, the Fund may obtain no return at all on its
investment. See "Dividends, Distributions and Taxes."
Investment Restrictions
The Fund has adopted the investment restrictions numbered 1
through 14 as fundamental policies. Fundamental policies cannot
be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940 (the "Act")) of the
Fund's outstanding voting shares. Investment restriction number
15 is not a fundamental policy and may be changed by vote of a
majority of the Trustees at any time. The Fund may not:
1. Purchase the securities of any issuer (other than a
bank) if such purchase would cause more than 5% of the value of
its total assets to be invested in securities of such issuer, or
invest more than 15% of its assets in the obligations of any one
bank, except that up to 25% of the value of the Fund's total
assets may be invested, and securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities may be
purchased, without regard to such limitations. Notwithstanding
the foregoing, based on rules of the Securities and Exchange
Commission, the Fund will not invest more than 5% of its assets
in the obligations of any one bank, except as otherwise provided
in such rules.
2. Purchase the securities of any issuer if such purchase
would cause the Fund to hold more than 10% of the outstanding
voting securities of such issuer. This restriction applies only
with respect to 75% of the Fund's assets.
3. 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.
4. 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.
5. 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 securi-
ties of such issuer or together own beneficially more than 5% of
the securities of such issuer.
6. 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.
7. Invest in commodities, except that the Fund may
purchase and sell futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
8. Borrow money, except from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the
value of the Fund's total assets (including the amount borrowed)
based on the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the value of the Fund's total
assets, the Fund will not make any additional investments.
9. 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 indexes, and options on futures contracts or indexes.
10. Make loans to others except through the purchase of
debt obligations or the entry into repurchase agreements.
However, the Fund may lend its portfolio securities in an amount
not to exceed 33/% 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.
11. 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.
12. 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 ac-
cordance with its views.
13. Purchase, sell or write puts, calls or combinations
thereof, except as set forth under "Short-Selling," "Call and Put
Options on Specific Securities," "Futures Transactions - In
General", "Interest Rate Futures Contracts and Options on
Interest Rate Futures Contracts", "Futures Contracts Based on an
Index of Debt Securities and Options on such Futures Contracts"
and "Options on Foreign Currency" in the Fund's Prospectus and
"Futures Contracts and Options on Futures Contracts" and "Options
Transactions" in this Statement of Additional Information.
14. 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.
15. 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.
While not fundamental policies, the Fund has undertaken, so
as to permit the sale of Fund shares in certain states, not to
invest in oil, gas and other mineral leases or in real estate
limited partnerships, and to treat the securities of foreign
issuers which are not listed on a recognized domestic or foreign
exchange and for which a bona-fide market does not exist at the
time of purchase or subsequent valuation as not readily
marketable.
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 interest 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
Trustees 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 Trustee who is deemed to
be an "interested person" of the Fund, as defined in the Act, is
indicated by an asterisk.
Trustees of the Fund
*DAVID W. BURKE, Trustee. Vice President and Chief
Administrative Officer of Dreyfus since October 1990 and an
officer, director or trustee of other investment companies
advised or administered by Dreyfus. 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.
DIANE DUNST, Trustee. 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. Her address
is 1070 Park Avenue, New York, New York 10128.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer
AT&T Investment Management Corporation. He is also a
trustee of Corporate Property Investors, a real estate
investment company. His address is One Oak Way, Berkeley
Heights, New Jersey 07922.
ROSALIND GERSTEN JACOBS, Trustee. 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.
Her address is c/o Corporate Property Investors, 305 East
47th Street, New York, New York 10017.
JAY I. MELTZER, Trustee. 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. His address is 903 Park Avenue, New
York, New York 10021.
DANIEL ROSE, Trustee. 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. His address is c/o Rose
Associates, Inc., 380 Madison Avenue, New York, New York
10017.
WARREN B. RUDMAN, Trustee. Since January 1993, Partner in the
law firm Paul, Weiss, Rifkin, Wharton & Garrison. From
January 1981 to January 1993, Mr. Rudman served as a United
States Senator from the State of New Hampshire. Since
January 1993, Mr. Rudman also 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. His address is
c/o Paul, Weiss, Rifkind, Wharton & Garrison, 1615 L.
Street, N.W., Washington, D.C. 20036.
SANDER VANOCUR, Trustee. Since January 1992, Mr. Vanocur has
been the President of Old Owl Communications, a full-service
communications firm and, since November 1989, he has served
as 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 1991, he was Anchor of the ABC News program
"Business World," a weekly business program on the ABC
television network. His address is 2928 P Street, N.W.,
Washington, D.C. 20007.
There ordinarily will be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less
than a majority of the Trustees holding office have been elected
by shareholders, at which time the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Under
the Act, shareholders of record of not less than two-thirds of
the outstanding shares of the Fund may remove a Trustee through a
declaration in writing or by vote cast in person or by proxy at a
meeting called for that purpose. Under the Fund's Agreement and
Declaration of Trust, the Trustees are required to call a meeting
of shareholders for the purpose of voting upon the question of
removal of any such Trustee 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 plan described in the section
captioned "Service Plan" remains in effect, the Trustees of the
Fund who are not "interested persons" of the Fund, as defined in
the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
The "non-interested" Trustees and Mr. Feldman are also
trustees of Dreyfus BASIC U.S. Government Money Market Fund,
Dreyfus California Intermediate Municipal Bond Fund, Dreyfus
Connecticut Intermediate Municipal Bond Fund, Dreyfus
Massachusetts Intermediate Municipal Bond Fund, Dreyfus New
Jersey Intermediate Municipal Bond Fund, Dreyfus Pennsylvania
Municipal Bond Fund and Dreyfus Strategic Investing, and
directors of Dreyfus BASIC Money Market Fund, Inc. and Dreyfus
Strategic Governments Income, Inc. Messrs. Feldman, Rose and
Vanocur are also directors of Dreyfus New Jersey Municipal Bond
Fund, Inc., managing general partners of Dreyfus Strategic
Growth, L.P. and Dreyfus Strategic World Investing, L.P., and
trustees of Dreyfus Florida Intermediate Municipal Bond Fund,
Dreyfus New York Insured Tax Exempt Bond Fund and Dreyfus
Investors GNMA Fund, Dreyfus 100% U.S. Treasury Intermediate Term
Fund, Dreyfus 100% U.S. Treasury Long Term Fund, Dreyfus 100%
U.S. Treasury Money Market Fund, Dreyfus 100% U.S. Treasury Short
Term Fund. Mr. Feldman is also a director of Dreyfus Edison
Electric Index Fund, Inc., Dreyfus Life and Annuity Index Fund,
Inc., Peoples Index Fund, Inc., Peoples S&P MidCap Index Fund,
Inc and Premier Global Investing. Mr. Rudman is also a trustee
of Dreyfus Cash Management, Dreyfus Government Cash Management,
Dreyfus Municipal Cash Management, Dreyfus New York Municipal
Cash Management Plus, Dreyfus Tax Exempt Cash Management, Dreyfus
Treasury Cash Management and Dreyfus Treasury Prime Cash
Management and a director of Dreyfus Cash Management Plus, Inc.
The Fund does not pay any remuneration to its officers and
Trustees other than fees and expenses to Trustees who are not
officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, which totalled
$25,583 for the fiscal year ended October 31, 1994 for such
Trustees as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating Officer 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., a wholly-
owned subsidiary of The Boston Company, Inc. Prior to
December 1991, she served as Vice President and Controller,
and later as Senior Vice President, of The Boston Company
Advisors, Inc.
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, and prior to August 1990, he
was employed as an Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior
Vice President of the Distributor and an officer of other
investment companies advised or administered by the Manager.
From 1988 to August 1994, he was Manager of the High
Performance Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary.
Associate General Counsel of the Distributor and an officer
of other investment companies advised or administered by the
Manager. From September 1992 to August 1994, he was an
attorney with the Board of Governors of the Federal Reserve
System.
JOSEPH F. TOWER, III, 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.
JOHN J. PYBURN, Assistant Treasurer, Vice President of the
Distributor and an officer of other investment companies
advised or administered by the Manager. From 1984 to July
1994, he was Assistant Vice President in the Mutual Fund
Accounting Department of the Administrator.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President
of the Distributor and an officer of other investment
companies advised or administered by the Manager. From
March 1992 to July 1994, she was a Compliance Officer for
The Managers Funds, a registered investment company. From
March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior
thereto, was employed as a Research Assistant for the Bureau
of National Affairs.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of
the Distributor and an officer of other investment companies
advised or administered by the Manager. From January 1992
to July 1994, he was a Senior Legal Product Manager for The
Boston Company Advisors, Inc., and, from January 1990 to
January 1992, he was a mutual fund accountant for The Boston
Company Advisors, Inc.
The address of each officer of the Fund is ________________.
Trustees and officers of the Fund, as a group, owned less
than 1% of the Fund's outstanding shares of beneficial interest
on December 22, 1994.
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 of Trustees or (ii) vote of a majority (as
defined in the Act) of the outstanding voting securities of the
Fund, provided that in either event the continuance also is
approved by a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Fund or the Manager, by
vote cast in person at a meeting called for the purpose of voting
on such approval. The Agreement was last approved by share-
holders on August 3, 1994, and was last approved by the Board of
Trustees, including a majority of the Trustees who are not
"interested persons" of any party to the Agreement, at a meeting
held on May __, 1994. The Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board of Trustees 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 Act).
The following persons are officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive
Officer; Julian M. Smerling, Vice Chairman of the Board of
Directors; W. Keith Smith, Chief Operating Officer and a
Director; Paul H. Snyder, Vice President and Chief Financial
Officer; Daniel C. Maclean, Vice President and General Counsel;
Elie M. Genadry, Vice President-Institutional Sales; Henry D.
Gottmann, Vice President-Retail Sales and Service; Jeffrey N.
Nachman, Vice President-Mutual Fund Accounting; Diane M. Coffey,
Vice President-Corporate Communications; Jay R. DeMartine, Vice
President-Retail Marketing; Barbara E. Casey, Vice President-
Retirement Services; Lawrence S. Kash, Vice Chairman-
Distribution; Philip L. Toia, Vice Chairman-Operations and
Administration; Katherine C. Wickham, Vice President-Human
Resources; Mark N. Jacobs, Vice President-Fund Legal and
Compliance, and Secretary; Maurice Bendrihem, Controller; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence
M. Greene and David B. Truman, 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 of Trustees. The Manager is
responsible for investment decisions, and provides the Fund with
Portfolio Managers who are authorized by the Board of Trustees to
execute purchases and sales of securities. The Fund's Portfolio
Managers are Garitt Kono, Gerald Thunelius 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 Trustees' review at the meeting subsequent
to such transactions.
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 certain Board members, 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 shareholders' reports
and meetings and any extraordinary expenses. The Fund bears
certain Servicing expenses in accordance with the Service Plan
and also bears the costs of preparing and printing prospectuses
and statements of additional information and costs associated
with implementing and operating such Plan. See "Service Plan."
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. The Manager also may make
such advertising and promotional expenditures, using its own
resources, as it from time to time deems appropriate.
As compensation for its services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .60 of
1% of the value of the Fund's average daily net assets. The
management fees chargeable for the fiscal years ended October 31,
1992, 1993 and 1994 amounted to $545,396, $1,536,141 and
$2,157,631, respectively; however, the fees for fiscal 1992 and
1993 were reduced by $363,819 and $213,144, respectively,
resulting in a net fee of $181,577 in fiscal 1992 and $1,322,997
in fiscal 1993, pursuant to various undertakings in effect.
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 limit 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 FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"HOW TO BUY FUND SHARES."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in
the Dreyfus Family of Funds and for certain other investment
companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer
purchase orders may be made between the hours of 8:00 A.M. and
4:00 P.M., New York time, on any business day that the Transfer
Agent and the New York Stock Exchange are open. Such purchases
will be credited to the shareholder's Fund account on the next
bank business day. To qualify to use Dreyfus 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 "Redemption of Fund
Shares--TeleTransfer Privilege."
Sales Loads. The scale of sales loads applies to purchases
made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or
for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a
single fiduciary account (including a pension, profit-sharing or
other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Code) although more than one beneficiary
is involved; or a group of accounts established by or on behalf
of the employees of an employer or affiliated employers pursuant
to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k), and 457 of the
Code); or an organized group which has been in existence for more
than six months, provided that it is not organized for the
purpose of buying redeemable securities of a registered
investment company and provided that the purchases are made
through a central administration or a single dealer, or by other
means which result in economy of sales effort or expense.
Offering Price
The method of computing the offering price for individual
sales aggregating less than $100,000, based upon the price in
effect at the close of business on October 31, 1994, is as
follows:
NET ASSET VALUE and redemption price per share. .$12.95
Sales load, 3.0 percent of offering price
(approximately 3.1 percent of net asset
value per share) . . . . . . . . . . . . . . . .40
Offering price to public. . . . . . . . . . . . .$13.35
SERVICE PLAN
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"SERVICE PLAN."
Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 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. Because some or all of the fees paid for advertising or
marketing the Fund's shares and the fees paid to the Distributor
and to certain financial institutions (which may include banks)
securities dealers, and other financial industry professionals
(collectively "Service Agents") could be deemed to be payment of
distribution expenses, the Fund's Board of Trustees has adopted
such a plan (the "Plan"). The Fund's Board of Trustees believes
that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. In some states, banks or other
financial institutions effecting transactions in Fund shares may
be required to register as dealers pursuant to state law.
A quarterly report of the amounts expended under the Plan,
and the purposes for which such expenditures were incurred, must
be made to the Board of Trustees for its review. In addition,
the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution
pursuant to the Plan without shareholder approval and that other
material amendments of the Plan must be approved by the Board of
Trustees, and by the Trustees who are not "interested persons"
(as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in
the related service agreements, by vote cast in person at a
meeting called for the purpose of considering such amendments.
The Plan and the related service agreements are subject to annual
approval by such vote of the Trustees cast in person at a meeting
called for the purpose of voting on the Plan. The Plan was last
approved by shareholders on August 3, 1994 and by the Board of
Trustees at a meeting held on May 27, 1994. The Plan may be
terminated at any time by vote of a majority of the Trustees who
are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan or in any of the
related service agreements or by vote of a majority of the Fund's
shares. Any service agreement may be terminated without penalty,
at any time, by such vote of the Trustees, or, upon not more than
60 days' written notice to the Service Agent, by vote of the
holders of a majority of the Fund's shares, or, upon 15 days'
written notice, by the Distributor. Each service agreement will
terminate automatically in the event of its assignment (as
defined in the Act).
For the period from August 24, 1994 through October 31,
1994, $155,810 was charged to the Fund by the Distributor
pursuant to the Fund's Service Plan.
Prior Distribution Plan. As of August 24, 1994 the Fund
terminated its then existing Service Plan, which provided for
payments to be made to Dreyfus Service Corporation for
advertising, marketing and distributing Fund shares at the annual
rate of .25%. For the period from November 1, 1993 through
August 23, 1994, the total amount charged to the Fund under such
Plan was a $760,609 of which $741,968 was charged for
advertising, marketing and servicing the Fund's shares and
$18,641 was charged for preparing, printing and distributing
prospectuses and statements of additional information and
operating the Plan. Pursuant to undertakings in effect, the
amount chargeable to the Fund pursuant to the Plan was reduced by
$391,394, resulting in a net amount paid of $369,215.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"HOW TO REDEEM FUND SHARES."
Dreyfus TeleTransfer Privilege. Investors should be aware
that if they have selected the Dreyfus TeleTransfer Privilege,
any request for a wire redemption will be effected as a Dreyfus
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
Fund Shares--Dreyfus 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 call one of the telephone numbers listed on
the cover.
Redemption Commitment. The Fund has committed itself to pay
in cash all redemption requests by any shareholder of record,
limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the value of the Fund's net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In
the case of requests for redemption in excess of such amount, the
Board of Trustees reserves the right to make payments in whole or
part in 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 would 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 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 that are offered without
a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other
funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares
purchased with a sales load, and additional shares
acquired through reinvestment of dividends or
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.
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, an investor or the investor's
Service Agent acting on his 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 relevant "NO" box on the Account Application,
indicating that the investor specifically refuses the request.
Telephone exchanges may be made only if the appropriate "YES" box
has been checked on the Account Application or a separate signed
Optional Services Form is on file with the Transfer Agent. By
using this Privilege, the investor authorizes the Transfer Agent
to act on telephonic, telegraphic or written exchange
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. 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.
To establish a Personal Retirement Plan by exchange, shares
of the fund being exchanged must have a value of at least the
minimum initial investment required for the fund into which the
exchange is being made. 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 the funds in the Dreyfus Family of Funds. To
exchange shares held in Personal Retirement Plans, the shares
exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Automatic-Exchange
Privilege permits an investor to purchase, in exchange for shares
of the Fund, shares of another fund in the Dreyfus Family of
Funds. This Privilege is available only for existing accounts.
Shares will be exchanged on the basis of relative net asset value
as described above under "Fund Exchanges." Investors may modify
or cancel this Privilege at any time by writing to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02040-9671. Enrollment in or modification or cancellation
of this Privilege is effective three business days following such
notification. An investor will be notified if his account falls
below the amount designated under this Privilege; 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
only among those accounts.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares
of the fund being acquired may legally be sold. Shares may be
exchanged only between accounts having identical names and other
identifying designations.
Shareholder Services Forms and prospectuses of the other
funds may be obtained by calling 1-800-654-6561. The Fund
reserves the right to reject any exchange request in whole or in
part. The Fund Exchanges Service or Dreyfus 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. There is a service charge of $.50
for each withdrawal check. 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.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows
investors to invest on the payment date their dividends or
dividends and capital gain distributions, if any, from the Fund
in shares of another fund in the Dreyfus Family of Funds of which
the investor is a shareholder. Shares of other funds purchased
pursuant to this Privilege will be purchased on the basis of
relative 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 that are
offered without 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. Distributions paid by a fund may be invested
in shares of other funds that impose a
contingent deferred sales charge ("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. SUCH
PURCHASES WILL BE EFFECTIVE WHEN PAYMENTS RECEIVED BY THE
TRANSFER AGENT ARE CONVERTED INTO FEDERAL FUNDS. 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 normally $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 FUND 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. Any securities or other assets for
which recent market quotations are not readily available are
valued at fair value as determined in good faith by the Board of
Trustees. Expenses and fees, including the management fee, are
accrued daily and taken into account for the purpose of
determining the net asset value of Fund shares.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: 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 believes that the Fund qualified as a "regulated
investment company" under the Code for fiscal year ended October
31, 1994 and 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 applicable provisions of the
Code. To qualify as a regulated investment company, the Fund
must distribute at least 90% of its net income (consisting of net
investment income and net short-term capital gain) to its
shareholders, must derive less than 30% of its annual gross
income from gain on the sale of securities held for less than
three months, and must meet certain asset diversification and
other requirements. Accordingly, the Fund may be restricted in
the selling of securities held for less than three months, and in
the utilization of certain of the investment techniques described
in the Prospectus under "Description of the Fund - Investment
Techniques." The Code, however, allows the Fund to net certain
offsetting positions, making it easier for the Fund to satisfy
the 30% test. The term "regulated investment company" does not
imply the supervision of management or investment practices or
policies by any government agency.
Any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the aggregate
net asset value of his shares below the cost of his investment.
Such a distribution would be a return on investment in an
economic sense, although taxable as stated above. In addition,
the Code provides that if a shareholder holds shares of the Fund
for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on
the sale of such shares will be treated as long-term capital loss
to the extent of the capital gain distribution received.
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. Finally, all or a portion of the gain realized
from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258. "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
or options as well as from closing transactions. In addition,
any such futures, forward contracts 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
futures, forwards or options 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. 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 futures, forwards 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 or
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
Manager's fee 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 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. The Fund's
portfolio turnover rate for the fiscal year ended October 31,
1994 was 161.35%. Portfolio turnover may vary from year to year,
as well as within a year. It is anticipated that in any fiscal
year, the turnover rate should not generally exceed 150%;
however, in periods in which extraordinary market conditions
prevail, the Manager will not be deterred from changing
investment strategy as rapidly as needed, in which case higher
turnover rates can be anticipated. 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.
In connection with its portfolio securities transactions for
the fiscal years ended October 31, 1992 and 1993, no brokerage
commissions were paid by the Fund. For the fiscal year ended
October 31, 1994 $25,618 in brokerage commissions were paid by
the Fund. Gross spreads and concessions on principal
transactions which, where determinable, amounted to $652,895,
$629,615 and $664,750 for fiscal 1992, 1993 and 1994,
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 Fund's current yield for the 30-day period ended October
31, 1994 was 7.29%. See "Management of the Fund" in the
Prospectus. Current yield is computed pursuant to a formula
which operates as follows: The amount of the Fund's expenses
accrued for the 30-day period (net of reimbursements) is
subtracted from the amount of the dividends and interest earned
(computed in accordance with regulatory requirements) by the Fund
during the period. That result is then divided by the product
of: (a) the average daily number of shares outstanding during
the period that were entitled to receive dividends, and (b) the
maximum offering price per share on the last day of the period
less any undistributed earned income per share reasonably
expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th
power, after which 1 is subtracted. The current yield is then
arrived at by multiplying the result by 2.
The Fund's average annual total return for the 1, 5 and
8.079 year periods ended October 31, 1994 was (10.25%), 7.53% and
8.57%, 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 1 from the
result.
Total return is calculated by subtracting the amount of the
Fund's maximum offering price per share at the beginning of a
stated period from the net asset value per share at the end of
the period (after giving effect to the reinvestment of dividends
and distributions during the period), and dividing the result by
the maximum offering price 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. In such cases, the calculation would not reflect the
deduction of the sales load which, if reflected, would reduce the
performance quoted. The Fund's total return for the period
October 3, 1986 to October 31, 1994, based on maximum offering
price per share, was 94.36%. Based on net asset value per share,
the Fund's total return was 100.39% for this period.
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. 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.
From time to time, advertising materials for the Fund may
refer to or discuss then-current or past economic or financial
conditions, development and/or events. The Fund's advertising
materials also may refer to the integration of the world's
securities markets, discuss the investment opportunities
available worldwide and mention the increasing importance of an
investment strategy including foreign investments. From time to
time advertising materials for the Fund also may refer to
Morningstar ratings and related analyses supporting the ratings.
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. Shares are of one class and have equal rights as
to dividends and in liquidation. Fund shares have no preemptive,
subscription or conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements
to all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New
York 10286, acts as custodian of the Fund's assets. The
Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
acts as the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group,
Inc. 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 of beneficial
interest 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.
<PAGE>
APPENDIX
Description of certain ratings assigned by Standard & Poor's
Corporation ("S&P"), Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, Inc. ("Fitch") and Duff & Phelps, Inc.
("Duff"):
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 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
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
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 payment.
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 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.
S&P's letter ratings may be modified by the addition of a
plus (+) or minus (-) sign designation, which is used to show
relative standing within the major rating categories, except in
the AAA (Prime Grade) category.
Commercial Paper Rating
The designation A-1 by S&P indicates that 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.
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 as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
A
Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment 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 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.
Moody's applies the numerical modifiers 1, 2 and 3 to show
relative standing within the major rating categories, except in
the Aaa category. 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 Rating
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.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's
ability to meet the obligations of a specific debt issue or class
of debt. The ratings take into consideration special features of
the issue, its relationship to other obligations of the issuer,
the current financial condition and operative performance of the
issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest
and repay principal is very strong, although not quite as strong
as bonds rated Aaa. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated
F-1+.
A
Bonds rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's
ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and
financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While
bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics,
which, if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.
Plus (+) and minus (-) signs are used with a rating symbol
to indicate the relative position of a credit within the rating
category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that
are payable on demand or have original maturities of up to three
years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond
rating analysis, the short-term rating places greater emphasis
than bond ratings on the existence of liquidity necessary to meet
the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance
for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The
risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A
Bonds rated A have protection factors which are average but
adequate. However, risk factors are more variable and greater in
periods of economic stress.
BBB
Bonds rated BBB are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
BB
Bonds rated BB are below investment grade but are deemed by
Duff as likely to meet obligations when due. Present or
prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may
move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the
risk that obligations will not be met when due. Financial
protection factors will fluctuate widely according to economic
cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in quality rating within this
category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities.
Such bonds may be in default or have considerable uncertainty as
to timely payment of interest, preferred dividends and/or
principal. Protection factors are narrow and risk can be
substantial with unfavorable economic or industry conditions
and/or with unfavorable company developments.
Plus (+) and minus (-) signs are used with a rating symbol
(except AAA) to indicate the relative position of a credit within
the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating
assigned by Duff. Paper rated Duff-1 is regarded as having very
high certainty of timely payment with excellent liquidity factors
which are supported by ample asset protection. Risk factors are
minor.
<PAGE>
DREYFUS STRATEGIC INCOME
<TABLE>
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
<CAPTION> PRINCIPAL
BONDS AND NOTES--87.8% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
AEROSPACE--1.3% McDonnell Douglas,
Notes, 9 1/4%, 2002.................. $ 4,000,000 $ 4,099,164
------------
AIRLINES--1.4% Qantas Airways,
Sr. Notes, 7 1/2%, 2003.............. 5,000,000 (a) 4,496,000
------------
BANKING--6.5% BankAmerica,
Sub. Notes, 9.70%, 2000.............. 5,000,000 5,333,815
First Chicago,
Sub. Notes, 11 1/4%, 2001............ 3,500,000 3,983,788
Fleet Financial Group,
Sub. Notes, 8 1/8%, 2004............. 6,000,000 5,831,202
NationsBank,
Sub. Notes, 7 3/4%, 2004............. 5,000,000 4,731,250
Republic New York,
Sub. Notes, 7 7/8%, 2001............. 1,000,000 984,317
------------
20,864,372
------------
CONSUMER--15.1% Cablevision Systems,
Sr. Sub. Deb., 9 7/8%, 2023.......... 5,500,000 5,005,000
News America Holdings (Gtd. by News):
Sr. Deb., 9 1/4%, 2013............... 5,000,000 4,830,245
Sr. Notes, 9 1/8%, 1999.............. 3,000,000 3,068,388
Paramount Communications,
Sr. Notes, 7 1/2%, 2002.............. 5,000,000 4,513,475
Rite Aid,
Sr. Deb., 6 7/8%, 2013............... 8,000,000 6,488,688
Rogers Cablesystems,
Sr. Secured Second Priority Deb.,
10 1/8%, 2012........................ 5,000,000 4,837,500
Tele-Communications, Sr. Deb.:
7 7/8%, 2013......................... 3,500,000 2,975,781
9 7/8%, 2022......................... 5,500,000 5,584,376
9 1/4%, 2023......................... 5,000,000 4,708,810
Time Warner Entertainment, L.P.,
Sr. Deb., 8 3/8%, 2023............... 8,000,000 6,813,544
------------
48,825,807
------------
FINANCE--17.0% Abbey National First Capital B.V., Sub. Notes
(Gtd. by Abbey National plc), 8.20%, 2004 3,000,000 2,949,357
Associates Corp. Of North America:
Medium-Term Sr. Notes, Ser. G, 8 1/4%, 2004 5,000,000 4,915,910
Sr. Notes, 7 7/8%, 2001.............. 5,000,000 4,905,390
Chrysler Financial,
Floating Rate Notes, 5 1/4%, 1996.... 10,000,000 (b) 10,026,200
Commercial Credit,
Deb., 10%, 2009...................... 1,000,000 1,103,673
Ford Motor Credit, Notes,
7 1/2%, 2004......................... 5,000,000 4,679,725
General Motors Acceptance,
Medium-Term Notes, 7 1/2%, 2000...... 5,000,000 4,819,415
Great Western Financial,
Notes, 6 3/8%, 2000.................. 5,000,000 4,557,620
KfW International Finance,
Notes (Gtd. by KfW International), 7%, 2013 5,000,000 4,308,870
McDonnell Douglas Finance:
Medium-Term Floating Rate Notes,
5 9/16%, 1998.................... 5,000,000 (b) 5,021,850
Medium-Term Notes, 9.90%, 2000....... 2,000,000 2,093,300
United States Leasing International,
Medium-Term Notes, Ser. A, 9.88%, 2001 5,000,000 5,375,000
------------
54,756,310
------------
INDUSTRIAL--3.4% Bowater,
Deb., 9 1/2%, 2012................... 5,000,000 5,086,455
Harnischfeger Industries,
Deb., 8.90%, 2022.................... 1,000,000 990,205
International Paper,
Notes, 7 5/8%, 2004.................. 5,000,000 4,756,865
------------
10,833,525
------------
INSURANCE--7.8% NAC Re,
Notes, 8%, 1999...................... 2,000,000 1,966,164
NWNL Cos.,
Notes, 6 5/8%, 2003.................. 5,000,000 4,372,895
New York Life Insurance,
Surplus Notes, 7 1/2%, 2023.......... 5,000,000 (a) 4,131,000
SunAmerica,
Notes, 9%, 1999...................... 5,000,000 5,159,075
USF&G,
Sr. Notes, 8 3/8%, 2001.............. 7,000,000 6,767,677
Western National,
Sr. Notes, 7 1/8%, 2004.............. 3,000,000 2,601,849
------------
24,998,660
------------
OIL AND GAS--3.9% Maxus Energy:
Notes, 9 1/2%, 2003.................. 2,000,000 1,830,000
Sinking Fund Deb., 11 1/4%, 2013..... 254,000 254,000
Occidental Petroleum:
Floating Rate Sr. Notes, 6 5/16%, 1999 6,000,000 (b) 6,000,000
Sr. Deb., 11 3/4%, 2011.............. 1,000,000 1,087,145
Texas Gas Transmission,
Notes, 9 5/8%, 1997.................. 1,000,000 1,032,500
Transcontinental Gas Pipe Line,
Sinking Fund Deb., 9 1/8%, 2017...... 1,000,000 914,098
Triton Energy,
Sr. Sub. Notes, Zero Coupon, 1997.... 2,000,000 1,482,500
-------------
12,600,243
-------------
TELEPHONE--.6% GTE North,
First Mortgage, 8 1/2%, 2031......... 1,000,000 954,194
MCI Communications,
Sr. Deb., 8 1/4%, 2023............... 1,000,000 938,962
--------------
1,893,156
--------------
UTILITIES--2.3% Dayton Power and Light,
First Mortgage, 7 7/8%, 2024......... 3,000,000 2,704,824
GG1B Funding (System Energy Resources),
Secured Lease Obligation Bonds, 8.20%, 2014 5,000,000 4,286,035
Long Island Lighting,
Deb., 11 3/4%, 1994.................. 500,000 500,526
--------------
7,491,385
--------------
FOREIGN--14.8% Banco Nacional de Comercio Exterior, S.N.C.,
Notes, 7 1/4%, 2004.................. 7,000,000 5,752,607
Banco Rio de la Plata S.A., Cl. lll Negotiable
Obligations, 8 1/2%, 1998............ 3,000,000 (a) 2,763,750
German Government Unity Bonds,
8%, 2002............................. 1,994,681 (c) 2,031,183
Iberdrola International B.V.,
Notes (Gtd. by Iberdrola, S.A.), 7 1/8%, 2003 8,500,000 (a) 7,832,750
Province of British Columbia,
Deb., Ser. BCCG-1, 7 3/4%, 2003...... 1,478,197 (d) 1,350,776
Province of Newfoundland,
Sinking Fund Deb., 10%, 2020......... 1,000,000 1,070,340
Province of Quebec :
Deb., 11%, 2015...................... 1,000,000 1,137,250
Deb., Ser. NN, 7 1/8%, 2024.......... 5,000,000 4,022,500
Province of Saskatchewan,
Notes, 8%, 2004...................... 5,000,000 4,860,940
Republic of Argentina,
Bonds, 8 3/8%, 2003.................. 8,000,000 6,500,064
Swedish Export Credit,
Deb., 9 7/8%, 2038................... 1,500,000 1,556,193
Telefonica de Argentina SA,
Notes, 8 3/8%, 2000.................. 5,000,000 (a) 4,412,500
Tolmex, S.A. de C.V., Notes (Gtd. by Empresas
Tolteca de Mexico, S.A. de C.V.
and Cegusa, S. A.), 8 3/8%, 2003..... 5,200,000 4,550,000
------------
47,840,853
------------
OTHER--.6% GPA Holland B.V.,
Medium-Term Notes (Gtd. by GPA Group
PLC),Ser. B, 9.06%, 1999............. 1,000,000 (a) 787,500
Rural Electric Cooperative Grantor Trust Ctfs.
(Soyland), 9.70%, 2017............... 1,000,000 1,095,439
------------
1,882,939
------------
U.S. GOVERNMENT
AND AGENCIES--13.1% Federal Home Loan Mortage Corp.,
Multiclass Mortgage Participation Ctfs.,
Ser. 1166, Cl. 1166-PG, 8%, 2020..... 5,000,000 5,056,050
Federal National Mortage Association,
Real Estate Mortgage Investment Conduit
Trust, Pass-Through Ctfs. (Collateralized by
FNMA Pass-Through Ctfs.),
Ser. 1992-136, Cl. 136-PD, 6%, 2016.. 4,240,000 3,812,692
Government National Mortgage Association 1:
7%, 7/15/2023........................ 10,000,000 8,971,800
8%, 8/15/2024........................ 10,185,646 9,778,220
8%, 9/15/2024........................ 12,963,149 12,444,623
U.S. Treasury Coupon Strips,
Zero Coupon, 8/15/2012............... 10,000,000 2,349,700
--------------
42,413,085
--------------
TOTAL BONDS AND NOTES
(cost $307,021,204).................. $282,995,499
==============
SHORT-TERM INVESTMENTS--14.7%
TIME DEPOSITS:
Bankers Trust (London),
4 11/16%, 11/1/1994.................. $ 15,800,000 $ 15,800,000
Chemical Bank (London),
4 3/4%, 11/1/1994.................... 15,800,000 15,800,000
Republic National Bank of New York (London),
4 3/4%, 11/1/1994.................... 15,800,000 15,800,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $47,400,000)................... $ 47,400,000
==============
TOTAL INVESTMENTS (cost $354,421,204)....................................... 102.5% $330,395,499
====== ==============
LIABILITIES, LESS CASH AND RECEIVABLES.................. (2.5%) $ (7,908,751)
====== ==============
NET ASSETS.................................................................. 100.0% $322,486,748
====== ==============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At October 31, 1994, these securities
amounted to $24,423,500 or 7.6% of net assets.
(b) Variable rate security-interest rate subject to periodic
change.
(c) Denominated in German Deutsche Marks.
(d) Denominated in Canadian Dollars.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $354,421,204)_see statement..................................... $330,395,499
Cash.................................................................... 446,935
Receivable for investment securities sold............................... 9,799,954
Interest receivable..................................................... 5,519,780
Receivable for shares of Beneficial Interest subscribed................. 19,425
Prepaid expenses........................................................ 16,333
--------------
346,197,926
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 226,886
Payable for investment securities purchased............................. 21,501,489
Payable for shares of Beneficial Interest redeemed...................... 1,815,751
Accrued expenses........................................................ 167,052 23,711,178
------------- -------------
NET ASSETS ................................................................ $322,486,748
==============
REPRESENTED BY:
Paid-in capital......................................................... $360,098,071
Accumulated net realized capital losses and distributions
in excess of net realized gain on investments......................... (13,585,618)
Accumulated net unrealized (depreciation) on investments_Note 4(b)...... (24,025,705)
--------------
NET ASSETS at value applicable to 24,911,719 outstanding shares of
Beneficial Interest, equivalent to $12.95 per share (unlimited number of
$.001 par value shares authorized)...................................... $322,486,748
==============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 27,974,897
EXPENSES:
Management fee_Note 3(a).............................................. $ 2,157,631
Shareholder servicing costs_Note 3(b)................................. 1,336,114
Registration fees..................................................... 68,330
Prospectus and shareholders' reports_Note 3(b)........................ 55,462
Custodian fees........................................................ 53,980
Professional fees..................................................... 51,053
Trustees' fees and expenses_Note 3(c)................................. 25,583
Miscellaneous......................................................... 20,082
--------------
3,768,235
Less_reduction in shareholder servicing costs due to
undertakings_Note 3(b)............................................ 391,394
--------------
TOTAL EXPENSES.................................................. 3,376,841
-------------
INVESTMENT INCOME--NET.......................................... 24,598,056
-------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS--Note 4(a):
Net realized (loss) on investments:
Long transactions (including options transactions).................... $(12,001,406)
Short sale transactions............................................... (138,215)
Net realized (loss) on forward currency exchange contracts;
Short transactions.................................................... (952,005)
Net realized (loss) on financial futures................................ (539,572)
--------------
NET REALIZED (LOSS)................................................... (13,631,198)
Net unrealized (depreciation) on investments............................ (39,799,142)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (53,430,340)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(28,832,284)
==============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC INCOME
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................... $ 17,478,134 $ 24,598,056
Net realized gain (loss) on investments................................. 9,177,002 (13,631,198)
Net unrealized appreciation (depreciation) on investments for the year.. 13,890,150 (39,799,142)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 40,545,286 (28,832,284)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income_net.............................................. (17,466,360) (24,598,056)
From net realized gain on investments................................... (832,582) (9,045,367)
In excess of net realized gain on investments........................... ----- (122,223)
-------------- --------------
TOTAL DIVIDENDS....................................................... (18,298,942) (33,765,646)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 235,916,143 90,796,927
Dividends reinvested.................................................... 13,989,576 25,835,418
Cost of shares redeemed................................................. (46,493,330) (107,007,060)
-------------- --------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.......... 203,412,389 9,625,285
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 225,658,733 (52,972,645)
NET ASSETS:
Beginning of year....................................................... 149,800,660 375,459,393
-------------- --------------
End of year............................................................. $375,459,393 $322,486,748
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 15,965,920 6,360,200
Shares issued for dividends reinvested.................................. 945,381 1,842,973
Shares redeemed......................................................... (3,143,003) (7,743,228)
-------------- --------------
NET INCREASE IN SHARES OUTSTANDING.................................... 13,768,298 459,945
============== ==============
</TABLE>
See notes to financial statements.
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated
March 1, 1995.
<PAGE>
DREYFUS STRATEGIC INCOME
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of
1940 ("Act") as a diversified open-end management investment
company. Dreyfus Service Corporation, until August 24, 1994,
acted as the distributor of the Fund's shares. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus
Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The
Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding
short-term investments and U.S. Government obligations) are
valued each business day by an independent pricing service
("Service") approved by the Board of Trustees. Investments for
which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of
the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on
methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market
conditions. Securities for which there are no such valuations are
valued at fair value as determined in good faith under the dire
ction of the Board of Trustees. Investments in U.S. Government
obligations are valued at the mean between quoted bid and asked
prices. Short-term investments are carried at amortized cost,
which approximates value. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates
of exchange.
(B) 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. Interest income including, where
applicable, amortization of discount on investments,
is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund
to declare dividends daily from investment income-net. Such
dividends are paid monthly. 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
distribution 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.
(D) 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.
The Fund has an unused capital loss carryover of
approximately $13,753,000 available for Federal income tax
purposes to be applied against future net securities profits, if
any, realized subsequent to October 31, 1994. If not applied, the
carryover expires in fiscal 2002.
NOTE 2--BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may
borrow up to $10 million under a short-term unsecured line of
credit. Interest on borrowings is charged at rates which are
related to Federal Funds rates in effect from time to time.
There were no borrowings during the year ended October 31,
1994.
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 .60
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 interest on securities sold short), brokerage 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 (exclusive of 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, 1994.
Dreyfus Service Corporation retained $2,061,758 during the
year ended October 31, 1994 from commissions earned on sales of
Fund shares.
(B) On August 3, 1994, Fund shareholders approved a revised
Service Plan (the "Plan") pursuant to Rule 12b-1 under the Act.
Pursuant to the Plan, effective August 24, 1994, the Fund (a)
reimburses the Distributor for payments to certain Service Agents
for distributing the Fund's shares and servicing shareholder
accounts and (b) pays the Manager, Dreyfus Service Corporation or
any affiliate (collectively "Dreyfus") for advertising and
marketing relating to the Fund and servicing shareholder
accounts, at an aggregate annual rate of .25 of 1% of the value
of the Fund's average daily net assets. Each of the Distributor
and Dreyfus may pay Service Agents (a securities dealer,
financial institution or other industry professional) a fee in
respect of the Fund's shares owned by shareholders with whom the
Service Agent has a servicing relationship or for whom the
Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determine the amounts to be paid to
Service Agents to which it will make payments and the basis on
which such payments are made. The Plan also separately provides
for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of
additional information and costs associated with implementing and
operating the Plan, not to exceed the greater of $100,000 or .005
of 1% of the Fund's average daily net assets for any full fiscal
year.
Prior to August 24, 1994, the Fund's Service Plan ("prior
Service Plan") provided that the Fund pay Dreyfus Service
Corporation at an annual rate of .25 of 1% of the value of the
Fund's average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the
Fund's shares and for servicing shareholder accounts. Dreyfus
Service Corporation made payments to one or more Service Agents
based on the value of the Fund's shares owned by clients of the
Service Agent. The prior Service Plan also separately provided
for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements
of additional information and costs associated with implementing
and operating the prior Service Plan, not to exceed the greater
of $100,000 or .005 of 1% of the Fund's average daily net assets
for any full fiscal year.
During the year ended October 31, 1994, $155,810 was charged
to the Fund pursuant to the Plan and $760,609 was charged to the
Fund pursuant to the prior Service Plan, of which $391,394 was
waived pursuant to an undertaking by the Manager.
(C) Prior to August 24, 1994 certain officers and trustees of
the Fund were "affiliated persons," as defined in the Act, of the
Manager and/or Dreyfus Service Corporation. Each trustee who is
not an "affiliated person" receives an annual fee of $2,500 and
an attendance fee of $250 per meeting.
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, forward currency exchange
contracts and options transactions, during the year ended October
31, 1994:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------- ------------------
<S> <C> <C>
Long transactions................................................ $552,298,250 $575,824,875
Short sale transactions.......................................... 150,820,989 130,235,899
---------------- ------------------
Total.......................................................... $703,119,239 $706,060,774
================ ==================
</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, consisting of cash and/or U.S.
Government securities sufficient to cover its short position. At
October 31, 1994, there were no securities sold short
outstanding.
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. At October 31, 1994, no forward
currency exchange contracts were outstanding.
In addition, the following table summarizes the Fund's
call/put options written transactions for the year ended October
31, 1994:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
----------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Contracts outstanding October 31, 1993...... _ $ _
Contracts written........................... 1240 778,047
------ ------------
1240 778,047
------ ------------
Contracts terminated:
Closed.................................... 990 617,891 $293,594 $324,297
Expired................................... 250 160,156 ___ 160,156
------------ ------------ ----------- -----------
Total contracts terminated............ 1240 778,047 $293,594 $484,453
----------- ------------- =========== ===========
Contracts outstanding October 31, 1994...... _ $ _
=========== =============
</TABLE>
As a writer of call options, the Fund receives a premium at
the outset and then bears the market risk of unfavorable changes
in the price of the financial instrument underlying the option.
Generally, the Fund would incur a gain, to the extent of the
premiums, if the price of the underlying financial instrument
decreases between the date the option is written and the date on
which the option is terminated. Generally, the Fund would realize
a loss, if the price of the financial instrument increases
between those dates. At October 31, 1994, there were no call
options written outstanding.
As a writer of put options, the Fund receives a premium at
the outset and then bears the market risk of unfavorable changes
in the price of the financial instrument underlying the option.
Generally, the Fund would incur a gain, to the extent of the
premiums, if the price of the underlying financial instrument
increases between the date the option is written and the date on
which the option is terminated. Generally, the Fund would realize
a loss, if the price of the financial instrument declines between
those dates. At October 31, 1994, there were no put options
written outstanding.
The Fund is engaged in trading financial futures contracts.
The Fund is exposed to market risk as a result of changes in the
value of the underlying financial instruments. Investments in
financial futures require the Fund to "mark to market" on a daily
basis, which reflects the change in 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. At October 31, 1994 there were no financial
futures contracts outstanding.
(B) At October 31, 1994, accumulated net unrealized
depreciation on investments was $24,025,705 consisting of
$498,636 gross unrealized appreciation and $24,524,341 gross
unrealized depreciation.
At October 31, 1994, 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>
DREYFUS STRATEGIC INCOME
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS STRATEGIC INCOME
We have audited the accompanying statement of assets and
liabilities of Dreyfus Strategic Income, including the statement
of investments, as of October 31, 1994, 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, 1994 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 Dreyfus Strategic Income at
October 31, 1994, 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 Signature Logo)
New York, New York
December 5, 1994
<PAGE>
DREYFUS STRATEGIC INCOME
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from
October 1, 1986 (commencement of operations) to
October 31, 1986 and for each of the eight years in the
period ended October 31, 1994.
Included in Part B of the Registration Statement:
Statement of Investments-- October 31, 1994.
Statement of Assets and Liabilities-- October 31, 1994.
Statement of Operations--year ended October 31, 1994.
Statement of Changes in Net Assets--for each of the
two years in the period ended October 31, 1994.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors,
dated December 5, 1994.
Schedules No. I through VII and other financial statement
information, for
which provision is made in the applicable accounting regulations
of the
Securities and Exchange Commission, are either omitted because
they are
not required under the related instructions, they are
inapplicable, or the
required information is presented in the financial statements or
notes
thereto which are included in Part B of the Registration
Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Amended and Restated Agreement and
Declaration of
Trust is incorporated by reference to Exhibit (1) of Post
Effective Amendment No. 8 to the Registration Statement filed on
Form N-1A filed on December 29, 1992.
(2) Registrant's By-Laws, as amended, are incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed on October 2, 1986.
(4) Specimen certificate for the Registrant's securities
is incorporated by reference to Exhibit (4) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A,
filed on October 2, 1986.
(5) Management Agreement.
(6) Distribution Agreement.
(8)(a) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 6 to
the Registration Statement on Form N-1A, filed on March 1, 1991.
(8)(b) Sub-Custodian Agreements are incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A, filed on March 1, 1991.
(10) Opinion and consent of Registrant's counsel is
incorporated by reference to Exhibit (10) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on October 2, 1986.
(11) Consent of Independent Auditors.
(15) Service Plan.
(16) Schedules of Computation of Performance Data are
incorporated by reference to Exhibit (16) of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A filed
on January 20, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney. Additional Powers of
Attorney are incorporated by reference to Other Exhibits (b) of
Post Effective Amendment Nos. 7 and 9 to the Registration
Statement on Form N-1A, filed on December 31, 1991 and January
20, 1994, respectively.
(b) Certificate of Secretary is incorporated by reference
to Other Exhibits (b) of Post-Effective Amendment No. 2 and 9 to
the Registration Statement on Form N-1A, filed on February 25,
1988 and January 20, 1994, respectively. An additional
Certificate of Secretary is enclosed herewith.
Item 25. Persons Controlled by or under Common Control with
Registrant.
_____________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of December 23, 1994
Beneficial Interest
(Par value $.001) 15,898
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item
4 of Part II of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on October 2, 1986.
Reference is also made to the Distribution Agreement
attached as Exhibit (6) thereto.
Item 28. Business and Other Connections of Investment Adviser
(continued)
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, and The Dreyfus Trust Company++;
Director Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
W. KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating Officer The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman, Distribution Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
LAWRENCE S. KASH Executive Vice President
(cont'd) Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President, Marketing The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park
Avenue, New York, New York 10166.
** The address of the business so indicated is 80 Cutter
Mill Road, Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway,
New York, New York 10006.
**** The address of the business so indicated is Five Triad
Center, Salt Lake City, Utah 84180.
+ The address of the business so indicated is Atrium
Building, 80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One
Rockefeller Plaza, New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard
Royal, Luxembourg.
+++++ The address of the business so indicated is Nassau,
Bahama Islands.
(b)
Positions and
Name and principal Positions and offices with offices with
business address Dreyfus Service Corporation Registrant
__________________ __________________________________
Howard Stein* Chairman of the Board Trustee and
Investment Officer
Robert H. Schmidt* President and Director None
Joseph S. DiMartino* Executive Vice President and Director None
Lawrence M. Greene* Executive Vice President and Director None
Julian M. Smerling* Executive Vice President and Director None
Elie M. Genadry* Executive Vice President None
Hank Gottmann* Executive Vice President None
Donald A. Nanfeldt* Executive Vice President None
Kevin Flood* Senior Vice President None
Roy Gross* Senior Vice President None
Irene Papadoulis** Senior Vice President None
Kirk Stumpp* Senior Vice President None
and Director of Marketing
Diane M. Coffey* Vice President None
Walter T. Harris* Vice President None
William Harvey* Vice President None
Adwick Pinnock** Vice President None
George Pirrone* Vice President/Trading None
Karen Rubin Waldmann* Vice President None
Peter D. Schwab* Vice President/New Products None
Michael Anderson* Assistant Vice President None
Carolyn Sobering* Assistant Vice President-Trading None
Daniel C. Maclean* Secretary Secretary
Robert F. Dubuss* Treasurer None
Maurice Bendrihem* Controller None
Michael J. Dolitsky* Assistant Controller None
Susan Verbil Goldgraben* Assistant Treasurer None
Christine Pavalos* Assistant Secretary Assistant
Secretary
Broker-Dealer Division of Dreyfus Service Corporation
=====================================================
Positions and offices with
Positions and
Name and principal Broker-Dealer Division of offices with
business address Dreyfus Service Corporation
Registrant
__________________ ____________________ ______
Elie M. Genadry* President None
Craig E. Smith* Executive Vice President None
Peter Moeller* Vice President and Sales Manager None
Kristina Williams
Pomano Beach, FL Vice President-Administration None
Edward Donley
Latham, NY Regional Vice President None
Glenn Farinacci* Regional Vice President None
Peter S. Ferrentino
San Francisco, CA Regional Vice President None
William Frey
Hoffman Estates, IL Regional Vice President None
Suzanne Haley
Tampa, FL Regional Vice President None
Philip Jochem
Warrington, PA Regional Vice President None
Fred Lanier
Atlanta, GA Regional Vice President None
Beth Presson
Colchester, VT Regional Vice President None
Joseph Reaves
New Orleans, LA Regional Vice President None
Christian Renninger
Germantown, MD Regional Vice President None
Kurt Wiessner
Minneapolis, MN Regional Vice President None
Mary Rogers** Assistant Vice President None
Institutional Services Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Institutional Services Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _____________________ _____________
Elie M. Genadry* President None
Donald A. Nanfeldt* Executive Vice President None
Charles Cardona** Senior Vice President None
Stacy Alexander* Vice President None
Eric Almquist* Vice President None
James E. Baskin+++++++ Vice President None
Kenneth Bernstein
Boca Raton, FL Vice President-Institutional Sales None
Stephen Burke* Vice President None
Laurel A. Diedrick
Burrows*** Vice President None
Daniel L. Clawson++++ Vice President None
Michael Caraboolad
Gates Mills, OH Vice President-Institutional Sales None
Laura Caudillo++ Vice President-Institutional Sales None
Steven Faticone***** Vice-President-Institutional Sales None
William E. Findley**** Vice President None
Mary Genet***** Vice President None
Melinda Miller Gordon* Vice President None
Christina Haydt++ Vice President-Institutional Sales None
Carol Anne Kelty* Vice President-Institutional Sales None
Gwenn Kessler***** Vice President-Institutional Sales None
Nancy Knee++++ Vice President-Institutional Sales None
Bradford Lange* Vice President-Institutional Sales None
Kathleen McIntyre
Lewis++ Vice President None
Eva Machek***** Vice President-Institutional Sales None
Mary McCabe*** Vice President-Institutional Sales None
James McNamara***** Vice President-Institutional Sales None
James Neiland* Vice President None
Susan M. O'Connor* Vice President-Institutional
Seminars None
Andrew Pearson+++ Vice President-Institutional Sales None
Jean Heitzman Penny***** Vice President-Institutional Sales None
Dwight Pierce+ Vice President None
Lorianne Pinto* Vice President-Institutional Sales None
Douglas Rentschler
Grosse Point Park, MI Vice President-Institutional Sales None
Leah Ryan**** Vice President-Institutional Sales None
Emil Samman* Vice President-Institutional
Marketing None
Edward Sands* Vice President-Institutional
Administration None
William Schalda* Vice President None
Sue Ann Seefeld++++ Vice President-Institutional Sales None
Elizabeth Biordi Vice President-Institutional
Wieland* Administration None
Jeanne Butler* Assistant Vice President-
Institutional Operations None
Roberta Hall***** Assistant Vice President-
Institutional Servicing None
Tracy Hopkins** Assistant Vice President-
Institutional Operations None
Lois Paterson* Assistant Vice President-
Institutional Operations None
Karen Markovic
Shpall++++++ Assistant Vice President None
Patrick Synan** Assistant Vice President-
Institutional Support None
Emilie Tongalson** Assistant Vice President-
Institutional Servicing None
Carolyn Warren++ Assistant Vice President-
Institutional Servicing None
Tonda Watson**** Assistant Vice President-
Institutional Sales None
Group Retirement Plans Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Group Retirement Plans Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ __________________ ____________
Elie M. Genadry* President None
Robert W. Stone* Executive Vice President None
Paul Allen* Executive Vice President-
National Sales None
Leonard Larrabee* Vice President and Senior Counsel None
George Anastasakos* Vice President None
Bart Ballinger++ Vice President-Sales None
Paula Cleary* Vice President-Marketing None
Ellen S. Dinas* Vice President-Marketing/Communications None
Wendy Holcomb++ Vice President-Sales None
William Gallagher* Vice President-Sales None
Brent Glading* Vice President-Sales None
Gerald Goz* Vice President-Sales None
Jeffrey Lejune
Dallas, TX Vice President-Sales None
Samuel Mancino** Vice President-Installation None
Joanna Morris* Vice President-Sales None
Joseph Pickert++ Vice President-Sales None
Alison Saunders** Vice President-Enrollment None
Scott Zeleznik* Vice President-Sales None
Alana Zion* Vice President-Sales None
Jeffrey Blake* Assistant Vice President-Sales None
___________________________________________________
* The address of the offices so indicated is 200 Park
Avenue, New York, New York 10166
** The address of the offices so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
*** The address of the offices so indicated is 580
California Street, San Francisco, California 94104.
**** The address of the offices so indicated is 3384
Peachtree Road, Suite 100, Atlanta, Georgia 30326-1106.
***** The address of the offices so indicated is 190 South
LaSalle Street, Suite 2850, Chicago, Illinois 60603.
+ The address of the offices so indicated is P.O. Box
1657, Duxbury, Massachusetts 02331.
++ The address of the offices so indicated is 800 West
Sixth Street, Suite 1000, Los Angeles, California 90017.
+++ The address of the offices so indicated is 11 Berwick
Lane, Edgewood, Rhode Island 02905.
++++The address of the offices so indicated is 1700 Lincoln
Street, Suite 3940, Denver, Colorado 80203.
+++++The address of the offices so indicated is 6767 Forest Hill
Avenue, Richmond, Virginia 23225.
++++++ The address of the offices so indicated is 2117
Diamond Street, San Diego, California 92109.
+++++++ The address of the offices so indicated is P.O. Box
757, Holliston, Massachusetts 01746.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's
principal
underwriter (exclusive distributor) acts as principal underwriter
or exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Short-Term Income Fund, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Strategic Growth, L.P.
68) Dreyfus Strategic Income
69) Dreyfus Strategic Investing
70) Dreyfus Tax Exempt Cash Management
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ _______________ _____________
Marie E. Connolly Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. PelletierSenior Vice President and General Vice
Counsel President
and Secretary
Frederick C. Dey Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn Vice President Assistant
Treasurer
Jean M. O'Leary Assistant Secretary None
Ruth D. Leibert Assistant Vice President Assistant Secretary
Paul D. Furcinito Assistant Vice President Assistant Secretary
John W. Gomez Director None
William J. Nutt Director None
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or directors
when requested in writing to do so by the holders of at least 10%
of the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and theInvestment Company Act of 1940, the Registrant has duly
caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, and State of New York on the 29th day of
December, 1994.
DREYFUS STRATEGIC INCOME
BY: /s/ Marie E. Connolly *
-----------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, this Amendment to the
Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
___________________________ ______________________________ ________
<S> <C> <C>
/s/Marie E. Connolly* President (Principal Executive 12/29/94
- ------------------------- and Financial Officer)
Marie E. Connolly
/s/David W. Burke* Trustee 12/29/94
- -------------------------
David W. Burke
/s/Diane Dunst* Trustee 12/29/94
- -------------------------
Diane Dunst
/s/Rosalind Gersten Jacobs* Trustee 12/29/94
- -------------------------
Rosalind Gersten Jacobs
/s/Jay I. Meltzer* Trustee 12/29/94
- -------------------------
Jay I. Meltzer
/s/Daniel Rose* Trustee 12/29/94
- -------------------------
Daniel Rose
/s/Warren B. Rudman* Trustee 12/29/94
- -------------------------
Warren B. Rudman
/s/Sander Vanocur* Trustee 12/29/94
- -------------------------
Sander Vanocur
*BY: /s/Eric B. Fischman
-------------------------
Eric B. Fischman,
Attorney-in-Fact
</TABLE>
EXHIBIT 5
MANAGEMENT AGREEMENT
DREYFUS STRATEGIC INCOME
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund") herewith
confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to time
you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of the Fund's
portfolio in accordance with the Fund's investment objectives
and policies as stated in its Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise the Fund's investments and conduct a
continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. You
will furnish to the Fund such statistical information, with
respect to the investments which the Fund may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting its portfolio and shall expect you, on your own
initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which may
be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to the Fund's
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of the Fund's shares;
and generally assist in all aspects of the Fund's operations.
You shall have the right, at your expense, to engage other
entities to assist you in performing some or all of the
obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by the Fund, provided
that nothing herein shall be deemed to protect or purport to
protect you against any liability to the Fund or to its security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the annual rate of .60 of 1% of the value of
the Fund's average daily net assets. Net asset value shall be
computed on such days and at such time or times as described in
the Fund's then-current Prospectus and Statement of Additional
Information. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be pro-
rated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to you, the
value of the Fund's net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting
securities, Securities and Exchange Commission fees and 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 independent pricing
services, costs of maintaining the Fund's existence, 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 stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement, but excluding
interest, taxes, brokerage and, with the prior written consent
of the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the fees to
be paid hereunder, or you will bear, such excess expense to the
extent required by state law. Your obligation pursuant hereto
will be limited to the amount of your fees hereunder. 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 Fund understands that you now act, and that from time
to time hereafter you may act, as investment adviser to one or
more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your so acting,
provided that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or
more companies or accounts managed by you which have available
funds for investment, the available securities will be allocated
in a manner believed by you to be equitable to each company or
account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by the Fund or the
size of the position obtainable for or disposed of by the Fund.
In addition, it is understood that the persons employed by
you to assist in the performance of your duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director,
partner, employee or agent or one under your control or
direction even though paid by you.
This Agreement shall continue until September 11, 1994, and
thereafter shall continue automatically for successive annual
periods ending on September 11th of each year, provided such
continuance is specifically approved at least annually by
(i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding
voting securities, provided that in either event its continuance
also is approved by a majority of the Fund's Board members who
are not "interested persons" (as defined in said Act) of any
party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agree-
ment is terminable without penalty, on 60 days' notice, by the
Fund's Board or by vote of holders of a majority of the Fund's
shares or, upon not less than 90 days' notice, by you. This
Agreement also will terminate automatically in the event of its
assignment (as defined in said Act).
The Fund recognizes that from time to time your directors,
officers and employees may serve as directors, trustees,
partners, officers and employees of other corporations, business
trusts, partnerships or other entities (including other
investment companies) and that such other entities may include
the name "Dreyfus" as part of their name, and that your
corporation or its affiliates may enter into investment advisory
or other agreements with such other entities. If you cease to
act as the Fund's investment adviser, the Fund agrees that, at
your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Dreyfus" in any
form or combination of words.
This Agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the
enclosed copy hereof.
Very truly yours,
DREYFUS STRATEGIC INCOME
By:_______________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
<PAGE>
EXHIBIT 6
DISTRIBUTION AGREEMENT
DREYFUS STRATEGIC INCOME
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of
the agreements hereinafter contained, the above-named investment
company (the "Fund") has agreed that you shall be, for the
period of this agreement, the distributor of (a) shares of each
Series of the Fund set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series") or
(b) if no Series are set forth on such Exhibit, shares of the
Fund. For purposes of this agreement the term "Shares" shall
mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the
distribution of Shares covered by, and in accordance with, the
registration statement and prospectus then in effect under the
Securities Act of 1933, as amended, and will transmit promptly
any orders received by you for purchase or redemption of Shares
to the Transfer and Dividend Disbursing Agent for the Fund of
which the Fund has notified you in writing.
1.2 You agree to use your best efforts to
solicit orders for the sale of Shares. It is contemplated that
you will enter into sales or servicing agreements with
securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares
in compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action
is warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and
expenses in connection with the registration of Shares under the
Securities Act of 1933, as amended, and all expenses in
connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and
other data to be furnished by the Fund hereunder, and all
expenses in connection with the preparation and printing of the
Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders;
provided however, that nothing contained herein shall be deemed
to require the Fund to pay any of the costs of advertising the
sale of Shares.
1.6 The Fund agrees to execute any and all
documents and to furnish any and all information and otherwise
to take all actions which may be reasonably necessary in the
discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may
designate to the Fund and the Fund may approve, and the Fund
agrees to pay all expenses which may be incurred in connection
with such qualification. You shall pay all expenses connected
with your own qualification as a dealer under state or Federal
laws and, except as otherwise specifically provided in this
agreement, all other expenses incurred by you in connection with
the sale of Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to
time, for use in connection with the sale of Shares, such
information with respect to the Fund or any relevant Series and
the Shares as you may reasonably request, all of which shall be
signed by one or more of the Fund's duly authorized officers;
and the Fund warrants that the statements contained in any such
information, when so signed by the Fund's officers, shall be
true and correct. The Fund also shall furnish you upon request
with: (a) semi-annual reports and annual audited reports of the
Fund's books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all
registration statements and prospectuses filed by the Fund with
the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully
prepared in conformity with the requirements of said Acts and
rules and regulations of the Securities and Exchange Commission
thereunder. As used in this agreement the terms "registration
statement" and "prospectus" shall mean any registration state-
ment and prospectus, including the statement of additional
information incorporated by reference therein, filed with the
Securities and Exchange Commission and any amendments and
supplements thereto which at any time shall have been filed with
said Commission. The Fund represents and warrants to you that
any registration statement and prospectus, when such registra-
tion statement becomes effective, will contain all statements
required to be stated therein in conformity with said Acts and
the rules and regulations of said Commission; that all state-
ments of fact contained in any such registration statement and
prospectus will be true and correct when such registration
statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading. The Fund may but shall not be obligated to propose
from time to time such amendment or amendments to any registra-
tion statement and such supplement or supplements to any pro-
spectus as, in the light of future developments, may, in the
opinion of the Fund's counsel, be necessary or advisable. If
the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by
the Fund of a written request from you to do so, you may, at
your option, terminate this agreement or decline to make offers
of the Fund's securities until such amendments are made. The
Fund shall not file any amendment to any registration statement
or supplement to any prospectus without giving you reasonable
notice thereof in advance; provided, however, that nothing
contained in this agreement shall in any way limit the Fund's
right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever
character, as the Fund may deem advisable, such right being in
all respects absolute and unconditional.
1.9 The Fund authorizes you to use any pro-
spectus in the form furnished to you from time to time, in con-
nection with the sale of Shares. The Fund agrees to indemnify,
defend and hold you, your several officers and directors, and
any person who controls you within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from
and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in
connection therewith) which you, your officers and directors, or
any such controlling person, may incur under the Securities Act
of 1933, as amended, or under common law or otherwise, arising
out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in any registration
statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required
to be stated in either any registration statement or any pro-
spectus or necessary to make the statements in either thereof
not misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and
hold the Fund, its several officers and Board members, and any
person who controls the Fund within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from
and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in
connection therewith) which the Fund, its officers or Board
members, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or
otherwise, but only to the extent that such liability or expense
incurred by the Fund, its officers or Board members, or such
controlling person resulting from such claims or demands, shall
arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished
in writing by you to the Fund specifically for use in the Fund's
registration statement and used in the answers to any of the
items of the registration statement or in the corresponding
statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a
material fact in connection with such information furnished in
writing by you to the Fund and required to be stated in such
answers or necessary to make such information not misleading.
Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is
expressly conditioned upon your being notified of any action
brought against the Fund, its officers or Board members, or any
such controlling person, such notification to be given by letter
or telegram addressed to you at your address set forth above
within ten days after the summons or other first legal process
shall have been served. You shall have the right to control the
defense of such action, with counsel of your own choosing,
satisfactory to the Fund, if such action is based solely upon
such alleged misstatement or omission on your part, and in any
other event the Fund, its officers or Board members, or such
controlling person shall each have the right to participate in
the defense or preparation of the defense of any such action.
The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the Fund,
its officers or Board members, or to such controlling person by
reason of any such untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of your
indemnity agreement contained in this paragraph 1.10. This
agreement of indemnity will inure exclusively to the Fund's
benefit, to the benefit of the Fund's officers and Board
members, and their respective estates, and to the benefit of any
controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either
you or the Fund under any of the provisions of this agreement
and no orders for the purchase or sale of such Shares hereunder
shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or
any necessary amendments thereto shall be suspended under any of
the provisions of the Securities Act of 1933, as amended, or if
and so long as a current prospectus as required by Section 10 of
said Act, as amended, is not on file with the Securities and
Exchange Commission; provided, however, that nothing contained
in this paragraph 1.11 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to
repurchase any Shares from any shareholder in accordance with
the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you
immediately in writing:
(a) of any request by the Securities and
Exchange Commission for amendments to the
registration statement or prospectus then in
effect or for additional information;
(b) in the event of the issuance by the
Securities and Exchange Commission of any
stop order suspending the effectiveness of
the registration statement or prospectus
then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which
makes
untrue any statement of a material fact made
in the registration statement or prospectus
then in effect or which requires the making
of a change in such registration statement
or prospectus in order to make the state-
ments therein not misleading; and
(d) of all actions of the Securities
and
Exchange Commission with respect to any
amendments to any registration statement or
prospectus which may from time to time be
filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for
sale by you shall be offered for sale at a price per share (the
"offering price") approximately equal to (a) their net asset
value (determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date
(the "Reapproval Date") set forth on Exhibit A hereto (and, if
the Fund has Series, a separate Reapproval Date shall be
specified on Exhibit A for each Series), and thereafter shall
continue automatically for successive annual periods ending on
the day (the "Reapproval Day") of each year set forth on Exhibit
A hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of
Shares, you shall not perform any services for any entity other
than investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf
of the Fund by the undersigned officer of the Fund in his
capacity as an officer of the Fund. The obligations of this
agreement shall only be binding upon the assets and property of
the Fund and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
Please confirm that the foregoing is in
accordance with your understanding and indicate your acceptance
hereof by signing below, whereupon it shall become a binding
agreement between us.
Very truly yours,
DREYFUS STRATEGIC INCOME
By:_________________________
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
<PAGE>
EXHIBIT A
Reapproval Date Reapproval Day
September 11, 1995 September 11th
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Condensed Financial Information" and "Custodian, Transfer and
Dividend Disbursing Agent, Counsel and Independent Auditors" and
to the use of our reports dated December 5, 1994, in this
Registration Statement (Form N-1A 33-7172) of Dreyfus Strategic
Income.
ERNST & YOUNG LLP
New York, New York
December 28, 1994
<PAGE>
EXHIBIT 15
DREYFUS STRATEGIC INCOME
SERVICE PLAN
INTRODUCTION: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Service Plan
(the "Plan") in accordance with Rule 12b-1, promulgated under
the Investment Company Act of 1940, as amended (the "Act").
Under the Plan, the Fund would pay for the costs and expenses of
preparing, printing and distributing its prospectuses and
statements of additional information, and would (a)
reimburse the Fund's distributor (the "Distributor") for
payments to third parties for distributing the Fund's shares and
servicing shareholder accounts ("Servicing") (the payments in
this clause (a) being referred to as the "Distributor Payments")
and (b) pay The Dreyfus Corporation, Dreyfus Service Corporation
and any affiliate of either of them (collectively, "Dreyfus")
for advertising and marketing relating to the Fund and for
Servicing (the payments in this clause (b) being referred to as
"Dreyfus Payments"). If this proposal is to be implemented, the
Act and said Rule 12b-1 require that a written plan describing
all material aspects of the proposed financing be adopted by the
Fund.
The Fund's Board, in considering whether the Fund should
implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use assets of the Fund for such
purposes.
In voting to approve the implementation of such a plan, the
Board members have concluded, in the exercise of their
reasonable business judgment and in light of their respective
fiduciary duties, that there is a reasonable likelihood that the
plan set forth below will benefit the Fund and its shareholders.
THE PLAN: The material aspects of this Plan are as
follows:
1. The Fund shall pay all costs of preparing and printing
prospectuses and statements of additional information for
regulatory purposes and for distribution to existing
shareholders. The Fund also shall pay an amount of the costs
and expenses in connection with (a) preparing, printing and
distributing the Fund's prospectuses and statements of
additional information used for other purposes and (b)
implementing and operating this Plan, such aggregate amount not
to exceed in any fiscal year of the Fund the greater of $100,000
or .005 of 1% of the average daily value of the Fund's net
assets for such fiscal year.
2. (a) The aggregate annual fee the Fund may pay under
this Plan for Distributor Payments and Dreyfus Payments is .25
of 1% of the value of the Fund's average daily net assets for
such year (the "Aggregate Amount").
(b) The Fund shall reimburse the Distributor in respect
of Distributor Payments an amount not to exceed an annual rate
of .25 of 1% of the value of the Fund's average daily net assets
for such year (the "Distributor Amount").
(c) The Fund shall pay Dreyfus in respect of Dreyfus
Payments an annual fee equal to the difference between the
Aggregate Amount and the Distributor Amount for such year.
(d) Each of the Distributor and Dreyfus may pay one or
more securities dealers, financial institutions (which may
include banks) or other industry professionals, such as
investment advisers, accountants and estate planning firms
(severally, a "Service Agent"), a fee in respect of the Fund's
shares owned by investors with whom the Service Agent has a
Servicing relationship or for whom the Service Agent is the
dealer or holder of record. Each of the Distributor and Dreyfus
shall determine the amounts to be paid to the Service Agents to
which it will make payments under this Plan and the basis on
which such payments will be made. Payments to a Service Agent
are subject to compliance by the Service Agent with the terms of
any related Plan agreement between the Service Agent and the
Distributor or Dreyfus, as the case may be.
3. For the purposes of determining the fees payable under
this Plan, the value of the Fund's net assets shall be computed
in the manner specified in the Fund's charter documents as then
in effect for the computation of the value of the Fund's net
assets.
4. The Fund's Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
5. This Plan will become effective upon the later to occur
of (i) the consummation of the transactions contemplated by the
Amended and Restated Agreement and Plan of Merger dated as of
December 5, 1993 by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation or
(ii) approval by (a) holders of a majority of the Fund's
outstanding shares, and (b) a majority of the Board members,
including a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan.
6. This Plan shall continue for a period of one year from
its effective date, unless earlier terminated in accordance with
its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 5(b)
hereof.
7. This Plan may be amended at any time by the Fund's
Board, provided that (a) any amendment to increase materially
the costs which the Fund may bear pursuant to this Plan shall be
effective only upon approval by a vote of the holders of a
majority of the Fund's outstanding shares, and (b) any material
amendments of the terms of this Plan shall become effective only
upon approval as provided in paragraph 5(b) hereof.
8. This Plan is terminable without penalty at any time by
(a) vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection with
this Plan, or (b) vote of the holders of a majority of the
Fund's outstanding shares.
9. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of
the Fund and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
Dated: May 27, 1994
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert and John E. Pelletier and
each of them, with full power to act without the other, his or
her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the
Registration Statement for each Fund listed on Schedule
A attached hereto (including post-effective amendments and
amendments thereto), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/David W. Burke
- -----------------------------
David W. Burke, Board Member
- -----------------------------
Diane Dunst, Board Member
- -----------------------------
David P. Feldman, Board Member
- -----------------------------
Rosalind Gersten Jacobs, Board
Member
- -----------------------------
Jay I. Meltzer, Board Member
- -----------------------------
Daniel Rose, Board Member
- -----------------------------
Warren B. Rudman, Board Member
- -----------------------------
Sander Vanocur, Board Member
Dated: August 29, 1994
<PAGE>
SCHEDULE A
GROUP VIII
Dreyfus BASIC Money Market Fund, Inc.
Dreyfus BASIC U.S. Government Money Market Fund
Dreyfus Strategic Income
Dreyfus Strategic Governments Income, Inc.
Dreyfus California Intermediate Municipal Bond Fund
Dreyfus Connecticut Intermediate Municipal Bond fund
Dreyfus Massachusetts Intermediate Municipal Bond Fund
Dreyfus New Jersey Intermediate Municipal Bond Fund
Dreyfus Pennsylvania Intermediate Municipal Bond Fund
Dreyfus Strategic Investing
<PAGE>
Other Exhibit (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoints Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert and John E. Pelletier and
each of them, with full power to act without the other, her true
and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for her and in her name, place
and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration
Statement for each Fund listed on Schedule A attached hereto
(including post-effective amendments and amendments thereto), and
to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his
or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/s/Marie E. Connolly
- -----------------------------
Marie E. Connolly, President and Treasurer
Dated: August 29, 1994
<PAGE>
SCHEDULE A
GROUP VIII
Dreyfus BASIC Money Market Fund, Inc.
Dreyfus BASIC U.S. Government Money Market Fund
Dreyfus Strategic Income
Dreyfus Strategic Governments Income, Inc.
Dreyfus California Intermediate Municipal Bond Fund
Dreyfus Connecticut Intermediate Municipal Bond fund
Dreyfus Massachusetts Intermediate Municipal Bond Fund
Dreyfus New Jersey Intermediate Municipal Bond Fund
Dreyfus Pennsylvania Intermediate Municipal Bond Fund
Dreyfus Strategic Investing
<PAGE>
Other Exhibit (b)
DREYFUS STRATEGIC INCOME
Assistant Secretary's Certificate
The undersigned, Eric B. Fischman, Assistant
Secretary of Dreyfus Strategic Income (the "Fund"), hereby
certifies that set forth below is a copy of the resolution
adopted by the Written Consent of the Fund's Board members and
Marie E. Connolly, President and Treasurer of the Fund on August
29, 1994, authorizing the signing by Federick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John E. Pelletier on behalf of
the proper officers of the Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any
and all amendments and supplements thereto may be signed by any
one of Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert and
John E. Pelletier as the attorney-in-fact for the proper officers
of the Fund, with full power of substitution and resubstitution;
and that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that
such attorneys-in-fact, and each of them, shall have full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and supplements
thereto, as fully to all intents and purposes as the officer for
whom he is acting as attorney-in-fact, might or could do in
person.
IN WITNESS WHEREOF, I have hereunto signed my name
and affixed the seal of the Fund on December 29, 1994.
Eric B. Fischman
Assistant Secretary
(SEAL)
