File No. 33-7172
811-4748
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. 22 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 22 [ X ]
(Check appropriate box or boxes.)
DREYFUS DEBT AND EQUITY FUNDS
(formerly, Dreyfus Income Funds)
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
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 December 24, 1998 pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
DREYFUS DEBT AND EQUITY FUNDS
Cross-Reference Sheet Pursuant to Rule 495(b)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis *
3 Condensed Financial Information 4
4 General Description of Registrant 5
5 Management of the Fund 8
5(a) Management's Discussion of Fund's Performance 20
6 Capital Stock and Other Securities 20
7 Purchase of Securities Being Offered 9
8 Redemption or Repurchase 16
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-48
13 Investment Objectives and Policies B-2
14 Management of the Fund B-23
15 Control Persons and Principal Holders of
securities B-27
16 Investment Advisory and Other Services B-27
17 Brokerage Allocation B-32
18 Capital Stock and Other Securities B-40
19 Purchase, Redemption and Pricing B-30, B-34,
of Securities Being Offered B-39
20 Tax Status B-40
DREYFUS DEBT AND EQUITY FUNDS
Cross-Reference Sheet Pursuant to Rule 495(b) (continued)
Items in
Part C of
Form N-1A
_________
21 Underwriters B-32
22 Calculations of Performance Data B-44
23 Financial Statements B-50
Items in
Part C of
Form N-1A Caption Page
_________ _______ _____
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-5
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.
_____________________________________________________________________________
PROSPECTUS December 24, 1998
Dreyfus Premier Real Estate Mortgage Fund
______________________________________________________________________________
Dreyfus Premier Real Estate Mortgage Fund (the "Fund") is a separate
non-diversified portfolio of Dreyfus Debt and Equity Funds, an open-end,
management investment company (the "Company"), known as a mutual fund. The
Fund's investment objective is to maximize total return, consisting of
capital appreciation and current income.
BY THIS PROSPECTUS, THE FUND IS OFFERING FIVE CLASSES OF SHARES _
CLASS A, CLASS B, CLASS C, CLASS R, AND CLASS T _ WHICH ARE DESCRIBED
HEREIN. SEE "ALTERNATIVE PURCHASE METHODS."
The Fund invests primarily in mortgage-related securities, including
those rated below investment grade. Investments in lower rated
mortgage-related securities are subject to a greater risk of loss of
principal and non-payment of interest. Investors should carefully assess the
risks associated with an investment in the Fund.
You can purchase or redeem shares by telephone using Dreyfus
TELETRANSFER.
The Dreyfus Corporation professionally manages the Fund's portfolio.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated December 24, 1998,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Securities and
Exchange Commission maintains a Web site (http://www.sec.gov) that contains
the Statement of Additional Information, material incorporated by reference,
and other information regarding the Fund. For a free copy of the Statement of
Additional Information, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611. When telephoning, ask
for Operator 144.
Mutual fund shares are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
______________________________________________________________________________
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.
______________________________________________________________________________
Table of Contents
Page
Fee Table...................................................... 3
Condensed Financial Information................................ 4
Alternative Purchase Methods................................... 4
Description of the Fund........................................ 5
Management of the Fund......................................... 8
How to Buy Shares.............................................. 9
Shareholder Services........................................... 13
How to Redeem Shares........................................... 16
Distribution Plan and Shareholder Services Plan................ 19
Dividends, Distributions and Taxes............................. 19
Performance Information........................................ 20
General Information............................................ 21
Appendix....................................................... 22
[Page 2]
<TABLE>
Fee Table
Shareholder Transaction Expenses CLASS A CLASS B CLASS C CLASS R CLASS T
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..... 5.75% None None None 4.50%
Maximum Deferred Sales Charge Imposed on
Redemptions (as a percentage of the amount
subject to charge)...................... None* 4.00% 1.00% None None*
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees......................... .65% .65% .65% .65% .65%
12b-1 Fees.............................. None .75% .75% None .25%
Other Expenses.......................... .25% .25% .25% .__% .25%
Total Fund Operating Expenses.... .__% .__% .__% .__% .__%
EXAMPLE:
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) except where noted,
redemption at the end of each time period: CLASS A CLASS B CLASS C CLASS R CLASS T
1 Year............................ $ 69 $__/$__** $30/$20** $____ $___
3 Years........................... $ 93 $__/$__** $____ $____ $___
5 Years........................... $119 $__/$__** $____ $____ $___
10 Years........................... $192 $___*** $____ $____ $___
* A contingent deferred sales charge of 1.00% may be assessed
on certain redemptions of Class A and Class T shares purchased
without an initial sales charge as part of an investment of $1
million or more.
** Assuming no redemption of shares.
*** Ten year figure assumes conversion of Class B shares to Class
A shares at the end of the sixth year following the date of
purchase.
</TABLE>
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 costs and expenses borne by the Fund and investors, the payment of which
will reduce investors' annual return. The information in the foregoing table
does not reflect any fee waivers or expense reimbursement arrangements that
may be in effect. Long-term investors in Class B or Class C shares could pay
more in 12b-1 fees than the economic equivalent of paying a front-end sales
charge. Certain Service Agents (as defined below) may charge their clients
direct fees for effecting transactions in Fund shares; such fees are not
reflected in the foregoing table. For a further description of the various
costs and expenses incurred in the operation of the Fund, as well as expense
reimbursement or waiver arrangements, see "Management of the Fund," "How to
Buy Shares," "How to Redeem Shares" and "Distribution Plan and Shareholder
Services Plan."
[Page 3]
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors. Further financial data, related
notes and report of independent auditors accompany the Statement of
Additional Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a Class A
share of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each period indicated.
This information has been derived from the Fund's financial statements.
<TABLE>
Year Ended October 31,
PER SHARE DATA: 1997 1998
______ ______
<S> <C> <C>
Net asset value, beginning of period...................................... $12.50
______ ______
INVESTMENT OPERATIONS:
Investment income-net..................................................... .06
Net realized and unrealized gain on investments........................... .13
______ ______
TOTAL FROM INVESTMENT OPERATIONS.......................................... .19
______ ______
Net asset value, end of period............................................ $12.69
====== ======
TOTAL INVESTMENT RETURN..................................................... 17.34%(1,2)
====== ======
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... .90%(1)
Ratio of net investment income to average net assets...................... 5.39%(1)
Decrease reflected in above expense ratio due to undertaking by The Dreyfus
Corporation............... 2.77%(1)
Portfolio Turnover Rate................................................... 244.61%(3)
Net Assets, end of period (000's omitted)................................. $10,396
(1) For September 30, 1997 (commencement of operations) through
October 31, 1997.
(2) Exclusive of redemption fee then in effect.
(3) Not annualized.
</TABLE>
No information is provided for the Fund's Class B, Class C, Class R,
or Class T shares, which were first offered to the public on December 24,
1998.
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.
Alternative Purchase Methods
The Fund offers you five methods of purchasing Fund shares. You may
choose the Class of shares that best suits your needs, given the amount of
your purchase, the length of time you expect to hold your shares and any
other relevant circumstances. Each Fund share represents an identical pro
rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a maximum
initial sales charge of 5.75% of the public offering price imposed at the
time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Shares _ Class A Shares." These shares are
subject to an annual service fee at the rate of .25 of 1% of the value of the
average daily net assets of Class A. See "Distribution Plan and Shareholder
Services Plan - Shareholder Services Plan."
Class B shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class B shares are subject to a maximum
4% contingent deferred sales charge ("CDSC"), which is assessed only if you
redeem Class B shares within the first six years of their purchase. See "How
to Buy Shares - Class B Shares" and "How to Redeem Shares - Contingent
Deferred Sales Charge - Class B Shares." These shares are subject to an
annual distribution fee at the rate of .75 of 1%, and an annual service fee
at the rate of .25 of 1%, of the value of the average daily net assets of
Class B. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. Approximately six
years after the date of purchase, Class B shares automatically will convert
to Class A shares, based on the relative net asset values for shares of each
such Class, and will no longer be subject to the distribution fee. Class B
shares that have been acquired through the reinvestment of dividends and
other distributions will be converted on a pro rata basis together with other
Class B shares, in the proportion that a shareholder's Class B shares
converting to Class A shares bears to the total Class B shares not acquired
through the reinvestment of dividends and distributions.
Class C shares are sold at net asset value per share with no initial
sales charge at the time of purchase; as a result, the entire purchase price
is immediately invested in the Fund. Class C shares are subject to a 1% CDSC,
which is
[Page 4]
assessed only if you redeem Class C shares within one year of their purchase.
See `How to Buy Shares - Class C Shares" and "How to Redeem Shares -
Contingent Deferred Sales Charge - Class C Shares." These shares are subject
to an annual distribution fee at the rate of .75 of 1%, and an annual service
fee at the rate of .25 of 1%, of the value of the average daily net assets of
Class C. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class C will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A.
Class R shares may not be purchased directly by individuals, although
eligible institutions may purchase Class R shares for accounts maintained by
individuals. Class R shares are sold at net asset value per share only to
institutional investors acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity for qualified or non-qualified employee
benefit plans, including pension, profit-sharing, SEP-IRAs and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments, but not including IRAs or
IRA"Rollover Accounts." Class R shares are not subject to an annual service
fee or distribution fee.
Class T shares are sold at net asset value per share plus a maximum
initial sales charge of 4.50% of the public offering price imposed at the
time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Shares - Class T Shares." These shares are
subject to an annual distribution fee and an annual service fee each at the
rate of .25 of 1% of the value of the average daily net assets of Class T.
See "Distribution Plan and Shareholder Services Plan." The distribution fee
paid by Class T will cause such Class to have a higher expense ratio and to
pay lower dividends than Class A.
The decision as to which Class of shares is more beneficial to you
depends on the amount and the intended length of your investment. If you are
not eligible to purchase Class R shares, you should consider whether, during
the anticipated life of your investment in the Fund, the accumulated
distribution fee and CDSC, if any, on Class B or Class C shares would be less
than the initial sales charge on Class A shares, or the accumulated
distribution fee and initial sales charge on Class T shares, purchased at the
same time, and to what extent, if any, such differential would be offset by
the return of Class A or Class T shares, respectively. You may also want to
consider whether, during the anticipated life of your investment in the Fund,
the accumulated distribution fee and initial sales charge on Class T shares
would be less than the higher initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
could be offset by the return of Class A shares. Additionally, investors
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution fee on Class B or
Class C shares, and the accumulated distribution fee and initial sales charge
on Class T shares may exceed the initial sales charge on Class A shares
during the life of the investment. Finally, you should consider the effect of
the CDSC period and any conversion rights of the Classes in the context of
your own investment time frame. For example, while Class C shares have a
shorter CDSC period than Class B shares, Class C shares do not have a
conversion feature and, therefore, are subject to an ongoing distribution
fee. Thus, Class A and Class B shares may be more attractive than Class C
shares to investors with longer term investment outlooks. Generally, Class A
shares will be most appropriate for investors who invest $1,000,000 or more
in Fund shares, and Class A and Class T shares will not be appropriate for
investors who invest less than $50,000 in Fund shares.
Description of the Fund
Investment Objective
The Fund's investment objective is to maximize total return,
consisting of capital appreciation and current income. 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, as amended (the "1940 Act"))
of the Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved.
Management Policies
Under normal market conditions, the Fund will invest at least 65% of
the value of its total assets in mortgage-related securities.
Mortgage-related securities are collateralized by pools of loans on
commercial or residential real estate. These securities are a form of
derivative and include complex instruments such as collateralized mortgage
obligations, stripped mortgage-backed securities, mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs"),
adjustable rate mortgages, real estate investment trusts ("REITs"), including
debt, preferred stock, and common stock issued by REITs, as well as other
real estate-related securities. The mortgage-related securities in which the
Fund may invest include those with fixed, floating or variable interest
rates, those with interest rates that change based on multiples of changes in
a specified index of interest rates and those with interest rates that change
inversely to changes in interest rates, as well as those that do not bear
interest.
In addition, the Fund may invest in asset-backed securities, zero
coupon securities, preferred stock, convertible preferred stock and
convertible debt obligations and other corporate debt securities
(collectively, with mortgage-related debt securities, "Fixed Income
Securities").
[Page 5]
The Fund also may invest in equity securities, such as common stocks
and securities convertible into common stocks, issued by companies that
primarily invest or deal in real estate.
The issuers of the securities in which the Fund may invest may
include domestic and foreign corporations, partnerships, trusts or similar
entities, and governmental entities or their political subdivisions, agencies
or instrumentalities. The foreign securities in which the Fund may invest
must be U.S. dollar denominated. The Fixed-Income Securities in which the
Fund will invest typically will have an effective duration ranging between
two and six years. See "Appendix_Certain Portfolio Securities."
The Fund also may invest in money market instruments consisting of
U.S. Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under
"Appendix_Certain Portfolio Securities_Money Market Instruments." Under
normal market conditions, the Fund does not expect to invest more than 25% 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 all of its assets in money market
instruments.
The Fund may invest without limitation in Fixed Income Securities
rated below investment grade, or, if unrated, determined by The Dreyfus
Corporation to be of comparable quality. Securities rated below investment
grade are those rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") and BBB by Standard & Poor's Ratings Group ("S&P"), Fitch IBCA,
Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff"). These securities
carry a high degree of risk and are considered speculative by the credit
rating agencies. The average dollar-weighted credit rating of the Fixed
Income Securities held by the Fund, however, as measured on the basis of the
dollar value of the securities purchased and their credit rating without
reference to rating subcategories, will be at least Baa by Moody's or BBB by
S&P, Fitch or Duff. Fixed Income Securities rated Baa by Moody's and BBB by
S&P, Fitch and Duff are considered investment grade obligations which lack
outstanding investment characteristics and may have speculative
characteristics as well. See "Investment Considerations and Risks_High
Yield-Lower Rated Fixed Income Securities" below for a discussion of certain
risks, and "Appendix" in the Statement of Additional Information.
The Fund's annual portfolio turnover rate for the current fiscal year
is not expected to exceed 200%. A turnover rate of 100% is equivalent to the
Fund buying and selling all of the securities in its portfolio once in the
course of a year. Higher portfolio turnover rates usually generate additional
brokerage commissions and expenses and the short-term gains realized from
these transactions are taxable to shareholders as ordinary income. In an
effort to increase returns, the Fund may engage in various investment
techniques, such as transactions in options, futures and swaps, leveraging,
lending portfolio securities, and short-selling. For a discussion of the
investment techniques and their related risks, see "Investment Considerations
and Risks" and "Appendix_Investment Techniques" below and "Investment
Objective and Management Policies_Management Policies" in the Statement of
Additional Information.
Investment Considerations and Risks
General_The Fund's net asset value per share should be expected to fluctuate.
An investment in the Fund will generally be subject to the risks associated
with real estate. These risks include declines in the value of real estate,
risks related to general and local economic conditions, overbuilding and
increased competition, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, variations in rental
income, changes in neighborhood values, the appeal of properties to tenants
and increases in interest rates. The Fund also will be subject to different
credit, prepayment, and interest rate risks on its portfolio holdings.
Investors should consider the Fund as a supplement to an overall investment
program and should invest only if they are willing to undertake the risks
involved. You could lose money by investing in the Fund. See "Investment
Objective and Management Policies" in the Statement of Additional Information
for a further discussion of certain risks.
The Fund's use of leverage may increase fluctuations in its net asset
value and increase the gain or loss on your investment.
Mortgage-Related Securities-Mortgage-related securities are complex
derivative instruments, subject to both credit and prepayment risk. Although
they may provide opportunities for enhanced total return, you should be aware
that the lower rated mortgage-related securities in which the Fund may invest
are likely to be more volatile and less liquid, and more difficult to price
accurately, than more traditional debt securities. These securities may be
particularly susceptible to economic downturns. It is likely that an economic
recession, or a downturn in the real estate market in particular, could
disrupt severely the market for such securities and may have an adverse
impact on the value of such securities.
Mortgage-related securities generally are subject to credit risks
associated with the performance of the underlying mortgage properties and to
prepayment risk. In certain instances, the credit risk associated with
mortgage-related securities can be reduced by third party guarantees or other
forms of credit support. Improved credit risk does not reduce prepayment risk
which is unrelated to the rating assigned to the mortgage-related security.
Prepayment risk can lead to fluctuations in value of the mortgage-related
security which may be pronounced. If a mortgage-related security is purchased
at a premium, all or part of the premium may be lost if there is a decline in
the market value
[Page 6]
of the security, whether resulting from changes in interest rates or
prepayments on the underlying mortgage collateral. Certain mortgage-related
securities that may be purchased by the Fund, such as inverse floating rate
collateralized mortgage obligations, have coupons that move inversely to a
multiple of a specific index which may result in a form of leverage. As with
other interest-bearing securities, the prices of certain mortgage-related
securities are inversely affected by changes in interest rates. However,
although the value of a mortgage-related security may decline when interest
rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the security are more
likely to be prepaid. For this and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages, and, therefore, it is not possible to predict
accurately the security's return to the Fund. Moreover, with respect to
certain stripped mortgage-backed securities, if the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Fund may fail to fully recoup its initial investment even if the securities
are rated in the highest rating category by a nationally recognized
statistical rating organization. During periods of rapidly rising interest
rates, prepayments of mortgage-related securities may occur at slower than
expected rates. Slower prepayments effectively may lengthen a
mortgage-related security's expected maturity which generally would cause the
value of such security to fluctuate more widely in response to changes in
interest rates. Were the prepayments on the Fund's mortgage-related
securities to decrease broadly, the Fund's effective duration, and thus
sensitivity to interest rate fluctuations, would increase. Commercial real
property loans, however, often contain provisions that reduce the likelihood
that such securities will be prepaid. The provisions generally impose
significant prepayment penalties on loans and in some cases there may be
prohibitions on principal prepayments for several years following
origination.
REAL ESTATE-RELATED EQUITY SECURITIES - Equity securities fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced. Changes in the value of
the Fund's investments will result in changes in the value of its shares and
thus the Fund's total return to investors. The value of the equity securities
in which the Fund invests will be particularly likely to be impacted by
changing conditions in the real estate market, in addition to conditions in
the general equity market or economy.
Fixed Income Securities_Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities generally are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. The values
of fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuer. Certain securities purchased by
the Fund, such as those rated Baa or lower by Moody's and BBB or lower by
S&P, Fitch and Duff, may be subject to such risk with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. Once the rating of a portfolio security has
been changed, the Fund will consider all circumstances deemed relevant in
determining whether to continue to hold the security. See "High Yield-Lower
Rated Fixed Income Securities" and "Appendix_Certain Portfolio
Securities-Ratings" below and "Appendix" in the Statement of Additional
Information.
High Yield-Lower Rated Fixed Income Securities_The Fund may invest without
limitation in higher yielding (and, therefore, higher risk) mortgage-related
and other fixed income securities such as those rated Ba by Moody's or BB by
S&P, Fitch or Duff or as low as the lowest rating assigned by Moody's, S&P,
Fitch or Duff, or non-rated subordinated classes of equivalent quality. They
may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations and greater risk of loss of income and principal,
than certain lower yielding, higher rated fixed-income securities. The retail
secondary market for these securities may be less liquid than that of higher
rated securities; adverse conditions could make it difficult at times for the
Fund to sell certain securities or could result in lower prices than those
used in calculating the Fund's net asset value. See "Appendix_Certain
Portfolio Securities-High Yield-Lower Rated Fixed Income Securities" below
and "Appendix" in the State of Additional Information.
Foreign Securities-Foreign securities markets generally are not as developed
or efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable U.S.
issuers. Similarly, volume and liquidity in most foreign securities markets
are less than in the United States and, at times, volatility of price can be
greater than in the United States.
Use of Derivatives-In addition to mortgage-related securities and
asset-backed securities, the Fund may invest in, or enter into, other
derivatives ("Derivatives") such as options, futures and swaps. These are
financial instruments which derive their performance, at least in part, from
the performance of an underlying asset, index or interest rate. While
Derivatives can be used effectively in furtherance of the Fund's investment
objective, under certain market conditions, they can increase the volatility
of the Fund's net asset value, decrease the liquidity of the Fund's portfolio
and make more difficult the accurate pricing of the Fund's portfolio. See
"Appendix - Investment Techniques - Use of Derivatives" below and "Investment
Objectives and Management Policies - Management Policies - Derivatives" in
the Statement of Additional Information.
Non-Diversified Status - The classification of the Fund as a "non-diversified"
investment company means that the proportion of the Fund's assets that may be
invested in the securities of a single issuer is not limited by the 1940
[Page 7]
Act. A "diversified" investment company is required by the 1940 Act
generally, with respect to 75% of its total assets, to invest not more than
5% of such assets in the securities of a single issuer. Since a relatively
high percentage of the Fund's assets may be invested in the securities of a
limited number of issuers, the Fund's portfolio securities may be more
sensitive to changes in the market value of a single issuer. However, to meet
Federal tax requirements, at the close of each quarter the Fund may not have
more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested
in any one issuer. These limitations do not apply to U.S. Government
securities.
Simultaneous Investments-Investment decisions for the Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
Year 2000 Risks - Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by The Dreyfus Corporation and the
Fund's other service providers do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Dreyfus Corporation is taking
steps to address the Year 2000 Problem with respect to the computer systems
that it uses and to obtain assurances that comparable steps are being taken
by the Fund's other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Fund.
Management of the Fund
Investment Adviser-The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of November 30, 1998, The Dreyfus Corporation managed or
administered approximately $109 billion in assets for approximately 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Company, subject to the authority of the Company's Board in accordance with
Massachusetts law. The Fund's primary portfolio manager is Michael Hoeh. He
has held that position since the Fund's inception and has been employed by
The Dreyfus Corporation since October 1996. Prior to joining The Dreyfus
Corporation, Mr. Hoeh was Vice President of Portfolio Management at ARM
Capital Advisors, Inc. From 1993 to 1994, Mr. Hoeh was Vice President in the
Risk Management division of Blackrock Financial Management. The Fund's other
portfolio managers are identified in the Statement of Additional Information.
The Dreyfus Corporation also provides research services for the Fund and for
other funds advised by The Dreyfus Corporation through a professional staff
of portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$___ billion in assets as of September 30, 1998, including approximately $___
billion in proprietary mutual fund assets. As of September 30, 1998, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $_____ trillion in
assets, including approximately $__ 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 .65 of 1% of
the value of the Fund's average daily net assets. For the fiscal year ended
October 31, 1998, the Fund paid The Dreyfus Corporation a management fee at
the effective annual rate of ___ of 1% of the value of the Fund's net assets,
pursuant to an undertaking by The Dreyfus Corporation. 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
expense ratio of the Fund and increasing yield to investors. The Fund will
not pay The Dreyfus Corporation at a later time for any amounts it may waive,
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume.
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered
[Page 8]
by The Dreyfus Corporation as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the Statement of Additional Information.
Expenses_All expenses incurred in the operation of the Company are borne by
the Company, except to the extent specifically assumed by The Dreyfus
Corporation. The expenses borne by the Company include: 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 officers, directors, employees or holders of 5% or more
of the outstanding voting securities of The Dreyfus Corporation or any of its
affiliates, 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 independent
pricing services, costs of maintaining the Company'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 shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. Expenses attributable to the Fund
are charged against the assets of the Fund; other expenses of the Company are
allocated among the Company's portfolios on the basis determined by the
Board, including, but not limited to, proportionately in relation to the net
assets of each portfolio.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service Agents
in respect of these services.
Distributor_The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109. The
Distributor's ultimate parent is Boston Institutional Group, Inc.
Transfer and Dividend Disbursing Agent and Custodian_Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). Mellon Bank, N.A., One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, is the Fund's Custodian.
HOW TO BUY SHARES
GENERAL - Class A shares, Class B shares, Class C shares, and Class T shares
may be purchased only by clients of certain financial institutions (which may
include banks), securities dealers ("Selected Dealers") and other industry
professionals (collectively, "Service Agents"), except that full-time or
part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Fund's Board, or
the spouse or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor. Subsequent purchase orders may be sent
directly to the Transfer Agent or your Service Agent.
Class R shares are offered only to institutional investors acting
for themselves or in a fiduciary, advisory, agency, custodial or similar
capacity for qualified or non-qualified employee benefit plans, including
pension, profit-sharing, SEP-IRAs and other deferred compensation plans,
whether established by corporations, partnerships, non-profit entities or
state and local governments ("Retirement Plans"). The term "Retirement Plans"
does not include IRAs or IRA "Rollover Accounts."Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
When purchasing Fund shares, you must specify which Class is being
purchased. Share certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order. See "Appendix_Additional Information About
Purchases, Exchanges and Redemptions."
Service Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees. You
should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments must
be at least $100. However, the minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7)
Plans with only one participant and $500 for Dreyfus-sponsored Education
IRAs, with no minimum for subsequent purchases. The initial investment must
be accompanied by the Account Application. The Fund reserves the right to
offer Fund shares without regard to minimum purchase requirements to
employees participating in certain qualified and non-qualified employee
benefit plans or other programs where contributions or account information
can be transmitted in a manner and form acceptable to the Fund. The Fund
reserves the right to vary further the initial and subsequent investment
minimum requirements at any time.
[Page 9]
You may purchase Fund shares by check or wire, or through the
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 which are mailed should be sent
to Dreyfus Premier Real Estate Mortgage Fund, P.O. Box 6587, Providence,
Rhode Island 02940-6587. If you are opening a new account, please enclose
your Account Application indicating which Class of shares is being purchased.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed. For Dreyfus retirement plan
accounts, payments which are mailed should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427.
Neither initial nor subsequent investments should be made by third party
check.
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# 8900336692/Dreyfus Premier
Real Estate Mortgage Fund. 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, and must
indicate the Class of shares being purchased. If your initial purchase of
Fund shares is by wire, please call your Service Agent, or 1-800-554-4611,
after completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Account Application and promptly
mail the Account Application to the Fund, as no redemptions will be permitted
until the Account Application is received. You may obtain further information
about remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only on
U.S. banks. A charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark, the Government Direct Deposit Privilege and the
Payroll Savings Plan described under "Shareholder Services." These services
enable you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will
not protect an investor against loss in a declining market.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the New York Stock Exchange
(currently 4:00 p.m., New York time), on each day the New York Stock Exchange
is open for business. For purposes of determining net asset value, options
and futures contracts will be valued 15 minutes after the close of trading on
the New York Stock Exchange. Net asset value per share of each Class is
computed by dividing the value of the Fund's net assets represented by such
Class (i.e., the value of its assets less liabilities) by the total number of
shares of such Class outstanding. The Fund's investments are valued based on
market value or, where market quotations are not readily available, based on
fair value as determined in good faith by the Fund's Board. For further
information regarding the methods employed in valuing Fund investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
If an order is received in proper form by the Transfer Agent or
other entity authorized to receive orders on behalf of the Fund by the close
of trading on the New York Stock Exchange (currently 4:00 p.m., New York
time) on a business day, Fund shares will be purchased at the public offering
price determined as of the close of trading on the New York Stock Exchange on
that day. Otherwise, Fund shares will be purchased at the public offering
price determined as of the close of trading on the New York Stock Exchange on
the next business day, except where shares are purchased through a dealer as
provided below.
Orders for the purchase of Fund shares received by the close of
trading on the floor of the New York Stock Exchange on a business day and
transmitted to the Distributor or its designee by the close of its business
day (normally 5:15 p.m., New York time) will be based on the public offering
price per share determined as of the close of trading on the New York Stock
Exchange on that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealer's responsibility to
transmit orders so that they will be received by the Distributor or its
designee before the close of its business day. For certain institutions that
have entered into agreements with the Distributor, payment for the purchase of
Fund shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is not
received within three business days after the order is placed, the order may
be canceled and the institution could be held liable for resulting fees
and/or losses.
[Page 10]
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds $1,000,000 ("Eligible Benefit Plans").
Shares of funds in the Dreyfus Family of Funds then held by Eligible Benefit
Plans will be aggregated to determine the fee payable. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service ("IRS").
<TABLE>
CLASS A SHARES - The public offering price for Class A shares is the net
asset value per share of that Class plus a sales load as shown below:
Total Sales Load
__________________-
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
______________________ _______ _______ __________
<S> <C> <C> <C>
Less than $50,000............................ 5.75 6.10 5.00
$50,000 to less than $100,000................ 4.50 4.70 3.75
$100,000 to less than $250,000............... 3.50 3.60 2.75
$250,000 to less than $500,000............... 2.50 2.60 2.25
$500,000 to less than $1,000,000............. 2.00 2.00 1.75
$1,000,000 or more........................... -0- -0- -0-
</TABLE>
For shareholders who beneficially owned Class A shares prior to
December 24, 1998, the public offering price for Class A shares is the net
asset value per share of that Class.
A CDSC of 1% will be assessed at the time of redemption of Class A
shares purchased without an initial sales charge as part of an investment of
at least $1,000,000 and redeemed within one year of purchase. This provision
does not apply to a shareholder who owned Class A shares prior to December
24, 1998. The Distributor may pay Service Agents an amount up to 1% of the
net asset value of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Shares - Contingent Deferred Sales Charge" (other
than the amount of the CDSC and time periods) are applicable to the Class A
shares subject to a CDSC. Letter of Intent and Right of Accumulation apply to
such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of
other financial institutions which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage related or clearing arrangement with an NASD member firm or
financial institution with respect to the sale of Fund shares) may purchase
Class A shares for themselves, directly or pursuant to an employee benefit
plan or other program, or for their spouses and minor children at net asset
value, provided that they have furnished the Distributor with such
information that it may request from time to time in order to verify
eligibility for this privilege. This privilege also applies to full-time
employees of financial institutions affiliated with NASD member firms whose
full-time employees are eligible to purchase Class A shares at net asset
value. In addition, Class A shares are offered at net asset value to
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also may be
purchased (including by exchange) at net asset value without a sales load for
Dreyfus-sponsored IRA "Rollover Accounts" with the distribution proceeds from
a qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided
that, at the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible
Benefit Plan and all or a portion of such plan's assets were invested in
funds in the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds
or certain other products made available by the Distributor to such plans, or
(b) invested all of its assets in certain funds in the Dreyfus Premier Family
of Funds or the Dreyfus Family of Funds or certain other products made
available by the Distributor to such plans.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares
be
[Page 11]
sold for the benefit of clients participating in a "wrap-account" or
a similar program under which such clients pay a fee to such broker-dealer or
other financial institution.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a registered
open-end management investment company not managed by The Dreyfus Corporation
or its affiliates. The purchase of Class A shares of the Fund must be made
within 60 days of such redemption and the shareholder must have been subject
to an initial sales charge or a contingent deferred sales charge with respect
to such redeemed shares.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i) qualified separate accounts maintained by
an insurance company pursuant to the laws of any State or territory of the
United States, (ii) a State, county or city or instrumentality thereof, (iii)
a charitable organization (as defined in Section 501 (c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code") investing $50,000 or more in
Fund shares, and (iv) a charitable remainder trust (as defined in Section
501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its expense, may provide
additional promotional incentives to dealers that sell shares of funds
advised by The Dreyfus Corporation which are sold with a sales load, such as
the Fund. In some instances, these incentives may be offered only to certain
dealers who have sold or may sell significant amounts of shares.
CLASS B SHARES - The public offering price for Class B shares is the net
asset value per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on certain redemptions of
Class B shares as described under "How to Redeem Shares." The Distributor
compensates certain Service Agents for selling Class B and Class C shares at
the time of purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these expenses.
CLASS C SHARES - The public offering price for Class C shares is the net
asset value per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on redemptions of Class C
shares made within the first year of purchase. See "Class B Shares"above and
"How to Redeem Shares."
CLASS R SHARES - The public offering price for Class R shares is the net
asset value per share of that Class.
CLASS T SHARES - The public offering price for Class T shares is the net
asset value of that Class plus a sales load as shown below:
<TABLE>
Total Sales Load
__________________-
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
_______________________ _______ _______ __________
<S> <C> <C> <C>
Less than $50,000................................ 4.50 4.70 4.00
$50,000 to less than $100,000.................... 4.00 4.20 3.50
$100,000 to less than $250,000................... 3.00 3.10 2.50
$250,000 to less than $500,000................... 2.00 2.00 1.75
$500,000 to less than $1,000,000................. 1.50 1.50 1.25
$1,000,000 or more............................... -0- -0- -0-
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more
of Class T shares. However, if you purchase Class T shares without an initial
sales charge as part of an investment of at least $1,000,000 and redeem all or
a portion of those shares within one year of purchase, a CDSC of 1.00% will be
assessed at the time of redemption. The Distributor may pay Service Agents an
amount up to 1% of the net asset value of Class T shares purchased by their
clients that are subject to a CDSC. The terms contained in the section of the
Prospectus entitled "How to Redeem Shares-Contingent Deferred Sales Charge-Class
B Shares" (other than the amount of the CDSC and time periods) and "How to
Redeem Shares-Waiver of CDSC" are applicable to the Class T shares subject to
a CDSC. Letter of Intent and Right of Accumulation apply to such purchases of
Class T shares. Because the expenses associated with Class A shares will be
lower than those associated with Class T shares, purchasers investing $1,000,000
or more in the Fund (assuming ineligibility to purchase Class R shares)
generally will find it beneficial to purchase Class A shares rather than Class
T shares.
RIGHT OF ACCUMULATION - CLASS A AND CLASS T SHARES - Reduced sales loads
may apply to any purchase of Class A and Class T shares, shares of other
funds in the Dreyfus Premier Family of Funds, shares of certain other funds
advised by The Dreyfus Corporation which are sold with a sales load and
shares acquired by a previous exchange of such shares (hereinafter referred
to as "Eligible Funds"), by you and any related "purchaser" as defined in the
Statement of Additional Information, where the aggregate investment,
including such purchase, is $50,000 or more. If, for example, you previously
purchased and still hold Class A and Class T shares of the Fund, or of any
other Eligible Fund, or combination thereof, with an aggregate current market
value of $40,000 and subsequently purchase Class A or Class T shares of the
Fund having a current value of $20,000, the sales load applicable to the
[Page 12]
subsequent purchase would be reduced to 4.50% of the offering price in the
case of Class A shares, or 4.00% of the offering price in the case of Class T
shares. All present holdings of Eligible Funds may be combined to determine
the current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of a purchase you
or your Service Agent must notify theDistributor if orders are made by wire,
or the Transfer Agent if orders are made by mail. The reduced sales load is
subject to confirmation of your holdings through a check of appropriate
records.
TELETRANSFER PRIVILEGE - You may purchase shares (minimum $500, maximum
$150,000 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
your Fund account. Only such a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be so
designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER purchase of shares by calling your Service Agent, or
1-800-221-4060 or, if you are calling from overseas, call 401-455-3306.
Shareholder Services
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
FUND EXCHANGES - You may purchase, in exchange for shares of a Class, shares
of the same Class (or Class A in the case of Class T) of certain other funds
managed or administered by The Dreyfus Corporation, to the extent such shares
are offered for sale in your state of residence. These funds may have
different investment objectives which may be of interest to you. You also may
exchange your Fund shares that are subject to a CDSC for shares of Dreyfus
Worldwide Dollar Money Market Fund, Inc. The shares so purchased will be held
in a special account created solely for this purpose ("Exchange Account").
Exchanges of shares from an Exchange Account only can be made into certain
other funds managed or administered by The Dreyfus Corporation. No CDSC is
charged when an investor exchanges into an Exchange Account; however, the
applicable CDSC will be imposed when shares are redeemed from an Exchange
Account or other applicable fund account. Upon redemption, the applicable
CDSC will be calculated without regard to the time such shares were held in
an Exchange Account. See "How to Redeem Shares." Redemption proceeds for
Exchange Account shares are paid by Federal wire or check only. Exchange
Account shares also are eligible for the Auto-Exchange Privilege, Dividend
Sweep and the Automatic Withdrawal Plan. To use this service, you should
consult your Service Agent or call 1-800-554-4611 to determine if it is
available and whether any conditions are imposed on its use.
To request an exchange, your Service Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling your Service Agent, or 1-800-554-4611. Except in
cases of personal retirement plans, shares being exchanged must have a
current value of at least $500; furthermore, when establishing a new account
by exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all fund shareholders automatically, unless you check the applicable "No"
box on the Account Application indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request signed by all shareholders on the
account, by a separate signed Shareholder Services Form, available by calling
your Service Agent or 1-800-554-4611, or by oral request from any of the
authorized signatories on the account by calling your Service Agent or
1-800-554-4611. If you have established the Telephone Exchange Privilege, you
may telephone exchange instructions (including over The Dreyfus
TouchRegistration Mark automated telephone system) by calling 1-800-645-6561.
If you are calling from overseas, call 516-794-5452. See "How to Redeem Shares
- - Procedures." Upon an exchange into a new account, the following shareholder
services and privileges, as applicable and where available, will be
automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, TELETRANSFER Privilege, and the
dividend/capital gain distribution option (except for Dividend Sweep)selected
by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges of Class A or
Class T shares into funds sold with a sales load. No CDSC will be imposed on
Class B or Class C shares at the time of an exchange; however, Class B or
Class C shares acquired through an exchange will be subject on redemption to
the higher CDSC applicable to the exchanged or acquired shares. The
[Page 13]
CDSC applicable on redemption of the acquired Class B or Class C
shares will be calculated from the date of the initial purchase of the Class
B or Class C shares exchanged. If you are exchanging Class A or Class T
shares into a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load, if the shares you are exchanging were: (a) purchased with a sales load,
(b) acquired by a previous exchange from shares purchased with a sales load,
or (c) acquired through reinvestments of dividends or distributions paid with
respect to the foregoing categories of shares. To qualify, at the time of the
exchange your Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of your holdings through a check of
appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders directly
in connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal
administrative 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. See "Appendix-Additional Information About
Purchases, Exchanges and Redemptions." The availability of Fund Exchanges may
be modified or terminated at any time upon notice to shareholders. See
"Dividends, Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE - Auto-Exchange Privilege permits you to invest
regularly (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, in shares of the same Class (or Class A in
the case of Class T) of other funds in the Dreyfus Premier Family of Funds or
certain other funds in the Dreyfus Family of Funds of which you are a
shareholder. 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
of Class A or Class T shares into funds sold with a sales load. No CDSC will
be imposed on Class B or Class C shares at the time of an exchange; however,
Class B or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired shares.
The CDSC applicable on redemption of the acquired Class B or Class C shares
will be calculated from the date of the initial purchase of the Class B or
Class C shares exchanged. See "Shareholder Services" in the Statement of
Additional Information. This Privilege may be modified or canceled by the
Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to Dreyfus Premier Real
Estate Mortgage Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The
Fund may charge a service fee for this Privilege. No such fee currently is
contemplated. For more information concerning this Privilege and the funds in
the Dreyfus Family of Funds eligible to participate in this Privilege, or to
obtain a Auto-Exchange Authorization Form, please contact your Service Agent
or call 1-800-554-4611. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. 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 from your Service Agent or by calling
1-800-554-4611. You may cancel your participation in this Privilege or change
the amount of purchase at any time by mailing written notification to Dreyfus
Premier Real Estate Mortgage Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587, or, if for Dreyfus retirement plan accounts, to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427, and
the notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
The Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a completed
Direct Deposit Sign-Up Form for each type of payment that you desire to
include in this Privilege. The appropriate form may be obtained from your
Service Agent or by calling 1-800-554-4611. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time to
terminate your participation by notifying in writing the appropriate Federal
agency. The Fund may terminate your participation upon 30 days' notice to
you.
PAYROLL SAVINGS PLAN
The Payroll Savings Plan permits you to purchase Fund shares (minimum
of $100 per transaction) automatically on a regular basis. Depending upon
your employer's direct deposit program, you may have part or all of your
[Page 14]
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 Dreyfus Premier Real Estate
Mortgage Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. You may
obtain the necessary authorization form from your Service Agent or by calling
1-800-554-4611. 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.
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 CDSC, the shares purchased will be
subject on redemption to the CDSC, if any, applicable to the purchased
shares. See "Shareholder Services" in the Statement of Additional
Information. 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 an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call your Service Agent or 1-800-554-4611. You
may cancel these privileges by mailing written notification to Dreyfus
Premier Real Estate Mortgage Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a new
Dividend Options Form. Enrollment in or cancellation of these privileges is
effective three business days following receipt. These privileges are
available only for existing accounts and may not be used to open new
accounts. Minimum subsequent investments do not apply for Dividend Sweep. The
Fund may modify or terminate these privileges at any time or charge a service
fee. No such fee currently is contemplated. Shares held under Keogh Plans,
IRAs or other retirement plans are not eligible for Dividend Sweep.
AUTOMATIC WITHDRAWAL PLAN - The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. Particular
retirement plans, including Dreyfus sponsored retirement plans, may permit
certain participants to establish an automatic withdrawal plan from such
retirement plans. Participants should consult their retirement plan sponsor
and tax adviser for details. Such a withdrawal plan is different than the
Automatic Withdrawal Plan. An application for the Automatic Withdrawal Plan
can be obtained by calling your Service Agent or 1-800-554-4611. 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.
No CDSC with respect to Class B shares will be imposed on withdrawals
made under the Automatic Withdrawal Plan, provided that the amounts withdrawn
under the plan do not exceed on an annual basis 12% of the account value at
the time the shareholder elects to participate in the Automatic Withdrawal
Plan. Withdrawals with respect to Class B shares under the Automatic
Withdrawal Plan that exceed on an annual basis 12% of the value of the
shareholder's account will be subject to a CDSC on the amounts exceeding 12%
of the initial account value. Withdrawals with respect to Class A or Class T
shares subject to a CDSC, and of Class C shares, under the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A and Class T shares where the sales load is imposed
concurrently with withdrawals of Class A and Class T shares generally are
undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs),
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs (except SEP-IRAs), 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 - CLASS A AND CLASS T SHARES - By signing a Letter of
Intent form, available by calling your Service Agent, or 1-800-554-4611, you
become eligible for the reduced sales load applicable to the total number of
Eligible Fund shares purchased in a 13-month period pursuant to the terms and
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
[Page 15]
toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced sales
load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in
the Letter of Intent for payment of a higher sales load if you do not
purchase the full amount indicated in the Letter of Intent. The escrow will
be released when you fulfill the terms of the Letter of Intent by purchasing
the specified amount. If your purchases qualify for a further sales load
reduction, the sales load will be adjusted to reflect your total purchase at
the end of 13 months. If total purchases are less than the amount specified,
you will be requested to remit an amount equal to the difference between the
sales load actually paid and the sales load applicable to the aggregate
purchases actually made. If such remittance is not received within 20 days,
the Transfer Agent, as attorney-in-fact pursuant to the terms of the Letter
of Intent, will redeem an appropriate number of Class A or Class T shares
held in escrow to realize the difference. Signing a Letter of Intent does not
bind you to purchase, or the Fund to sell, the full amount indicated at the
sales load in effect at the time of signing, but you must complete the
intended purchase to obtain the reduced sales load. At the time you purchase
Class A or Class T shares, you must indicate your intention to do so under a
Letter of Intent. Purchases made pursuant to a Letter of Intent will be made
at the then-current net asset value plus the applicable sales load in effect
at the time such Letter of Intent was executed.
How to Redeem Shares
General
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, the Fund will redeem the
shares at the next determined net asset value as described below. See
"Appendix_Additional Information About Purchases, Exchanges and Redemptions."
If you hold Fund shares of more than one Class, any request for redemption
must specify the Class of shares being redeemed. If you fail to specify the
Class of shares to be redeemed or if you own fewer shares of the Class than
specified to be redeemed, the redemption request may be delayed until the
Transfer Agent receives further instructions from you or your Service Agent.
The Fund will deduct a redemption fee of 1% of the net asset value of
Class A shares purchased prior to December 24, 1998 and redeemed or exchanged
in less than six months following the issuance of such shares. The fee will
be retained by the Fund. The Fund imposes no other redemption charges on
holders of shares purchased prior to such date. For purposes of calculating
the six-month holding period, the Fund will employ the "first-in, first-out"
method, which assumes that the shares you are redeeming or exchanging are the
ones you have held the longest. Any certificates representing Fund shares
being redeemed must be submitted with the redemption request. The value of
the shares redeemed may be more or less than their original cost, depending
upon the Fund's then-current net asset value.
For shares purchased on or after December 24, 1998, the Fund imposes
no charges (other than any applicable CDSC) when shares are redeemed. Service
Agents may charge their clients a fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending 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 PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDERRegistration
Mark 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 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
Contingent Deferred Sales Charge
[Page 16]
CLASS B SHARES - A CDSC payable to the Distributor is imposed on any
redemption by a shareholder of Class B shares which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares of
the Fund held by you at the time of redemption. No CDSC will be imposed to
the extent that the net asset value of the Class B shares redeemed does not
exceed (i) the current net asset value of Class B shares acquired through
reinvestment of dividends or capital gain distributions, plus (ii) increases
in the net asset value of your Class B shares above the dollar amount of all
your payments for the purchase of Class B shares of the Fund held by you at
the time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may
be applied to the then-current net asset value rather than the purchase
price.
In circumstances where the CDSC is imposed, the amount of the charge
will depend on the number of years from the time you purchased the Class B
shares until the time of redemption of such shares. Solely for purposes of
determining the number of years from the time of any payment for the purchase
of Class B shares, all payments during a month will be aggregated and deemed
to have been made on the first day of the month.
The following table sets forth the rates of the CDSC for Class B
shares:
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
__________ ____________
First..................................... 4.00
Second.................................... 4.00
Third..................................... 3.00
Fourth.................................... 3.00
Fifth..................................... 2.00
Sixth..................................... 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in net asset value of Class B shares
above the total amount of payments for the purchase of Class B shares made
during the preceding six years; then of amounts representing the cost of
shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 per share
for a cost of $1,000. Subsequently, the shareholder acquired 5 additional
shares through dividend reinvestment. During the second year after the
purchase the investor decided to redeem $500 of his or her investment.
Assuming at the time of the redemption the net asset value had appreciated to
$12 per share, the value of the investor's shares would be $1,260 (105 shares
at $12 per share). The CDSC would not be applied to the value of the
reinvested dividend shares and the amount which represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260)
would be charged at a rate of 4% for a total CDSC of $9.60.
CLASS C SHARES - A CDSC of 1% payable to the Distributor is imposed on any
redemption of Class C shares within one year of the date of purchase. The
basis for calculating the payment of any such CDSC will be the method used in
calculating the CDSC for Class B shares. See "Contingent Deferred Sales
Charge - Class B Shares" above.
WAIVER OF CDSC - The CDSC applicable to Class B and Class C shares may be
waived in connection with (a) redemptions made within one year after the
death or disability, as defined in Section 72(m)(7) of the Code, of the
shareholder, (b) redemptions by employees participating in Eligible Benefit
Plans, (c) redemptions as a result of a combination of any investment company
with the Fund by merger, acquisition of assets or otherwise, (d) a
distribution following retirement under a tax-deferred retirement plan or
upon attaining age 701\2 in the case of an IRA or Keogh plan or custodial
account pursuant to Section 403(b) of the Code, and (e) redemptions pursuant
to the Automatic Withdrawal Plan, as described in the Fund's Prospectus. If
the Fund's Board determines to discontinue the waiver of the CDSC, the
disclosure in the Fund's Prospectus will be appropriately revised. Any Fund
shares subject to a CDSC which were purchased prior to the termination of
such waiver will have the CDSC waived as provided in the Fund's Prospectus at
the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you
must notify the Transfer Agent or your Service Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
entitlement.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent. You also may redeem shares through the
TELETRANSFER Privilege, if you have checked the appropriate box and supplied
the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. Other redemption procedures
may be in effect for clients of certain Service Agents. The Fund makes
available to certain
[Page 17]
large institutions the ability to issue redemption instructions through
compatible computer facilities. The Fund reserves the right to refuse any
request made by wire or telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption Privilege at any
time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for the TELETRANSFER Privilege.
The Telephone Exchange Privilege authorizes the Transfer Agent to act
on telephone instructions (including over The Dreyfus TouchRegistration Mark
automated telephone system) from any person representing himself or herself to
be you, and reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Fund or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION - Under the regular redemption procedure, you may redeem
shares by written request mailed to Dreyfus Premier Real Estate Mortgage
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, or, if for Dreyfus
retirement plan accounts, to TheDreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Written redemption requests must
specify the Class of shares being redeemed. Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock 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.
TELETRANSFER PRIVILEGE - You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request. 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.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of shares by calling 1-800-554-4611 or, if you are
calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER - If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by
the Transfer Agent prior to the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time), the redemption request
will be effective on that day. If a redemption request is received by the
Transfer Agent after the close of trading on the floor of the New York Stock
Exchange, the redemption request will be effective on the next business day.
It is the responsibility of the Selected Dealer to transmit a request so that
it is received in a timely manner. The proceeds of the redemption are
credited to your account with the Selected Dealer. See "How to Buy Shares"
for a discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by
dealers by the close of trading on the floor of the New York Stock Exchange
on any business day and transmitted to the Distributor or its designee prior
to the close of its business day (normally 5:15 p.m., New York time) are
effected at the price determined as of the close of trading on the floor of
the New York Stock Exchange on that day. Otherwise, the shares will be
redeemed at the next determined net asset value. It is the responsibility of
the Selected Dealer to transmit orders on a timely basis. The Selected Dealer
may charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
REINVESTMENT PRIVILEGE - Upon written request, you may reinvest up to the
number of Class A, Class B, or Class T shares you have redeemed, within 45
days of redemption, at the then-prevailing net asset value without a sales
[Page 18]
load, or reinstate your account for the purpose of exercising Fund Exchanges.
Upon reinstatement, with respect to Class B shares, or Class A or Class T
shares if such shares were subject to a CDSC, the shareholder's account will
be credited with an amount equal to the CDSC previously paid upon redemption
of the shares reinvested. The Reinvestment Privilege may be exercised only
once.
Distribution Plan and Shareholder Services Plan
(Class A, Class B, Class C, and Class T Shares)
Class B, Class C, and Class T shares are subject to a Distribution
Plan, and Class A, Class B, Class C, and Class T shares of the Fund are
subject to a Shareholder Services Plan.
DISTRIBUTION PLAN - Under the Distribution Plan, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund pays the Distributor for distributing the
Fund's Class B, Class C, and Class T shares, at an annual rate of .75 of 1%
of the value of the average daily net assets of Class B and Class C shares,
and .25 of 1% of the value of the average daily net assets of Class T shares.
SHAREHOLDER SERVICES PLAN - Under the Shareholder Services Plan, the Fund
pays the Distributor for the provision of certain services to the holders of
Class A, Class B, Class C, and Class T shares a fee at the annual rate of .25
of 1% of the value of the average daily net assets of the Class. The services
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents.
Dividends, Distributions and Taxes
The Fund ordinarily declares and pays dividends from its net
investment income quarterly and distributes net realized securities gains, if
any, once a year, but it may make distributions on a more frequent basis to
comply with the distribution requirements of the Code, in all events in a
manner consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose whether
to receive dividends and distributions in cash or to reinvest in additional
shares at net asset value. If you elect to receive dividends and
distributions in cash, and your dividend or distribution check is returned to
the Fund as undeliverable or remains uncashed for six months, the Fund
reserves the right to reinvest such dividend or distribution and all future
dividends and distributions payable to you in additional Fund shares at net
asset value. No interest will accrue on amounts represented by uncashed
distribution or redemption checks. All expenses are accrued daily and
deducted before declaration of dividends to investors. Dividends paid by each
Class will be calculated at the same time and in the same manner and will be
of the same amount, except that the expenses attributable solely to a
particular Class will be borne exclusively by such Class. Class B and Class C
shares will receive lower per share dividends than Class T shares, which will
receive lower per share dividends than Class A shares, which will receive
lower dividends than Class R shares, because of the higher expenses borne by
the relevant Class. See "Fee Table."
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 for Federal income tax purposes whether received in cash
or reinvested in additional shares. No dividend paid by the Fund will qualify
for the dividends-received deduction allowable to certain U.S. corporations.
Distributions from net realized long-term securities gains of the Fund will
be taxable to U.S. shareholders as long-term capital gains for Federal income
tax purposes, regardless of how long shareholders have held their Fund shares
and whether such distributions are received in cash or reinvested in Fund
shares. The Code provides that an individual generally will be taxed on his
or her net capital gain at a maximum rate of 28% with respect to capital gain
from securities held for more than one year but not more than 18 months and
at a maximum rate of 20% with respect to capital gain from securities held
for more than 18 months. 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 will
be 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.
[Page 19]
The Code provides for the "carryover" of some or all of the initial
sales charge imposed on Class A and Class T shares, if you exchange your Class
A or Class T shares for shares of another fund advised by The Dreyfus
Corporation within 91 days of purchase and such other fund reduces or
eliminates its otherwise applicable sales charge for the purpose of the
exchange. In this case, the amount of your sales charge for Class A or Class T
shares, up to the amount of the reduction of the sales charge on the exchange,
is not included in the basis of your Class A or Class T shares for purposes of
computing gain or loss on the exchange, and instead is added to the basis of
the fund shares received on the exchange.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number, IRS individual taxpayer
identification 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 Company believes that the Fund has qualified as a
"regulated investment company" under the Code for its fiscal year ended
October 31, 1998. 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 tax to
the extent its earnings are distributed in accordance with applicable
provisions of the Code. The Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or 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. These total return figures reflect changes in the price of the shares
and assume that any income dividends and/or capital gains distributions made
by the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable service and
distribution fees. As a result, at any given time, the performance of Class B
and Class C shares should be expected to be lower than that of Class T
shares, the performance of Class B, Class C, and Class T shares should be
expected to be lower than Class A shares, and the performance of Class A,
Class B, Class C, and Class T shares should be expected to be lower than
Class R shares. Performance for each Class will be calculated separately.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value 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 to 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. Income is adjusted to
reflect gains and losses from principal repayments received by the Fund with
respect to mortgage-related securities and other asset-backed securities.
Other capital gains and losses and gains and losses from exchange rate
fluctuations generally are excluded from the calculation. Calculations of the
Fund's current yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment 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 periods depending upon the
length of time the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total
[Page 20]
return generally is expressed as a percentage rate which is calculated by
combining the income and principal changes for a specified period and
dividing by the net asset value per share (or maximum offering price for
Class A and Class T shares) 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 also may be
calculated by using the net asset value per share at the beginning of the
period instead of the maximum offering price per share at the beginning of
the period for Class A and Class T shares or without giving effect to any
applicable CDSC at the end of the period for Class B and Class C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the applicable sales charge which, if reflected, would reduce
the performance quoted.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from broad-based
securities indexes and industry publications.
General Information
The Company 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"), and commenced operations on
October 1, 1986. Before January 1, 1996, the Company's name was Dreyfus
Strategic Income, and before August 13, 1998, the Company's name was Dreyfus
Income Funds. The Company is authorized to issue an unlimited number of
shares of beneficial interest, par value $.001 per share. The Fund's shares
are classified into five classes _ Class A, Class B, Class C, Class R, and
Class T. Each share has one vote and shareholders will vote in the aggregate
and not by class except as otherwise required by law or when class voting is
permitted by the Fund's Board. However, only holders of Class B, Class C, and
Class T shares will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of a
Massachusetts business trust. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Company and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Company 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
Company intends to conduct its operations in such a way so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the
Fund. As discussed under "Management of the Company" in the Statement of
Additional Information, the Fund ordinarily will not hold shareholder
meetings; however, shareholders under certain circumstances may have the right
to call a meeting of shareholders for the purpose of voting to remove Board
members.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. By this Prospectus, shares of the Fund are being
offered. Other portfolios are sold pursuant to other offering documents.
To date, the Board has authorized the creation of six series of
shares. All consideration received by the Company for shares of one of the
series and all assets in which such consideration is invested will belong to
that series (subject only to the rights of creditors of the Company) and will
be subject to the liabilities related thereto. The income attributable to,
and the expenses of, one series are treated separately from those of the
other series. The Company has the ability to create, from time to time, new
series without shareholder approval.
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 your Service
Agent.
[Page 21]
Appendix
Investment Techniques
Leverage_Leveraging exaggerates the effect on net asset value of any increase
or decrease in the market value of the Fund's portfolio. Money borrowed for
leveraging is limited to 331\3% of the value of the Fund's total assets.
These borrowings would 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.
See also "Forward Commitments" below.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the Fund
of an underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Fund retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Fund repurchases the security at principal plus accrued
interest. Except for these transactions, the Fund's borrowings generally will
be unsecured.
Short-Selling_In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery
to the buyer. The Fund is obligated to replace the security borrowed by
purchasing it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Fund, which would result in a loss or gain,
respectively. The Fund also may make short sales "against the box," in which
the Fund enters into a short sale of a security it owns. Securities will not
be sold short if, after effect is given to any such short sale, the total
market value of all securities sold short would exceed 25% of the value of
the Fund's net assets.
Use of Derivatives_The Fund may invest in, or enter into, the types of
Derivatives enumerated under "Description of the Fund _ Investment
Considerations and Risks _ Use of Derivatives." These instruments and certain
related risks are described more specifically under "Investment Objective and
Management Policies_Management Policies_Derivatives" in the Statement of
Additional Information.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its Derivatives
were poorly correlated with its other investments, or if the Fund were unable
to liquidate its position because of an illiquid secondary market. The market
for many Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for Derivatives.
Although the Fund will not be a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in such Derivatives. The
Fund may invest in futures contracts and options with respect thereto for
hedging purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
The Fund may purchase call and put options and write (i.e., sell)
covered call and put options. When required by the Securities and Exchange
Commission, the Fund will set aside permissible liquid assets in a segregated
account to cover its obligations relating to its transactions in Derivatives.
To maintain this required cover, the Fund may have to sell portfolio
securities at disadvantageous prices or times since it may not be possible to
liquidate a Derivative position at a reasonable price.
Forward Commitments-The Fund may purchase or sell securities on a forward
commitment, when-issued or delayed delivery basis, which means delivery and
payment take place a number of days after the date of the commitment to
purchase or sell the securities at a predetermined price and/or yield.
Typically, no interest accrues to the purchaser until the security is
delivered. When purchasing a security on a forward commitment basis, the Fund
assumes the rights and risks of ownership of the security, including the risk
of price and yield fluctuations, and takes such fluctuations into account
when determining its net asset value. Because the Fund is not required to pay
for these securities until the delivery date, these risks are in addition to
the risks associated with the Fund's other investments. If the Fund is fully
or almost fully invested when forward commitment purchases are outstanding,
such purchases may result in a form of leverage.
[Page 22]
The Fund intends to engage in forward commitments to increase its portfolio's
financial exposure to the types of securities in which it invests. Leveraging
the portfolio in this manner will increase the Fund's exposure to changes in
interest rates and will increase the volatility of its returns. The Fund will
set aside in a segregated account permissible liquid assets at least equal at
all times to the amount of the Fund's purchase commitments. At no time will
the Fund have more than 33 1\3% of its assets committed to purchase securities
on a forward commitment basis.
Forward Roll Transactions-To enhance current income, the Fund may enter into
forward roll transactions with respect to mortgage-related securities. In a
forward roll transaction, the Fund sells a mortgage-related security to a
financial institution, such as a bank or broker-dealer, and simultaneously
agrees to purchase a similar security from the institution at a later date at
an agreed upon price. The securities that are purchased will bear the same
interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different pre-payment histories than those
sold. During the period between the sale and purchase, the Fund will not be
entitled to receive interest and principal payments on the securities sold.
Proceeds of the sale typically will be invested in short-term instruments,
particularly repurchase agreements, and the income from these investments,
together with any additional fee income received on the sale will be expected
to generate income for the Fund exceeding the yield on the securities sold.
Forward roll transactions involve the risk that the market value of the
securities sold by the Fund may decline below the purchase price of those
securities. The Fund will set aside in a segregated account of the Fund
permissible liquid assets at least equal to the amount of the repurchase
price (including accrued interest).
Lending Portfolio Securities-The Fund may lend securities from its portfolio
to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33 1\3%
of the value of the Fund's total assets, and the Fund will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of
credit which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. The Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
Certain Portfolio Securities
HIGH YIELD-LOWER 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 S&P, Fitch or Duff are
regarded as having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other
speculative grade debt, they face major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
Securities rated C by Moody's are regarded as having extremely poor prospects
of ever attaining any real investment standing. Securities rated D by S&P,
Fitch and Duff are in default and the payment of interest and/or repayment of
principal is in arrears. Such securities, though high yielding, are
characterized by great risk. See "Appendix" in the Statement of Additional
Information for a general description of securities ratings.
These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely the
market for such securities and may have an adverse impact on the value of
such securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. Ratings
are relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation also will evaluate these securities and the ability of the issuers
of such securities to pay interest and principal. The Fund's ability to
achieve its investment objective may be more dependent on The Dreyfus
Corporation's credit analysis than might be the case for a fund that invested
in higher rated securities.
Mortgage-Related Securities_Mortgage-related securities are secured, directly
or indirectly, by pools of mortgage loans, including mortgage loans made by
savings and loan institutions, mortgage bankers, commercial banks and others,
assembled as securities for sale to investors by various governmental,
government-related and private organizations. The mortgage-related securities
in which the Fund may invest include the following:
Residential Mortgage-Related Securities. The Fund may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), and the Federal Home Loan Mortgage Corporation
[Page 23]
("FHLMC"), or issued by private entities. Similar to commercial
mortgage-related securities, residential mortgage-related securities have
been issued using a variety of structures, including multi-class structures
featuring senior and subordinated classes.
Mortgage-related securities issued by 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
certificates also are supported by the authority of GNMA to borrow funds from
the U.S. Treasury to make payments under its guarantee. Mortgage-related
securities issued by 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. Fannie Maes are guaranteed as to timely payment of principal
and interest by FNMA. Mortgage-related securities issued by FHLMC include
FHLMC Mortgage Participation Certificates (also known as "Freddie Macs" or
"PCs"). Freddie Macs are not guaranteed by the United States or by any
Federal Home Loan Bank 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.
Commercial Mortgage-Related Securities. The Fund may invest in
commercial mortgage-related securities, which generally are multi-class debt
or pass-through certificates secured by mortgage loans on commercial
properties. These mortgage-related securities generally are structured to
provide protection to the senior classes investors against potential losses
on the underlying mortgage loans. This protection is generally provided by
having the holders of subordinated classes of securities ("Subordinated
Securities") take the first loss if there are defaults on the underlying
commercial mortgage loans. Other protection, which may benefit all of the
classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross-collateralization and
over-collateralization.
Subordinated Securities. The Fund may invest in Subordinated
Securities issued or sponsored by commercial banks, savings and loan
institutions, mortgage bankers, private mortgage insurance companies and
other non-governmental issuers. Subordinated Securities have no governmental
guarantee, and are subordinated in some manner as to the payment of principal
and/or interest to the holders of more senior mortgage-related securities
arising out of the same pool of mortgages. The holders of Subordinated
Securities typically are compensated with a higher stated yield than are the
holders of more senior mortgage-related securities. On the other hand,
Subordinated Securities typically subject the holder to greater risk than
senior mortgage-related securities and tend to be rated in a lower rating
category, and frequently a substantially lower rating category, than the
senior mortgage-related securities issued in respect of the same pool of
mortgage. Subordinated Securities generally are likely to be more sensitive
to changes in prepayment and interest rates and the market for such
securities may be less liquid than is the case for traditional fixed-income
securities and senior mortgage-related securities.
Collateralized Mortgage Obligations and Multi-Class Pass-Through
Securities. Collateralized mortgage obligations or "CMOs" are multiclass
bonds backed by pools of mortgage pass-through certificates or mortgage
loans. CMOs may be collateralized by (a) pass-through certificates issued or
guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured
by the Federal Housing Administration or guaranteed by the Department of
Veterans' Affairs, (c) unsecuritized conventional mortgages, (d) other
mortgage-related securities or (e) any combination thereof. CMOs may be issued
by agencies or instrumentalities of the U.S. government, or by private
originators of, or investors in, mortgage loans, including depository
institutions, mortgage banks, investment banks and special purpose
subsidiaries of the foregoing. From time to time, a substantial portion of
the Fund's portfolio may be invested in CMOs. The issuer of CMOs or
multi-class pass-through securities may elect to be treated as a REMIC. The
Fund will not invest in residual interests in REMICs.
Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be
retired substantially earlier than the stated maturities or final
distribution dates. The principal and interest on the underlying mortgages
may be allocated among the several classes of a series of a CMO in many ways.
One or more tranches of a CMO may have coupon rates which reset periodically
at a specified increment over an index, such as the London Interbank Offered
Rate ("LIBOR") (or sometimes more than one index). These floating rate CMOs
typically are issued with lifetime caps on the coupon rate thereon. The Fund
also may invest in inverse floating rate CMOs. Inverse floating rate CMOs
constitute a tranche of a CMO with a coupon rate that moves in the reverse
direction to an applicable index such as the LIBOR. Accordingly, the coupon
rate thereon will increase as interest rates decrease. Inverse floating rate
CMOs are typically more volatile than fixed or floating rate tranches of
CMOs.
[Page 24]
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying inversely
to a multiple of an applicable index creates a leverage factor. Inverse
floaters based on multiples of a stated index are designed to be highly
sensitive to changes in interest rates and can subject the holders thereof to
extreme reductions of yield and loss of principal. The markets for inverse
floating rate CMOs with highly leveraged characteristics at times may be very
thin. The Fund's ability to dispose of its positions in such securities will
depend on the degree of liquidity in the markets for such securities. It is
impossible to predict the amount of trading interest that may exist in such
securities, and therefore the future degree of liquidity.
Stripped Mortgage-Backed Securities. The Fund also may invest in
stripped mortgage-backed securities which are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or
more new securities, each with a specified percentage of the underlying
security's principal or interest payments. Mortgage securities may be
partially stripped so that each investor class received some interest and
some principal. When securities are completely stripped, however, all of the
interest is distributed to holders of one type of security, known as an
interest-only security, or IO, and all of the principal is distributed to
holders of another type of security known as a principal-only security, or
PO. Strips can be created in a pass-through structure or as tranches of a
CMO. The yields to maturity on IOs and POs are very sensitive to the rate of
principal payments (including prepayments) on the related underlying mortgage
assets. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, the Fund may not fully recoup its initial
investment in IOs. Conversely, if the underlying mortgage assets experience
less than anticipated prepayments of principal, the yield on POs could be
materially and adversely affected.
Real Estate Investment Trusts. A REIT is a corporation, or a business
trust that would otherwise be taxed as a corporation, which meets the
definitional requirements of the Code. The Code permits a qualifying REIT to
deduct dividends paid, thereby effectively eliminating corporate level
Federal income tax and making the REIT a pass-through vehicle for Federal
income tax purposes. To meet the definitional requirements of the Code, a
REIT must, among other things, invest substantially all of its assets in
interests in real estate (including mortgages and other REITs) or cash and
government securities, derive most of its income from rents from real
property or interest on loans secured by mortgages on real property, and
distribute to shareholders annually a substantial portion of its otherwise
taxable income.
REITs are characterized as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs, which may include operating or finance companies, own
real estate directly and the value of, and income earned by, the REITs
depends upon the income of the underlying properties and the rental income
they earn. Equity REITs also can realize capital gains (or losses) by selling
properties that have appreciated (or depreciated) in value. Mortgage REITs
can make construction, development or long-term mortgage loans and are
sensitive to the credit quality of the borrower. Mortgage REITs derive their
income from interest payments on such loans. Hybrid REITs combine the
characteristics of both equity and mortgage REITs, generally by holding both
ownership interests and mortgage interests in real estate. The value of
securities issued by REITs are affected by changes in the value of property
in which the REIT invests, tax and regulatory requirements, and by
perceptions of management skill. They also are subject to heavy cash flow
dependency, defaults by borrowers or tenants, self-liquidation and the
possibility of failing to qualify for tax-free status under the Code or to
maintain exemption from the 1940 Act.
Private Entity Securities. These mortgage-related securities are
issued by commercial banks, savings and loan institutions, mortgage bankers,
private mortgage insurance companies and other non-governmental issuers.
Timely payment of principal and interest on mortgage-related securities
backed by pools created by non-governmental issuers often is supported
partially by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance.
Asset-Backed Securities_Asset-backed securities are a form of Derivative. The
securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. These securities include debt
securities and securities with debt-like characteristics. The collateral for
these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. The Fund may
invest in these and other types of asset-backed securities that may be
developed in the future.
Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities may provide the
Fund with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available
to support payments on these securities.
Corporate Debt Securities_Corporate debt securities include corporate bonds,
debentures, notes and other similar instruments, including convertible
securities. Debt securities may be acquired with warrants attached. Corporate
income-producing securities also may include forms of preferred or preference
stock. The rate of interest on a corporate debt security may be fixed,
floating or variable, and may vary inversely with respect to a reference
rate. The
[Page 25]
rate of return or return of principal on some debt obligations may be linked
or indexed to the level of exchange rates between the U.S. dollar and a
foreign currency or currencies.
Convertible Securities_Convertible securities may be converted at either a
stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
non-convertible securities.
Money Market Instruments_The Fund may invest in the following types of money
market instruments.
U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
Repurchase Agreements. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
Bank Obligations. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund_Investment Considerations and
Risks-Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's,
A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated at least A3 by Moody's or A-
by S&P, Fitch or Duff, 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.
ZERO COUPON SECURITIES _ The Fund may invest in zero coupon securities
issued by private entities or by the U.S. Treasury. A zero coupon security
pays no interest to its holder during its life and is sold at a discount to
its par value at maturity. The market prices of zero coupon securities
generally are more volatile than the market prices of securities that pay
interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
Zero coupon securities issued by private entities include bonds,
notes, and debentures that do not pay current interest and are issued at
substantial discounts from par value or, in some cases, that pay no current
interest until a stated date one or more years in the future, after which the
issuer is obligated to pay interest until maturity (in which case the
interest rate is usually higher than if interest were payable from the
issuance date). Zero coupon securities issued by private entities are subject
to the risk of the issuer's failure to pay interest and repay the principal
value of the security, which risk is enhanced in the case of below investment
grade rated (or of comparable quality, if unrated)
[Page 26]
zero coupon securities. Private entities also may issue zero coupon
securities which constitute a proportionate interest of the issuer's pool of
underlying U.S. Treasury securities. Zero coupon securities issued directly
by the U.S. Treasury include notes and bonds which have been stripped of
their interest coupons and receipts. While U.S. Treasury-related zero coupon
securities are not subject to the same credit risk as a security issued
directly by a private entity, they are subject to interest rate risk to the
same extent.
The Fund is required to accrue taxable income on zero coupon
securities and is required to distribute it to shareholders. Such
distributions may require the Fund to sell other securities and incur a gain
or loss at a time it may otherwise not want to in order to obtain the cash
needed for these distributions.
Investment Companies_The Fund may invest in securities issued by other
investment companies. Under the 1940 Act, the Fund's investment in such
securities, subject to certain exceptions, currently is limited to (i) 3% of
the total voting stock of any one investment company, (ii) 5% of the Fund's
total assets with respect to any one investment company and (iii) 10% of the
Fund's total assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain
other expenses.
Illiquid Securities_The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available at a price
the Fund deems representative of their value, the value of the Fund's net
assets could be adversely affected.
Ratings_The rating assigned to a given issue and class of mortgage-related
securities is a product of many factors, including the structure of the
security, the level of subordination, the quality and adequacy of the
collateral, and the past performance of the originators and servicing
companies. The rating of any commercial mortgage-related security is
determined to a substantial degree by the debt service coverage ratio (i.e.,
the ratio of the current net operating income from the commercial properties,
in the aggregate, to the current debt service obligations on the properties)
and the loan-to-value ratio of the pooled properties. The amount of the
securities issued in any one rating category is determined by the rating
agencies after a credit rating process which includes analysis of the issuer,
servicer and property manager, as well as verification of the loan-to-value
and debt service coverage ratios. Loan-to-value ratios may be particularly
important in the case of commercial mortgages because most commercial
mortgage loans provide that the lender's sole remedy in the event of a
default is against the mortgaged property, and the lender is not permitted to
pursue remedies with respect to other assets of the borrower. Accordingly,
loan-to-value ratios, in certain circumstances, may determine the amount
realized by the holder of the commercial mortgage-related security in the
event of a default.
Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations have
less near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. Securities rated C by Moody's
are regarded as having extremely poor prospects of ever attaining any real
investment standing. Securities rated D by S&P, Fitch and Duff are in default
and the payment of interest and repayment of principal is in arrears. Such
securities, though high yielding, are characterized by great risk. See
"Appendix" in the Statement of Additional Information for a general
description of securities ratings.
The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. Ratings
are relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation also will evaluate these securities and the ability of the issuers
of such securities to pay interest and principal. The Fund's ability to
achieve its investment objectives 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.
Additional Information About Purchases, Exchanges and Redemptions
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term
market movements. A pattern of frequent purchases and exchanges can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and its shareholders. Accordingly, if
the Fund's management determines that an investor is engaged in excessive
trading, the Fund, with or without prior notice, may temporarily or
permanently terminate the availability of Fund exchanges, or reject in whole
or part any purchase or exchange request, with respect to such investor's
account. Such investors also may be barred from purchasing other funds in the
Dreyfus Family of Funds. Generally, an investor who makes more than four
[Page 27]
exchanges out of the Fund during any calendar year or who makes exchanges
that appear to coincide with an active market-timing strategy may be deemed
to be engaged in excessive trading. Accounts under common ownership or
control will be considered as one account for purposes of determining a
pattern of excessive trading. In addition, the Fund may refuse or restrict
purchase or exchange requests by any person or group if, in the judgment of
the Fund's management, the Fund would be unable to invest the money
effectively in accordance with its investment objective and policies or could
otherwise be adversely affected or if the Fund receives or anticipates
receiving simultaneous orders that may significantly affect the Fund (e.g.,
amounts equal to 1% or more of the Fund's total assets). If an exchange
request is refused, the Fund will take no other action with respect to the
shares until it receives further instructions from the investor. The Fund may
delay forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on excessive
trading applies to investors who invest in the Fund directly or through
financial intermediaries, but does not apply to the Dreyfus Auto-Exchange
Privilege, to any automatic investment or withdrawal privilege described
herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange
requests based on their separate components _ redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case, the
redemption request would be processed at the Fund's next determined net asset
value but the purchase order would be effective only at the net asset value
next determined after the fund being purchased receives the proceeds of the
redemption, which may result in the purchase being delayed.
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.
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Copy Rights 1998 Dreyfus Service Corporation ____p1298
DREYFUS PREMIER
REAL ESTATE MORTGAGE FUND
FPO
PROSPECTUS
December 24, 1998
DREYFUS DEBT AND EQUITY FUNDS
DREYFUS CORE BOND FUND
DREYFUS EQUITY DIVIDEND FUND
DREYFUS HIGH YIELD SECURITIES FUND
DREYFUS PREMIER HIGH YIELD DEBT PLUS EQUITY FUND
(Class A, Class B, Class C, and Class T Shares)
DREYFUS PREMIER REAL ESTATE MORTGAGE FUND
(Class A, Class B, Class C, Class R, and Class T Shares)
DREYFUS SHORT TERM HIGH YIELD FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
December 24, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Core Bond Fund, Dreyfus Equity Dividend Fund, Dreyfus High Yield
Securities Fund, and Dreyfus Short Term High Yield Fund, each dated March 1,
1998, Dreyfus Premier High Yield Debt Plus Equity Fund, dated June 29, 1998,
and Dreyfus Premier Real Estate Mortgage Fund, dated December 24, 1998
(each, a "Fund", and collectively, the "Funds") of Dreyfus Debt and Equity
Funds (the "Company"), as each may be revised from time to time. To obtain
a copy of the Prospectus for Dreyfus Core Bond Fund, Dreyfus Equity Dividend
Fund, Dreyfus High Yield Securities Fund, or Dreyfus Short Term High Yield
Fund, please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale,
New York 11556-0144, or call toll free 1-800-645-6561. In New York City,
call 1-718-895-1206; and outside the U.S. call 516-794-5452.
For a copy of the prospectus for Dreyfus Premier High Yield Debt Plus
Equity Fund or Dreyfus Premier Real Estate Mortgage Fund, please call your
financial advisor 1-800-554-4611.
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser. Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of each Fund's shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies .............. B-2
Management of the Company................................... B-23
Management Agreement........................................ B-27
Purchase of Shares.......................................... B-30
Distribution Plan and Shareholder Services Plan............. B-32
Redemption of Shares........................................ B-34
Shareholder Services ....................................... B-36
Determination of Net Asset Value............................ B-39
Dividends, Distributions and Taxes.......................... B-40
Portfolio Transactions...................................... B-42
Performance Information..................................... B-44
Information About the Funds ................................ B-48
Transfer and Dividend Disbursing Agent
Custodian, Counsel and Independent Auditors................. B-49
Financial Statements and Report of Independent Auditors .... B-50
Appendix ................................................... B-51
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in each Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Portfolio Securities
American Depositary Receipts. (Dreyfus Equity Dividend Fund and
Dreyfus Premier High Yield Debt Plus Equity Fund only) The Fund may invest
in American Depositary Receipts, through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of
the underlying security and a depositary, whereas a depositary may establish
an unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored depositary receipts generally bear all the
costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to-distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited
securities.
Repurchase Agreements. (All Funds) The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by a Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund that enters into them. In an attempt to
reduce the risk of incurring a loss on a repurchase agreement, each Fund
will enter into repurchase agreements only with domestic banks with total
assets in excess of $1 billion, or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which the Fund may invest, and will require that
additional securities be deposited with it if the value of the securities
purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. (All
Funds) These instruments include variable amount master demand notes, which
are obligations that permit a Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that-such instruments
generally will be traded, and there generally is no established secondary
market for these obligations, although they are redeemable at face value,
plus accrued interest, at any time. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements,
the Fund's right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies, and a Fund may invest in them only if at
the time of an investment the borrower meets the criteria set forth in the
Fund's Prospectus for other commercial paper issuers.
Convertible Securities. (All Funds) Convertible securities may be
converted at either a stated price or stated rate into underlying shares of
common stock. Convertible securities have characteristics similar to both
fixed-income and equity securities. Convertible securities generally are
subordinated to other similar but non-convertible securities of the same
issuer, although convertible bonds, as corporate debt obligations, enjoy
seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of
the subordination feature, however, convertible securities typically have
lower ratings than similar non-convertible securities.
Although to a lesser extent than with fixed-income securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the
underlying common stock. A unique feature of convertible securities is that
as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the
value of the underlying common stock. While no securities investments are
without risk,- investments in convertible securities generally entail less
risk than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.
Warrants. (Dreyfus Core Bond Fund, Dreyfus High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, and Dreyfus Short Term
High Yield Fund only). A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.
The Fund may invest up to 5% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Fund that are sold in
units with, or attached to, other securities.
Common Stock. (All Funds, as indicated). From time to time, the Fund
may hold common stock sold in units with, or attached to, debt securities
purchased by the Fund. The Fund also may hold common stock received upon
the conversion of convertible securities. Dreyfus Premier Real Estate
Mortgage Fund may invest directly in the common stocks of issuers that
primarily invest or deal in real estate. Dreyfus Premier High Yield Debt
Plus Equity Fund and Dreyfus Equity Dividend Fund are not restricted in the
kinds of common stock each may purchase.
Illiquid Securities. (All Funds) When purchasing securities that have
not been registered under the Securities Act of 1933 as amended, and are not
readily marketable, the Fund will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally,
there will be a lapse of time between the Fund's decision to sell any such
security and the registration of the security permitting sale. During any
such period, the price of the securities will be subject to market
fluctuations. However, where a substantial market of qualified
institutional buyers has developed for certain unregistered securities
purchased by the Fund pursuant to Rule 144A under the Securities Act of
1933, as amended, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Company's Board.
Because it is not possible to predict with assurance how the market for
specific restricted securities sold pursuant to Rule 144A will develop, the
Company's Board has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity in its investment portfolio during such period.
Participation Interests. (Dreyfus Core Bond Fund, Dreyfus High Yield
Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus
Premier Real Estate Mortgage Fund, and Dreyfus Short Term High Yield Fund
only) The Fund may invest in short-term corporate obligations denominated in
U.S. and foreign currencies that are originated, negotiated and structured
by a syndicate of lenders ("Co-Lenders") consisting of commercial banks,
thrift institutions, insurance companies, financial companies or other
financial institutions one or more of which administers the security on
behalf of the syndicate (the "Agent Bank"). Co-Lenders may sell such
securities to third parties called "Participants." The Fund may invest in
such securities either by participating as a Co-Lender at origination or by
acquiring an interest in the security from a Co-Lender or a Participant
(collectively, "participation interests"). Co-Lenders and Participants
interposed between the Fund and the corporate borrower (the "Borrower"),
together with Agent Banks, are referred herein as "Intermediate
Participants." The Fund also may purchase a participation interest in a
portion of the rights of an Intermediate Participant, which would not
establish any direct relationship between the Fund and the Borrower. In
such cases, the Fund would be required to rely on the Intermediate
Participant that sold the participation interest not only for the
enforcement of the Fund's rights against the Borrower but also for the
receipt and processing of payments due to the Fund under the security.
Because it may be necessary to assert through an Intermediate Participant
such rights as may exist against the Borrower, in the event the Borrower
fails to pay principal and interest when due, the Fund may be subject to
delays, expenses and risks that are greater than those that would be
involved if the Fund would enforce its rights directly against the Borrower.
Moreover, under the terms of a participation interest, the Fund may be
regarded as a creditor of the Intermediate Participant (rather than of the
Borrower), so that the Fund may also be subject to the risk that the
Intermediate Participant may become insolvent. Similar risks may arise with
respect to the Agent Bank if, for example, assets held by the Agent Bank for
the benefit of the Fund were determined by the appropriate regulatory
authority or court to be subject to the claims of the Agent Bank's
creditors. In such case, the Fund might incur certain costs and delays in
realizing payment in connection with the participation interest or suffer a
loss of principal and/or interest. Further, in the event of the bankruptcy
or insolvency of the Borrower, the obligation of the Borrower to repay the
loan may be subject to certain defenses that can be asserted by such
Borrower as a result of improper conduct by the Agent Bank or Intermediate
Participant.
Municipal Obligations. (Dreyfus Core Bond Fund, Dreyfus High Yield
Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund, and
Dreyfus Short Term High Yield Fund only) Municipal obligations generally
include debt obligations issued to obtain funds for various public purposes
as well as certain industrial development bonds issued by or on behalf of
public authorities. Municipal obligations are classified as general
obligation bonds, revenue bonds and notes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds are payable from the
revenue derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue
source, but not from the general taxing power. Industrial development
bonds, in most cases, are revenue bonds that generally do not carry the
pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes
are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities.
Variable and Floating Rate Securities. (All Funds) Variable and
floating rate securities provide for a periodic adjustment in the interest
rate paid on the obligations. The terms of such obligations must provide
that interest rates are adjusted periodically based upon an interest rate
adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be
event based, such as based on a change in the prime rate.
The Fund may invest in floating rate debt instruments ("floaters").
The interest rate on a floater is a variable rate which is tied to another
interest rate, such as a money-market index or Treasury bill rate. The
interest rate on a floater resets periodically, typically every six months.
Because of the interest rate reset feature, floaters provide the Fund with a
certain degree of protection against rises in interest rates, although the
Fund will participate in any declines in interest rates as well.
The Fund also may invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse
floater is indexed or inversely to a multiple of the applicable index. An
inverse floating rate security may exhibit greater price volatility than a
fixed rate obligation of similar credit quality.
Mortgage-Related Securities. (Dreyfus Core Bond Fund, Dreyfus High
Yield Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund,
Dreyfus Premier Real Estate Mortgage Fund, and Dreyfus Short Term High Yield
Fund only) Mortgage-related securities are a form of Derivative
collateralized by pools of commercial or residential mortgages. Pools of
mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations. These
securities may include complex instruments such as collateralized mortgage
obligations and stripped mortgage-backed securities, mortgage pass-through
securities, interests in Real Estate Mortgage Investment Conduits ("REMICs")
or other kinds of mortgage-backed securities, including those with fixed,
floating and variable interest rates, those with interest rates based on
multiples of changes in a specified index of interest rates and those with
interest rates that change inversely to changes in interest rates.
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. GNMA certificates 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 Bank 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.
Private Entity Securities-These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other nongovernmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance. The insurance and guarantees are issued by
government entities, private insurers and the mortgage poolers. There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss. No insurance
or guarantee covers the Fund or the price of the Fund's shares. Mortgage-
related securities issued by non-governmental issuers generally offer a
higher rate of interest than government-agency and government-related
securities because there are no direct or indirect government guarantees of
payment.
Commercial Mortgage-Related Securities-Commercial mortgage-related
securities generally are multi-class debt or pass-through certificates
secured by mortgage loans on commercial properties. These mortgage related
securities generally are constructed to provide protection to the senior
classes investors against potential losses on the underlying mortgage loans.
This protection generally is provided by having the holders of subordinated
classes of securities ("Subordinated Securities") take the first loss if
there are defaults on the underlying commercial mortgage loans. Other
protection, which may benefit all of the classes or particular classes, may
include issuer guarantees, reserve funds, additional Subordinated
Securities, cross-collateralization and over-collateralization.
The Fund-may invest in Subordinated Securities issued or sponsored by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers.
Subordinated Securities have no governmental guarantee, and are subordinated
in some manner as to the payment of principal and/or interest to the holders
of more senior mortgage-related securities arising out of the same pool of
mortgages. The holders of Subordinated Securities typically are compensated
with a higher stated yield than are the holders of more senior mortgage-
related securities. On the other hand, Subordinated Securities typically
subject the holder to greater risk than senior mortgage-related securities
and tend to be rated in a lower rating category, and frequently a
substantially lower rating category, than the senior mortgage-related
securities issued in respect of the same pool of mortgage. Subordinated
Securities generally are likely to be more sensitive to changes in
prepayment and interest rates and the market for such securities may be less
liquid than is the case for traditional fixed-income securities and senior
mortgage-related securities.
The market for commercial mortgage-related securities developed more
recently and in terms of total outstanding principal amount of issues is
relatively small compared to the market for residential single-family
mortgage-related securities. In addition, commercial lending generally is
viewed as exposing the lender to a greater risk of loss than one- to four-
family residential lending. Commercial lending, for example, typically
involves larger loans to single borrowers or groups of related borrowers
than residential one- to four-family mortgage loans. In addition, the
repayment of loans secured by income producing properties typically is
dependent upon the successful operation of the related real estate project
and the cash flow generated therefrom. Consequently, adverse changes in
economic conditions and circumstances are more likely to have an adverse
impact on mortgage-related securities secured by loans on commercial
properties than on those secured by loans on residential properties.
Collateralized Mortgage Obligations ("CMOs")-A CMO is a multiclass bond
backed by a pool of mortgage pass-through certificates or mortgage loans.
CMOs may be collateralized by (a) Ginnie Mae, Fannie Mae, or Freddie Mac
pass-through certificates, (b) unsecuritized mortgage loans insured by the
Federal Housing Administration or guaranteed by the Department of Veterans'
Affairs, (c) unsecuritized conventional mortgages, (d) other mortgage-
related securities, or (e) any combination thereof. Each class of CMOs,
often referred to as a "tranche," is issued at a specific coupon rate and
has a stated maturity or final distribution date. Principal prepayments on
collateral underlying a CMO may cause it to be retired substantially earlier
than the stated maturities or final distribution dates. The principal and
interest on the underlying mortgages may be allocated among the several
classes of a series of a CMO in many ways. One or more tranches of a CMO
may have coupon rates which reset periodically at a specified increment over
an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes
more than one index). These floating rate CMOs typically are issued with
lifetime caps on the coupon rate thereon. The Fund also may invest in
inverse floating rate CMOs. Inverse floating rate CMOs constitute a tranche
of a CMO with a coupon rate that moves in the reverse direction to an
applicable index such a LIBOR. Accordingly, the coupon rate thereon will
increase as interest rates decrease. Inverse floating rate CMOs are
typically more volatile than fixed or floating rate tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying
inversely to a multiple of an applicable index creates a leverage factor.
Inverse floaters based on multiples of a stated index are designed to be
highly sensitive to changes in interest rates and can subject the holders
thereof to extreme reductions of yield and loss of principal. The markets
for inverse floating rate CMOs with highly leveraged characteristics at
times may be very thin. The Fund's ability to dispose of its positions in
such securities will depend on the degree of liquidity in the markets for
such securities. It is impossible to predict the amount of trading interest
that may exist in such securities, and therefore the future degree of
liquidity.
Stripped Mortgage-Backed Securities-The Fund also may invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are created
by segregating the cash flows from underlying mortgage loans or mortgage
securities to create two or more new securities, each with a specified
percentage of the underlying security's principal or interest payments.
Mortgage securities may be partially stripped so that each investor class
receives some interest and some principal. When securities are completely
stripped, however, all of the interest is distributed to holders of one type
of security, known as an interest-only security, or IO, and all of the
principal is distributed to holders of another type of security known as a
principal-only security, or PO. Strips can be created in a pass-through
structure or as tranches of a CMO. The yields to maturity on IOs and POs
are very sensitive to the rate of principal payments (including prepayments)
on the related underlying mortgage assets. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the
Fund may not fully recoup its initial investment in IOs. Conversely, if the
underlying mortgage assets experience less than anticipated prepayments of
principal, the yield on POs could be materially and adversely affected.
Real Estate Investment Trusts-A REIT is a corporation, or a business trust
that would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code").
The Code permits a qualifying REIT to deduct dividends paid, thereby
effectively eliminating corporate level Federal income tax and making the
REIT a pass-through vehicle for Federal income tax purposes. To meet the
definitional requirements of the Code, a REIT must, among other things,
invest substantially all of its assets in interests in real estate
(including mortgages and other REITs) or cash and government securities,
derive most of its income from rents from real property or interest on loans
secured by mortgages on real property, and distribute to shareholders
annually a substantial portion of its otherwise taxable income.
REITs are characterized as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs, which may include operating or finance companies, own
real estate directly and the value of, and income earned by, the REITs
depends upon the income of the underlying properties and the rental income
they earn. Equity REITs also can realize capital gains (or losses) by
selling properties that have appreciated (or depreciated) in value.
Mortgage REITs can make construction, development or long-term mortgage
loans and are sensitive to the credit quality of the borrower. Mortgage
REITs derive their income from interest payments on such loans. Hybrid REITs
combine the characteristics of both equity and mortgage REITs, generally by
holding both ownership interests and mortgage interests in real estate. The
value of securities issued by REITs are affected by tax and regulatory
requirements and by perceptions of management skill. They also are subject
to heavy cash flow dependency, defaults by borrowers or tenants, self-
liquidation and the possibility of failing to qualify for tax-free status
under the Code or to maintain exemption from the Investment Company Act of
1940, as amended (the "1940 Act").
Adjustable-Rate Mortgage Loans ("ARMs")-ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest
rate for a specified period of time, generally for either the first three,
six, twelve, thirteen, thirty-six, or sixty scheduled monthly payments.
Thereafter, the interest rates are subject to periodic adjustment based on
changes in an index. ARMs typically have minimum and maximum rates beyond
which the mortgage interest rate may not vary over the lifetime of the
loans. Certain ARMs provide for additional limitations on the maximum amount
by which the mortgage interest rate may adjust for any single adjustment
period. Negatively amortizing ARMs may provide limitations on changes in
the required monthly payment. Limitations on monthly payments can result in
monthly payments that are greater or less than the amount necessary to
amortize a negatively amortizing ARM by its maturity at the interest rate in
effect during any particular month.
Other Mortgage-Related Securities-Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage
loans on real property, including CMO residuals. Other mortgage-related
securities may be equity or debt securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.
Foreign Government Obligations: Securities of Supranational Entities.
(Dreyfus Core Bond Fund, Dreyfus High Yield Securities Fund, Dreyfus Premier
High Yield Debt Plus Equity Fund, Dreyfus Premier Real Estate Mortgage Fund,
and Dreyfus Short Term High Yield Fund only) The Fund may invest in
obligations issued or guaranteed by one or more foreign governments or any
of their political subdivisions, agencies or instrumentalities that are
determined by the Manager to be of comparable quality to the other
obligations in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities
to promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Zero Coupon Securities. (Dreyfus Core Bond Fund, Dreyfus High Yield
Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus
Premier Real Estate Mortgage Fund, and Dreyfus Short Term High Yield Fund
only). Zero coupon securities are debt instruments that generally do not
make cash interest payments prior to maturity. Instead, they are sold at a
discount to par value, and this discount can be substantial. Zero coupon
securities can be rated above or below investment grade. In either case,
when interest rates change the market price of zero coupon securities
generally will be subject to greater volatility than "coupon" bonds, which
pay regular interest. In addition, lower rated zero coupon securities are
subject to enhanced credit risk.
Zero coupon securities issued by private entities include bonds, notes,
and debentures that do not pay current interest and are issued at
substantial discounts from par value or, in some cases, that pay no current
interest until a stated date one or more years in the future, after which
the issuer is obligated to pay interest until maturity (in which case the
interest rate is usually higher than if interest were payable from the
issuance date). Zero coupon securities issued by private entities are
subject to the risk of the issuer's failure to pay interest and repay the
principal value of the security, which risk is enhanced in the case of below
investment grade (or of comparable quality, if unrated) zero coupon
securities. Private entities also may issue zero coupon securities which
constitute a proportionate interest of the private issuer's pool of
underlying U.S. Treasury securities. Zero coupon securities issued directly
by the U.S. Treasury notes and bonds which have been stripped of their
interest coupons and receipts. While U.S. Treasury-related zero coupon
securities are not subject to the same credit risk as a security issued
directly by a private entity, they are subject to the same level of interest
rate risk.
While the Fund generally will not receive cash payments of interest on-
zero coupon securities, the Fund does accrue taxable income on these
securities and is required to distribute it to shareholders. Such
distributions may require the Fund to sell other securities and incur a gain
or loss at a time it may otherwise not want to in order to obtain the cash
needed for these distributions.
Management Policies
Duration. (Dreyfus Core Bond Fund, Dreyfus High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus Premier Real
Estate Mortgage Fund, and Dreyfus Short Term High Yield Fund only). As a
measure of a fixed-income security's cash flow, duration is an alternative
to the concept of "term to maturity" in assessing the price volatility
associated with changes in interest rates. Generally, the longer the
duration, the more volatility an investor should expect. For example, the
market price of a bond with a duration of three years would be expected to
decline 3 % if interest rates rose 1%. Conversely, the market price of the
same bond would be expected to increase 3 % if interest rates fell 1%. The
market price of a bond with a duration of six years would be expected to
increase or decline twice as much as the market price of a bond with a three-
year duration. Duration is a way of measuring a security's maturity in
terms of the average time required to receive the present value of all
interest and principal payments as opposed to its term to maturity. The
maturity of a security measures only the time until final payment is due; it
does not take account of the pattern of a security's cash flows over time,
which would include how cash flow is affected by prepayments and by changes
in interest rates. Incorporating a security's yield, coupon interest
payments, final maturity and option features into one measure, duration is
computed by determining the weighted average maturity of a bond's cash
flows, where the present values of the cash flows serve as weights. In
computing the duration of the Fund, the Manager will estimate the duration
of obligations that are subject to features such as prepayment or redemption
by the issuer, put options retained by the investor or other imbedded
options, taking into account the influence of interest rates on prepayments
and coupon flows.
Portfolio Maturity. (Dreyfus Core Bond Fund and Dreyfus Short Term
High Yield Fund only) Dreyfus Core Bond Fund typically will maintain an
average effective maturity ranging between five and ten years. However, to
the extent the maturity of the Fund's benchmark index is outside this range
at a particular time (generally, this may occur during other than usual
market conditions), the Fund's average effective maturity also may fall
outside such range. Under normal market conditions, the average effective
portfolio maturity of Dreyfus Short Term High Yield Fund is expected to be
three years to less. For purposes of calculating average effective portfolio
maturity, a security that is subject to redemption at the option of the
issuer on a particular date (the "call date") which is prior to the
security's stated maturity may be deemed to mature on the call date rather
than on its stated maturity date. The call date of a security will be used
to calculate average effective portfolio maturity when the Manager
reasonably anticipates, based upon information available to it, that the
issuer will exercise its right to redeem the security. The Manager may base
its conclusion on such factors as the interest-rate paid on the security
compared to prevailing market rates, the amount of cash available to the
issuer of the security, events affecting the issuer of the security, and
other factors that may compel or make it advantageous for the issuer to
redeem a security prior to its stated maturity.
Leverage. (Dreyfus Core Bond Fund, Dreyfus High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus Premier Real
Estate Mortgage Fund, and Dreyfus Short Term High Yield Fund only) For
borrowings for investment purposes, the 1940 Act requires the Fund to
maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of its
portfolio securities within three days to reduce the amount of its
borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Fund also may be required to maintain minimum average balances in
connection with such borrowing or pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. To the extent the Fund enters into
a reverse repurchase agreement, the Fund will maintain in a segregated
account permissible liquid assets at least equal to the aggregate amount of
its reverse repurchase obligations, plus accrued interest, in certain cases,
in accordance with releases promulgated by the Securities and Exchange
Commission. The Securities and Exchange Commission views reverse repurchase
transactions as collateralized borrowings by the Fund.
Short-Selling. (All Funds) In these transactions, a Fund sells a
security it does not own in anticipation of a decline in the market value of
the security. To complete the transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund is obligated to replace
the security borrowed by purchasing it subsequently at the market price at
the time of replacement. The price at such time may be more or less than
the price at which the security was sold by the Fund, which would result in
a loss or gain, respectively.
Securities will not be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed
25% of the value of a Fund's net assets. In the case of Dreyfus Core Bond
Fund, Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund, and
Dreyfus Short Term High Yield Fund, the Fund may not make a short sale which
results in the Fund having sold short in the aggregate more than 5 % of the
outstanding securities of any class of an issuer.
The Fund also may make short sales "against the box," in which the Fund
enters into a short sale of a security it owns.
Until the Fund closes its short position or replaces the borrowed
security, it will: (a) maintain a segregated account, containing permissible
liquid assets, at such a level that the amount deposited in the account plus
the amount deposited with the broker as collateral always equals the current
value of the security sold short; or (b) otherwise cover its short position.
Lending Portfolio Securities. (Dreyfus Core Bond Fund, Dreyfus High
Yield Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund,
Dreyfus Premier Real Estate Mortgage Fund, and Dreyfus Short Term High Yield
Fund only) The Fund may lend securities from its portfolio to brokers,
dealers and other financial institutions needing to borrow securities to
complete certain transactions. The Fund continues to be entitled to
payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities, which affords the Fund an opportunity to
earn interest on the amount of the loan and on the loaned securities'
collateral. Loans of portfolio securities may not exceed 33-1/3% of the
value of the Fund's total assets, and the Fund will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of
credit which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. The Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund. In
connection with its securities lending transactions, the Fund may return to
the borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned securities may pass
to the borrower, the Company's Board must terminate the loan and regain the
right to vote the securities if a material event adversely affecting the
investment occurs.
Derivatives. (All Funds) A Fund may invest in, or enter into,
Derivatives (as defined in the relevant Fund's Prospectus) for a variety of
reasons, including to hedge certain market risks, to provide a substitute
for purchasing or selling particular securities or to increase potential
income gain. Derivatives may provide a cheaper, quicker or more
specifically focused way for the Fund to invest than "traditional"
securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a Fund to increase or decrease
the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could
have a large potential impact on a Fund's performance.
If a Fund invests in Derivatives at inopportune times or judges market
conditions incorrectly, such investments may lower the Fund's return or
result in a loss. A Fund also could experience losses if its Derivatives
were poorly correlated with its other investments, or if the Fund were
unable to liquidate its position because of an illiquid secondary market.
The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable
changes in the prices for Derivatives.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested in
bidding for it.
Futures Transactions-In General. (All Funds) A Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and
the International Monetary Market of the Chicago Mercantile Exchange, or, if
permitted in its Prospectus, on exchanges located outside the United States,
such as the London International Financial Futures Exchange and the Sydney
Futures Exchange Limited. Foreign markets may offer advantages such as
trading opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than
domestic markets. For example, some foreign exchanges are principal markets
so that no common clearing facility exists and an investor may look only to
the broker for performance of the contract. In addition, any profits that a
Fund might realize in trading could be eliminated by adverse changes in the
exchange rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not. Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to a Fund which
could adversely affect the value of the Fund's net assets. Although each
Fund intends to purchase or sell futures contracts only if there is-an
active market for such contracts, no assurance can be given that-a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by a Fund also is subject to the ability of
the Manager to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if a Fund uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. A Fund may have to sell such
securities at a time-when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Fund may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation of
such assets will have the effect of limiting a Fund's ability otherwise to
invest those assets.
Specific-Futures Transactions. A Fund may purchase and sell interest
rate futures contracts. An interest rate future obligates the Fund to
purchase or sell an amount of a specific debt security at a future date at a
specific price.
A Fund (other than Dreyfus Premier Real Estate Mortgage Fund) may
purchase and sell currency futures. A foreign currency future obligates the
Fund to purchase or sell an amount of a specific currency at a future date
at a specific price.
Dreyfus Equity Dividend Fund and Dreyfus Premier High Yield Debt Plus
Equity Fund may purchase and sell stock index futures contracts. A stock
index future obligates the Fund to pay or receive an amount of cash equal to
a fixed dollar amount specified in the futures contract multiplied by the
difference between the settlement price of the contract on the contract's
last trading day and the value of the index based on the stock prices of the
securities that comprise it at the opening of trading in such securities on
the next business day.
Interest Rate Swaps. (Dreyfus High Yield Securities Fund, Dreyfus
Premier High Yield Debt Plus Equity Fund, Dreyfus Premier Real Estate
Mortgage Fund, and Dreyfus Short Term High Yield Fund only). Interest rate
swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange
of floating rate payments for fixed-rate payments). The exchange
commitments can involve payments to be made in the same currency or in
different currencies. The use of interest rate swaps is a highly
specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio security
transactions. If the Manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment
performance of the Fund would diminish compared with what it would have been
if these investment techniques were not used. Moreover, even if the Manager
is correct in its forecasts, there is a risk that the swap position may
correlate imperfectly with the price of the asset or liability being hedged.
There is no limit on the amount of interest rate swap transactions that may
be entered into by the Fund. These transactions do not involve the delivery
of securities or other underlying assets or principal. Accordingly, the
risk of loss with respect to interest rate swaps is limited to the net
amount of interest payments that the Fund is contractually obligated to
make. If the other party to an interest rate swap defaults, the Fund's risk
of loss consists of the net amount of interest payments that the Fund
contractually is entitled to receive.
Credit Derivatives. (Dreyfus High Yield Securities Fund, Dreyfus Premier
High Yield Debt Plus Equity Fund, and Dreyfus Short Term-High Yield Fund
only). The Fund may engage in credit derivative transactions. There are two
broad categories of credit derivatives: default price risk derivatives and
market spread derivatives. Default price risk derivatives are linked to the
price of reference securities or loans after a default by the issuer or
borrower, respectively. Market spread derivatives are based on the risk
that changes in market factors, such as credit spreads, can cause a decline
in the value of a security, loan or index. There are three basic
transactional forms for credit derivatives: swaps, options and structured
instruments. The use of credit derivatives is a highly specialized activity
which involves strategies and risks different from those associated with
ordinary portfolio security transactions. If the Manager is incorrect in its
forecasts of default risks, market spreads or other applicable factors, the
investment performance of the Fund would diminish compared with what it
would have been if these techniques were not used. Moreover, even if the
Manager is-correct in its forecasts, there is a risk that a credit
derivative position may correlate imperfectly with the price of the asset or
liability being hedged. There is no limit on the amount of credit
derivative transactions that may be entered into by the Fund. The Fund's
risk of loss in a credit derivative transaction varies with the form of the
transaction. For example, if the Fund purchases a default option on a
security, and if no default occurs with respect to the security, the Fund's
loss is limited to the premium it paid for the default option. In contrast,
if there is a default by the grantor of a default option, the Fund's loss
will include both the premium that it paid for the option and the decline in
value of the underlying security that the default option hedged.
Options-In General. (All Funds) A Fund may purchase and write (i.e., sell)
call or put options with respect to specific securities. A call option
gives the purchaser of the option the right to buy, and obligates the writer
to sell, the underlying security or securities at the exercise price at any
time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
A covered call option written by a Fund is a call option with respect
to which a Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written
by a Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. A Fund receives
a premium from writing covered call or put options which it retains whether
or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered call
option writer, the Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
Specific Options Transactions. A Fund may purchase and sell call and
put options on foreign currency. These options convey the right to buy or
sell the underlying currency at a price which is expected to be lower or
higher than the spot price of the currency at the time the option is
exercised or expires.
Dreyfus Equity Dividend Fund and Dreyfus Premier High Yield Debt Plus
Equity Fund may purchase and sell call and put options in respect of
specific securities (or groups or "baskets" of specific securities) or stock
indices listed on national securities exchanges or traded in the over-the-
counter market. An option on a stock index is similar to an option in
respect of specific securities, except that settlement does not occur by
delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon
which the option is based is greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option. Thus, the
effectiveness of purchasing or writing stock index options will depend upon
price movements in the level of the index rather than the price of a
particular stock.
Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus Premier Real
Estate Mortgage Fund, and Dreyfus Short Term Yield Fund may purchase cash-
settled options on swaps in pursuit of their respective investment
objective. Equity index swaps in which Dreyfus Equity Dividend Fund and
Dreyfus Premier High Yield Debt Plus Equity Fund may invest involve the
exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated
transactions from financial institutions, including securities brokerage
firms.
Successful use by a Fund of options will be subject to the ability of
the Manager to predict correctly movements in the prices of individual
stocks, the stock market generally, foreign currencies, or interest rates.
To the extent such predictions are incorrect, a Fund may incur losses.
Future Developments. (All Funds) A Fund may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other Derivatives which are not presently
contemplated for use by the Fund or which are not currently available but
which may be developed, to the extent such opportunities are both consistent
with the Fund's investment objective and legally permissible for the Fund.
Before entering into such transactions or making any such investment, the
Fund will provide appropriate disclosure in its Prospectus or Statement of
Additional Information.
Forward Commitments. (All Funds) A Fund may purchase securities on a
forward commitment or when-issued basis, which means that delivery and
payment take place a number of days after the date of the commitment to
purchase. The payment obligation and the interest rate receivable on a
forward commitment or when-issued security are fixed when the Fund enters
into the commitment, but a Fund does not make payment until it receives
delivery from the counterparty. A Fund will commit to purchase such
securities only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is
deemed advisable. The Fund will set aside in a segregated account of the
Fund permissible liquid assets at least equal at all times to the amount of
the commitments.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest
rates rise) based upon the public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may expose
a Fund to risks because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. Purchasing securities on a forward commitment or when-issued basis
when a Fund is fully or almost fully invested may result in greater
potential fluctuation in the value of the Fund's net assets and its net
asset value per share.
Investment Considerations and Risks
High Yield - Lower Rated Fixed Income Securities. (Dreyfus Core Bond
Fund, Dreyfus High Yield Securities Fund, Dreyfus Premier High Yield Debt
Plus Equity Fund, Dreyfus Premier Real Estate Mortgage Fund, and Dreyfus
Short Term High Yield Fund only) Each of these Funds is permitted to invest
in securities rated Ba or lower by Moody's Investors Service, Inc.
("Moody's") or BB or lower by Standard & Poor's Ratings Group ("S&P"), Fitch
IBCA, Inc. ("Fitch") and Duff & Phelps Credit Rating Co. ("Duff" and, with
Moody's, S&P and Fitch, the "Rating Agencies"), including in securities with
the lowest rating assigned by the Rating Agencies. Notwithstanding the
foregoing, Dreyfus Core Bond Fund will not invest more than 5% of its net
assets in securities with the lowest credit quality (whether rated or
unrated if deemed of comparable credit quality) and Dreyfus Premier Real
Estate Mortgage Fund may invest in lower rated securities to the extent it
maintains an investment grade ("BBB/Baa") overall average credit quality
with respect to its fixed income security investments. Such securities,
though higher yielding, are characterized by risk. See "Description of the
Fund--Investment Considerations and Risks" in each Fund's Prospectus for a
discussion of certain risks and the "Appendix" for a general description of
the Rating Agencies' ratings. Although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these securities. The Fund will rely on the Manager's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by the Rating
Agencies to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with the higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
not have sufficient revenues to meet their interest payment obligations.
The issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, forecasts, or the
unavailability of additional financing. The risk of loss because of default
by the issuer is significantly greater for the holders of these securities
because such securities generally are unsecured and often are subordinated
to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid-as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio and
calculating its net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable, objective data may be available.
These securities may be particularly susceptible to economic downturns.
It is likely that an economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
A Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. No Fund
has an arrangement with any person concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Investment Restrictions
Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund, and
Dreyfus Short Term High Yield Fund only. Each of these Funds has adopted
investment restrictions numbered 1 through 10 as fundamental policies, which
cannot be changed, as to a Fund, without approval by the holders of a
majority (as defined in the 1940 Act) of the Fund's outstanding voting
shares. Investment restrictions numbered 11 through 16 are not fundamental
policies and may be changed by vote of a majority of the Company's Board
members at any time. None of these Funds may:
1. Invest more than 5 % of its assets in the obligations of any
single issuer, 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, grits agencies or instrumentalities may be purchased, without
regard to any such limitation.
2. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to 75%
of the Fund's total assets.
3. Invest more than 25 % of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
4. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment
trusts.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and
the Company's Board.
8. 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.
9. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 4, 6, 13 and 14 may be deemed to give rise to a
senior security.
10. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, and options on futures contracts.
11. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) 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.
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 accordance with its views.
13. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts, and options on
futures contracts.
14. Purchase, sell or write puts, calls or combinations thereof,
except as described in the relevant Fund's Prospectus and Statement of
Additional Information.
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.
16. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
Dreyfus Core Bond Fund only. The Fund has adopted investment
restrictions numbered 1 through 10 as fundamental policies, which cannot be
changed without approval by the holders of a majority (as defined in the
1940 Act) of the Fund's outstanding voting shares. Investment restriction
numbered 11 through 14 are not fundamental policies and may be changed by
vote of a majority of the Company's Board members 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. 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.
4. 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.
5. Invest in commodities, except that the Fund may purchase and sell
futures contracts, including those relating to indices, and options on
futures contracts or indices.
6. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this investment restriction, the
entry into options, futures contracts, including those relating to indices,
and options on futures contracts or indices shall not constitute borrowing.
7. 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 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board members.
8. 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.
9. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent permitted under the 1940 Act.
10. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indices, and options on
futures contracts or indices.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or delayed delivery
basis and collateral and initial or variation margin arrangements with
respect to options, futures contracts, including those relating to indices
and options on futures contracts or indices.
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 accordance with its views.
13. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
14. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15 % of the value of the Fund's net assets would
be so invested.
* * *
Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus Premier
Real Estate Mortgage Fund only. Each of these Funds has adopted investment
restrictions numbered 1 through 8 as fundamental policies, which cannot be
changed, as to a Fund, without approval by the holders of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting shares.
Investment restrictions numbered 9 through 11 are not fundamental policies
and may be changed by vote of a majority of the Company's Board members at
any time. Neither of these Funds may:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. As to Dreyfus Premier
Real Estate Mortgage Fund, for purposes of this Investment Restriction,
securities and instruments backed directly or indirectly by real estate and
real estate mortgages and securities of companies engaged in the real estate
business, including interests in real estate investment trusts, are not
considered an industry.
2. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, but the Fund may purchase
and sell securities that are secured by real estate or issued by companies
that invest or deal in real estate or real estate investment trusts-or, as
to Dreyfus Premier Real Estate Mortgage Fund only, acquire and sell real
estate as a result of ownership of such securities or instruments.
4. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3 % of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Company's Board.
6. 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.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 2, 4, 8 and 9 may be deemed to give rise to a
senior security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indices, and options on
futures contracts or indices.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts, including those
related to indices, and options on futures contracts or indices.
10. 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.
11. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Company may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Company determine that a commitment is no longer in the best
interest of the Fund and its shareholders, the Company reserves the right to
revoke the commitment by terminating the sale of such Fund's shares in the
state involved.
MANAGEMENT OF THE COMPANY
Board members and officers of the Company, together with information as
to their principal business occupations during at least the last five years,
are shown below.
Board Members of the Company
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
a director of Noel Group, Inc., a venture capital company (for which,
from February 1995 until November 1997, he was Chairman of the Board),
The Muscular Dystrophy Association, HealthPlan Services Corporation, a
provider of marketing, administrative and risk management services to
health and other benefit programs, Carlyle Industries, Inc. (formerly,
Belding Heminway Company, Inc.), a button packager and distributor,
Century Business Services, Inc., (formerly, International Alliance
Services, Inc.), a provider of various outsourcing functions for small
to medium sized companies, and Career Blazers Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency. For more than five
years prior to January 1995, he was President, a director and, until
August 1994, Chief Operating Officer of the Manager and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 24, 1994, the Company's
distributor. From August 1994 until December 31, 1994, he was a
director of Mellon Bank Corporation. He is 54 years old and his
address is 200 Park Avenue, New York, New York 10166.
DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 to December 31, 1994, Mr
Burke was a Consultant to the Manager, and from October 1990 to August
1994, he was Vice President and Chief Administrative Officer of the
Manager. From 1977 to 1990, Mr. Burke was involved in the management
of national television news, as Vice President and Executive Vice
President of ABC News, and subsequently as President of CBS News. He
is 61 years old and his address is Box 654, Eastham, Massachusetts
02642.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a merchandise
and marketing consulting firm. Prior to 1974, she was a Vice President
of Macy's, New York. She is 72 years old and her address is c/o
Corporate Property Investors, 305 East 47th Street, New York, New York
10017.
DIANE DUNST, Board Member. Since January 1992, President of Diane Dunst
Promotion, Inc., a full service promotion agency. From January 1989 to
January 1992, Director of Promotion Services, Lear's Magazine. From
1985 to January 1989, she was Sales Promotion Manager of Wile Magazine.
Ms. Dunst is 58 years old and her address is 1172 Park Avenue, New
York, New York 10128.
JAY I. MELTZER, Board Member. Physician engaged in private practice
specializing in internal medicine. He is also a member of the Advisory
Board of the Section of Society and Medicine, College of Physicians and
Surgeons, Columbia University and a Clinical Professor of Medicine,
Department of Medicine, Columbia University College of Physicians and
Surgeons. He is 69 years old and his address is 903 Park Avenue, New
York, New York 10021.
DANIEL ROSE, Board Member. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. Pursuant to a Presidential appointment received in
July 1994, Mr. Rose also serves as a Director of the Baltic-American
Enterprise Fund, which makes equity investments and loans and provides
technical business assistance to new business concerns in the Baltic
states. He is also Chairman of the Housing Committee of the Real
Estate Board of New York, Inc., and a Board Member of Corporate
Property Investors, a real estate investment company. He is 68 years
old and his address is c/o Rose Associates, Inc., 200 Madison Avenue,
New York, New York 10016.
WARREN B. RUDMAN, Board Member. Since January 1993, Partner in the law firm
Paul, Weiss, Rifkind, Wharton & Garrison. He is also a director of
Collins & Aikman Corporation, Chubb Corporation and the Raytheon
Company, and a trustee of Boston College. He also serves as Chairman
of the President's Foreign Intelligence Advisory Board (from January
1994 to February 1998, as Vice Chairman) 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. From January 1981
to January 1993, Mr. Rudman served as a United States Senator from the
State of New Hampshire. From January 1993 to December 1994, Mr. Rudman
served as Chairman of the Federal Reserve Bank of Boston. He is 67
years old and his address is c/o Paul, Weiss, Rifkind, Wharton &
Garrison, 1615 L Street, NW., Suite 1300, Washington, D.C. 20036.
SANDER VANOCUR, Board Member. Since January 1992, Mr. Vanocur has been the
President of Old Owl Communications, a full-service communications
firm. From May 1995 to June 1996, he was a Professional in Residence
at the Freedom Forum in Arlington, VA, and, from January 1994 to May
1997, he served as a Visiting Professional Scholar at the Freedom Forum
First Amendment Center at Vanderbilt University. From November 1989 to
November 1995, he was 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 1977 to December 1991, he
was Anchor of the ABC News program "Business World," a weekly business
program on the ABC television network. Mr. Vanocur joined ABC News in
1977. He is 70 years old and his address is 2928 P Street, N.W.,
Washington, D C. 20007.
Ordinarily, meetings of shareholders for the purpose of electing Board
members will not be held unless and until such time as less than a majority
of the Board members holding office have been elected by shareholders, at
which time the Board members then in office will call a shareholders'
meeting for the election of Board members. Under the 1940 Act, shareholders
of record of not less than two-thirds of the outstanding shares of the Fund
may remove a Board member through a declaration in writing or by vote cast
in person or by proxy at a meeting called for that purpose. The Board will
call a meeting of shareholders for the purpose of voting upon the question
of removal of any Board member when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
For so long as the Company's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remains in effect, the
Board members who are not "interested persons" of the Company, as defined in
the 1940 Act, will be selected and nominated by the Board members who are
not "interested persons" of the Company.
The Company typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25 % of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid by the Company to each Board member for the fiscal year
ended October 31, 1998, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for the
year ended December 31, 1997, were as follows:
Total Compensation
From Company and
Aggregate Fund Complex
Name of Board Compensation Paid to Board
Member From Company* Member
Joseph S. DiMartino $ $597,128 (94)
David W. Burke $ $239,000 (51)
Rosalind Gersten Jacobs $ $ 95,250 (20)
Diane Dunst $ $ 37,750 (10)
Jay I. Meltzer $ $ 37,750 (10)
Daniel Rose $ $ 76,375 (21)
Warren B. Rudman $ $ 89,500 (18)
Sander Vanocur $ $ 87,125 (21)
_____________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $_____ (Dreyfus Equity Dividend Fund),
$_____ (Dreyfus High Yield Securities Fund), $______ (Dreyfus Premier
Real Estate Mortgage Fund), $______ (Dreyfus Short Term High Yield
Fund) and $_____ (Dreyfus Core Bond Fund) for all Board members as a
group.
Officers of the Company
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 40 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, Ms. Chambers was Vice President and
Assistant General Counsel for Loomis, Sayles & Company, L.P. From
January 1986 to July 1996, she was-an associate with the law firm of
Ropes & Gray. She is 38 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 35 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Executive Vice
President of the Distributor and Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From March 1994 to November 1995, he was Vice President and
Division Manager for First Data Investor Services Group. From 1989 to
1994, he was Vice President, Assistant Treasurer and Tax Director -
Mutual Funds of The Boston Company, Inc. He is 42 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or
administered by the Manager. From September 1989 to July 1994, she was
an Assistant Vice President and Client Manager for The Boston Company,
Inc. She is 33 years old.
MICHAEL S. PETRUCELLI, Vice President, Assistant Treasurer and Assistant
Secretary
Senior Vice President of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by the Manager.
From December 1989 through November 1996, he was employed by GE
Investments where he held various financial,
business development and compliance positions. He also served as
Treasurer of the GE Funds and as a director of GE Investments Services.
He is 36 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. From September 1983 to May 1994, he was Senior Vice
President & Manager of Client Services and Director of Internal Audit
at The Boston Company. He is 43 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. She is 29 years
old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. From December 1991 to March 1993, he
was employed as a Fund Accountant at The Boston Company, Inc. He is 28
years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
March 1990 to May 1996, she was employed by U.S. Trust Company of New
York, where she held various sales and marketing positions. She is 36
years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 25 years old.
CHRISTOPHER J. KELLY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 33 years old.
The address of each officer of the Company is 200 Park Avenue, New
York, New York 10166.
The Company's Board members and officers, as a group, owned less than
1% of each Fund's voting securities outstanding on October 5, 1998.
As of October 5, 1998, the following shareholders were known by the
Company to own 5% or more of the outstanding voting securities of the
indicated Fund: Dreyfus Equity Dividend Fund: APT Holdings Corporation,
Wilmington, DE (69.99%); Dreyfus High Yield Securities Fund: Charles Schwab
& Co. Inc. Reinvest Account, San Francisco CA (24.89%); Charles Schwab &
Co. Inc. Cash Account, San Francisco CA (9.59%); Richard Family Trust,
Calabasas CA (6.63%); Dreyfus Short Term High Yield Fund: Charles Schwab &
Co. Inc. Reinvest Account, San Francisco, CA (11.37%); Dreyfus Premier Real
Estate Mortgage Fund: MBCIC, c/o Mellon Bank, Wilmington, DE (80.89%);
Dreyfus Premier High Yield Debt Plus Equity Fund: MBCIC, c/o Mellon Bank,
Wilmington, DE (99.38%). A shareholder who beneficially owns, directly or
indirectly, more than 25% of a Fund's voting securities may be deemed a
"control person" (as defined in the 1940 Act) of the Fund.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus entitled "Management of the
Fund."
Management Agreement. The Manager provides management services
pursuant to the Management Agreement (the "Agreement") dated August 24,
1994, as amended December 6, 1995, with the Company. As to each Fund, the
Agreement is subject to annual approval by (i) the Company's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Fund, provided that in either event the continuance also
is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Company or the Manager, by vote
cast in person at a meeting called for the purpose of voting on such
approval. The Agreement was approved by shareholders of Dreyfus Core Bond
Fund on August 3, 1994, and was last approved by the Company's Board as to
each Fund except Dreyfus Premier High Yield Debt Plus Equity Fund, including
a majority of the Board members who are not "interested persons" of any
party to the Agreement, at a meeting held on August 5, 1998. With respect
to Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund, Dreyfus
Short Term High Yield Fund, and Dreyfus Premier Real Estate Mortgage Fund,
the Agreement was approved by such Fund's initial shareholder on January 2,
1996, March 25, 1996, August 16, 1996, and September 30, 1997, respectively.
With respect to Dreyfus Premier High Yield Debt Plus Equity Fund, the
Agreement was approved initially by the Company's Board at a meeting held on
May 6, 1998, and by the Fund's initial shareholder on June 29, 1998. As to
each Fund, the Agreement is terminable without penalty, on 60 days' notice,
by the Company's Board or by vote of the holders of a majority of such
Fund's shares, or, on not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically, as to the relevant Fund, in the
event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; Ronald P. O'Hanley, Vice
Chairman; J. David Officer, Vice Chairman and a director; William T.
Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Patrice M. Kozlowski, Vice President--
Corporate Communications; Mary Beth Leibig, Vice President--Human Resources;
Andrew S. Wasser, Vice President--Information Systems; Wendy Strutt, Vice
President; Richard Terres, Vice President; William H. Maresca, Controller;
James Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary;
and Mandell L. Berman, Burton Borgelt, Frank V. Cahouet and Richard F.
Syron, directors.
The Manager manages each Fund's investments in accordance with the
stated policies of such Fund, subject to the approval of the Company's
Board. The Manager is responsible for investment decisions, and provides
the Funds with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The portfolio managers for Dreyfus
Equity Dividend Fund are Timothy Ghriskey and Douglas Ramos. Michael Hoeh,
Kevin M. McClintock, Roger King, C. Matthew Olson, and Gerald E. Thunelius
each are portfolio managers for Dreyfus Core Bond Fund, Dreyfus High Yield
Securities Fund, Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus
Premier Real Estate Mortgage Fund, and Dreyfus Short Term High Yield Fund.
John Koerber also is a portfolio manager for Dreyfus Premier High Yield Debt
Plus Equity Fund. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for each Fund as well as for other funds advised by the
Manager.
Mellon Bank, N.A., the Manager's parent, and its affiliates may have
deposit, loan and commercial banking or other relationships with the issuers
of securities purchased by a Fund. The Manager has informed the Company that
in making its investment decisions it does not obtain or use material inside
information that Mellon Bank, N.A. or its affiliates may possess with
respect to such issuers.
The Manager maintains office facilities on behalf of the Funds, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Funds. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
Expenses. All expenses incurred in the operation of the Company are
borne by the Company, except to the extent specifically assumed by the
Manager. The expenses borne by the Company include: 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 officers, directors, employees or holders of 5% or more
of the outstanding voting securities of the Manager or any of its
affiliates, 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 Company's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. Also, Class B, Class C, and Class
T shares of Dreyfus Premier High Yield Debt Plus Equity and Dreyfus Premier
Real Estate Mortgage Fund are subject to an annual distribution fee, and
Class A, Class B, Class C, and Class T shares of Dreyfus Premier High Yield
Debt Plus Equity and Dreyfus Premier Real Estate Mortgage Fund are subject
to an annual service fee. See "Distribution Plan and Shareholder Services
Plan". Expenses attributable to a particular Fund are charged against the
assets of that Fund; other expenses of the Company are allocated among the
Funds on the basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Fund.
As compensation for the Manager's services to the Company, the Company
has agreed to pay the Manager a monthly management fee at the annual rate of
.75 of 1% of the value of the average daily net assets of Dreyfus Equity
Dividend Fund and Dreyfus Premier High Yield Debt Plus Equity Fund, .65 of
1% of the value of the average daily net assets of each of Dreyfus Premier
Real Estate Mortgage Fund, Dreyfus High Yield Securities Fund, and Dreyfus
Short Term High Yield Fund, and .60 of 1% of the value of Dreyfus Core Bond
Fund's average daily net assets. For the fiscal years and/or periods ended
October 31, 1996, 1997 and 1998, as applicable, the management fees payable
by each indicated Fund, the amounts waived by the Manager, and the actual
net fees paid by each Fund, were as follows:
<TABLE>
Name of Fund Management Fee Payable Reduction in Fee Net Fee Paid
1996 1997 1998 1996 1997 1998 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dreyfus Core $1,829,326 $1,670,431 - - $1,829,326 $1,670,431
Bond Fund
Dreyfus Equity $ 15,722(1) $ 27,673 $72,722 $ 27,673 $ 0 $ 0
Dividend Fund
Dreyfus High Yield $ 72,715(2) $ 425,180 $72,715 $279,698 $ 0 $ 145,492
Securities Fund
Dreyfus Premier High - -
Yield Debit Plus
Equity Fund
Dreyfus Premier Real - $ 5,784(3) $ 5,784 - $ 0
Estate Mortgage Fund
Dreyfus Short Term
High Yield Fund $ 18,501(4) $ 527,739 $18,501 $15,583 $ 0 $ 511,886
(1) For the period December 29, 1995 (commencement of operations) through
October 31, 1996.
(2) For the period March 25, 1996 (commencement of operations) through October
31, 1996.
(3) For the period September 30, 1997 (commencement of operations) through
October 31, 1997.
(4) For the period August 16, 1996 (commencement of operations) through October
31, 1996.
</TABLE>
As to Dreyfus Core Bond Fund, Dreyfus Equity Dividend Fund, the Dreyfus
High Yield Securities Fund, and Dreyfus Short Term High Yield Fund, the
Manager has agreed that if in any fiscal year the aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest on borrowings and (with the
prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from the payment to be made to the Manager under the Agreement, or
the Manager will bear, such excess expense. 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 a Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus (except as indicated) entitled
"How to Buy Shares."
The Distributor. The Distributor serves as each Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
Sales Loads-Class A and Class T. (Dreyfus Premier High Yield Debt Plus
Equity Fund and Dreyfus Premier Real Estate Mortgage Fund only). The scale
of sales loads applies to purchases of Class A and Class T shares of Dreyfus
Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real Estate
Mortgage Fund made by any "purchaser," which term includes an individual
and/or spouse purchasing securities for his, her or their own account or for
the account of any minor children, or a trustee or other fiduciary
purchasing securities for a single trust estate or a single fiduciary
account trust estate or a single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code") although more than one beneficiary is involved; or a group of
accounts established by or on behalf of the employees of an employer or
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k), and 457
of the Code); or an organized group which has been in existence for more
than six months, provided that it is not organized for the purpose of buying
redeemable securities of a registered investment company and provided that
the purchases are made through a central administration or a single dealer,
or by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of Dreyfus Class A and Class T shares of Dreyfus Premier High Yield
Debt Plus Equity Fund and Dreyfus Premier Real Estate Mortgage Fund. The
example assumes a purchase of Class A and Class T shares of the Fund
aggregating less than $50,000 each, subject to the schedule of sales charges
set forth in each Fund's Prospectus at a price based upon the net asset
value of the Fund's Class A and Class T shares, respectively, as of its
initial offering date:
Class A Class T
Net Asset Value Per Share $12.50 $12.50
Per Share Sales Charge
Class A-5.75% of offering price (6.10% of
net asset value per share) $ 0.76 -
Class T-4.50% of offering price (4.70%
of net asset value per share) - $ 0.59
Per Share Offering Price to the Public $13.26 $13.09
TeleTransfer Privilege. The TeleTransfer purchase orders may be made
at any time. Purchase orders received by 4:00 p.m., New York time, on any
business day that Dreyfus Transfer, Inc., each Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock Exchange are
open for business will be credited to the shareholder's Fund account on the
next bank business day following such purchase order. Purchase orders made
after 4:00 p.m., New York time, on any business day the Transfer Agent and
the New York Stock Exchange are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the New York Stock Exchange
is not open for business), will be credited to the shareholder's Fund
account on the second bank business day following such purchase order. To
qualify to use the TeleTransfer Privilege, the initial payment for purchase
of shares must be drawn on, and redemption proceeds paid to, the same bank
and account as are designated on the Account Application or Shareholder
Services Form on file. If the proceeds of a particular redemption are to be
wired to an account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares-[Dreyfus] TeleTransfer
Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
DISTRIBUTION PLAN AND
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus (except as indicated) entitled
"Distribution Plan and Shareholder Services Plan" or "Shareholder Services
Plan", as applicable.
Class B, Class C, and Class T shares of Dreyfus Premier High Yield Debt
Plus Equity Fund and Dreyfus Premier Real Estate Mortgage Fund are subject
to a Distribution Plan, and Class A, Class B, Class C, and Class T shares of
the Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus Premier
Real Estate Mortgage Fund are subject to a Shareholder Services Plan. As to
each other Fund, such Fund's shares are subject to a Shareholder Services
Plan only.
Distribution Plan. (Dreyfus Premier High Yield Debt Plus Equity Fund
and Dreyfus Premier Real Estate Mortgage Fund only). Rule 12b-1 (the
"Rule") adopted by the Securities and Exchange Commission under the 1940
Act, provides, among other things, that an investment company may bear
expenses of distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Company's Board has adopted such a plan (the
"Distribution Plan") with respect to Class B, Class C, and Class T shares of
Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real
Estate Mortgage Fund pursuant to which the Fund pays the Distributor for
distributing its Class B, Class C, and Class T shares. The Company's Board
believes that there is a reasonable likelihood that the Distribution Plan
will benefit the Fund and the holders of its Class B, Class C, and Class T
shares.
A quarterly report of the amounts expended under the Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to
the Board for its review. In addition, the Distribution Plan provides that
it may not be amended to increase materially the costs which holders of
Class B, Class C, or Class T shares may bear pursuant to the Distribution
Plan without the approval of the holders of such shares and that other
material amendments of the Distribution Plan must be approved by the Board,
and by the Board members who are not "interested persons" (as defined in the
1940 Act) of the Company and have no direct or indirect financial interest
in the operation of the Distribution Plan or in any agreements entered into
in connection with the Distribution Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. The
Distribution Plan is subject to annual approval by such vote of the Board
cast in person at a meeting called for the purpose of voting on the
Distribution Plan. The Distribution Plan initially was approved by the
Board, as to Dreyfus Premier High Yield Debt Plus Equity Fund, at a meeting
held on May 6, 1998, and as to Dreyfus Premier Real Estate Mortgage Fund, at
a meeting held on November 4, 1998. As to the relevant Class of shares of
the Fund, the Distribution Plan may be terminated at any time by vote of a
majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution
Plan or in any agreements entered into in connection with the Distribution
Plan or by vote of the holders of a majority of such Class of shares.
For the fiscal year ended October 31, 1998. Dreyfus Premier High Yield
Debt Plus Equity Fund was charged $_________ pursuant to the Distribution
Plan. The Distribution Plan was not in effect for Dreyfus Premier Real
Estate Mortgage Fund during the fiscal year ended October 31, 1998.
Shareholder Services Plan. (All Funds) The Company has adopted a
Shareholder Services Plan, as to each Class of shares of Dreyfus Premier
High Yield Debt Plus Equity Fund, as to Class A, Class B, Class C, and Class
T shares of Dreyfus Premier Real Estate Mortgage Fund, and as to the shares
of each other Fund. Under the Plan, the Company pays the Distributor for
the provision of certain services to the holders of each Fund's shares. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding a Fund, and
providing reports and other information, and services related to the
maintenance of such shareholder accounts. Under the Shareholder Services
Plan, the Distributor may make payments to certain securities dealers,
financial institutions and other financial industry professionals
(collectively, "Service Agents") in respect of these services. Dreyfus
Premier Real Estate Mortgage Fund (during such period, the Fund only offered
a "single" class of shares, which were converted to Class R shares on
December 24, 1998.
A quarterly report of the amounts expended under the Shareholder
Services Plan (including as to each relevant Class of Dreyfus Premier High
Yield Debt Plus Equity Fund and Dreyfus Premier Real Estate Mortgage Fund),
and the purposes for which such expenditures were incurred, must be made to
the Board for its review. In addition, the Shareholder Services Plan
provides that material amendments must be approved by the Company's Board,
and by the Board members who are not "interested persons" (as defined in the
1940 Act) of the Company and have no direct or indirect financial interest
in the operation of the Shareholder Services Plan or in any agreements
entered into in connection with the Shareholder Services Plan, by vote cast
in person at a meeting called for the purpose of considering such
amendments. As to each Fund, the Shareholder Services Plan is subject to
annual approval by such vote of the Board members cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan.
The Shareholder Services Plan was last so approved on August 5, 1998, (as to
Dreyfus Premier Real Estate Mortgage Fund, the Plan was approved only with
respect to shares which were reclassified as Class A shares, effective
December 24, 1998). As to Dreyfus Premier Real Estate Mortgage Fund's Class
B, Class C, and Class T Shares, the Shareholder Services Plan was approved
initially on November 4, 1998. As to Dreyfus Premier High Yield Debt Plus
Equity Fund, the Shareholder Services Plan was approved initially by the
Board at a meeting held on May 6, 1998. The Shareholder Services Plan is
terminable with respect to each Fund at any time by vote of a majority of
the Board members who are not "interested persons" and who have no direct or
indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan.
For the fiscal year ended October 31, 1998, $_______, $_______,
$_______, and $_______was charged the Company with respect to Dreyfus Core
Bond Fund, Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund,
and Dreyfus Short Term High Yield Fund, respectively, pursuant to the
Shareholder Services Plan. As to Drefyus Premier Real Estate Mortgage Fund,
for the fiscal year ended October 31, 1998, $_______was charged to the
Company pursuant to the Shareholder Services Plan (reflecting amounts for
shares reclassified as Class A shares effective December 24, 1998). As to
Dreyfus Premier High Yield Debt Plus Equity Fund, for the fiscal year on
October 31, 1998, $_______ was charged to the Fund, of which $_______,
$_______, $_______, and $_______ was attributable to Class A, Class B, Class
C, and Class T Shares, respectively.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus (except as indicated) entitled
"How to Redeem Shares."
Redemption Fee. (Dreyfus High Yield Securities Fund only) The Fund
deducts a redemption fee equal to 1.00% of the net asset value of Fund
shares redeemed (including redemptions through use of the Fund Exchanges
service) where the redemption or exchange occurs less than six months
following the issuance of such shares. For purposes of computing the six-
month period, any issuance of Fund shares during a month will be deemed to
occur on the first day of such month. The redemption fee will be deducted
from redemption proceeds and retained by the respective Fund. For the
fiscal year ended October 31, 1998, redemption fees retained by Dreyfus High
Yield Securities Fund amounted to $________.
Prior to December 24, 1998, Dreyfus Premier Real Estate Mortgage Fund
also charged a 1% redemption fee on shares (which were reclassified as Class
A shares effective December 24, 1998 and held for six months or less. For
the fiscal year ended October 31, 1998 and redemption fees retained by
Dreyfus Premier Real Estate Mortgage Fund amounted to $________.
Dreyfus High Yield Securities Fund will not charge a redemption fee on
the redemption or exchange of shares (1) through the Fund's Automatic
Withdrawal Plan or Dreyfus Auto-Exchange Privilege, (2) through accounts
that are reflected on the records of the Transfer Agent as omnibus accounts
approved by Dreyfus Service Corporation, (3) through accounts established by
Service Agents approved by Dreyfus Service Corporation that utilize the
National Securities Clearing Corporation's networking system, or (4)
acquired through the reinvestment of dividends or capital gains
distributions.
Wire Redemption Privilege (Dreyus Core Bond Fund, Dreyfus Equity
Dividend Fund, Dreyfus High Yield Securities Fund, and Dreyfus Short Term
High Yield Fund only). By using this Privilege, the investor authorizes the
Transfer Agent to act on wire, telephone or letter redemption instructions
from any person representing himself or herself to be the investor and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, the
Company will initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt by the Transfer Agent of the
redemption request in proper form.
Redemption proceeds ($1,000 minimum) will be transferred by Federal
Reserve wire only to the commercial bank account specified by the investor
on the Account Application or Shareholder Services Form, or to a
correspondent bank if the investor's bank is not a member of the Federal
Reserve System. Fees ordinarily are imposed by such bank and borne by the
investor. Immediate notification by the correspondent bank to the
investor's bank is necessary to avoid a delay in crediting the funds to the
investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures. "
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a wire redemption will
be effected as a TeleTransfer transaction through the Automated Clearing
House ("ACH") system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's account
at an ACH member bank ordinarily two business days after receipt of the
redemption request. See "Purchase of 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 Company has committed itself to pay in cash
all redemption requests by any shareholder of record of a Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1 % of the
value of such 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 reserves the right to make payments in whole or in
part in securities or other assets in case of an emergency or any time a
cash distribution would impair the liquidity of the Fund to the detriment of
the existing shareholders. In such event, the securities would be valued in
the same manner as the Fund's securities are valued. If the recipient sold
such securities, brokerage charges would be incurred.
Suspension of Redemptions. 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 relevant 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 each Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Dreyfus High Yield Securities Fund deducts a
redemption fee equal to 1.00% of the net asset value of Fund shares
exchanged where the exchange occurs less than six months following the
issuance of such shares. Shares of any Class of Dreyfus Premier High Yield
Debt Plus Equity Fund or Dreyfus Premier Real Estate Mortgage Fund may be
exchanged for shares of the respective Class of certain other funds advised
or administered by the Manager, except that Class T shares of the Fund may
be exchanged for Class A shares of such other funds. Shares of other funds
(including the same Class of other funds) purchased by exchange (or of Class
A shares of such funds in the case of Class T shares of the Fund) 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.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods, if any,
will be deemed to have been held since the date the shares being
exchanged initially purchased.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, instructions must be given to the Transfer
Agent in writing or by telephone. Investors who have purchased Fund shares
through a Service Asset should have their Service Agent give such
instructions. Other investors may give such instructions directly. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless the investor checks the applicable "No"
box on the Account Application, indicating that the investor specifically
refuses this Privilege. By using the Telephone Exchange Privilege, the
investor authorizes the Transfer Agent to act on telephonic instructions
from any person representing himself or herself to be the investor, 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. See "Appendix--Additional
Information About Purchases, Exchanges and Redemptions" in the Prospectus.
Shares issued in certificate form are not eligible for telephone exchange.
Exchanges of Class R Shares of Dreyfus Premier Real Estate Mortgage
Fund held by a Retirement Plan may be made only between the investor's
Retirement Plan account in one fund and such investor's Retirement Plan
account in another fund.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of a Fund, shares of another
fund in the (including the same Class of another fund) Dreyfus Premier
Family of Funds, or the Dreyfus Family of Funds, except that Class T shares
of the Fund may be exchanged for Class A shares of such other 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." Enrollment in or modification or cancellation of this Privilege
is effective three business days following notification by the investor. An
investor will be notified if the investor's account falls below the amount
designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under 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 the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Company or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dividend Sweep. Dividend Sweep allows investors to invest
automatically their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of certain other funds in
the Dreyfus Premier Family of Funds, or the Dreyfus Family of Funds, of
which the investor is a shareholder, except that dividends and capital gain
distributions, if any, on Class T shares of the Dreyfus Premier High Yield
Debt Plus Equity Fund or Dreyfus Premier Real Estate Mortgage Fund may be
invested in Class A shares (or the equivalent) of such other funds. 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 a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a CDSC and the applicable CDSC,
if any, will be imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Company
makes available to corporations a variety of prototype pension and profit-
sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Company makes available Keogh Plans, IRAs (including regular IRAs, spousal
IRAs for a non-working spouse, Roth IRAs, IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs"), Education IRAs, and IRA "Rollover
Accounts") and 403(b)(7) Plans. Plan support services also are 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 acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$1,000, with no minimum for subsequent investments. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs,
and rollover IRAs) and 403(b)(7) Plans with only one participant, and $500
for Dreyfus-sponsored Education IRAs, with for minimum for subsequent
purchases.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus entitled "How to Buy Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
each business day using available market quotations or at fair value.
Substantially all of each Fund's fixed-income investments (excluding short-
term investments) are valued by one or more independent pricing services
(the "Service") approved by the Board. Securities valued by the Service for
which quoted bid prices in the judgment of the Service are readily available
and are representative of the bid side of the market are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments valued
by the Service are carried at fair value as determined by the Service, based
on methods which include consideration of: yields or prices of securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Short-term investments are not
valued by the Service and are valued at the mean price or yield equivalent
for such securities or for securities of comparable maturity, quality and
type as obtained from market makers. Other investments that are not valued
by the Service (including the Equity Securities (as defined in the
Prospectus) purchased by Dreyfus Equity Dividend Fund and Dreyfus Premier
High Yield Debt Plus Equity Fund, and Dreyfus Premier Real Estate Mortgage
Fund) are valued at the last sales price for securities traded primarily on
an exchange or the national securities market or otherwise at the average of
the most recent bid and asked prices. Bid-price is used when no asked price
is available. Any assets or liabilities initially expressed in terms of
foreign currency will be translated into U.S. dollars at the midpoint of the
New York interbank market spot exchange rate as quoted on the day of such
translation by the Federal Reserve Bank of New York or, if no such rate is
quoted on such date, at the exchange rate previously quoted by the Federal
Reserve Bank of New York or at such other quoted market exchange rate as may
be determined to be appropriate by the Manager. Forward currency contracts
will be valued at the current cost of offsetting the contract. Because of
the need to obtain prices as of the close of trading on various exchanges
throughout the world, the calculation of net asset value does not take place
contemporaneously with the determination of prices of a majority of each
Fund's portfolio securities. Short-term investments are carried at
amortized cost, which approximates value. Expenses and fees, including the
management fee paid by each Fund and the distribution and shareholder
services fees, as applicable (reduced by the expense limitation, if any),
are accrued daily and taken into account for the purpose of determining the
net asset value of a Fund's shares, or Class of shares, as the case may be.
Because of the differences in operating expenses incurred by each Class of
shares of Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus
Premier Real Estate Mortgage Fund, the per share net asset value of each
Class of shares of the Fund will differ.
Restricted securities, as well as securities or other assets for which
recent market quotations are not readily available, or are not valued by the
Service, are valued at fair value as determined in good faith by the Board.
The Board will review the method of valuation on a current basis. In making
their good faith-valuation of restricted securities, the Board members
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class
of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This
discount will be revised periodically by the Board if it believes that the
discount no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a public
market exists usually will be valued initially at cost. Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus entitled "Dividends'
Distributions and Taxes."
Management of the Company believes that each Fund has qualified for the
fiscal year ended October 31, 1998 as a "regulated investment company" under
the Code. Each Fund intends to continue to so qualify if such qualification
is in the best interests of its shareholders. As a regulated investment
company, each Fund will pay no Federal income tax on net investment income
and net realized securities gains to the extent that such income and gains
are distributed to shareholders in accordance with applicable provisions of
the Code. 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 and meet certain
asset diversification and other requirements. The term "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of the shares
below the cost of the investment. Such a dividend or distribution would be
a return of investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares of
a 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.
Depending upon the composition of a Fund's income, the entire amount or
a portion of the dividends paid by such Fund from net investment income may
qualify for the dividends received deduction allowable to qualifying U.S.
corporate shareholders ("dividends received deduction"). In general,
dividend income of a Fund distributed to qualifying corporate shareholders
will be eligible for the dividends received deduction only to the extent
that such Fund's income consists of dividends paid by U.S. corporations.
However, Section 246(c) of the Code provides that if a qualifying corporate
shareholder has disposed of Fund shares held for less than 46 days, which 46
days generally must be during the 90-day period commencing 45 days before
the shares become ex-dividend, and has received a dividend from net
investment income with respect to such shares, the portion designated by the
Fund as qualifying for the dividends received deduction will not be eligible
for such shareholder's dividends received deduction. In addition, the Code
provides other limitations with respect to the ability of a qualifying
corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares. The Company anticipates that no
dividend paid by a Fund will qualify for the dividends-received deduction.
A Fund may qualify for and may make an election permitted under Section
853 of the Code so that shareholders may be eligible to claim a credit or
deduction on their Federal income tax returns for, and will be required to
treat as part of the amounts distributed to them, their pro rata portion of
qualified taxes paid or incurred by the Fund to foreign countries (which
taxes relate primarily to investment income). A Fund may make an election
under Section 853 of the Code, provided that more than 50% of the value of
the Fund's total assets at the close of the taxable year consists of
securities in foreign corporations, and the Fund satisfies the applicable
distribution provisions of the Code. The foreign tax credit available to
shareholders is subject to certain limitations imposed by the Code.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gain or
loss realized from the disposition of foreign currencies (including foreign
currency denominated bank deposits) and non-U.S. dollar denominated
securities (including debt instruments and certain forward contracts and
options) may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income under Section 1276 of the Code. Finally, all or a portion
of the gain realized from engaging in "conversion transactions" may be
treated as ordinary income under Section 1258 of the Code. "Conversion
transactions" are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce capital
gains, or transactions described in Treasury regulations to be issued in the
future.
Under Section 1256 of the Code, any gain or loss realized by a Fund
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such contracts and options
as well as from closing transactions. In addition, any such contracts or
options remaining unexercised at the end of a Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to such Fund characterized in the manner described above.
Offsetting positions held by a Fund involving certain futures or
forward contracts or options transactions may be considered, for tax
purposes, to constitute "straddles." Straddles are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, override or modify the provisions of
Sections 1256 and 988 of the Code. As such, all or a portion of any short
or long-term capital gain from certain straddle transactions may be
recharacterized to ordinary income.
If a Fund were treated as entering into straddles by reason of its
engaging in financial futures or forward contracts or options transactions,
such straddles would be characterized as "mixed straddles" if the futures or
forward contracts or options transactions 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." Depending upon which
election is made, if any, the results to the Fund may differ. If no
election is made, to the extent the straddle and conversion transaction
rules apply to positions established by a Fund, losses realized by the Fund
will be deferred to the extent of unrealized gain in the offsetting
position. 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 gains or
straddle positions may be treated as short-term capital gains or ordinary
income.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally apply if the Fund either (1) holds an appreciated financial
position with respect to stock, certain debt obligations, or partnership
interests ("appreciated financial position") and then enters into a short
sale, futures, forward, or offsetting notional principal contract
(collectively, a "Contract") respecting the same or substantially identical
property or (2) holds an appreciated financial position that is a Contract
and then acquires property that is the same as, or substantially identical
to, the underlying property. In each instance, with certain exceptions, the
Fund generally will be taxed as if the appreciated financial position were
sold at its fair market value on the date the Fund enters into the financial
position or acquires the property, respectively. Transactions that are
identified hedging or straddle transactions under other provisions of the
Code can be subject to the constructive sale provisions.
Investment by a Fund in securities issued or acquired at a discount, or
providing for deferred interest or for payment of interest in the form of
additional obligations could under special tax rules affect the amount,
timing and character of distributions to shareholders by causing a Fund to
recognize income prior to the receipt of cash payments. For example, a Fund
could be required to accrue a portion of the discount (or deemed discount)
at which the securities were issued each year and to distribute such income
in order to maintain its qualification as a regulated investment company.
In such case, a 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 assumes general supervision over placing orders on behalf
of the Company 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 will 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 fees are
not reduced as consequence of the receipt of such supplemental information.
Such information may be useful to the Manager in serving both the Company
and other funds which it advises and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to the Manager in carrying out its obligations to the Company.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block trades
may, in certain cases, result from two or more funds advised or administered
by the Manager being engaged simultaneously in the purchase or sale of the
same security. Certain of a Fund's transactions in securities of foreign
issuers may not benefit from the negotiated commission rates available to a
Fund for transactions in securities of domestic issuers. When transactions
are executed in the over-the-counter market, each Fund will deal with the
primary market makers unless a more favorable price or execution otherwise
is obtainable. Foreign exchange transactions are made with banks or
institutions in the interbank market at prices reflecting a mark-up or mark-
down and/or commission.
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 will be less
than 100% for Dreyfus Equity Dividend Fund, less than 200% for Dreyfus
Premier Real Estate Mortgage Fund and Dreyfus Short Term High Yield Fund,
and 200% or more for Dreyfus Core Bond Fund, Dreyfus High Yield Securities
Fund, and Dreyfus Premier High Yield Debt Plus Equity Fund. In periods in
which extraordinary market conditions prevail, the Manager will not be
deterred from changing a Fund's investment strategy as rapidly as needed, in
which case higher turnover rates can be anticipated which would result in
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.
The following table summarizes the brokerage commissions, and gross
spreads and concessions on principal transaction amounts, for each Fund for
the past three fiscal years ended October 31, 1998 (as applicable):
<TABLE>
<CAPTION>
Brokerage Gross Spreads
Commissions And Concessions
1996 1997 1998 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Dreyfus Core $28,188 $41,764 $1,421,838 $217,238
Bond Fund
Dreyfus Equity $10,205(1) $11,048 2,875(1) 1,637
Dividend1 Fund
Dreyfus High Yield $5,740(2) $17,136 133,243(2) 266,750
Securities Fund
Dreyfus Premier High - - _______3 - - ______3
Yield Debt Plus
Equity Fund
Dreyfus Premier Real - 3,000(4) - 0
Estate Mortgage Fund
Dreyfus Short Term $2505(5) $80 18,500(5) 52,200
High Yield Fund
</TABLE>
None of the foregoing amounts were paid to the Distributor.
1 For the period December 29, 1995 (commencement of operations) through
October 31, 1996
2 For the period March 25, 1996 (commencement of operations) through
October 31, 1996
3 For the period June 29, 1998 (commencement of operations) through October
31, 1998
4 For the period September 30, 1997 (commencement of operations) through
October 31, 1997
5 For the period August 16, 1996 (commencement of operations) through
October 31, 1996
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus entitled "Performance
Information."
On October 27, 1998, shareholders of Dreyfus Core Bond Fund approved a
proposal for the Fund to pursue an investment objective of maximizing total
return. Prior to the implementation date of these changes on __________,
1998, the Fund's investment objective was to maximize current income.
Accordingly, performance for periods prior to __________, 1998 reflects the
Fund being managed pursuant to its prior investment objective.
The 30-day yield for the Funds set forth below, as of October 31, 1998,
is a follows:
30-day Yield
Dreyfus Core Bond Fund X%
Dreyfus High Yield Securities X%
Fund
Dreyfus Short Term High Yield X%
Fund
The 30-day yield for each class of shares of Dreyfus Premier High Yield
Debt Plus Equity Fund and Dreyfus Premier Real Estate Mortgage Fund (as
applicable), as of October 31, 1998, is as follows:
(During the period, the Manager waived a portion of the management fee
and/or absorbed a portion of each Fund's expenses. Absent such
arrangements, each yield would have been lower, as reflected in the column
entitled "Net Yield").
Dreyfus Premier High 30-day
Yield Debt 30-day Net Yield
Plus Equity Fund Yield
Class A X% X%
Class B X% X%
Class C X% X%
Class T X% X%
Dreyfus Premier Real
Estate Mortgage Fund
Class A X% X%
Current yield for a Fund 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 net asset
value 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 average annual total return for the one-, five-, and ten-year
periods ended October 31, 1998, or since the Fund's commencement of
operations (as indicated), for each Fund (and Class of shares), is as
follows:
Average Annual Total Return
Since
One Five Ten Years Incepti
Year Year on
Dreyfus Core Bond Fund X% X% X% X%
Dreyfus Equity Dividend X% - - X%
Fund (1/2/96
)
Dreyfus High Yield X% - - X%
Securities Fund (3/25/9
6)
Dreyfus Premier Real X% - - X%
Estate Mortgage Fund Class A (9/30/9
7)
Dreyfus Short Term High X% - - X%
Yield Fund (8/16/9
6)
For Class A shares of Dreyfus Premier Real Estate Mortgage Fund, the
foregoing assumes the deduction of the maximum front-end sales load from the
hypothetical initial investment at the time of purchase, although no sales
load was applicable to such shares as of October 31, 1998.
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. A Class's
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A or Class T the maximum applicable
sales load has been deducted from the hypothetical initial investment at the
time of purchase or, in the case of Class B or Class C, the maximum
applicable CDSC has been paid upon redemption at the end of the period.
The total return for each Fund indicated below for the period since the
Fund's commencement of operations through October 31, 1998, is as follows:
Total
Return
Dreyfus Core Bond Fund X%
(11/3/86)
Dreyfus Equity Dividend Fund X%
(1/2/96)
Dreyfus High Yield Securities X%
Fund (3/25/96)
Dreyfus Short Term High Yield X%
Fund (8/16/96)
The total return for each Fund indicated below for the period since the
Fund's commencement of operations through October 31, 1998, assuming and
without giving effect to the maximum sales charge applicable to the
respective share class, is as follows:
Dreyfus Premier High Maximum Net
Yield Debt Plus Equity Sales Asset
Fund Charge Value
Class A (max. 5.75% X% X%
FESC)
Class B (max. 4.0% X% X%
CDSC)
Class C (max. 1.0% X% X%
(CDSC)
Class T (max. 4.5% X% X%
(FESC)
(Commencement of
operations -6/29/98 -
all classes)
Dreyfus Premier Real
Estate Mortgage Fund
Class A (max. 5.75% X% X%
FESC)
(Commencement of
Operations - 9/30/97)
During these periods, receipt of certain fees was being waived, and/or
certain expenses were borne, by the Manager, without which the returns for
Dreyfus Equity Dividend Fund, Dreyfus High Yield Securities Fund, Dreyfus
Premier High Yield Debt Plus Equity Fund, Dreyfus Premier Real Estate
Mortgage Fund, and Dreyfus Short Term High Yield Fund would have been lower.
Class B, Class C, Class R, and Class T shares of Dreyfus Real Estate
Mortgage Fund not were not being offered as of October 31, 1998, so total
return information is not provided.
Total return is calculated by subtracting the amount of the Fund's net
asset value (maximum offering price in the case of Class A or Class T shares
of Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real
Estate Mortgage Fund) per share at the beginning of a stated period from the
net asset value (maximum offering price in the case of Class A or Class T)
per share at the end of the period (after giving effect to the reinvestment
of dividends and distributions during the period and, as to Dreyfus High
Yield Securities Fund, any applicable redemption fee, or, as to Dreyfus
Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real Estate
Mortgage Fund, any applicable CDSC), and dividing the result by the net
asset value (maximum offering price in the case of Class A or Class T) per
share at the beginning of the period. Total return also may be calculated
based on the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the
period for Class A or Class T shares or without giving effect to any
applicable CDSC at the end of the period for Class B or Class C shares of
Dreyfus Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real
Estate Mortgage Fund. In such cases, the calculation would not reflect the
deduction of the sales charge with respect to Class A or Class T shares, or
any applicable CDSC with respect to Class B or Class C shares, which, if
reflected, would reduce the performance quoted.
Advertising materials for each Fund may include reference to the role
played by the Manager or Jack J. Dreyfus, Jr. in popularizing the concept of
mutual funds as an investment vehicle and may refer to the role The Dreyfus
Corporation and the Dreyfus Family of Funds play or have played in the
mutual fund industry, and the fact that the mutual fund industry, which
includes Dreyfus and the Dreyfus funds, has, through the wide variety of
innovative and democratic mutual fund products it has made available,
brought to the public investment opportunities once reserved for the few.
Advertising materials for each Fund also may include (i) biographical
information relating to its portfolio manager, including honors or awards
received, and may refer to or include commentary by the Fund's portfolio
manager relating to investment strategy, asset growth, current or past
business, political, economic or financial conditions and other matters of
general interest to investors; (ii) information concerning retirement and
investing for retirement, including statistical data or general discussions
about the growth and development of Dreyfus Retirement Services (in terms of
new customers, assets under management, market share, etc.) and its presence
in the defined contribution plan market; (iii) the approximate number of
then-current Fund shareholders; (iv) Lipper, Morningstar and Value Line
rankings or ratings and related analysis supporting the rankings or ratings;
(v) discussions of the risk and reward potential of the high yield
securities markets, and the mortgage- and real estate-related markets, and
the comparative performance of each against other securities markets and
relevant indices; (vi) comparative performance of a Fund with a relevant
broad-based securities market index, or with a "customized index" created by
the Manger, or against inflation, short-term Treasury Bills (which are
direct obligations of the U.S. Government), bonds, stocks, or FDIC-insured
bank money market accounts; and (vii) as to Dreyfus Short Term High Yield
Fund, that at its inception the Fund was the first short-term, high yield
fund in the mutual fund industry.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in conjunction
with the section in each Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares are of one class, except in the case of Dreyfus Premier High
Yield Debt Plus Equity Fund and Dreyfus Premier Real Estate Mortgage Fund,
and have equal rights as to dividends and in liquidation. Shares have no
preemptive, subscription or conversion rights, except in the case of Dreyfus
Premier High Yield Debt Plus Equity Fund and Dreyfus Premier Real Estate
Mortgage Fund, and are freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of a
Massachusetts business trust. However, the Company's Agreement and
Declaration of Trust disclaims shareholder liability for acts or obligations
of the Company and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Company
or a Trustee. The Agreement and Declaration of Trust 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 Company intends to conduct its operations
in such a way so as to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of the Fund.
Each Fund will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Company, Dreyfus Transfer, Inc. arranges for the
maintenance of shareholder account records for each Fund, the handling of
certain communications between shareholders and the Fund, and the payment of
dividends and distributions payable by the Fund. For these services,
Dreyfus Transfer, Inc. receives a monthly fee computed on the basis of the
number of shareholder accounts it maintains for the Company during the
month, and is reimbursed for certain out-of-pocket expenses. For the fiscal
year ended October 31, 1998, Dreyfus Core Bond Fund, Dreyfus Equity Dividend
Fund, Dreyfus High Yield Securities Fund, Dreyfus Premier Real Estate
Mortgage Fund, Dreyfus Short Term High Yield Fund paid the Transfer Agent
$_______, $_______, $_______, and $_______, respectively. For the period
June 29, 1998 (commencement of operations) through October 31, 1998.
Dreyfus Premier High Yield Debt Plus Equity Fund paid the Transfer agent
$_________.
Mellon Bank, N.A. (the "Custodian"), the Manager's parent, located at
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, acts as the
custodian of each Fund's investments. Under a custody agreement with the
Company, the Custodian holds each Fund's portfolio securities and keeps all
necessary accounts and records. For its custody services, the Custodian
receives a monthly fee based on the market value of each Fund's assets held
in custody and receives certain securities transaction changes. For the
fiscal year ended October 31, 1998, Dreyfus Core Bond Fund, Dreyfus Equity
Dividend Fund, Dreyfus High Yield Securities Fund, and Dreyfus Short Term
High Yield Fund paid the Custodian $__________, $__________, $__________ and
$__________, respectively. For the period June 29, 1998 (commencement of
operations) through October 31, 1998. Dreyfus Premier High Yield Debt Plus
Equity Fund paid the Custodian $__________.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Company, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of
the shares being sold pursuant to each Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Company.
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS
The Company's Annual Reports to Shareholders for the fiscal year ended
October 31, 1998 are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes
and, report of independent auditors appearing therein, are incorporated by
reference in this Statement of Additional Information.
APPENDIX
Description of S&P, Moody's, Fitch and Duff ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default
and are dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in
arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a
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
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates 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 (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
B
Issues carrying this designation are regarded as having only
speculative capacity for timely payment.
C
This designation is assigned to short-term obligations with doubtful
capacity for payment.
D
Issues carrying this designation are in default, and payment of
interest and/or repayment of principal is in arrears.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
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.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be m-ore subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirements for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Issuers (or related supporting institutions) rated Not Prime do not
fall within any of the Prime rating categories.
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 F1+.
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.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months.
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+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1 + and F-1 categories.
F-3
Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate;
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-S
Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic
conditions.
D
Default. Issues assigned this rating are in actual or imminent payment
default.
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. There may be
considerable variability in risk for bonds in this category 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.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.
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. Paper rated Duff-2 is regarded
as having good certainty of timely payment, good access to capital markets
and sound liquidity factors and company fundamentals. Risk factors are
small. Paper rated Duff 3 is regarded as having satisfactory liquidity and
other protection factors. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected. Paper rated Duff 4 is
regarded as having speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation. Paper rated
Duff 5 is in default. The issuer has failed to meet scheduled principal
and/or interest payments.
DREYFUS INCOME FUNDS
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights for the period September 30, 1997
(commencement of operations) through October 31, 1997,
and for the fiscal year ended October 31, 1998.
Incorporated by reference in part B of the Registration
Statement for Dreyfus Equity Dividend Fund, Dreyfus High
Yield Securities Fund, Dreyfus Short Term High Yield Fund,
Dreyfus Strategic Income Fund, Dreyfus Premier High Yield
Debt Plus Equity Fund and Dreyfus Premier Real Estate
Mortgage Fund only:
Statement of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Report of Ernst & Young, LLP, Independent Auditors
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 which
are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Registrant's Amended and Restated Agreement and Declaration of
Trust, dated June 25, 1992, is incorporated by reference to
Exhibit (1)(a) of Post-Effective Amendment No. 13 to the
Registration Statement, filed on December 29, 1995.
(1)(b) Registrant's Articles of Amendment dated December 6, 1995, are
incorporated by reference to Exhibit (1)(b) of Post-Effective
Amendment No. 13 to the Registration Statement, filed on December
29, 1995.
(2) Registrant's By-Laws, as amended December 6, 1995, are
incorporated by reference to Exhibit (2) of Post-Effective
Amendment No. 13 to the Registration Statement, filed on December
29, 1995.
(5) Management Agreement dated August 24, 1994, as amended December 6,
1995 is incorporated by reference to Exhibit (5) of Post-Effective
Amendment No. 13 to the Registration Statement, filed on December
29, 1995.
(6) Distribution Agreement dated August 24, 1994, as amended December
6, 1995 is incorporated by reference to Exhibit (6) of Post-
Effective Amendment No. 13 to the Registration Statement, filed on
December 29, 1995.
(6)(b) Forms of Service Agreement are incorporated by reference to
Exhibit (6)(b) and (6)(c) of Post-Effective Amendment No. 10 to
the Registration Statement, filed on December 30, 1994.
(8)(a) Registrant's Amended and Restated Custody Agreement is
incorporated by reference to Exhibit (8) of Post-Effective
Amendment No. 13 to the Registration Statement, filed on December
29, 1995.
(9) Shareholder Services Plan dated August 24, 1994, as revised
November 4, 1998.
(10) Opinion and Consent of Stroock & Stroock & Lavan LLP, 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 Ernst & Young LLP.
(15) Rule 12b-1 Distribution Plan dated May 6, 1998, as revised
November 4, 1998.
(16) Schedule of Computation of Performance Data as to Dreyfus
Strategic Income Fund is incorporated by reference to Exhibit (16)
of Post-Effective Amendment No. 9 to the Registration Statement,
filed on January 20, 1994; and as to Dreyfus Equity Dividend Fund
to Post-Effective Amendment No. 14, filed on May 30, 1996.
(17) Financial Data Schedules.
(18) Rule 18f-3 Plan, dated May 6, 1998, as revised November 4, 1998.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney for each Board member and for Marie
E. Connolly, President are incorporated by reference to
Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A, filed on April 13, 1998.
(b) Certificate of Assistant Secretary is incorporated by
reference to Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A, filed on April 13,
1998.
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 Holders
Title of Class (as of September 30, 1998)
______________ _______________________________
Beneficial Interest Dreyfus Strategic Income Fund - 10,815
(Par value $.001)
Dreyfus Equity Dividend Fund - 93
Dreyfus High Yield Securities Fund - 3,787
Dreyfus Short Term High Yield Fund - 5,152
Dreyfus Premier Real Estate - 154
Mortgage Fund
Dreyfus Premier High Yield Debt - 11
Plus Equity Fund
Item 27. Indemnification
_______ _______________
Reference is made to Article EIGHTH of the Registrant's Amended and
Restated Agreement and Declaration of Trust, dated June 25, 1992,
and the laws of the Commonwealth of Massachusetts. The application
of these provisions is limited by Article VIII of the Registrant's
By-Laws and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted Board members, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference is also made to the Distribution Agreement incorporated by
reference to Exhibit (6) of Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A, filed on December 29,
1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies comprise a financial service organization whose
business consists primarily of providing investment management
services as the investment adviser and manager for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, is a registered broker-dealer. Dreyfus Investment
Advisors, Inc., another wholly-owned subsidiary, provides
investment management services to various pension plans,
institutions and individuals.
Item 28 Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
W. KEITH SMITH Senior Vice Chairman:
Chairman of the Mellon Bank, N.A.*;
Board President and Director:
The Bridgewater Land Co., Inc.**;
Mellon Preferred Capital Corporation**;
TBC Securities Co., Inc.**;
Wellington-Medford II Properties, Inc.**;
Chairman, President and Chief Executive Officer:
Shearson Summit Euromanagement, Inc.*;
Shearson Summit EuroPartners, Inc.*;
Shearson Summit Management, Inc.*;
Shearson Summit Partners, Inc.*;
Shearson Venture Capital, Inc.*;
Chairman and Chief Executive Officer:
The Boston Company, Inc.**;
Boston Safe Deposit and Trust Company**;
Boston Group Holdings, Inc.**;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
The Boston Company Asset Management, Inc.**;
Mellon Europe Limited
London, England;
Mellon Global Investing Corp.*;
Mellon Accounting Services, Inc.*;
MGIC-UK Ltd.;
Mellon Capital Management Corporation***;
Chairman:
Mellon Financial Company*;
Buck Consultants, Inc.
1 Pennsylvania Plaza, 29th Floor
New York, New York 10019;
Director and Vice Chairman:
Mellon Financial Services Corporation*;
Mellon Bank Corporation*;
Trustee:
Laurel Capital Advisors, LLP*;
Mellon Equity Associates, LLP*;
Mellon Bond Associates, LLP*;
Past Director:
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
W. KEITH SMITH Past Trustee:
Chairman of the Board Franklin Portfolio Associates Trust
(continued) 2 International Place, 22nd Floor
Boston, MA 02110
MANDELL L. BERMAN Real estate consultant and private investor:
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
BURTON C. BORGELT Director:
Director Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880;
Mellon Bank Corporation*;
Mellon Bank, N.A.*
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation*;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Alleghany Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067;
Past Chairman, President and Chief Executive Officer:
Mellon Bank, N.A.*
STEPHEN E. CANTER Chairman and President:
Vice Chairman, Dreyfus Investment Advisors, Inc.****;
Chief Investment Director:
Officer, and a The Dreyfus Trust Company+;
Director Acting Chief Executive Officer:
Founders Asset Management, Inc.
2930 E. 3rd Avenue
Denver, CO 80206
CHRISTOPHER M. CONDRON President and Chief Operating Officer:
President, Chief Mellon Bank, N.A.*;
Executive Officer, President and Director:
Chief Operating Boston Safe Advisors, Inc.**;
Officer and a Vice-Chairman and Director:
Director Mellon Bank Corporation*;
The Boston Company, Inc.**;
Director:
Certus Asset Advisors Corporation++;
Mellon Capital Management Corporation***;
Boston Safe Deposit and Trust Company**;
CHRISTOPHER M. CONDRON Past President and Director:
President, Chief The Boston Company Financial Services, Inc.**;
Executive Officer, Boston Safe Deposit and Trust Company**;
Chief Operating Past President:
Officer and a Director The Boston Company Financial Strategies,
(continued) Inc.**;
Acting Chief Executive Officer:
Founders Asset Management, Inc.
Denver, CO
Past Director:
Mellon Preferred Capital Corporation**;
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138;
Past Chairman, President, and Chief Executive Officer:
The Boston Company Asset Management, Inc.**;
Past Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Past Trustee:
Franklin Portfolio Associates Trust
2 International Place, 22nd Floor
Boston, MA. 02710;
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
LAWRENCE S. KASH Executive Vice President:
Vice Chairman- Mellon Bank, N.A.*;
Distribution and a Chairman, President and Director:
Director The Dreyfus Consumer Credit Corporation****;
Trustee, President and Chief Executive Officer:
Laurel Capital Advisors, LLP*;
Director:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
President and Director:
Dreyfus Service Corporation+;
Dreyfus Precious Metals, Inc.+;
Dreyfus Service Organization, Inc.****;
The Boston Company, Inc.**;
Boston Group Holdings, Inc.**;
Chairman and Chief Executive Officer:
Dreyfus Brokerage Services, Inc.
401 North Maple Avenue
Beverly Hills, CA 90210;
Chairman, President and Chief Executive Officer:
The Dreyfus Trust Company+;
The Boston Company Advisors, Inc.
Wilmington, DE.
J. DAVID OFFICER Director:
Vice Chairman Dreyfus Financial Services Corporation*****;
and a Director Dreyfus Investment Services Corporation*****;
J. DAVID OFFICER Mellon Trust of Florida
Vice Chairman 2875 Northeast 191st Street
and a Director North Miami Beach, Florida 33180;
(continued) Mellon Preferred Capital Corporation**;
Boston Group Holdings, Inc.**;
Mellon Trust of New York
1301 Avenue of the Americas - 41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Dreyfus Insurance Agency of Massachusetts, Inc.
53 State Street
Boston, Massachusetts 02109;
Executive Vice President:
Dreyfus Service Corporation****;
Mellon Bank, N.A.*;
Vice Chairman and Director:
The Boston Company, Inc.**;
President and Director:
RECO, Inc.**;
The Boston Company Financial Services, Inc.**;
Boston Safe Deposit and Trust Company**;
RICHARD F. SYRON Chairman of the Board and Chief Executive Officer:
Director American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
RONALD P. O'HANLEY III Director:
Vice Chairman The Boston Company Asset Management, LLC**;
TBCAM Holding, Inc.**;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Floor
Boston, Massachusetts 02110;
Mellon Capital Management Corporation***;
Certus Asset Advisors Corporation++;
Mellon-France Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.**;
RONALD P. O'HANLEY III Partner Representative:
Vice Chairman Pareto Partners
(continued) 271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
Trustee:
Laurel Capital Advisors, LLP*;
Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.*;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Chairman and Director:
Executive Vice President Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Dreyfus-Lincoln, Inc.
4500 New Linden Hill Rd.
Wilmington, DE 19808;
Executive Vice President and Chief Financial Officer:
Dreyfus Service Corporation****;
Executive Vice President, Treasurer and Director:
Dreyfus Service Organization, Inc.****;
Director and Treasurer:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
Dreyfus Precious Metals, Inc.+;
Director, Vice President and Treasurer:
The Dreyfus Consumer Credit Corporation****;
The TruePenny Corporation****
Director, Treasurer and Chief Financial Officer:
The Dreyfus Trust Company+;
Past Director and President:
Lion Management, Inc.****;
Dreyfus Partnership Management, Inc.****;
Past Director and Executive Vice President:
Dreyfus Service Organization, Inc.****;
Past Director and Treasurer:
Dreyfus Personal Management, Inc.****
MARK N. JACOBS Director:
Vice President, Dreyfus Service Organization, Inc.****;
General Counsel The Dreyfus Trust Company+;
and Secretary Dreyfus Investment Advisors, Inc.****;
Director and President:
The TruePenny Corporation****;
Past Director, Vice President and Secretary:
Lion Management, Inc.****
Past Secretary:
The TruePenny Corporation****;
Dreyfus Investment Advisers****
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
ANDREW S. WASSER Vice President:
Vice President- Mellon Bank Corporation*
Information Services
JAMES BITETTO Secretary:
Assistant Secretary The TruePenny Corporation****;
Assistant Secretary:
Dreyfus Service Corporation****;
Dreyfus Investment Advisers, Inc.****;
Dreyfus Service Organization, Inc.****
STEVEN F. NEWMAN Vice President, Secretary and Director:
Assistant Secretary Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Secretary:
Dreyfus Service Organization, Inc.****
Wendy Strutt None
Vice President
Richard Terres None
Vice President
William H. Maresca Director:
Controller The Dreyfus Trust Company+;
Chief Financial Officer:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Assistant Treasurer:
Dreyfus Service Organization, Inc.****
______________________________________
* The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
** The address of the business so indicated is One Mellon Bank Place,
Boston, Massachusetts, 02108.
*** The address of the business so indicated is 595 Market Street, Suite
3000, San Francisco CA 94105.
**** The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
***** The address of the business so indicated is Union Trust Building,
501 Grant Street, Pittsburgh, PA 15259.
+ 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 Bush Street, Suite
450, San Francisco, CA. 94104.
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 Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Insured Municipal Bond Fund
71) Dreyfus Premier Municipal Bond Fund
72) Dreyfus Premier New York Municipal Bond Fund
73) Dreyfus Premier State Municipal Bond Fund
74) Dreyfus Premier Value Fund
75) Dreyfus Short-Intermediate Government Fund
76) Dreyfus Short-Intermediate Municipal Bond Fund
77) The Dreyfus Socially Responsible Growth Fund, Inc.
78) Dreyfus Stock Index Fund, Inc.
79) Dreyfus Tax Exempt Cash Management
80) The Dreyfus Third Century Fund, Inc.
81) Dreyfus Treasury Cash Management
82) Dreyfus Treasury Prime Cash Management
83) Dreyfus Variable Investment Fund
84) Dreyfus Worldwide Dollar Money Market Fund, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Fund, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 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 Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares 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.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State
of New York on the 23rd day of October 1998.
DREYFUS DEBT AND EQUITY FUNDS
BY: /s/Marie E. Connolly*
-----------------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President and Treasurer 10/23/98
- --------------------------- (Principal Executive,
Marie E. Connolly Accounting and Financial Officer)
/s/David W. Burke* Board Member 10/23/98
- ---------------------------
David W. Burke
/s/Joseph S. DiMartino* Chairman of the Board 10/23/98
- ---------------------------
Joseph S. DiMartino
/s/Diane Dunst* Board Member 10/23/98
- ---------------------------
Diane Dunst
/s/Rosalind Gersten Jacobs* Board Member 10/23/98
- ---------------------------
Rosalind Gersten Jacobs
/s/Jay I. Meltzer* Board Member 10/23/98
- ---------------------------
Jay I. Meltzer
/s/Daniel Rose* Board Member 10/23/98
- ---------------------------
Daniel Rose
/s/Warren B. Rudman* Board Member 10/23/98
- ---------------------------
Warren B. Rudman
/s/Sander Vanocur* Board Member 10/23/98
- ---------------------------
Sander Vanocur
*BY: /s/Michael Petrucelli
---------------------------
Michael Petrucelli,
Attorney-in-Fact
EXHIBIT INDEX
Exhibit Index No. Exhibit
24(6)(9) Shareholders Services Plan
24(b)(11) Consent of Independent Auditors
24(b)(15) Rule 12b-1 Plan
24(b)(18) Rule 18f-3 Plan
DREYFUS DEBT AND EQUITY FUNDS
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Shareholder Services Plan under
which the Fund would pay the Fund's distributor (the "Distributor") for
providing services to (a) shareholders of each series of the Fund or class
of Fund shares set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time (each, a "Class"), or (b) if no series or classes are set
forth on such Exhibit, shareholders of the Fund. The Distributor would be
permitted to pay certain financial institutions, securities dealers and
other industry professionals (collectively, "Service Agents") in respect of
these services. The Plan is not to be adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "Act"), and the fee
under the Plan is intended to be a "service fee" as defined under the
Conduct Rules of the National Association of Securities Dealers, Inc.
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 Fund assets attributable
to each Class for such purposes.
In voting to approve the implementation of such a plan, the Board
has concluded, in the exercise of its reasonable business judgment and in
light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit the Fund and shareholders of each
Class.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor a fee at the annual
rate set forth on Exhibit A in respect of the provision of personal services
to shareholders and/or the maintenance of shareholder accounts. The
Distributor shall determine the amounts to be paid to Service Agents and the
basis on which such payments will be made. Payments to a Service Agent are
subject to compliance by the Service Agent with the terms of any related
Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable under this
Plan, the value of the Fund's net assets attributable to each Class shall be
computed in the manner specified in the Fund's charter documents for the
computation of net asset value.
3. The 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.
4. As to each Class, this Plan will become effective immediately
upon approval by 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.
5. As to each Class, 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 4 hereof.
6. As to each Class, this Plan may be amended at any time by the
Board, provided that any material amendments of the terms of this Plan shall
become effective only upon approval as provided in paragraph 4 hereof.
7. As to each Class, this Plan is terminable without penalty at
any time by 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.
8. The obligations hereunder and under any related Plan agreement
shall only be binding upon the assets and property of the Fund or the
affected Class, as the case may be, and shall not be binding upon any Board
member, officer or shareholder of the Fund individually.
Dated: July 19, 1995
Revised: November 4, 1998
EXHIBIT A
Name of Series or Class Fee as a Percentage of
Average Daily Net Assets
Dreyfus Core Bond Fund .25%
Dreyfus Equity Dividend Fund .25%
Dreyfus High Yield Securities Fund .25%
Dreyfus Premier High Yield Debt Plus Equity Fund
Class A .25%
Class B .25%
Class C .25%
Class T .25%
Dreyfus Premier Real Estate Mortgage Fund
Class A .25%
Class B .25%
Class C .25%
Class T .25%
Dreyfus Short Term High Yield Fund .25%
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Transfer and
Dividend Disbursing Agent, Custodian, Counsel and Independent Auditors" and to
the use of our reports dated December 17, 1997 on Dreyfus Equity Dividend
Fund, Dreyfus High Yield Securities Fund, Dreyfus Premier Real Estate Mortgage
Fund (formerly known as the Dreyfus Real Estate Mortgage Fund), Dreyfus Short
Term High Yield Fund and Dreyfus Core Bond Fund (formerly known as the Dreyfus
Strategic Income Fund), which are incorporated by reference in this
Registration Statement (Form N-1A No. 33-7172) of Dreyfus Debt and Equity
Funds.
ERNST & YOUNG LLP
New York, New York
October 22, 1998
DREYFUS DEBT AND EQUITY FUNDS
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Distribution Plan (the "Plan") in
accordance with Rule 12b-1, promulgated under the Investment Company Act of
1940, as amended (the "Act"). The Plan would pertain to each class of each
series set forth on Exhibit A hereto, as such Exhibit may be revised from
time to time (each, a "Class"). Under the Plan, the Fund would pay the
Fund's distributor (the "Distributor") for distributing shares of each
Class. 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 attributable to
each Class 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 shareholders of each Class.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor for distribution a fee
in respect of each Class at the annual rate set forth on Exhibit A.
2. For the purposes of determining the fees payable under this
Plan, the value of the Fund's net assets attributable to each Class 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
attributable to such Class.
3. 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.
4. As to each Class, this Plan will become effective upon
approval by (a) holders of a majority of the outstanding shares of such
Class, 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.
5. As to each Class, 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 4(b) hereof.
6. As to each Class, this Plan may be amended at any time by the
Fund's Board, provided that (a) any amendment to increase materially the
costs which such Class may bear pursuant to this Plan shall be effective
only upon approval by a vote of the holders of a majority of the outstanding
shares of such Class, and (b) any material amendments of the terms of this
Plan shall become effective only upon approval as provided in paragraph 4(b)
hereof.
7. As to each Class, 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 outstanding shares of such Class.
Dated: May 6, 1998
Revised: November 4, 1998
EXHIBIT A
Fee as a Percentage of
Name of Series and Class Average Daily Net Assets
Dreyfus Premier High Yield Debt
Plus Equity Fund
Class B .75%
Class C .75%
Class T .25%
Dreyfus Premier Real Estate
Mortgage Fund
Class B .75%
Class C .75%
Class T .75%
<TABLE> <S> <C>
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<NAME> DREYFUS INCOME FUND
<SERIES>
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<NAME> DREYFUS REAL ESTATE MORTGAGE FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 19014
<INVESTMENTS-AT-VALUE> 19033
<RECEIVABLES> 9142
<ASSETS-OTHER> 111
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28286
<PAYABLE-FOR-SECURITIES> 11902
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3394
<TOTAL-LIABILITIES> 15296
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12516
<SHARES-COMMON-STOCK> 995
<SHARES-COMMON-PRIOR> 819
<ACCUMULATED-NII-CURRENT> 144
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<ACCUMULATED-NET-GAINS> 311
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 12990
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<EXPENSES-NET> 124
<NET-INVESTMENT-INCOME> 445
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<NET-CHANGE-FROM-OPS> 793
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (349)
<DISTRIBUTIONS-OF-GAINS> (124)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 174
<NUMBER-OF-SHARES-REDEEMED> (35)
<SHARES-REINVESTED> 37
<NET-CHANGE-IN-ASSETS> 2594
<ACCUMULATED-NII-PRIOR> 48
<ACCUMULATED-GAINS-PRIOR> 124
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 38
<INTEREST-EXPENSE> 71
<GROSS-EXPENSE> 164
<AVERAGE-NET-ASSETS> 11747
<PER-SHARE-NAV-BEGIN> 12.69
<PER-SHARE-NII> .48
<PER-SHARE-GAIN-APPREC> .42
<PER-SHARE-DIVIDEND> (.39)
<PER-SHARE-DISTRIBUTIONS> (.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.05
<EXPENSE-RATIO> .021
<AVG-DEBT-OUTSTANDING> 2456
<AVG-DEBT-PER-SHARE> 2.71
</TABLE>
THE DREYFUS FAMILY OF FUNDS
(Dreyfus Debt and Equity Funds)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that the Board of an investment company desiring
to offer multiple classes pursuant to said Rule adopt a plan setting forth
the separate arrangement and expense allocation of each class, and any
related conversion features or exchange privileges.
The Board, including a majority of the non-interested Board
members, of each of the investment companies, or series thereof, listed on
Schedule A attached hereto (each, a "Fund") which desires to offer multiple
classes has determined that the following plan is in the best interests of
each class individually and each Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class
A, Class B, Class C, and Class T and, as to Dreyfus Premier Real Estate
Mortgage Fund only, Class R.
2. Differences in Services: The services offered to
shareholders of each Class shall be substantially the same, except that
Right of Accumulation and Letter of Intent shall be available only to
holders of Class A and Class T shares.
3. Differences in Distribution Arrangements: Class A shares
shall be offered with a front-end sales charge, as such term is defined
under the Conduct Rules of the National Association of Securities Dealers,
Inc. (the "NASD Conduct Rules"), and a deferred sales charge (a "CDSC"), as
such term is defined under the NASD Conduct Rules, may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The amount of the
sales charge and the amount of and provisions relating to the CDSC
pertaining to the Class A shares are set forth on Schedule B hereto.
Class B shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC and shall be charged an annual distribution
fee under a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of and provisions relating to the CDSC, and the amount of
the fees under the Distribution Plan pertaining to the Class B shares, are
set forth on Schedule C hereto.
Class C shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC and shall be charged an annual distribution
fee under a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of and provisions relating to the CDSC, and the amount of
the fees under the Distribution Plan pertaining to the Class C shares, are
set forth on Schedule D hereto.
With respect to Dreyfus Premier Real Estate Mortgage only, Class R
shares shall be offered at net asset value only to institutional investors
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity for qualified or non-qualified employee benefit plans,
including pension, profit-sharing, SEP-IRAs and other deferred compensation
plans, whether established by corporations, partnerships, non-profit
entities or state and local governments, but not including IRAs or IRA
"Rollover Accounts."
Class T shares shall be offered with a front-end sales charge, and
a CDSC may be assessed on certain redemptions of Class T shares purchased
without an initial sales charge as part of an investment of $1 million or
more. Class T shares also shall be charged an annual distribution fee under
a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The
amount of the sales charge, the amount of and provisions relating to the
CDSC, and the amount of the fees under the Distribution Plan pertaining to
the Class T shares are set forth on Schedule E hereto.
Class A, Class B, Class C, and Class T shares shall be subject to
an annual service fee at the rate of .25% of the value of the average daily
net assets of such Class pursuant to a Shareholder Services Plan.
4. Expense Allocation: The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a) fees
under the Distribution Plan and Shareholder Services Plan; (b) printing and
postage expenses related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current shareholders of a
specific Class; (c) Securities and Exchange Commission and Blue Sky
registration fees incurred by a specific Class; (d) the expense of
administrative personnel and services as required to support the
shareholders of a specific Class; (e) litigation or other legal expenses
relating solely to a specific Class; (f) transfer agent fees identified by
the Fund's transfer agent as being attributable to a specific Class; and (g)
Board members' fees incurred as a result of issues relating to a specific
Class.
5. Conversion Features: Class B shares shall automatically
convert to Class A shares after a specified period of time after the date of
purchase, based on the relative net asset value of each such Class without
the imposition of any sales charge, fee or other charge, as set forth on
Schedule F hereto. No other Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges: Shares of a Class shall be exchangeable
only for (a) shares of the same Class (or Class A, in the case of Class T)
of other investment companies managed or administered by The Dreyfus
Corporation and (b) shares of certain other investment companies specified
from time to time.
SCHEDULE A
Name of Fund Date Plan Adopted
Dreyfus Debt and Equity Funds May 6, 1998
- --Dreyfus Premier High Yield Debt May 6, 1998
Plus Equity Fund
- --Dreyfus Premier Real Estate Mortgage November 4, 1998
Fund
SCHEDULE B
Front-End Sales Charge--Class A Shares--The public offering price for Class
A shares shall be the net asset value per share of Class A plus a sales load
as shown below:
Total
Sales
Load
As a % of As a % of
Amount of Transaction Offering Net Asset
Price Per Value Per
Share Share
Less than $50,000 5.75 6.10
$50,000 to less than $100,000 4.50 4.70
$100,000 to less than $250,000 3.50 3.60
$250,000 to less than $500,000 2.50 2.60
$500,000 to less than $1,000,000 2.00 2.00
$1,000,000 or more -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1.00% shall be
assessed at the time of redemption of Class A shares purchased without an
initial sales charge as part of an investment of at least $1,000,000 and
redeemed within one year of purchase. The terms contained in Schedule C
pertaining to the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the provisions for
waiving the CDSC, shall be applicable to the Class A shares subject to a
CDSC. Letter of Intent and Right of Accumulation shall apply to purchases
of Class A shares subject to a CDSC.
SCHEDULE C
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the
Fund's Distributor shall be imposed on any redemption of Class B shares
which reduces the current net asset value of such Class B shares to an
amount which is lower than the dollar amount of all payments by the
redeeming shareholder for the purchase of Class B shares of the Fund held by
such shareholder at the time of redemption. No CDSC shall be imposed to the
extent that the net asset value of the Class B shares redeemed does not
exceed (i) the current net asset value of Class B shares acquired through
reinvestment of dividends or capital gain distributions, plus (ii) increases
in the net asset value of the shareholder's Class B shares above the dollar
amount of all payments for the purchase of Class B shares of the Fund held
by such shareholder at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may
be applied to the then-current net asset value rather than the purchase
price.
In circumstances where the CDSC is imposed, the amount of the
charge shall depend on the number of years from the time the shareholder
purchased the Class B shares until the time of redemption of such shares.
Solely for purposes of determining the number of years from the time of any
payment for the purchase of Class B shares, all payments during a month
shall be aggregated and deemed to have been made on the first day of the
month. The following table sets forth the rates of the CDSC:
CDSC as a % of
Year Since Amount Invested
Purchase Payment or Redemption
Was Made Proceeds
First
4.00
Second
4.00
Third
3.00
Fourth
3.00
Fifth
2.00
Sixth
1.00
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible
rate. Therefore, it shall be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the increase in
net asset value of Class B shares above the total amount of payments for the
purchase of Class B shares made during the preceding six years; then of
amounts representing the cost of shares purchased six years prior to the
redemption; and finally, of amounts representing the cost of shares held for
the longest period of time within the applicable six-year period.
Waiver of CDSC--The CDSC shall be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code"), of
the shareholder, (b) redemptions by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the
employers or affiliated employers maintaining such plans or programs have a
minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Fund's Distributor exceeds one million dollars, (c) redemptions as a result
of a combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) a distribution following retirement
under a tax-deferred retirement plan or upon attaining age 70-1/2 in the
case of an IRA or Keogh plan or custodial account pursuant to Section 403(b)
of the Code, and (e) redemptions pursuant to any systematic withdrawal plan
as described in the Fund's prospectus. Any Fund shares subject to a CDSC
which were purchased prior to the termination of such waiver shall have the
CDSC waived as provided in the Fund's prospectus at the time of the purchase
of such shares.
Amount of Distribution Plan Fees--Class B Shares--.75 of 1% of the value of
the average daily net assets of Class B.
SCHEDULE D
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1.00% payable to
the Fund's Distributor shall be imposed on any redemption of Class C shares
within one year of the date of purchase. The basis for calculating the
payment of any such CDSC shall be the method used in calculating the CDSC
for Class B shares. In addition, the provisions for waiving the CDSC shall
be those set forth for Class B shares.
Amount of Distribution Plan Fees--Class C Shares--.75 of 1% of the value of
the average daily net assets of Class C.
SCHEDULE E
Front-End Sales Charge--Class T Shares--The public offering price for
Class T shares shall be the net asset value per share of Class T plus a
sales load as shown below:
Total
Sales
Load
As a % of As a % of
Amount of Transaction Offering Net Asset
Price Per Value Per
Share Share
Less than $50,000 4.50 4.70
$50,000 to less than $100,000 4.00 4.20
$100,000 to less than $250,000 3.00 3.10
$250,000 to less than $500,000 2.00 2.00
$500,000 to less than $1,000,000 1.50 1.50
$1,000,000 or more -0- -0-
Contingent Deferred Sales Charge--Class T Shares--A CDSC of 1.00% shall be
assessed at the time of redemption of Class T shares purchased without an
initial sales charge as part of an investment of at least $1,000,000 and
redeemed within one year of purchase. The terms contained in Schedule C
pertaining to the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the provisions for
waiving the CDSC, shall be applicable to the Class T shares subject to a
CDSC. Letter of Intent and Right of Accumulation shall apply to purchases
of Class T shares subject to a CDSC.
Amount of Distribution Plan Fees--Class T Shares--.25 of 1% of the value of
the average daily net assets of Class T.
SCHEDULE F
Conversion of Class B Shares--Approximately six years after the date of
purchase, Class B shares automatically shall convert to Class A shares,
based on the relative net asset values for shares of each such Class, and
shall no longer be subject to the distribution fee. At that time, Class B
shares that have been acquired through the reinvestment of dividends and
distributions ("Dividend Shares") shall be converted in the proportion that
a shareholder's Class B shares (other than Dividend Shares) converting to
Class A shares bears to the total Class B shares then held by the
shareholder which were not acquired through the reinvestment of dividends
and distributions.
