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DREYFUS DEBT AND EQUITY FUNDS
DREYFUS PREMIER CORE BOND FUND
(Class A, Class B, Class C and Class R Shares)
DREYFUS PREMIER HIGH YIELD SECURITIES FUND
(Class A, Class B, Class C and Class T Shares)
DREYFUS PREMIER HIGH YIELD DEBT PLUS EQUITY FUND
(Class A, Class B, Class C and Class T Shares)
DREYFUS SHORT TERM HIGH YIELD FUND
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 2000
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REVISED JULY 3, 2000
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This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Premier Core Bond Fund, Dreyfus Premier High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, and Dreyfus Short Term High
Yield Fund, each dated March 1, 2000 (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 of 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. Also, you can
call your financial adviser.
For a copy of the Prospectus of Dreyfus Premier Core Bond Fund, Dreyfus
Premier High Yield Debt Plus Equity Fund, or Dreyfus Premier High Yield
Securities Fund (collectively, the "Dreyfus Premier Funds"), please call your
financial adviser, or you can write to the address above, or call
1-800-554-4611.
The most recent Annual Report and Semi-Annual Report to Shareholders for
each Fund are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Company and Funds.......................................B-3
Management of the Company.................................................B-30
Management Arrangements...................................................B-35
How to Buy Shares.........................................................B-39
Distribution Plan and Shareholder Services Plan...........................B-48
How to Redeem Shares......................................................B-49
Shareholder Services......................................................B-54
Determination of Net Asset Value..........................................B-59
Dividends, Distributions and Taxes........................................B-60
Portfolio Transactions....................................................B-63
Performance Information...................................................B-64
Information About the Company and Funds...................................B-68
Counsel and Independent Auditors..........................................B-70
Appendix..................................................................B-71
DESCRIPTION OF THE COMPANY AND FUNDS
The Company is a Massachusetts business trust that commenced operations on
October 1, 1986. Each Fund is a separate portfolio of the Company, an open-end
management investment company, known as a mutual fund. Each of Dreyfus Premier
Core Bond Fund, Dreyfus Premier High Yield Securities Fund and Dreyfus Short
Term High Yield Fund is a diversified fund, which means that, with respect to
75% of the Fund's total assets, the Fund will not invest more than 5% of its
assets in the securities of any single issuer nor hold more than 10% of the
outstanding voting securities of any single issuer. Dreyfus Premier High Yield
Debt Plus Equity Fund is a non-diversified fund, which 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 Investment Company Act of 1940, as amended (the "1940
Act").
The Dreyfus Corporation (the "Manager") serves as each Fund's investment
adviser.
Dreyfus Service Corporation (the "Distributor") is the distributor of each
Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with each Fund's Prospectus.
Corporate Debt Securities. (All Funds) Corporate debt securities include
corporate bonds, debentures, notes and other similar instruments, including
certain 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 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. (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 provide for a stable stream of income with
generally higher yields than common stocks, but 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 generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
Warrants. (All Funds) 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. A
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) From time to time, a Fund may hold common stock
sold in units with, or attached to, debt securities purchased by the Fund. A
Fund also may hold common stock received upon the conversion of convertible
securities. Dreyfus Premier High Yield Debt Plus Equity Fund is not restricted
in the kinds of common stock each may purchase.
Participation Interests. (All Funds) Each of these Funds 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. A participation interest gives
the Fund an undivided interest in the security in the proportion that the Fund's
participation interest bears to the total principal amount of the security.
These instruments may have fixed, floating or variable rates of interest. 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. (All Funds) Municipal obligations are debt
obligations issued by states, territories and possessions of the United States
and the District of Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities, the interest from
which, in the opinion of bond counsel to the issuer, is exempt from Federal
income tax. 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 do not carry the pledge
of the credit of the issuing municipality, but generally are guaranteed by the
corporate entity on whose behalf they are issued. Notes are short-term
instruments which are obligations of the issuing municipalities or agencies and
are sold in anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or equipment
issued by municipalities. Municipal obligations bear fixed, floating or variable
rates of interest, which are determined in some instances by formulas under
which the municipal obligation's interest rate will change directly or inversely
to changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum. Certain municipal obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related municipal obligation and
purchased and sold separately. The Fund also may acquire call options on
specific municipal obligations. The Fund generally would purchase these call
options to protect the Fund from the issuer of the related municipal obligation
redeeming, or other holder of the call option from calling away, the municipal
obligation before maturity.
While, in general, municipal obligations are tax exempt securities having
relatively low yields as compared to taxable, non-municipal obligations of
similar quality, certain municipal obligations are taxable obligations, offering
yields comparable to, and in some cases greater than, the yields available on
other permissible Fund investments. Dividends received by shareholders on Fund
shares which are attributable to interest income received by the Fund from
municipal obligations generally will be subject to Federal income tax. The Fund
may invest in municipal obligations, the ratings of which correspond with the
ratings of other permissible Fund investments. The Fund currently intends to
invest no more than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.
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.
A 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.
A 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. (All Funds) 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"),
adjustable rate mortgages, real estate investment trusts ("REITs"), 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, as well as those that do not bear
interest.
Residential Mortgage-Related Securities--A 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 ("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 know 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--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.
Subordinated Securities--A 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 ("CMOs") and Multi-Class
Pass-Through-Securities--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--A 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 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 IO 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 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.
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.
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.
Asset-Backed Securities. (All Funds) 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. A 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 a 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.
Zero Coupon Securities. (All Funds) A Fund may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been stripped
of their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Zero coupon securities also are issued by corporations and financial
institutions which constitute a proportionate ownership of the issuer's pool of
underlying U.S. Treasury securities. A zero coupon security pays no interest to
its holders during its life and is sold at a discount to its face value at
maturity. The market prices of zero coupon securities generally are more
volatile than the market prices of securities that pay interest periodically and
are likely to respond to a greater degree to changes in interest rates than
non-zero coupon securities having similar maturities and credit qualities.
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, including 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) 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.
High Yield-Lower Rated Securities. (All Funds) A Fund may invest in higher
yielding (and, therefore higher risk) debt securities, including
mortgage-related securities. These securities include those rated below Baa by
Moody's Investors Service, Inc. ("Moody's") and below BBB by Standard & Poor's
Ratings Group ("S&P"), Fitch IBCA, Inc. ("Fitch") and Duff & Phelps Credit
Rating Co. ("Duff," and with the other rating agencies, the "Rating Agencies")
and as low as the lowest rating assigned by the Rating Agencies. 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" 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 or 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 Manager 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 Manager's credit analysis than might be the case for a fund
that invested in higher rated securities.
With respect to each of Dreyfus Premier High Yield Securities Fund,
Dreyfus Premier High Yield Debt Plus Equity Fund, Dreyfus Short Term High Yield
Fund and Dreyfus Premier Core Bond Fund, the average distribution of investments
of the Fund in corporate bonds (excluding preferred stock, convertible preferred
stock and convertible bonds) by ratings for the fiscal year ended October 31,
1999, calculated monthly on a dollar-weighted basis, was as follows:
Dreyfus Premier High Moody's or S&P, Fitch or Duff Percentage
------- ------------------ ----------
Yield Securities
Fund
Aaa AAA 2.9%
Ba BB 1.1%
B B 26.8%
Caa CCC 13.0%
Ca CC 2.5%
NR NR 20.8%*
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67.1%**
* These unrated securities have been determined by the Manager to be of
comparable quality to securities rated as follows: A (0.3%), B (1.0%), CCC
(19.4%) and CC (0.1%).
** The Fund also owns equity securities (2.8%), convertible preferred stocks
rated CCC (6.8%), preferred stocks rated AAA (0.7%), preferred stocks rated B
(9.9%), preferred stocks rated CCC (10.4%) and convertible bonds rated B (2.0%).
Dreyfus Premier Moody's or S&P, Fitch or Duff Percentage
------- ------------------ ----------
High Yield Debt Plus
Equity Fund
Aaa AAA 8.7%
Aa AA 0.6%
Baa BBB 0.1%
Ba BB 0.5%
B B 23.0%
Caa CCC 21.4%
Ca CC 3.4%
C D 0.7%
NR NR 4.3%*
--------
62.7%**
* These unrated securities have been determined by the Manager to be of
comparable quality to securities rated as follows: B (0.8%) and CCC (3.5%).
** The Fund also owns equity securities (18.9%), convertible preferred stocks
rated B (0.1%), convertible preferred stocks rated CCC (6.4 %), preferred stocks
rated B (1.7%), preferred stocks rated CCC (3.2%), convertible bonds rated B
(5.0%) and convertible bonds rated CCC (0.3%).
Dreyfus Short Term Moody's or S&P, Fitch or Duff Percentage
------- ------------------ ----------
High Yield Fund
Aaa AAA 0.8%
A A 0.1%
Baa BBB 1.1%
Ba BB 10.3%
B B 64.5%
Caa CCC 5.9%
Ca CC 1.0%
NR NR 5.5%*
--------
89.2%**
* These unrated securities have been determined by the Manager to be of
comparable quality to securities rated as follows: BB (0.2%), B (3.9%) and CCC
(1.4%).
** The Fund also owns equity securities (0.1%), convertible preferred stocks
rated CCC (0.1%), preferred stocks rated CCC (0.8%), convertible bonds rated BB
(1.7%) and convertible bonds rated B (8.4%).
Dreyfus Premier Core Moody's or S&P, Fitch or Duff Percentage
------- ------------------ ----------
Bond Fund
Aaa AAA 45.9%
Aa AA 2.1%
A A 9.7%
Baa BBB 21.8%
Ba BB 10.6%
B B 3.2%
Caa CCC 0.8%
Ca CC 0.3%
NR NR 3.6%*
----------
98.0%**
==============================================================================
* These unrated securities have been determined by the Manager to be of
comparable quality to securities rated as follows: A (0.4%), BBB (1.7%), BB
(1.4%) and B (0.1%).
** The Fund also owns equity securities (0.6%), convertible preferred stocks
rated CCC (0.7%), preferred stocks rated CCC (8.1%), convertible bonds rated A
(0.2%), convertible bonds rated BBB (0.9%) and convertible bonds rated B (1.3%).
The actual distribution of each of these Funds' corporate bond investments
by ratings on any given date will vary, and the distribution of the Fund's
investments by ratings as set forth above should not be considered as
representative of the Fund's future portfolio composition.
American Depositary Receipts. (Dreyfus Premier High Yield Debt Plus Equity
Fund only) The Fund may invest in American Depositary Receipts ("ADRs"). These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. Generally, ADRs in registered form
are designed for use in the United States securities markets. ADRs may be
purchased through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the underlying security and a
depositary. 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.
Foreign Government Obligations; Securities Of Supranational Entities. (All
Funds) A Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable quality
to the other obligations in which the Fund may invest. Such securities also
include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Illiquid Securities. (All Funds) A 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. These securities may include securities that are not readily
marketable, such as 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.
Money Market Instruments. (All Funds) When the Manager determines that
adverse market conditions exist, a Fund may adopt a temporary defensive position
and invest some or all of its assets in money market instruments, including U.S.
Government securities, repurchase agreements, bank obligations and commercial
paper. A Fund also may purchase money market instruments when it has cash
reserves or in anticipation of taking a market position.
Investment Techniques
The following information supplements and should be read in conjunction
with each Fund's Prospectus.
Duration. (All Funds) 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 Premier Core Bond Fund and Dreyfus Short Term
High Yield Fund only) Dreyfus Premier 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 or less. For
purposes of calculating average effective portfolio maturity, a security that is
subject to redemption at the option of the issuer on a particular date (the
"call date") which is prior to the security's stated maturity may be deemed to
mature on the call date rather than on its stated maturity date. The call date
of a security will be used to calculate average effective portfolio maturity
when 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. (All Funds) Leveraging (that is, buying securities using
borrowed money) exaggerates the effect on net asset value of any increase or
decrease in the market value of a Fund's portfolio. These borrowings will be
subject to interest costs which may or may not be recovered by appreciation of
the securities purchased; in certain cases, interest costs may exceed the return
received on the securities purchased. For borrowings for investment purposes,
the 1940 Act requires a Fund to maintain continuous asset coverage (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 holdings 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.
A 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, a Fund's borrowings generally will be unsecured.
Short-Selling. (All Funds) In these transactions, a Fund sells a security
it does not own 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 Premier Core Bond
Fund, Dreyfus Premier 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) segregate permissible liquid assets in an amount that,
together with 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. (All Funds) A 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, a 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.
Derivatives. (All Funds) A Fund may invest in, or enter into, derivatives,
such as options and futures, swaps (as to swaps, with respect to all Funds,
except Dreyfus Premier Core Bond Fund), mortgage-related securities and
asset-backed securities, 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. However, 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.
Although neither the Company nor any Fund will be a commodity pool,
certain derivatives subject the Funds to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Fund can invest in such
derivatives. A Fund may invest in futures contracts and options with respect
thereto for hedging purposes without limit. However, no Fund may 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.
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 variation margin system 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, or on exchanges located outside the United
States. 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 currency exchange rate, or the Fund could
incur losses as a result of those changes. Transactions on foreign exchanges may
include commodities which are traded on domestic exchanges or 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 Manager's
ability to predict correctly movements in the direction of the relevant market
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the position 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 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. In addition, 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.
Each 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.
A 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. (All Funds, except Dreyfus Premier Core Bond Fund) 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 Premier High Yield Securities Fund, Dreyfus Premier
High Yield Debt Plus Equity Fund and Dreyfus Short Term High Yield Fund only)
Each of these Funds 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 invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put options. A Fund
may write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. 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 permissible liquid assets. A put option written by a Fund is covered
when, among other things, the Fund segregates permissible liquid assets having a
value equal to or greater than the exercise price of the option 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. Each 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 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.
Each Fund, except Dreyfus Premier Core Bond Fund, may purchase
cash-settled options on swaps in pursuit of their respective investment
objective. Equity index swaps in which 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 Roll Transactions. (Dreyfus Premier Core Bond Fund) 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 segregate permissible liquid assets at least
equal to the amount of the repurchase price (including accrued interest).
Forward Commitments. (All Funds) A 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. 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 segregate 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.
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.
Foreign Currency Transactions. (All Funds) A Fund may enter into foreign
currency transactions for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the Fund has
agreed to buy or sell; to hedge the U.S. dollar value of securities the Fund
already owns, particularly if it expects a decrease in the value of the currency
in which the foreign security is denominated; or to gain exposure to the foreign
currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, a Fund's purchase
of foreign currencies for U.S. dollars or the maintenance of short positions in
foreign currencies. A short position would involve the Fund agreeing to exchange
an amount of a currency it did not currently own for another currency at a
future date in anticipation of a decline in the value of the currency sold
relative to the currency the Fund contracted to receive. A Fund's success in
these transactions will depend principally on the ability of the Manager to
predict accurately the future exchange rates between foreign currencies and the
U.S. dollar.
Currency exchange rates may fluctuate significantly over short periods of
time. They generally are determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates also
can be affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
Investment Considerations and Risks
High Yield-Lower Rated Securities. (All Funds) Each Fund may invest in
securities rated below investment grade such as those rated Ba by Moody's BB by
S&P, Fitch and Duff, including in securities with the lowest rating assigned by
the Rating Agencies. They may be subject to certain risks with respect to the
issuing entity and to greater market fluctuations than certain lower yielding,
higher rated 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.
Bond prices are inversely related to interest rate changes; however, bond
price volatility also is inversely related to coupon. Accordingly, below
investment grade securities may be relatively less sensitive to interest rate
changes than higher quality securities of comparable maturity, because of their
higher coupon. This higher coupon is what the investor receives in return for
bearing greater credit risk. The higher credit risk associated with below
investment grade securities potentially can have a greater effect on the value
of such securities than may be the case with higher quality issues of comparable
maturity, and will be a substantial factor in the Fund's relative share price
volatility. 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. These Funds will rely on the Manager's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
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.
Mortgage-Related Securities. (All Funds) 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 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 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 a 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 a 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.
Foreign Securities. (All Funds) Foreign securities markets generally are
not as developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign securities markets
are less than in the United States and, at times, volatility of price can be
greater than in the United States.
Because evidences of ownership of foreign securities usually are held
outside the United States, a Fund investing in such securities will be subject
to additional risks which include possible adverse political and economic
developments, seizure or nationalization of foreign deposits and adoption of
governmental restrictions which might adversely affect or restrict the payment
of principal and interest on the foreign securities to investors located outside
the country of the issuer, whether from currency blockage or otherwise.
Moreover, foreign securities held by a Fund may trade on days when the Fund does
not calculate its net asset value and thus affect the Fund's net asset value on
days when investors have no access to the Fund.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Funds have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations.
Simultaneous Investments. (All Funds) Investment decisions for each Fund
are made independently from those of the other investment companies advised by
the Manager. If, however, such other investment companies desire to invest in,
or dispose of, the same securities as a 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.
Investment Restrictions
Each Fund's investment objective is a fundamental policy, 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. In addition, the Funds have
adopted certain investment restrictions as fundamental policies and certain
other investment restrictions as non-fundamental policies, as described below.
Dreyfus Premier High Yield Securities Fund and Dreyfus Short Term High
Yield Fund only. Each Fund 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. Neither Fund 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, its
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 Premier 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 restrictions 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 relating 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 only. The Fund 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 relating 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 relating 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 relating 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.
MANAGEMENT OF THE COMPANY
The Company's Board is responsible for the management and supervision of
each Fund. The Board approves all significant agreements with those companies
that furnish services to the Fund. These companies are as follows:
The Dreyfus Corporation................... Investment Adviser
Dreyfus Service Corporation............... Distributor
Dreyfus Transfer, Inc..................... Transfer Agent
Mellon Bank, N.A.......................... Custodian
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 also is a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway Company, Inc.), a button packager and
distributor, Century Business Services, Inc. (formerly, International
Alliance Services, Inc.), a provider of various outsourcing functions for
small and medium sized companies, and QuikCAT.com, Inc., a private company
engaged in the development of high speed movement, routing, storage and
encryption of data across all modes of data transport. For more than five
years prior to January 1995, he was President, a director and, until
August 1994, Chief Operating Officer of the Manager and Executive Vice
President and a director of the distributor. From August 1994 until
December 31, 1994, he was a director of Mellon Financial Corporation. He
is 56 years old and his address is 200 Park Avenue, New York, New York
10166.
DAVID W. BURKE, Board Member. Board member of various funds in the Dreyfus
Family of Funds. Chairman of the Broadcasting Board of Governors, an
independent board within the United States Information Agency, from August
1994 to November 1998. From August 1994 to December 31, 1994, he 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, he 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 63 years old and his address is 197 Eighth
Street, Charleston, Massachusetts 02109.
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. She is 60 years old and her address is 1172 Park Avenue, New
York, New York 10128.
ROSALIND GERSTEN JACOBS, Board Member. Marketing and Merchandising Consultant.
From 1977 to 1998, she was a 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 74 years old and her address is 19 East 72nd Street, New
York, New York 10021.
JAY I. MELTZER, Board Member. Physician engaged in private practice
specializing in internal medicine. He is a Clinical Professor of Medicine
at Columbia University, College of Physicians and Surgeons; an Adjunct
Clinical Professor of Medicine at Cornell Medical College; and a
Consultant in Medicine at Memorial Sloan Kettering Cancer Center. He
teaches in the section on Society and Medicine and he supervises a group
of medical ethics Fellows. He also writes a monthly commentary on medical
affairs for the Medical Herald. He is 71 years old and his address is 903
Park Avenue, New York, New York 10021.
DANIEL ROSE, Board Member. Chairman 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 serves as a Director and Vice Chairman 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 President of The Harlem
Educational Activities Fund, Inc. and was Chairman of the Housing
Committee of The Real Estate Board of New York, Inc. He is 70 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. Mr. Rudman also serves as a
director of Prime Succession, Inc., Collins & Aikman Corporation, Chubb
Corporation and the Raytheon Company, and as 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, 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 69 years old and his address is c/o
Paul, Weiss, Rifkind, Wharton & Garrison, 1615 L Street, N.W., 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 1995, 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 1977 to December 1991, he was a Senior
Correspondent of ABC News and, from October 1986 to December 1991, he was
Anchor of the ABC News program "Business World," a weekly business program
on the ABC television network. Mr. Vanocur joined ABC News in 1977. He is
71 years old and his address is 2626 Sycamore Canyon, Santa Barbara,
California 93108.
The Company has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Company, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Company for election to the
Company's Board.
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
to each Board member by the Company for the fiscal year ended October 31, 1999,
and by all 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, 1999, were as
follows:
Total Compensation From
------------------------ Company and Fund Complex
Name of Board Member Aggregate Compensation Paid to Board Member
From Company**
Joseph S. DiMartino $6,250 $642,177 (189)
David W. Burke $5,000 $228,500 (59)
Diane Dunst $4,500 $ 37,750 (16)
Rosalind Gersten Jacobs $5,000 $ 92,250 (44)
Jay I. Meltzer $4,500 $ 37,750 (16)
Daniel Rose $4,500 $ 78,625 (31)
Warren B. Rudman $4,500 $ 68,000 (25)
Sander Vanocur $5,000 $ 78,625 (31)
------------------------------------------------------------------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Funds, for which the Board
member serves.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $887 (Dreyfus Premier Core Bond Fund), $573 (Dreyfus
Premier High Yield Securities Fund), $21 (Dreyfus Premier High Yield Debt
Plus Equity Fund), and $2,791 (Dreyfus Short Term High Yield Fund) for all
Board members as a group.
Officers of the Company
STEPHEN E. CANTER, President. President, Chief Operating Officer, and Chief
Investment Officer of the Manager, and an officer of other investment
companies advised and administered by the Manager. Mr. Canter also is
a Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which
is an affiliate of the Manager. He is 54 years old.
JOSEPHCONNOLLY, Vice President and Treasurer. Director-Mutual Fund Accounting
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 42 years old.
MARK N. JACOBS, Vice President. Vice President and General Counsel to the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 53 years old.
JOHN B. HAMMALIAN, Secretary. Associate General Counsel of the Manager, and
an officer of other investment companies advised and administered by
the Manager. He is 36 years old.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 50 years old.
MICHAEL A. ROSENBERG, Assistant Secretary. Associate General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 40 years old.
WILLIAM MCDOWELL, Assistant Treasurer. Senior Accounting Manager-Taxable Fixed
Income of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 41 years old.
JAMES WINDELS, Assistant Treasurer. Senior treasury Manager of the Manager, and
an officer of other investment companies advised and administered by the
Manager. He is 41 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 February 2, 2000.
As of February 2, 2000, the following shareholders were known by the
Company to own of record 5% or more of the outstanding voting securities of the
indicated Fund: Dreyfus Premier Core Bond Fund: Boston Safe Deposit and Trust
Company TTEE, As Agent--Omnibus Account, 1 Cabot Road, Medford, MA 02155 (5.65%
Class A shares); Dreyfus Premier High Yield Securities Fund: Charles Schwab &
Co. Inc., Reinvest Account, 101 Montgomery Street, San Francisco, CA 94104
(19.16% Class A shares); Charles Schwab & Co. Inc., Cash Account, 101 Montgomery
Street, San Francisco, CA 94104 (13.32% Class A shares); Dreyfus Short Term High
Yield Fund: Charles Schwab & Co. Inc., Reinvest Account, 101 Montgomery Street,
San Francisco, CA 94104 (11.03%); and Dreyfus Premier High Yield Debt Plus
Equity Fund: MBCIC, c/o Mellon Bank, N.A., 919 N. Market Street, Wilmington, DE
19801 (83.48% Class A shares, 34.04% Class B shares, 32.99% Class C shares and
100% Class T shares); Merrill Lynch Pierce Fenner & Smith, for the Sole Benefit
of its Customers, 4800 Deer Lake Drive, Jacksonville, FL 32246 (36.23% Class B
shares and 17.75% Class C shares); PaineWebber Incorporated F/B/O Hersey Hawkins
and Jennifer Hawkins JTWROS, P.O. Box 43973, Detroit, MI 48243 (12.94% Class C
shares); PaineWebber Incorporated F/B/O Jerre S. Sachs, 34 Dexter Avenue,
Sandwich, MA 02563 (6.04% Class C shares); PaineWebber Incorporated F/B/O
Christie L. Helm TTEE of Christie L. Helm Trust (UA DTD 1/12/98), P.O. Box 6711,
Big Bear Lake, CA 92315 (6.02% Class C shares); and Prudential Securities, Inc.
F/B/O Allen Bruce Craig & Thelma Diane Craig JTTEN, 17118 SE 47th CT, Bellevue,
WA 98006 (5.09% Class C shares). 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 ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets.
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") between the Company and the Manager. 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. 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:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice-Chairman--Institutional and a
director; Lawrence S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice
Chairman; J. David Officer, Vice Chairman and a director; William T.
Sandalls, Jr., Executive Vice President; Stephen R. Byers, Senior Vice
President; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Diane P. Durnin, Vice President--Product Development; Patrice M. Kozlowski,
Vice President--Corporate Communications; Mary Beth Leibig, Vice
President--Human Resources; Ray Van Cott, Vice President--Information
Systems; Theodore A. Schachar, Vice President--Tax; Wendy Strutt, Vice
President; Richard Terres, Vice President; William H. Maresca, Controller;
James Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary;
and Mandell L. Berman, Burton Borgelt, Steven G. Elliott, Martin C. McGuinn,
Richard W. Sabo, 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. Michael Hoeh, Roger King, John Koerber, and Gerald E.
Thunelius are each Fund's portfolio managers. 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 has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by the Manager's employees does not
disadvantage any fund managed by the Manager. Under the Policy, the Manager's
employees must preclear personal transactions in securities not exempt under the
Policy. In addition, the Manager's employees must report their personal
securities transactions and holdings, which are reviewed for compliance with the
Policy. In that regard, the Manager's portfolio managers and other investment
personnel also are subject to the oversight of Mellon's Investment Ethics
Committee. Portfolio managers and other investment personnel of the Manager who
comply with the Policy's preclearance and disclosure procedures and the
requirements of the Committee may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
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 Company. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not including
the management fees paid by the Funds. The Distributor may use part or all of
such payments to pay Service Agents (as defined below) in respect of these
services. The Manager also may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
All expenses incurred in the operation of the 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 each of the Dreyfus Premier Funds are subject to an annual
distribution fee, and Class A, Class B, Class C and Class T shares of each of
the Dreyfus Premier Funds and shares of each other 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 0.75%
of the value of the average daily net assets of Dreyfus Premier High Yield Debt
Plus Equity Fund, 0.65% of the value of the average daily net assets of each of
Dreyfus Premier High Yield Securities Fund and Dreyfus Short Term High Yield
Fund, and 0.60% of the value of Dreyfus Premier Core Bond Fund's average daily
net assets. For the fiscal years and/or periods ended October 31, 1997, 1998 and
1999, 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
----------------- -------------------------------------- ---------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1998 1999 1997 1998 1999 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ----
Dreyfus Premier $1,670,431 $1,726,911 $1,658,341 $0 $0 $0 $1,670,431 $1,726,911 $1,658,341
Core Bond Fund
Dreyfus Premier $425,180 $1,188,069 $999,216 $279,698 $0 $0 $145,492 $1,188,069 $999,216
High Yield
Securities Fund
Dreyfus Premier N/A $81,082 N/A $23,351 $81,082 N/A $0 $0
High Yield Debt $23,351(1)
Plus Equity Fund
Dreyfus Short $527,739 $1,289,838 $1,115,088 $ 15,583 $0 $0 $511,886 $1,289,838 $1,115,088
Term High Yield
Fund
---------------------------
(1) For the period June 29, 1998 (commencement of operations) through
October 31, 1998.
</TABLE>
As to each 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.
Distributor. Dreyfus Service Corporation, located at 200 Park Avenue, New
York, New York 10166, a wholly-owned subsidiary of the Manager, serves as each
Fund's distributor on a best efforts basis pursuant to an agreement with the
Company which is renewable annually.
With respect to Dreyfus Premier High Yield Debt Plus Equity Fund, for the
fiscal years ended October 31, 1998 and 1999, no amounts were retained by the
Distributor from sales loads on Class A and Class T shares and $0 and $1,137,
respectively, was retained from contingent deferred sales charges ("CDSC") on
Class B shares and $645 and $218, respectively, was retained from the CDSC on
Class C shares. With respect to Dreyfus Premier Real Estate Mortgage Fund for
such periods, no amounts were retained by the Distributor from sales loads on
Class A and Class T shares or the CDSC on Class B and Class C shares. Dreyfus
Premier Core Bond Fund and Dreyfus Premier High Yield Securities Fund did not
offer multiple Classes of shares during such periods.
The Distributor may pay dealers a fee based on the amount invested through
such dealers in Fund shares by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs or (ii) such
plan's or program's aggregate assets available for investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor to
such plans or programs exceeds $1,000,000 ("Eligible Benefit Plans"). Generally,
the fee paid to dealers will not exceed 1% of the amount invested through such
dealers. The Distributor, however, may pay dealers a higher fee and reserves the
right to cease paying these fees at any time. The Distributor will pay such fees
from its own funds, other than amounts received from a Fund, including past
profits or any other source available to it.
The Distributor, at its expense, may provide promotional incentives to
dealers that sell shares of funds advised by the Manager which are sold with a
sales load, such as the Dreyfus Premier Funds. In some instances, those
incentives may be offered only to certain dealers who have sold or may sell
significant amounts of shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), 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,
the Transfer Agent 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, the Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for each Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A. (the "Custodian"), the Manager's parent, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, acts as custodian of the investments of
each Fund. Under a custody agreement with the Company, the Custodian holds each
Fund's securities and keeps all necessary accounts and records. For its custody
services, the Custodian receives a monthly fee based on the market value of the
Funds' assets held in custody and receives certain securities transactions
charges.
HOW TO BUY SHARES
Applicable to Dreyfus Short Term High Yield Fund only.
General. Fund shares are sold without a sales charge. You may be charged a
fee if you effect transactions in Fund shares through a securities dealer, bank
or other financial institution. Stock certificates are issued only upon your
written request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client of
a securities dealer, bank or other financial institution which maintains an
omnibus account in the Fund and has made an aggregate minimum initial purchase
for its customers of $2,500. 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, IRAs set up under a Simplified Employee Pension Plan ("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. For full-time
or part-time employees of the Manager or any of its affiliates or subsidiaries,
directors of the Manager, Board members of a fund advised by the Manager,
including members of the Company's Board, or the spouse or minor child of any of
the foregoing, the minimum initial investment is $1,000. For full-time or
part-time employees of the Manager or any of its affiliates or subsidiaries who
elect to have a portion of their pay directly deposited into their Fund
accounts, the minimum initial investment is $50. The Fund reserves the right to
offer Fund shares without regard to minimum purchase requirements to employees
participating in certain qualified or non-qualified employee benefit plans or
other programs where contributions or account information can be transmitted in
a manner and form acceptable to the Fund. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at any time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builder(R), Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to
the Dreyfus Step Program 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.
Shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form is received by the Transfer Agent
or other entity authorized to receive orders on behalf of the Fund. Net asset
value per share is determined as of the close of trading on the floor of the New
York Stock Exchange (currently 4:00 p.m., New York time) on each day the New
York Stock Exchange or the Transfer Agent is open for business. For purposes of
computing net asset value per share, options will be valued 15 minutes after the
close of trading on the floor of the New York Stock Exchange. Net asset value
per share is computed by dividing the value of the Fund's net assets (i.e., the
value of its assets less liabilities) by the total number of shares outstanding.
The Fund's investments are valued based on market value or, where market
quotations are not readily available, based on fair market value as determined
in good faith by the Fund's Board. For further information regarding the methods
employed in valuing the Fund's investments, see "Determination of Net Asset
Value."
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.
Applicable to the Dreyfus Premier Funds only
General. Class A shares, Class B shares, Class C shares, and Class T
shares (except for Dreyfus Premier Core Bond Fund which does not offer Class T)
of each Dreyfus Premier Fund 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 the Manager or any of its
affiliates or subsidiaries, directors of the Manager, Board members of a fund
advised by the Manager, including members of the Company's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Service Agent.
Dreyfus Premier Core Bond Fund offers Class R shares 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 Retirement 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 Dreyfus Premier Fund shares, you must specify which Class
is being purchased. Stock certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Company reserves
the right to reject any purchase order.
Service Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Service Agents may
impose certain conditions on their clients which are different from those
described in the relevant Fund's Prospectus and this Statement of Additional
Information, 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 Company reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner and
form acceptable to the Company. The Company reserves the right to vary further
the initial and subsequent investment minimum requirements at any time.
The Code imposes various limitations on the amount that may be contributed
to certain Retirement Plans. These limitations apply with respect to
participants at the plan level and, therefore, do not directly affect the amount
that may be invested in a Fund by a Retirement Plan. Participants and plan
sponsors should consult their tax advisers for details.
Fund shares also may be purchased through Dreyfus-Automatic Asset
Builder(R), Dreyfus Government Direct Deposit Privilege or Dreyfus 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.
Fund shares are sold on a continuous basis. Net asset value per share is
determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day the New York Stock
Exchange is open for business. For purposes of determining net asset value,
options and futures contracts will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset value per share
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. Each 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 Company's
Board. For further information regarding the methods employed in valuing the
Funds' investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the 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 floor of the New
York Stock Exchange on that day. Otherwise, Fund shares will be purchased at the
public offering price determined as of the close of trading on the floor of the
New York Stock Exchange on the next business day, except where shares are
purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by the close of
trading on the floor of the New York Stock Exchange on any business day and
transmitted to the Distributor or its designee by the close of its business day
(normally 5:15 p.m., New York time) will be based on the public offering price
per share determined as of the close of trading on the floor of the 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.
Class A Shares. The public offering price for Class A shares of Dreyfus
Premier High Yield Securities Fund and Dreyfus Premier High Yield Debt Plus
Equity Fund is the net asset value per share of that Class plus, except for
shareholders beneficially owning Class A shares of Dreyfus Premier High Yield
Securities Fund on February 29, 2000, a sales load as shown below:
Total Sales Load Class
A Shares
----------- -- --------- ----------------
As a % of As a % Dealers'
Amount of Transaction offering of Reallowance
---------------------
price per net as a % of
share asset offering price
value
per
share
----------- --------- -----------------
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-
The public offering price for Class A shares of Dreyfus Premier Core Bond
Fund is the net asset value per share of that Class plus, except for
shareholders beneficially owning Class A shares of Dreyfus Premier Core Bond
Fund on February 29, 2000, a sales load as shown below:
Total Sales Load Class
A Shares
---------- - ----------- -------------
As a % As a % of Dealers'
Amount of Transaction of net asset Reallowance
---------------------
offering value per as a % of
price share offering
per share price
---------- ----------- -------------
Less than $50,000............. 4.50 4.70 4.25
$50,000 to less than $100,000. 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more............ -0- -0- -0-
For shareholders of Dreyfus Premier Core Bond Fund or Dreyfus Premier High
Yield Securities Fund who beneficially owned Class A shares of either Fund on
February 29, 2000, the public offering price for Class A shares of Dreyfus
Premier Core Bond Fund or Dreyfus Premier High Yield Securities Fund, 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 of Dreyfus Premier Core Bond Fund or Dreyfus Premier High
Yield Securities Fund who owned Class A shares of either Fund on February 29,
2000. 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 scale of sales loads applies to purchases of Class A shares made by
any "purchaser," which term includes an individual and/or spouse purchasing
securities for his, her or their own account or for the account of any minor
children, or a trustee or other fiduciary purchasing securities for a single
trust estate or a single fiduciary account trust estate or a single fiduciary
account (including a pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the 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 Class A shares of the Dreyfus Premier Funds. The example assumes a
purchase of Class A shares of the relevant Dreyfus Premier Fund aggregating less
than $50,000, subject to the schedule of sales charges set forth above at a
price based upon the net asset value of the Fund's Class A shares as of October
31, 1999:
Dreyfus Dreyfus
Premier High Premier Dreyfus
Yield Debt High Yield Premier
Plus Equity Securities Core Bond
Fund.... Fund.... Fund....
----------- ----------- --------
Net Asset Value per Share............ $12.77 $11.52 $14.31
Per Share Sales Charge
Class A - 5.75% of offering price
(6.10% of net asset value per share) $ 0.78 $ 0.70 --
Class A - 4.5% of offering price
(4.70% of net asset value per share) -- -- $ 0.67
-------- -------- ------
Per Share Offering Price to the
Public............................... $13.55 $12.22 $14.98
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of such shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children, at net asset value, provided
they have furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This privilege
also applies to full-time employees of financial institutions affiliated with
NASD member firms whose full-time employees are eligible to purchase Class A
shares at net asset value. In addition, Class A shares are offered at net asset
value to full-time or part-time employees of the Manager or any of its
affiliates or subsidiaries, directors of the Manager, Board members of a fund
advised by the Manager, including members of the Company'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, 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 funds
advised by Founders Asset Management LLC ("Founders"), an affiliate of the
Manager, 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 funds advised by
Founders, or certain other products made available by the Distributor to such
plans.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares be
sold for the benefit of clients participating in a "wrap account" or a similar
program under which such clients pay a fee to such broker-dealer or other
financial institution.
Class A shares of Dreyfus Premier Core Bond Fund 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
Manager or its affiliates. The purchase of Class A shares of such Fund must be
made within 60 days of such redemption and the shares redeemed must have been
subject to an initial sales charge or a contingent deferred sales charge.
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 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).
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 in the relevant Dreyfus Premier Fund's Prospectus and in
this Statement of Additional Information under "How to Redeem Shares--Contingent
Deferred Sales Charge--Class B Shares." The Distributor compensates certain
Service Agents for selling Class B shares at the time of purchase from its own
assets. The proceeds of the CDSC and the Distribution Plan fee, in part, are
used to defray these expenses.
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. Class B shares that have been acquired
through the reinvestment of dividends and distributions will be converted on a
pro rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C Shares. The public offering price for Class C shares is the 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 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 per share of that Class plus a sales load as shown below:
Total Sales Load Class T Shares
---------- - ----------- -------------
As a % of As a % of Dealers'
Amount of Transaction offering net asset Reallowance
--------------------- price value per as a % of
per share share offering
price
---------- ----------- -------------
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-
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% 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. 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 a Dreyfus Premier Fund generally will find it
beneficial to purchase Class A shares rather than Class T shares.
The scale of sales loads applies to purchases of Class T shares made by
any "purchaser," as defined above under "Class A Shares."
Set forth below is an example of the method of computing the offering
price of Class T shares of the Dreyfus Premier Funds offering Class T shares.
The example assumes a purchase of Class T shares of the relevant Dreyfus Premier
Fund aggregating less than $50,000, subject to the schedule of sales charges set
forth above at a price based upon the net asset value of the Fund's Class T
shares (or Class A shares with respect to Dreyfus Premier High Yield Securities
Fund) as of October 31, 1999:
Dreyfus Premier
HighYield Dreyfus Premier
Debt Plus High Yield
Equity Fund Securities Fund
Net Asset Value per Share................ $12.79 $11.52
Per Share Sales Charge
Class T - 450% of offering price
(4.70% of net asset value per share) $ 0.60 $ 0.54
----- -----
Per Share Offering Price to the Public.. $13.39 $12.06
Class T shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class T 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, 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 funds
advised by Founders, 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 funds advised
by Founders, or certain other products made available by the Distributor to such
plans.
Class T shares of Dreyfus Premier High Yield Securities Fund and Dreyfus
Premier High Yield Debt Plus Equity Fund 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 Manager or
its affiliates. The purchase of Class T shares of such Funds must be made within
60 days of such redemption and the shares redeemed must have been subject to an
initial sales charge or a contingent deferred sales charge.
Right of Accumulation--Class A or Class T Shares. Reduced sales loads
apply to any purchase of Class A and Class T shares, shares of other funds in
the Dreyfus Premier Family of Funds which are sold with a sales load, shares of
certain other funds advised by the Manager or Founders which are sold with a
sales load and shares acquired by a previous exchange of such shares
(hereinafter referred to as "Eligible Funds"), by you and any related
"purchaser" as defined above, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased and
still hold Class A or Class T shares of a Dreyfus Premier Fund, or shares of any
other Eligible Fund, or combination thereof, with an aggregate current market
value of $40,000 and subsequently purchase Class A or Class T shares of such
Fund having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4.50% of the offering price in the case
of Class A shares, or 4.00% of the offering price in the case of Class T shares.
All present holdings of Eligible Funds may be combined to determine the current
offering price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase. Class A shares of Dreyfus Premier Core
Bond Fund are subject to a different sales load schedule as described above.
To qualify at the time of purchase you or your Service Agent must notify
the Distributor if orders are made by wire, or the Transfer Agent if orders are
made by mail. The reduced sales load is subject to confirmation of your holdings
through a check of appropriate records.
Applicable to All Funds
Dreyfus TeleTransfer Privilege. You may purchase shares 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 a bank account
maintained in a domestic financial institution which is an Automated Clearing
House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any day that 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 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 Dreyfus 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 "How to Redeem Shares--Dreyfus TeleTransfer
Privilege."
Reopening an Account. You 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
Class B, Class C and Class T shares of each Dreyfus Premier Fund are
subject to a Distribution Plan, and Class A, Class B, Class C and Class T shares
of each Dreyfus Premier Fund and the shares of each other Fund are subject to a
Shareholder Services Plan.
Distribution Plan. (Dreyfus Premier Funds 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 each Dreyfus Premier Fund pursuant to
which the Fund pays the Distributor for distributing such shares at an annual
rate of 0.50% of the value of the average daily net assets of Class B shares of
Dreyfus Premier Core Bond Fund and 0.75% of the value of the average daily net
assets of Class B shares of each other Dreyfus Premier Fund and of Class C
shares of each Dreyfus Premier Fund, and 0.25% of the value of the average daily
net assets of 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. 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, 1999, Class B, Class C and Class T
shares of Dreyfus Premier High Yield Debt Plus Equity Fund paid $35,076, $7,996
and $2,483, respectively, pursuant to the Distribution Plan, all of which
amounts was paid by Premier Mutual Fund Services, Inc. ("Premier") the Fund's
distributor during the fiscal year, to Service Agents for distribution. The
Distribution Plan was not in effect with respect to Dreyfus Premier Core Bond
Fund or Dreyfus Premier High Yield Securities Fund as of October 31, 1999.
Shareholder Services Plan. (All Funds) The Company has adopted a
Shareholder Services Plan as to Class A, Class B, Class C and Class T shares of
each of the Dreyfus Premier Funds, 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 such shares a fee at the annual rate of 0.25% of the
value of the average daily net assets of the 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 Service Agents in respect of these services.
A quarterly report of the amounts expended under the Shareholder Services
Plan (including as to each relevant Class of a Dreyfus Premier 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 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, 1999, Dreyfus Premier Core Bond Fund
(Class A) paid $690,976, Dreyfus Premier High Yield Securities Fund (Class A)
paid $384,314 and Dreyfus Short Term High Yield Fund paid $428,880, pursuant to
the Shareholder Services Plan. For the fiscal year ended October 31, 1999,
Dreyfus Premier High Yield Debt Plus Equity Fund paid $10,187 for Class A,
$11,692 for Class B, $2,665 for Class C and $2,483 for Class T, pursuant to the
Shareholder Services Plan. All of these amounts reflect payments made to
Premier, the Fund's distributor during the fiscal year.
HOW TO REDEEM SHARES
Redemption Fee. (Dreyfus Premier High Yield Securities Fund only) Prior to
March 1, 2000, Dreyfus Premier High Yield Securities Fund deducted a redemption
fee equal to 1% of the net asset value of Fund shares redeemed (including
redemptions through use of the Fund Exchanges service) where the redemption or
exchange occurred 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 was deemed to occur on the first day of such month. The
redemption fee was deducted from redemption proceeds and retained by the Fund.
For the fiscal year ended October 31, 1999, redemption fees retained by Dreyfus
Premier High Yield Securities Fund amounted to $84,838.
Contingent Deferred Sales Charge--Class B Shares. (Dreyfus Premier Funds
only) A CDSC is imposed on any redemption 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 held by you at the time of redemption.
If the aggregate value of 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 for 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 Distributor receives the proceeds from
the CDSC imposed on the redemption of Class B shares.
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
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time within the
applicable six-year period.
For example, assume an investor purchased 100 shares at $10 per share for
a cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of the investment. Assuming at the time of the
redemption the net asset value had appreciated to $12 per share, the value of
the investor's shares would be $1,260 (105 shares at $12 per share). The CDSC
would not be applied to the value of the reinvested dividend shares and the
amount which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4% (the
applicable rate in the second year after purchase) for a total CDSC of $9.60.
Contingent Deferred Sales Charge--Class C Shares. (Dreyfus Premier Funds
only) A CDSC of 1% 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. The Distributor
receives the proceeds from the CDSC imposed on the redemption of Class C shares.
Waiver of CDSC. (Dreyfus Premier Funds only) The CDSC may be waived in
connection with (a) redemptions made within one year after the death or
disability, as defined in Section 72(m)(7) of the Code, of the shareholder, (b)
redemptions by employees participating in Eligible Benefit Plans, (c)
redemptions as a result of a combination of any investment company with the Fund
by merger, acquisition of assets or otherwise, (d) a distribution following
retirement under a tax-deferred retirement plan or upon attaining age 70 1/2 in
the case of an IRA or Keogh plan or custodial account pursuant to Section 403(b)
of the Code, and (e) redemptions pursuant to the Automatic Withdrawal Plan, as
described below. If the Company's Board determines to discontinue the waiver of
the CDSC, the disclosure herein will be revised appropriately. Any Fund shares
subject to a CDSC which were purchased prior to the termination of such waiver
will have the CDSC waived as provided in the Fund's Prospectus or this Statement
of Additional Information at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Service Agent must notify the Distributor. Any
such qualification is subject to confirmation of your entitlement.
Redemption Through a Selected Dealer. (Dreyfus Premier Funds only) 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. (Dreyfus Premier Funds only) 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 load, or reinstate your account for the purpose of exercising
Fund Exchanges. Upon reinstatement, with respect to Class B shares, or Class A
or Class T shares if such shares were subject to a CDSC, your account will be
credited with an amount equal to the CDSC previously paid upon redemption of the
shares reinvested. The Reinvestment Privilege may be exercised only once.
Wire Redemption Privilege. (Dreyfus Short Term High Yield Fund only) By
using this Privilege, you authorize the Transfer Agent to act on wire, telephone
or letter redemption instructions from any person representing himself or
herself to be you, or a representative of your Service Agent, and reasonably
believed by the Transfer Agent to be genuine. 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 you have specified on the
Account Application or Shareholder Services Form, or to a correspondent bank if
your 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 your bank is necessary to avoid a delay in crediting the
funds to your bank account.
If you have access to telegraphic equipment you 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
If you do not have direct access to telegraphic equipment you may have the
wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. You should advise the operator that the above transmittal code must be
used and you 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."
Dreyfus TeleTransfer Privilege. (All Funds) You may request by telephone
that redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an Automated Clearing House ("ACH") member may be designated. Holders
of jointly registered Fund or bank accounts may redeem through the Dreyfus
TeleTransfer Privilege for transfer to their bank account not more than $500,000
within any 30-day period. You should be aware that if you have selected the
Dreyfus TeleTransfer Privilege, any request for a wire redemption will be
effected as a Dreyfus TeleTransfer transaction through the ACH system unless
more prompt transmittal specifically is requested. Redemption proceeds will be
on deposit in your account at an ACH member bank ordinarily two business days
after receipt of the redemption request. See "How to Buy Shares--Dreyfus
TeleTransfer Privilege."
Share Certificates; Signatures. (All Funds) 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.
Redemption Commitment. (All Funds) 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 such 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 sells such securities, brokerage charges
would be incurred.
Suspension of Redemptions. (All Funds) 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.
Small Account Fee. (All Funds) To offset the relatively higher costs of
servicing smaller accounts, a Fund will charge regular accounts with balances
below $2,000 an annual fee of $12. The valuation of accounts and the deductions
are expected to take place during the last four months of each year. The fee
will be waived for any investor whose aggregate Dreyfus mutual fund investments
total at least $24,000, and will not apply to IRA accounts or to accounts
participating in automatic investment programs or opened through a securities
dealer, bank or other financial institution, or to other fiduciary accounts.
SHAREHOLDER SERVICES
Fund Exchanges. (All Funds) You may purchase, in exchange for shares of a
Fund, shares of certain other funds managed or administered by the Manager or
Founders, to the extent such shares are offered for sale in your state of
residence. Shares of a Dreyfus Premier Fund may be exchanged for shares of the
same Class of such other funds, except that Class T shares of a Dreyfus Premier
Fund may be exchanged for Class A shares of certain funds in the Dreyfus Premier
Family of Funds. Shares of other funds (including the same Class of other funds,
or Class A shares of such funds in the case of Class T shares of a Dreyfus
Premier Fund) purchased by exchange will be purchased on the basis of relative
net asset value per share as follows:
A. Exchanges for shares of funds offered without a sales load will
be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), but if the sales load applicable to the
Offered Shares exceeds the maximum sales load that could have
been imposed in connection with the Purchased Shares (at the time
the Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
E. Shares of funds subject to a CDSC 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, you or, with respect to the
Dreyfus Premier Funds, your Service Agent acting on your behalf, must notify the
Transfer Agent of their prior ownership of fund shares and their account number.
With respect to each of the Dreyfus Premier Funds, 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 Manager. 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 Dreyfus
Auto-Exchange Privilege, Dreyfus Dividend Sweep and the Automatic Withdrawal
Plan.
To request an exchange, you or, with respect to the Dreyfus Premier Funds,
your Service Agent acting on your behalf, must give exchange instructions to the
Transfer Agent in writing or by telephone. If you did not purchase your Dreyfus
Premier Fund shares through a Service Agent, you may give exchange instructions
directly to the Transfer Agent. The Fund automatically gives you the ability to
issue exchange instructions by telephone, unless you check the applicable "No"
box on the Account Application, indicating that you specifically refuse this
Privilege. By using the Telephone Exchange Privilege, you authorize the Transfer
Agent to act on telephonic instructions from any person representing himself or
herself to be you, or a representative of your Service Agent, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be subject
to limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserve 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.
Exchanges of Class R Shares of Dreyfus Premier Core Bond 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.
Dreyfus Auto-Exchange Privilege. (All Funds) Dreyfus Auto-Exchange
Privilege permits you to purchase, in exchange for shares of a Fund, shares of
certain other funds advised by the Manager or Founders of which you are a
shareholder. Shares of a Dreyfus Premier Fund may be exchanged for shares of the
same Class of such other funds, except that Class T shares of a Dreyfus Premier
Fund may be exchanged for Class A shares of certain funds in the Dreyfus Premier
Family of Funds. This Privilege is available only for existing accounts. Shares
will be exchanged on the basis of relative net asset value as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. You will be notified if your account falls below the amount designated
to be exchanged under this Privilege. In this case, your 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.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Shares may be exchanged only between
accounts having identical names and other identifying designations. The Fund
reserves the right to reject any exchange request in whole or in part. The Fund
Exchanges service or Dreyfus Auto-Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
Dreyfus-Automatic Asset Builder(R). (All Funds) 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.
Dreyfus Government Direct Deposit Privilege. (All Funds) Dreyfus
Government Direct Deposit Privilege enables you to purchase Fund shares (minimum
of $100 and maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the U.S.
Government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect.
Dreyfus Payroll Savings Plan. (All Funds) Dreyfus Payroll Savings Plan
permits you to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon your employer's direct deposit
program, you may have part or all of your paycheck transferred to your existing
Dreyfus account electronically through the Automated Clearing House system at
each pay period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. It is the
sole responsibility of your employer to arrange for transactions under the
Dreyfus Payroll Savings Plan.
Dreyfus Step Program. (Dreyfus Short Term High Yield Fund only) The
Dreyfus Step Program enables you to purchase Fund shares without regard to the
Fund's minimum initial investment requirements through Dreyfus-Automatic Asset
Builder(R), Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll
Savings Plan. To establish a Dreyfus Step Program account, you must supply the
necessary information on the Account Application and file the required
authorization form(s) with the Transfer Agent. For more information concerning
this Program, or to request the necessary authorization form(s), please call
toll free 1-800-782-6620. You may terminate your participation in this Program
at any time by discontinuing your participation in Dreyfus-Automatic Asset
Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan, as the case may be, as provided under the terms of such Privilege(s). The
Fund may modify or terminate this Program at any time.
Dreyfus Dividend Options. (All Funds) Dreyfus Dividend Sweep allows you to
invest automatically your dividends or dividends and capital gain distributions,
if any, from a Fund in shares of another fund advised by the Manager or Founders
of which you are a shareholder. Dividends or distributions from a Dreyfus
Premier Fund Class of shares may be invested in shares of the same Class of such
other funds (or Class A shares with respect to Class T shares). 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
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 that charges a sales load
may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), but 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.
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.
Automatic Withdrawal Plan. (All Funds) 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.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted. The
Automatic Withdrawal Plan may be terminated 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.
Certain 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.
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 shareholders account will
be subject to a CDSC on the amounts exceeding 12% of the initial account value.
Withdrawals of Class A or Class T shares subject to a CDSC and Class C shares
under the Automatic Withdrawal Plan will be subject to any applicable CDSC.
Purchases of additional Class A or Class T shares where the sales load is
imposed concurrently with withdrawals of Class A or Class T shares generally are
undesirable.
Letter of Intent--Class A and Class T Shares. (Dreyfus Premier Funds only)
By signing a Letter of Intent form, which can be obtained by calling
1-800-554-4611, you become eligible for the reduced sales load applicable to the
total number of Eligible Fund shares purchased in a 13-month period pursuant to
the terms and conditions set forth in the Letter of Intent. A minimum initial
purchase of $5,000 is required. To compute the applicable sales load, the
offering price of shares you hold (on the date of submission of the Letter of
Intent) in any Eligible Fund that may be used toward "Right of Accumulation"
benefits described above may be used as a credit toward completion of the Letter
of Intent. However, the reduced sales load will be applied only to new
purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A or Class T shares of the Fund held in escrow to
realize the difference. Signing a Letter of Intent does not bind you to
purchase, or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended purchase to
obtain the reduced sales load. At the time you purchase Class A or Class T
shares, you must indicate your intention to do so under a Letter of Intent.
Purchases pursuant to a Letter of Intent will be made at the then-current net
asset value plus the applicable sales load in effect at the time such Letter of
Intent was executed.
Corporate Pension/Profit-Sharing and Retirement Plans. (All Funds) 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, SEP-IRAs, Rollover IRAs and Education
IRAs), and 403(b)(7) Plans. Plan support services also are available.
If you wish to purchase Fund shares in conjunction with a Keogh Plan, a
403(b)(7) Plan or an IRA, including a SEP-IRA, you 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.
You 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
Valuation of Portfolio Securities. Each Fund's investments are valued each
business day using available market quotations or at fair value. Substantially
all of a 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 purchased by Dreyfus
Premier High Yield Debt Plus Equity 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 a Dreyfus Premier Fund, the per
share net asset value of each Class of shares of these Funds 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
Management believes that each Fund has qualified as a "regulated
investment company" under the Code for the fiscal year ended October 31, 1999.
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. If a
Fund did not qualify as a regulated investment company, it would be treated for
tax purposes as an ordinary corporation subject to Federal income tax. The term
"regulated investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
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
dividends or distributions 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.
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 988 and 1256 of the Code. As such, all or a
portion of any short or long-term capital gain from certain straddle
transactions may be recharacterized to ordinary income.
If 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 by a broker of shares of a Fund or other funds advised by the
Manager or its affiliates 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. 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 aggregate amount of transactions during the fiscal year ended October
31, 1999 in securities effected on an agency basis through a broker for, among
other things, research services, and the commissions and concessions related to
such transactions were as follows:
Transaction Amount Commissions & Concessions
Dreyfus Premier High Yield $ 267,144 $ 870
Debt Plus Equity Fund
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, 1999 (as applicable). None of these
amounts was paid to the Distributor, or to Premier, the Fund's distributor
during the fiscal year.
<TABLE>
Brokerage Commissions Gross Spreads and Concessions
----------------------------------- -----------------------------
1997 1998 1999 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Dreyfus Premier Core Bond Fund $41,764 $274,824 $88,425 $217,238 $0 $3,120
Dreyfus Premier High Yield $17,136 $172,013 $0 $266,750 $0 $0
Securities Fund
Dreyfus Premier High Yield Debt Plus N/A $0(1) $8,360 N/A $0(1) $0
Equity Fund
Dreyfus Short Term High Yield Fund $80 $0 $0 $52,200 $0 $0
----------------------
(1) For the period June 29, 1998 (commencement of operations) through
October 31, 1998.
</TABLE>
From time to time, consistent with the policy of obtaining the most
favorable net price, the Company may conduct brokerage transactions through the
Manager or its affiliates, including Dreyfus Brokerage Services, Inc. ("DBS").
The Company's Board has adopted procedures in conformity with Rule 17e-1 under
the 1940 Act to ensure that all brokerage commissions paid to the Manager or its
affiliates are reasonable and fair. No brokerage transactions were conducted
through, and no amounts were paid to, the Manager or its affiliates, including
DBS, for the fiscal years ended October 31, 1997 and 1998. For the fiscal year
ended October 31, 1999, the amounts paid to DBS by the indicated Fund for
brokerage commissions and the percentage such amounts represent of the aggregate
brokerage commissions paid by the Fund and of the aggregate dollar amount of
transactions for which the Fund paid brokerage commissions were as follows:
Brokerage % of Aggregate % of Aggregate Dollar
Name of Fund Commissions Brokerage Amount of
Commissions Transactions
Dreyfus Premier High $1,370 16% 18%
Yield Debt Plus
Equity Fund
PERFORMANCE INFORMATION
The 30-day yield for the Funds set forth below, as of October 31, 1999, was as
follows:
Name of Fund 30-day Yield
Dreyfus Premier Core Bond Fund (Class A) 6.89%
Dreyfus Premier High Yield Securities
Fund (Class A) 11.85%
Dreyfus Short Term High Yield Fund 10.97%
The 30-day yield for each Class of shares (as applicable) of the indicated
Dreyfus Premier Funds, as of October 31, 1999, is set forth below. During the
period, the Manager waived a portion of the management fee and/or absorbed a
portion of each such Fund's expenses. Absent such arrangements, each yield would
have been lower, as reflected in the column entitled "30-day Net Yield."
Name of Fund 30-day Yield 30-day Net Yield
Dreyfus Premier High Yield
Debt Plus Equity Fund
Class A 10.09% 9.16%
Class B 9.89% 8.90%
Class C 9.92% 8.93%
Class T 9.99% 9.04%
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, 1999, or since the Fund's commencement of operations (as
indicated), for each Fund (and Class of shares), was as follows:
Average Annual Total Return
Name of Fund Since
------------
One Year Five Years Ten Years Inception
Dreyfus Premier Core Bond Fund
Class A .25% 7.99% 8.08% N/A
Dreyfus Premier High Yield
Securities Fund
Class A 12.78% N/A N/A 7.96%(1)
Dreyfus Premier High Yield Debt
Plus Equity Fund
Class A 34.50% N/A N/A 9.21%(2)
Class B 37.82% N/A N/A 10.43%(2)
Class C 40.70% N/A N/A 13.24%(2)
Class T 36.04% N/A N/A 10.01%(2)
Dreyfus Short Term High Yield 3.06% N/A N/A 5.40%(3)
Fund
----------------------
(1) For the period March 25, 1996 (commencement of operations) through
October 31, 1999.
(2) For the period June 29, 1998 (commencement of operations) through
October 31, 1999.
(3) For the period August 16, 1996 (commencement of operations) through
October 31, 1999.
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, 1999 was as follows:
Name of Fund Total Return
Dreyfus Short Term High Yield Fund(1) 18.40%
----------------------
(1) For the period August 16, 1996 (commencement of operations) through
October 31, 1999.
The total return for each Fund indicated below for the period since the
Fund's commencement of operations through October 31, 1999 was as follows:
Aggregate Total Return
Since Inception Based on
Maximum Offering Price
Aggregate Total Return for Class A and Class T
Since Inception Based on or Deduction of Maximum
Name of Fund Net Asset Value (without CDSC for Class B and
deduction of maximum Class C
sales load)
-------------------- -------------------------- --------------------------
Dreyfus Premier Core Bond
Fund
Class A(1) 212.22% 194.35%
Dreyfus Premier High
Yield Securities
Fund
Class A(2) 39.76% 31.75%
Dreyfus Premier High
Yield Debt Plus
Equity Fund
Class A(3) 19.37% 12.53%
Class B(3) 18.22% 14.22%
Class C(3) 18.13% 18.13%
Class T(3) 19.00% 13.63%
----------------------
(1) For the period October 3, 1986 (commencement of operations) through
October 31, 1999.
(2) For the period March 25, 1996 (commencement of operations) through
October 31, 1999.
(3) For the period June 29, 1998 (commencement of operations) through
October 31, 1999.
During these periods, with respect to each Fund, other than Dreyfus
Premier Core Bond Fund, certain fees were waived, and/or certain expenses were
borne, by the Manager, without which the returns would have been lower.
Class B, Class C and Class R shares of Dreyfus Premier Core Bond Fund and
Class B, Class C and Class T shares of Dreyfus Premier High Yield Securities
Fund were not being offered as of October 31, 1999, so performance information
is not provided for such Classes.
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
each of the Dreyfus Premier Funds) per share at the beginning of a stated period
from the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period and, as to
each of the Dreyfus Premier Funds, 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 each of the Dreyfus Premier Funds.
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.
On November 5, 1998, shareholders of Dreyfus Premier 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 November 15,
1998, the Fund's investment objective was to maximize current income.
Accordingly, performance for periods prior to November 15, 1998 reflects the
Fund being managed pursuant to its prior investment objective.
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 COMPANY AND FUNDS
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 the Dreyfus Premier Funds, and have
equal rights as to dividends and in liquidation. Shares have no preemptive or
subscription rights and are freely transferable.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for a Fund to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office. Fund
shareholders may remove a Board member by the affirmative vote of two-thirds of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
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 shareholders 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.
To date, the Board has authorized the creation of four 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.
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.
Each Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating 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 following a market-timing strategy or is
otherwise engaging 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 or the Dreyfus Premier Family of Funds.
Generally, an investor who makes more than four exchanges out of the Fund during
any calendar year or who makes exchanges that appear to coincide with a
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 any 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.
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.
COUNSEL AND INDEPENDENT AUDITORS
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 independent auditors of the Company.
<PAGE>
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 an 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 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 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 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 rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba
Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and, therefore, not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa
Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds rated Ca present obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C
Bonds rated C are the lowest rated class of bonds, and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a ranking for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
Commercial Paper 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 more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirements for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Issuers (or related supporting institutions) rated Not Prime do not fall
within any of the Prime rating categories.
Fitch
Bond Rating
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of 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, 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.
