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PROSPECTUS SEPTEMBER 1, 1997
DREYFUS PREMIER MUNICIPAL BOND FUND
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Dreyfus Premier Municipal Bond Fund (the "Fund") is an open-end,
diversified, management investment company, known as a mutual fund. The
Fund's investment objective is to maximize current income exempt from Federal
income tax to the extent consistent with the preservation of capital.
By this Prospectus, the Fund is offering three Classes of shares_Class A,
Class B and Class C_which are described herein. See "Alternative Purchase
Methods."
The Fund provides free redemption checks with respect to Class A,
which you can use in amounts of $500 or more for cash or to pay bills. You
continue to earn income on the amount of the check until it clears. You can
purchase or redeem all Classes of shares by telephone using the TeleTransfer
Privilege.
The Dreyfus Corporation professionally manages the Fund's portfolio.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated September 1, 1997,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Securities and
Exchange Commission maintains a Web site (http://www.sec.gov) that contains
the Statement of Additional Information, material incorporated by reference,
and other information regarding the Fund. For a free copy of the Statement of
Additional Information, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611. When telephoning, ask
for Operator 144.
Mutual fund shares are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Mutual fund shares involve certain investment risks, including the
possible loss of principal.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Table of Contents
Page
Fee Table....................................................... 3
Condensed Financial Information................................. 4
Alternative Purchase Methods.................................... 5
Description of the Fund......................................... 5
Management of the Fund.......................................... 8
How to Buy Shares............................................... 8
Shareholder Services............................................ 11
How to Redeem Shares............................................ 14
Distribution Plan and Shareholder Services Plan................. 17
Dividends, Distributions and Taxes.............................. 17
Performance Information......................................... 18
General Information............................................. 19
Appendix........................................................ 21
Page 2
<TABLE>
<CAPTION>
Fee Table
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................ 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)...........................None* 4.00% 1.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees............................................................ .55% .55% .55%
12b-1 Fees..................................................................None .50% .75%
Other Expenses............................................................. .36% .38% .34%
Total Fund Operating Expenses............................................ .91% 1.43% 1.64%
Example
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) except where noted, redemption
at the end of each time period: CLASS A CLASS B CLASS C
1 Year.................................................................... $ 54 $55/15** $27/17**
3 Years.................................................................... $ 73 $75/45** $ 52
5 Years.................................................................... $ 93 $98/78** $ 89
10 Years......................................................................$152 $144*** $194
* A contingent deferred sales charge of 1% may be assessed on certain redemptions of Class A shares purchased
without an initial sales charge as part of an investment of $1 million or more.
** Assuming no redemption of shares.
***.Ten year figure assumes conversion of Class B shares to Class A shares at the end of the sixth year following
the date of purchase.
</TABLE>
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The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be greater
or less than those indicated. Moreover, while the example assumes a 5% annual
return, the Fund's actual performance will vary and may result in an actual
return greater or less than 5%.
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The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Long-term investors in
Class B or Class C shares could pay more in 12b-1 fees than the economic
equivalent of paying a front-end sales charge. Certain Service Agents (as
defined below) may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of the Fund," "How to Buy Shares," "How to Redeem
Shares," and "Distribution Plan and Shareholder Services Plan."
Page 3
Condensed Financial Information
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
Financial Highlights
Contained below is per share operating performance data for a share
of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class A Shares
_______________________________________________________________________________________________
Year Ended April 30,
_______________________________________________________________________________________________
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of year $12.83 $12.30 $12.97 $12.77 $13.28 $13.75 $14.45 $13.81 $13.86 $13.85
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Investment Operations:
Investment income-net........ .97 1.01 .99 .98 .94 .92 .89 .84 .86 .82
Net realized and unrealized
gain (loss) on investments (.53) .67 (.20) .51 .49 .91 (.59) .05 (.01). .27
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total from Investment
Operations .44 1.68 .79 1.49 1.43 1.83 .30 .89 .85 1.09
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment
income-net (.97) (1.01) (.99) (.98) (.94) (.92) (.89) (.84) (.86) (.82)
Dividends from net
realized gain on investments ._ ._ ._ ._ (.02) (.21). (.05) ._ ._. (.01)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total Distributions........ (.97) (1.01) (.99) (.98) (.96) (1.13) (.94) (.84) (.86) (.83)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year. $12.30 $12.97 $12.77 $13.28 $13.75 $14.45 $13.81 $13.86 $13.85 $14.11
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN*..... 3.64% 14.13% 6.25% 12.13% 11.08% 13.76% 1.84% 6.72% 6.08% 8.03%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets ._ ._ ._ .22% .54% .74% .85% .92% .92% .91%
Ratio of net investment income
to average net assets 7.81% 7.72% 7.51% 7.43% 6.90% 6.43% 6.01% 6.16% 5.98% 5.84%
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation 1.50% 1.50% 1.15% .82% .40% .20% .06% ._ ._ ._
Portfolio Turnover Rate..... 33.25% 143.20% 63.53% 41.30% 50.72% 30.99% 22.15% 38.60% 36.59% 28.17%
Net Assets, end of year
(000's omitted) $5,650 $26,342 $100,784 $247,195 $388,793 $526,606 $546,036 $495,616 $474,044 $457,327
*Exclusive of sales load.
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
________________________________________________ __________________
Year Ended April 30, Year Ended April 30,
________________________________________________ __________________
1993(1) 1994 1995 1996 1997 1996(2) 1997
______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year. .$14.02 $14.45 $13.81 $13.86 $13.85 $14.28 $13.87
______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net............... .24 .80 .77 .78 .75 .60 .72
Net realized and unrealized
gain (loss) on investments.......... .43 (.59) .05 (.01) .27 (.41) .26
______ ______ ______ ______ ______ ______ ______
TOTAL FROM INVESTMENT OPERATIONS.... .67 .21 .82 .77 1.02 .19 .98
______ ______ ______ ______ ______ ______ ______
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.80) (.77) (.78) (.75) (.60) (.72)
Dividends from net realized gain
on investments ._ (.05) ._ ._ (.01) ._ (.01)
______ ______ ______ ______ ______ ______ ______
TOTAL DISTRIBUTIONS................. (.24) (.85) (.77) (.78) (.76) (.60) (.73)
______ ______ ______ ______ ______ ______ ______
Net asset value, end of year........ $14.45 $13.81 $13.86 $13.85 $14.11 $13.87 $14.12
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)......... 16.80%(4) 1.26% 6.15% 5.53% 7.49% 1.56%(4) 7.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets. 1.15%(4) 1.40% 1.44% 1.43% 1.43% 1.77%(4) 1.64%
Ratio of net investment income
to average net assets............ 5.13%(4) 5.33% 5.62% 5.46% 5.33% 4.84%(4) 5.01%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation..............10%(4) .05% ._ ._ ._ ._ ._
Portfolio Turnover Rate............. 30.99% 22.15% 38.60% 36.59% 28.17% 36.59% 28.17%
Net Assets, end of year
(000's omitted)................... $19,855 $95,643 $99,411 $106,931 $109,485.... ... $340 $1,049
(1) From January 15, 1993 (commencement of initial offering)to April 30, 1993.
(2) From July 13, 1995 (commencement of initial offering) to April 30, 1996.
(3 )Exclusive of sales load.
(4) Annualized.
</TABLE>
Further information about the Fund's performance is contained in
the Fund's annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
Page 4
Alternative Purchase Methods
The Fund offers you three methods of purchasing Fund shares. You
may choose the Class of shares that best suits your needs, given the amount
of your purchase, the length of time you expect to hold your shares and any
other relevant circumstances. Each Fund share represents an identical pro
rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a maximum
initial sales charge of 4.50% of the public offering price imposed at the
time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Shares _ Class A Shares." These shares are
subject to an annual service fee at the rate of .25 of 1% of the value of the
average daily net assets of Class A. See "Distribution Plan and Shareholder
Services Plan _ Shareholder Services Plan."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which is
assessed if you redeem Class B shares within six years of purchase. See "How
to Buy Shares _ Class B Shares" and "How to Redeem Shares _ Contingent
Deferred Sales Charge_Class B Shares." These shares also are subject to an
annual service fee at the rate of .25 of 1% of the value of the average daily
net assets of Class B. In addition, Class B shares are subject to an annual
distribution fee at the rate of .50 of 1% of the value of the average daily
net assets of Class B. See "Distribution Plan and Shareholder Services Plan."
The distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. Approximately six
years after the date of purchase, Class B shares automatically will convert
to Class A shares, based on the relative net asset values for shares of each
such Class, and will no longer be subject to the distribution fee. Class B
shares that have been acquired through the reinvestment of dividends and
distributions will be converted on a pro rata basis together with other Class
B shares, in the proportion that a shareholder's Class B shares converting to
Class A shares bears to the total Class B shares not acquired through the
reinvestment of dividends and distributions.
Class C shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class C shares are
subject to a 1% CDSC, which is assessed only if you redeem Class C shares
within one year of their purchase. See "How to Buy Shares _ Class C Shares"
and "How to Redeem Shares _ Contingent Deferred Sales Charge _ Class C
Shares." These shares also are subject to an annual service fee at the rate
of .25 of 1%, and an annual distribution fee at the rate of .75 of 1%, of the
value of the average daily net assets of Class C. See "Distribution Plan and
Shareholder Services Plan." The distribution fee paid by Class C will cause
such Class to have a higher expense ratio and to pay lower dividends than
Class A.
The decision as to which Class of shares is more beneficial to you
depends on the amount and the intended length of your investment. You should
consider whether, during the anticipated life of your investment in the Fund,
the accumulated distribution fee and CDSC, if any, on Class B or Class C
shares would be less than the initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential
would be offset by the return of Class A. Additionally, investors qualifying
for reduced initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A shares because
the accumulated continuing distribution fees on Class B or Class C shares may
exceed the initial sales charge on Class A shares during the life of the
investment. Finally, you should consider the effect of the CDSC period and
any conversion rights of the Classes in the context of your own investment
time frame. For example, while Class C shares have a shorter CDSC period than
Class B shares, Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing distribution fee. Thus, Class A and
Class B shares may be more attractive than Class C shares to investors with
long term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares, and
for investors who invest between $100,000 and $999,999 in Fund shares with
long term investment outlooks. Class A shares will not be appropriate for
investors who invest less than $50,000 in Fund shares.
Description of the Fund
Investment Objective
The Fund's investment objective is to maximize current income
exempt from Federal income tax to the extent consistent with the preservation
of capital. To accomplish its investment objective, the Fund invests
primarily in Municipal Obligations (described below) rated at least Baa by
Moody's Investors Service, Inc. ("Moody's ") or BBB by Standard & Poor's
Ratings Group ("S&P") or Fitch Investors Service, L.P. ("Fitch"). The Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of the Fund's outstanding voting shares. There can be no
assurance that the Fund's investment objective will be achieved.
Municipal Obligations
Municipal Obligations are debt securities 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
Page 5
authorities, the interest from which is, in the opinion of bond counsel to the
issuer, 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. Tax exempt 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.Management Policies
It is a fundamental policy of the Fund that it will invest at least
80% of the value of its net assets (except when maintaining a temporary
defensive position) in Municipal Obligations. Generally, at least 65% of the
value of the Fund's net assets (except when maintaining a temporary defensive
position) will be invested in bonds, debentures and other debt instruments.
At least 70% of the value of the Fund's net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than
Baa by Moody's or BBB by S&P or Fitch. The Fund may invest up to 30% of the
value of its net assets in Municipal Obligations which, in the case of bonds,
are rated lower than Baa by Moody's and BBB by S&P and Fitch and as low as
the lowest rating assigned by Moody's, S&P or Fitch. The Fund may invest in
short-term Municipal Obligations which are rated in the two highest rating
categories by Moody's, S&P or Fitch. See "Appendix" in the Statement of
Additional Information. Municipal Obligations rated Baa by Moody's or BBB by
S&P or Fitch are considered investment grade obligations; those rated Baa by
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics, while those
rated BBB by S&P and Fitch are regarded as having an adequate capacity to pay
principal and interest. Investments rated Ba or lower by Moody's and BB or
lower by S&P and Fitch ordinarily provide higher yields but involve greater
risk because of their speculative characteristics. The Fund may invest in
Municipal Obligations rated C by Moody's or D by S&P or Fitch, which is the
lowest rating assigned by such rating organizations and indicates that the
Municipal Obligation is in default and interest and/or repayment of principal
is in arrears. See "Investment Considerations and Risks _ Lower Rated Bonds"
below for a further discussion of certain risks. The Fund also may invest in
securities which, while not rated, are determined by The Dreyfus Corporation
to be of comparable quality to the rated securities in which the Fund may
invest; for purposes of the 70% requirement described in this paragraph, such
unrated securities shall be deemed to have the rating so determined. The Fund
also may invest in Taxable Investments of the quality described under
"Appendix_Certain Portfolio Securities_Taxable Investments." Under normal
market conditions, the weighted average maturity of the Fund's portfolio is
expected to exceed ten years.
From time to time, the Fund may invest more than 25% of the value
of its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The Fund may invest
without limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective.
The Fund's annual portfolio turnover rate is not expected to exceed
100%. The Fund may engage in various investment techniques, such as options
and futures transactions, lending portfolio securities and short-selling. Use
of certain of these techniques may give rise to taxable income. See
"Dividends, Distributions and Taxes." For a discussion of the investment
techniques and their related risks, see "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objective and
Management Policies_Management Policies" in the Statement of Additional
Information.
Page 6
Investment Considerations and Risks
General _ Even though interest-bearing securities are investments which
promise a stable stream of income, the prices of such securities are
inversely affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. Certain securities that may be
purchased by the Fund, such as those with interest rates that fluctuate
directly or indirectly based upon multiples of a stated index, are designed
to be highly sensitive to changes in interest rates and can subject the holder
s thereof to extreme reductions of yield and possibly loss of principal. The
values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. Once the rating
of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to hold the security.
The Fund's net asset value generally will not be stable and should fluctuate
based upon changes in the value of the Fund's portfolio securities.
Securities in which the Fund invests may earn a higher level of current
income than certain shorter-term or higher quality securities which generally
have greater liquidity, less market risk and less fluctuation in market
value.
Investing in Municipal Obligations _ The Fund may invest more than 25% of
the value of its total assets in Municipal Obligations which are related in
such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for
example, securities the interest upon which is paid from revenues of similar
types of projects, or securities whose issuers are located in the same state.
As a result, the Fund may be subject to greater risk as compared to a fund
that does not follow this practice.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for the
leased property.
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions could be
to increase the cost of the Municipal Obligations available for purchase by
the Fund and thus reduce available yield. Shareholders should consult their
tax advisers concerning the effect of these provisions on an investment in
the Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If any
such proposal were enacted that would reduce the availability of Municipal
Obligations for investment by the Fund so as to adversely affect Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
Zero Coupon Securities _ The Fund may invest in zero coupon securities and
pay-in-kind bonds (bonds which pay interest through the issuance of
additional bonds.) Federal income tax law requires the holder of a zero
coupon security or of certain pay-in-kind bonds to accrue income with respect
to these securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of portfolio
securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
Lower Rated Bonds _ The Fund may invest up to 30% of its net assets in higher
yielding (and, therefore, higher risk) debt securities, such as those rated
Ba by Moody's or BB by S&P or Fitch or as low as the lowest rating assigned
by Moody's, S&P or Fitch (commonly known as junk bonds). They may be subject
to certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. The retail secondary market for these securities may be less
liquid than that of higher rated securities; adverse conditions could make it
difficult at times for the Fund to sell certain securities or could result in
lower prices than those used in calculating the Fund's net asset value. See
"Appendix _ Certain Portfolio Securities _ Ratings."
Use of Derivatives _ The Fund may invest, to a limited extent, in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. The Derivatives the Fund may use include options and
futures. While Derivatives can be used effectively in furtherance of the
Fund's investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, decrease the liquidity
of the Fund's portfolio and make more difficult the accurate pricing of the
Fund's portfolio. See "Appendix_Investment Techniques_Use of Derivatives"
below and "Investment Objective and Management Policies_Management
Policies_Derivatives" in the Statement of Additional Information.
Simultaneous Investments _ Investment decisions for the Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allo-
Page 7
cated equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Fund or the price paid or received by the Fund.
Management of the Fund
Investment Adviser _ The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of July 31, 1997, The Dreyfus Corporation managed or
administered approximately $92 billion in assets for approximately 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Massachusetts
law. The Fund's primary portfolio manager is Samuel J. Weinstock. He has held
that position since August 1987 and has been employed by The Dreyfus
Corporation since March 1987. The Fund's other portfolio managers are
identified in the Statement of Additional Information. The Dreyfus Corporation
also provides research services for the Fund and for other funds advised by
The Dreyfus Corporation through a professional staff of portfolio managers
and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$259 billion in assets as of March 31, 1997, including approximately $88
billion in proprietary mutual fund assets. As of March 31, 1997, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.061 trillion in assets
including approximately $58 billion in mutual fund assets.
For the fiscal year ended April 30, 1997, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .55 of 1% of the
value of the Fund's average daily net assets. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the expense
ratio of the Fund and increasing yield to investors. The Fund will not pay
The Dreyfus Corporation at a later time for any amounts it may waive, nor
will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume.
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. See "Portfolio Transactions" in the State
ment of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service Agents
in respect of these services.
Distributor _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
Transfer and Dividend Disbursing Agent and Custodian _ Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90 Washington
Street, New York, New York 10286, is the Fund's Custodian.
How to Buy Shares
General _ Fund shares may be purchased only by clients of certain financial
institutions (which may include banks), securities dealers ("Selected
Dealers") and other industry professionals (collectively, "Service Agents"),
except that full-time or part-time employees of The Dreyfus Corporation or
any of its affiliates or subsidiaries, directors of The Dreyfus Corporation,
Board members of a fund advised by The Dreyfus Corporation, including members
of the Fund's Board, or the spouse or minor child of any of the foregoing may
purchase Class A shares directly through the Distributor. Subsequent
purchases may be sent directly to the Transfer Agent or your Service Agent.
When purchasing Fund shares, you must specify which Class is being
purchased. Share certificates are issued only upon your written request. No
certificates are issued for fractional shares. It is not recommended that the
Fund be used as a vehicle for Keogh, IRA or other qualified retirement plans.
The Fund reserves the right to reject any purchase order.
Page 8
Service Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees. You
should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments
must be at least $100. The initial investment must be accompanied by the
Account Application. The Fund reserves the right to vary the initial and
subsequent investment minimum requirements at any time.
You may purchase Fund shares by check or wire, or through the
TeleTransfer Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments which are mailed should be sent to Dreyfus
Premier Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. If you are opening a new account, please enclose your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed. Neither initial nor subsequent
investments should be made by third party check.
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the Fund's DDA
#8900119292/Dreyfus Premier Municipal Bond Fund, for purchase of Fund shares
in your name. The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable, and must
indicate the Class of shares being purchased. If your initial purchase of
Fund shares is by wire, please call 1-800-554-4611 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Account Application and promptly mail the Account Application
to the Fund, as no redemptions will be permitted until the Account
Application is received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be made in U.S.
dollars and, to avoid fees and delays, should be drawn only on U.S. banks. A
charge will be imposed if any check used for investment in your account does
not clear. The Fund makes available to certain large institutions the ability
to issue purchase instructions through compatible computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark and the Government Direct Deposit Privilege
described under "Shareholder Services." These services enable you to make
regularly scheduled investments and may provide you with a convenient way to
invest for long-term financial goals. You should be aware, however, that
periodic investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number preceded by the digits "1111."
Fund shares are sold on a continuous basis. Net asset value per
share of each Class 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.
The Fund's investments are valued by an independent pricing service approved
by the Fund's Board and are valued at fair value as determined by the pricing
service. The pricing service's procedures are reviewed under the general
supervision of the Fund's Board. For further information regarding the
methods employed in valuing Fund investments, see "Determination of Net Asset
Value" in the Statement of Additional Information.
If an order is received by the Transfer Agent by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on any 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 a business
day and transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the public
offering price per share determined as of the close of trading on the floor
of the New York Stock Exchange on that day. Otherwise, the orders will be
based on the next determined public offering price. It is the dealers'
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day.
Page 9
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Class A Shares _ The public offering price for Class A shares is the net
asset value per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
_____________________________
As a % of As a % of Dealers' Reallowance
offering price net asset value as a % of
Amount of Transaction per share per share offering price
_______________________ ______________ ______________ ____________________
<S> <C> <C> <C>
Less than $50,000......... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more........ -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of Class A
shares purchased without an initial sales charge as part of an investment of
at least $1,000,000 and redeemed within one year of purchase. The Distributor
may pay Service Agents an amount up to 1% of the net asset value of Class A
shares purchased by their clients that are subject to a CDSC. The terms
contained in the section of the Prospectus entitled "How to Redeem
Shares_Contingent Deferred Sales Charge" (other than the amount of the CDSC
and time periods) are applicable to the Class A shares subject to a CDSC.
Letter of Intent and Right of Accumulation apply to such purchases of
Class A shares.
Full-time employees of NASD member firms and full-time employees of
other financial institutions which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage related or clearing arrangement with an NASD member firm or
financial institution with respect to sales of Fund shares) may purchase
Class A shares for themselves directly or pursuant to an employee benefit
plan or other program, or for their spouses or minor children at net asset
value, provided that they have furnished the Distributor with such
information as it may request from time to time in order to verify
eligibility for this privilege. This privilege also applies to full-time
employees of financial institutions affiliated with NASD member firms whose
full-time employees are eligible to purchase Class A shares at net asset
value. In addition, Class A shares are offered at net asset value to
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares
be sold for the benefit of clients participating in a "wrap account" or a
similar program under which such clients pay a fee to such broker-dealer or
other financial institution.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a registered
open-end management investment company not managed by The Dreyfus Corporation
or its affiliates. The purchase of Class A shares of the Fund must be made
within 60 days of such redemption and the shareholder must have either (i)
paid an initial sales charge or a contingent deferred sales charge or (ii)
been obligated to pay at any time during the holding period, but did not
actually pay on redemption, a deferred sales charge with respect to such
redeemed shares.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i)qualified separate accounts maintained by an
insurance company pursuant to the laws of any State or territory of the
United States, (ii) a State, county or city or instrumentality thereof, (iii)
a charitable organization (as defined in Section 501(c)(3) of the Code
investing $50,000 or more in Fund shares, and (iv) a charitable remainder
trust (as defined in Section 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. The Distributor, at its own expense, may
provide additional promotional incentives to dealers that sell shares of
funds advised by The Dreyfus Corporation which are sold with a sales load,
such as the Fund. In some instances, these incentives may be offered only to
certain dealers who have sold or may sell significant amounts of such shares.
Class B Shares _ The public offering price for Class B shares is the net
asset value per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on certain redemptions of
Class B shares as described under "How to Redeem Shares." The Distributor
compensates certain Service Agents for selling Class B and Class C shares at
the time of purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these expenses.
Page 10
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."
Right of Accumulation _ Class A Shares _ Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Dreyfus Premier
Family of Funds, shares of certain other funds advised by The Dreyfus
Corporation which are sold with a sales load and shares acquired by a previous
exchange of such shares (hereinafter referred to as "Eligible Funds"), by
you and any related "purchaser" as defined in the Statement of Additional
Information, where the aggregate investment, including such purchase, is
$50,000 or more. If, for example, you have previously purchased and still
hold Class A shares of the Fund, or of any other Eligible Fund or combination
thereof, with an aggregate current market value of $40,000 and subsequently
purchase Class A shares of the Fund or an Eligible Fund having a current
value of $20,000, the sales load applicable to the subsequent purchase would
be reduced to 4% of the offering price. All present holdings of Eligible
Funds may be combined to determine the current offering price of the
aggregate investment in ascertaining the sales load applicable to each
subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or
your Service Agent must notify the Distributor if orders are made by wire, or
the Transfer Agent if orders are made by mail. The reduced sales load is
subject to confirmation of your holdings through a check of appropriate
records.
TeleTransfer Privilege _ You may purchase Fund shares (minimum $500, maximum
$150,000 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the 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 member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the TeleTransfer Privilege, you may request a
TeleTransfer purchase of shares by calling 1-800-554-4611 or, if you are
calling from overseas, call 516-794-5452.
Shareholder Services
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
Fund Exchanges
Clients of certain Service Agents may purchase, in exchange for
shares of a Class, shares of the same Class of certain other funds managed by
The Dreyfus Corporation, to the extent such shares are offered for sale in
your state of residence. These funds have different investment objectives
which may be of interest to you. You also may exchange your Fund shares that
are subject to a CDSC for shares of Dreyfus Worldwide Dollar Money Market
Fund, Inc. The shares so purchased will be held in a special account created
solely for this purpose ("Exchange Account"). Exchanges of shares from an
Exchange Account only can be made into certain other funds managed or
administered by The Dreyfus Corporation. No CDSC is charged when an investor
exchanges into an Exchange Account; however, the applicable CDSC will be
imposed when shares are redeemed from an Exchange Account or other applicable
Fund account. Upon redemption, the applicable CDSC will be calculated without
regard to the time such shares were held in an Exchange Account. See "How to
Redeem Shares." Redemption proceeds for Exchange Account shares are paid by
Federal wire or check only. Exchange Account shares also are eligible for the
Auto-Exchange Privilege, Dividend Sweep and the Automatic Withdrawal Plan. To
use this service, you should consult your Service Agent or call
1-800-554-4611 to determine if it is available and whether any conditions are
imposed on its use.
To request an exchange, you or your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-554-4611. Except in the case of
personal retirement plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless you check the applicable "No"
box on the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request signed by all shareholders on the
account, by a separate signed Shareholder Services Form, available by calling
1-800-554-4611, or by oral request from any of the authorized signatories on
the account by calling 1-800-554-4611. If you have established the Telephone
Exchange Privilege, you may telephone exchange instructions (including over
The Dreyfus TouchRegistration Mark automated telephone system) by calling
1-800-554-4611. If you are calling from overseas, call 516-794-
Page 11
5452. See "How to Redeem Shares _ Procedures." Upon an exchange into a new
account, the following shareholder services and privileges, as applicable and
where available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Check Redemption Privilege,
TeleTransfer Privilege and the dividend/capital gain distribution option
(except for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges of Class A
shares into funds sold with a sales load. No CDSC will be imposed on Class B
or Class C shares at the time of an exchange; however, Class B or Class C
shares acquired through an exchange will be subject on redemption to the
higher CDSC applicable to the exchanged or acquired shares. The CDSC
applicable on redemption of the acquired Class B or Class C shares will be
calculated from the date of the initial purchase of the Class B or Class C
shares exchanged. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not include
the sales load or which reflect a reduced sales load, if the shares you are
exchanging were: (a) purchased with a sales load, (b) acquired by a previous
exchange from shares purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your Service
Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the Statement of Additional Information. No fees
currently are charged shareholders directly in connection with exchanges,
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal administrative fee in accordance
with the rules promulgated by the Securities and Exchange Commission. The
Fund reserves the right to reject any exchange request in whole or in part.
The availability of Fund Exchanges may be modified or terminated at any time
upon notice to shareholders. See "Dividends, Distributions and Taxes."
Auto-Exchange Privilege
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same Class of other funds in the Dreyfus Premier
Family of Funds or certain other funds in the Dreyfus Family of Funds of
which you are a shareholder. The amount you designate, which can be expressed
either in terms of a specific dollar or share amount ($100 minimum), will be
exchanged automatically on the first and/or fifteenth of the month according
to the schedule you have selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales load. No
CDSC will be imposed on Class B or Class C shares at the time of an exchange;
however, Class B or Class C shares acquired through an exchange will be
subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase of
the Class B or Class C shares exchanged. See "Shareholder Services" in the
Statement of Additional Information. The right to exercise this Privilege may
be modified or cancelled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to Dreyfus Premier Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. For more
information concerning this Privilege and the funds in the Dreyfus Premier
Family of Funds or the Dreyfus Family of Funds eligible to participate in
this Privilege, or to obtain an Auto-Exchange Authorization Form, please call
toll free 1-800-554-4611. See "Dividends, Distributions and Taxes."
Dreyfus-AUTOMATIC Asset BuilderRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the
bank account designated by you. At your option, the bank account designated
by you will be debited in the specified amount, and Fund shares will be
purchased, once a month, on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.
To establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-554-4611. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to Dreyfus Premier Municipal Bond Fund, P.O.
Box 6587, Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Government Direct Deposit Privilege
Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. To enroll in
Government Direct Deposit, you must file with the Transfer Agent a com-
Page 12
pleted Direct Deposit Sign-Up Form for each type of payment that you desire to
include in this Privilege. The appropriate form may be obtained from your
Service Agent or by calling 1-800-554-4611. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time to
terminate your participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate your participation upon 30 days'
notice to you.
Dividend Options
Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares
of the same Class of another fund in the Dreyfus Premier Family of Funds or
the Dreyfus Family of Funds of which you are a shareholder. Shares of the
other fund will be purchased at the then-current net asset value; however, a
sales load may be charged with respect to investments in shares of a fund
sold with a sales load. If you are investing in a fund that charges a sales
load, you may qualify for share prices which do not include the sales load or
which reflect a reduced sales load. If you are investing in a fund that
charges a CDSC, the shares purchased will be subject on redemption to the
CDSC, if any, applicable to the purchased shares. See "Shareholder Services"
in the Statement of Additional Information. Dividend ACH permits you to
transfer electronically dividends or dividends and capital gain
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dividend Options Form, please call toll free 1-800-554-4611. You may cancel
these privileges by mailing written notification to Dreyfus Premier Municipal
Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a
new fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dividend Sweep. The Fund may modify or terminate
these privileges at any time or charge a service fee. No such fee currently
is contemplated.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request withdrawal of
a specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-554-4611. The Automatic
Withdrawal Plan may be ended at any time by you, the Fund or the Transfer
Agent. Shares for which certificates have been issued may not be redeemed
through the Automatic Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on
withdrawals made under the Automatic Withdrawal Plan, provided that the
amounts withdrawn under the plan do not exceed on an annual basis 12% of the
account value at the time the shareholder elects to participate in the
Automatic Withdrawal Plan. Withdrawals with respect to Class B shares under
the Automatic Withdrawal Plan that exceed on an annual basis 12% of the value
of the shareholder's account will be subject to a CDSC on the amounts
exceeding 12% of the initial account value. Withdrawals with respect to Class
A 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
shares where the sales load is imposed concurrently with withdrawals of Class
A shares generally are undesirable.
Letter of Intent _ Class A Shares
By signing a Letter of Intent form, which can be obtained by
calling 1-800-554-4611, you become eligible for the reduced sales load
applicable to the total number of Eligible Fund shares purchased in a
13-month period pursuant to the terms and conditions set forth in the Letter
of Intent. A minimum initial purchase of $5,000 is required. To compute the
applicable sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Eligible Fund that may be used
toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced sales
load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated
in the Letter of Intent for payment of a higher sales load if you do not
purchase the full amount indicated in the Letter of Intent. The escrow will
be released when you fulfill the terms of the Letter of Intent by purchasing
the specified amount. If your purchases qualify for a further sales load
reduction, the sales load will be adjusted to reflect your total purchase at
the end of 13 months. If total purchases are less than the amount specified,
you will be requested to remit an amount equal to the difference between the
sales load actually paid and the sales load applicable to the aggregate
purchases actually made. If such remittance is not received within 20 days,
the Transfer Agent, as attorney-in-fact pursuant to the terms of the Letter
of Intent, will redeem an appropriate number of Class A shares held in escrow
to realize the difference. Signing a Letter of Intent does not bind you to
purchase, or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended purchase to
obtain the reduced sales load. At the time you purchase Class A shares, you
must indicate your intention to do so under a Letter of Intent. Purchases
pur-
Page 13
suant to a Letter of Intent will be made at the then-current net asset
value plus the applicable sales load in effect at the time such Letter of
Intent was executed.
How to Redeem Shares
General
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value as described below. If you hold Fund shares
of more than one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of shares to be
redeemed or if you own fewer shares of the Class than specified to be
redeemed, the redemption request may be delayed until the Transfer Agent
receives further instructions from you or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC) when
shares are redeemed. Service Agents may charge their clients a fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the Securities and
Exchange Commission. However, if you have purchased Fund shares by check, by
the TeleTransfer Privilege or through Dreyfus-AUTOMATIC Asset
BuilderRegistration Mark and subsequently submit a written redemption request
to the Transfer Agent, the redemption proceeds will be transmitted to you
promptly upon bank clearance of your purchase check, TeleTransfer purchase
or Dreyfus-AUTOMATIC Asset Builder order, which may take up to eight business
days or more. In addition, the Fund will not honor Redemption Checks under the
Check Redemption Privilege, and will reject requests to redeem shares pursuant
to the TeleTransfer Privilege, for a period of eight business days after
receipt by the Transfer Agent of the purchase check, the TeleTransfer purchase
or the Dreyfus-AUTOMATIC Asset Builder order against which such redemption is
requested. These procedures will not apply if your shares were purchased by
wire payment, or if you otherwise have a sufficient collected balance in your
account to cover the redemption request. Prior to the time any redemption is
effective, dividends on such shares will accrue and be payable, and you will
be entitled to exercise all other rights of beneficial ownership. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option
upon not less than 30 days' written notice if your account's net asset value
is $500 or less and remains so during the notice period.
Contingent Deferred Sales Charge
Class B Shares _ A CDSC payable to the Distributor is imposed on any
redemption of Class B shares which reduces the current 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
Class B shares above the dollar amount of all your payments for the purchase
of Class B shares of the Fund held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may
be applied to the then-current net asset value rather than the purchase
price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment for
the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC for Class B
shares, except for Class B shares purchased by shareholders who beneficially
owned Class B shares on November 30, 1996:
<TABLE>
<CAPTION>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
________- ______________________
<S> <C>
First.................................................... 4.00
Second................................................... 4.00
Third.................................................... 3.00
Fourth................................................... 3.00
Fifth.................................................... 2.00
Sixth.................................................... 1.00
</TABLE>
Page 14
The following table sets forth the rates of the CDSC for Class B
shares purchased by shareholders who beneficially owned Class B shares on
November 30, 1996:
<TABLE>
<CAPTION>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
________- ______________________
<S> <C>
First.................................................... 3.00
Second................................................... 3.00
Third.................................................... 2.00
Fourth................................................... 2.00
Fifth.................................................... 1.00
Sixth.................................................... 0.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares 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 (five years for shareholders beneficially
owning Class B shares on November 30, 1996); then of amounts representing the
cost of shares purchased six years (five years for shareholders beneficially
owning Class B shares on November 30, 1996) 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 (five-year period for
shareholders beneficially owning Class B shares on November 30, 1996).
For example, assume an investor purchased 100 shares at $10 per
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year after
the purchase the investor decided to redeem $500 of his or her investment.
Assuming at the time of the redemption the net asset value has appreciated to
$12 per share, the value of the investor's shares would be $1,260 (105 shares
at $12 per share). The CDSC would not be applied to the value of the
reinvested dividend shares and the amount which represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260)
would be charged at a rate of 4% (the applicable rate in the second year
after purchase) for a total CDSC of $9.60.
Class C Shares _ A CDSC of 1% payable to the Distributor is imposed on any
redemption of Class C shares within one year of the date of purchase. The
basis for calculating the payment of any such CDSC will be the method used in
calculating the CDSC for Class B shares. See "Contingent Deferred Sales
Charge _ Class B Shares" above.
Waiver of CDSC _ The CDSC will 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 qualified or non-qualified employee benefit plans or other
programs where (i) the employers or affiliated employers maintaining such
plans or programs have a minimum of 250 employees eligible for participation
in such plans or programs, or (ii) such plan's or program's aggregate
investment in the Dreyfus Family of Funds or certain other products made
available by the Distributor exceeds $1,000,000, (c) redemptions as a result
of a combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) a distribution following retirement
under a tax-deferred retirement plan or upon attaining age 701/2 in the case
of an IRA or Keogh plan or custodial account pursuant to Section 403(b) of the
Code and (e) redemptions pursuant to the Automatic Withdrawal Plan, as
described in the Fund's Prospectus. If the Fund's Board determines to
discontinue the waiver of the CDSC, the disclosure in the Prospectus will be
revised appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as provided
in the Prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you
must notify the Transfer Agent or your Service Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
entitlement.
Procedures
You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege with respect to Class A shares only, or the TeleTransfer
Privilege. If you are a client of a Selected Dealer, you may redeem shares
through the Selected Dealer. Other redemption procedures may be in effect for
clients of certain Service Agents. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address, and
may limit the amount involved or the number of such requests. The Fund may
modify or terminate any redemption Privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is contemplated.
Shares for which certificates have been issued are not eligible for the Check
Redemption or TeleTransfer Privilege.
Your redemption request may direct that the redemption proceeds be
used to purchase shares of other funds advised or administered by The Dreyfus
Corporation that are not available through the Exchange Privilege. The
Page 15
applicable CDSC will be charged upon the redemption of Class B or Class C
shares. Your redemption proceeds will be invested in shares of the other fund
on the next business day. Before you make such a request, you must obtain and
should review a copy of the current prospectus of the fund being purchased.
Prospectuses may be obtained by calling 1-800-554-4611. The prospectus will
contain information concerning minimum investment requirements and other
conditions that may apply to your purchase.
If you select the TeleTransfer Redemption Privilege or Telephone
Exchange Privilege (which is granted automatically unless you refuse it), you
authorize the Transfer Agent to act on telephone instructions (including over
The Dreyfus TouchRegistration Mark automated telephone system) from any
person representing himself or herself to be you, or a representative of your
Service Agent, and reasonably believed by the Transfer Agent to be genuine.
The Fund will require the Transfer Agent to employ reasonable procedures, such
as requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
Regular Redemption _ Under the regular redemption procedure, you may redeem
shares by written request mailed to Dreyfus Premier Municipal Bond Fund, P.O.
Box 6587, Providence, Rhode Island 02940-6587. Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
If you have any questions with respect to signature-guarantees, please
contact your Service Agent or call the telephone number listed on the cover
of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
Check Redemption Privilege _ Class A Shares _ You may write Redemption
Checks drawn on your Fund account. Redemption Checks may be made payable to
the order of any person in the amount of $500 or more. Potential fluctuations
in the net asset value of Class A shares should be considered in determining
the amount of the check. Redemption Checks should not be used to close your
account. Redemption Checks are free, but the Transfer Agent will impose a fee
for stopping payment of a Redemption Check upon your request or if the
Transfer Agent cannot honor the Redemption Check due to insufficient funds or
other valid reason. You should date your Redemption Checks with the current
date when you write them. Please do not postdate your Redemption Checks. If
you do, the Transfer Agent will honor, upon presentment, even if presented
before the date of the check, all postdated Redemption Checks which are dated
within six months of presentment for payment, if they are otherwise in good
order. This Privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding on
redemptions (see "Dividends, Distributions and Taxes"). Any Redemption Check
written on an account which has become subject to backup withholding on
redemptions will not be honored by the Transfer Agent.
TeleTransfer Privilege _ You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the TeleTransfer Privilege for transfer to their
bank account not more than $250,000 within any 30-day period.
If you have selected the TeleTransfer Privilege, you may request a
TeleTransfer redemption of shares by calling 1-800-554-4611 or, if you are
calling from overseas, call 516-794-5452.
Redemption Through a Selected Dealer _ If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by
the Transfer Agent prior to the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time), the redemption request
will be effective on that day. If a redemption request is received by the
Transfer Agent after the close of trading on the floor of the New York Stock
Exchange, the redemption request will be effective on the next business day.
It is the responsibility of the Selected Dealer to transmit a request so that
it is
Page 16
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 the
dealer by the close of trading on the floor of the New York Stock Exchange on
any business day and transmitted to the Distributor or its designee prior to
the close of its business day (normally 5:15 p.m., New York time) are
effected at the price determined as of the close of trading on the floor of
the New York Stock Exchange on that day. Otherwise, the shares will be
redeemed at the next determined net asset value. It is the responsibility of
the Selected Dealer to transmit orders on a timely basis. The Selected Dealer
may charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
Reinvestment Privilege
Upon written request, you may reinvest up to the number of Class A
or Class B 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 reinvestment, with
respect to Class B shares, or Class A shares if such shares were subject to a
CDSC, the shareholder's account will be credited with an amount equal to the
CDSC previously paid upon redemption of the Class A or Class B shares
reinvested. The Reinvestment Privilege may be exercised only once.
Distribution Plan and Shareholder Services Plan
Class B and Class C shares are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.
Distribution Plan _ Under the Distribution Plan, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund pays the Distributor for distributing the
Fund's Class B and Class C shares at an annual rate of .50 of 1% of the value
of the average daily net assets of Class B and .75 of 1% of the value of the
average daily net assets of Class C.
Shareholder Services Plan _ Under the Shareholder Services Plan, the Fund
pays the Distributor for the provision of certain services to the holders of
Class A, Class B and Class C shares a fee at the annual rate of .25 of 1% of
the value of the average daily net assets of each such Class. The services
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents.
Dividends, Distributions and Taxes
The Fund ordinarily declares dividends from its net investment
income on each day the New York Stock Exchange is open for business. Fund
shares begin earning income dividends on the day immediately available funds
("Federal Funds" (monies of member banks within the Federal Reserve System
which are held on deposit at a Federal Reserve Bank)) are received by the
Transfer Agent in written or telegraphic form. If a purchase order is not
accompanied by remittance in Federal Funds, there may be a delay between the
time the purchase order becomes effective and the time the shares purchased
start earning dividends. If your payment is not made in Federal Funds, it
must be converted into Federal Funds. This usually occurs within one business
day of receipt of a bank wire and within two business days of receipt of a
check drawn on a member bank of the Federal Reserve System. Checks drawn on
banks which are not members of the Federal Reserve System may take
considerably longer to convert into Federal Funds.
Dividends usually are paid on the last calendar day of each month
and are automatically reinvested in additional shares of the same Class from
which they were paid at net asset value without a sales load or, at your
option, paid in cash. The Fund's earnings for Saturdays, Sundays and holidays
are declared as dividends on the preceding business day. If you redeem all
shares in your account at any time during the month, all dividends to which
you are entitled will be paid to you along with the proceeds of the
redemption. If you are an omnibus accountholder and indicate in a partial
redemption request that a portion of any accrued dividends to which such
account is entitled belongs to an underlying accountholder who has redeemed
all shares in his or her account, such portion of the accrued dividends will
be paid to you along with the proceeds of the redemption. Distributions from
net realized securities gains, if any, generally are declared and paid once a
year, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive dividends and distributions in cash or to reinvest in
additional shares of the same Class from which they were paid at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors. Dividends paid by each Class will be calculated at
the same time and in the same manner and will be of the same amount, except
that the expenses attributable solely to a particular Class will be borne
exclusively by such Class. Class B and Class C shares will receive lower per
share dividends than Class A shares because of the higher expenses borne by
the relevant Class . See "Fee Table."
Page 17
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the Fund will not be subject to
Federal income tax. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S. corporations.
Dividends derived from Taxable Investments, together with distributions from
any net realized short-term securities gains and all or a portion of any
gains realized from the sale or other disposition of certain market discount
bonds, paid by the Fund are subject to Federal income tax as ordinary income
whether received in cash or reinvested in additional shares. Distributions
from net realized long-term securities gains of the Fund generally are
subject to Federal income tax as long-term capital gains, if you are a
citizen or resident of the United States. The Code provides that the net
capital gain of an individual generally will not be subject to Federal income
tax at a rate in excess of 28%. Under the Code, interest on indebtedness
incurred or continued to purchase or carry Fund shares which is deemed to
relate to exempt-interest dividends is not deductible. Dividends and
distributions may be subject to state and local taxes.
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by shareholders of the Fund from their gross income for
Federal income tax purposes, the Fund may purchase specified private activity
bonds, the interest from which may be (i) a preference item for purposes of
the alternative minimum tax, or (ii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If the Fund
purchases such securities, the portion of the Fund's dividends related
thereto will not necessarily be tax exempt to an investor who is subject to
the alternative minimum tax and/or tax on Social Security benefits and may
cause an investor to be subject to such taxes.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
The Code provides for the "carryover" of some or all of the sales
load imposed on Class A shares if you exchange your Class A shares for shares
of another fund advised or administered by The Dreyfus Corporation within 91
days of purchase and such other fund reduces or eliminates its otherwise
applicable sales load for the purpose of the exchange. In this case, the
amount of the sales load charge for Class A shares, up to the amount of the
reduction of the sales load charge on the exchange, is not included in the
basis of your Class A shares for purposes of computing gain or loss on the
exchange, and instead is added to the basis of the fund shares received on
the exchange.
Notice as to the tax status of your dividends and distributions
will be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and distributions
from securities gains, if any, paid during the year. These statements set
forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. These dollar amounts will vary
depending on the size and length of time of your investment in the Fund. If
the Fund pays dividends derived from taxable income, it intends to designate
as taxable the same percentage of the day's dividends as the actual taxable
income earned on that day bears to total income earned on that day. Thus, the
percentage of the dividend designated as taxable, if any, may vary from day
to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax withheld as
a result of backup withholding does not constitute an additional tax imposed
on the record owner of the account, and may be claimed as a credit on the
record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended April 30, 1997 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify, if such qualification
is in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local income taxes.
Performance Information
For purposes of advertising, performance for each Class of shares
may be calculated on several bases, including current yield, tax equivalent
yield, average annual total return and/or total return. These total return
figures reflect changes in the price of the shares and assume that any income
dividends and/or capital gains distributions made by the Fund during the
measuring period were reinvested in shares of the same Class. Class A total
return figures
Page 18
include the maximum initial sales charge and Class B and Class C total return
figures include any applicable CDSC. These figures also take into account any
applicable service and distribution fees. As a result, at any given time, the
performance of Class B or Class C should be expected to be lower than that of
Class A. Performance for each Class will be calculated separately.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value (or maximum offering price in the case of Class A) per share at the end
of the period. For purposes of calculating current yield, the amount of net
investment income per share during that 30-day period, computed in accordance
with regulatory requirements, is compounded by assuming that it is reinvested
at a constant rate over a six-month period. An identical result is then
assumed to have occurred during a second six-month period which, when added
to the result for the first six months, provides an "annualized" yield for an
entire one-year period. Calculations of the Fund's current yield may reflect
absorbed expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return is
expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end of
the period. Advertisements of the Fund's performance will include the Fund's
average annual total return for one, five and ten year periods, or for
shorter periods depending upon the length of time the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value (or maximum offering price in the case of Class A) per share at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return. Total return also may be calculated by using the net asset value per
share at the beginning of the period instead of the maximum offering price
per share at the beginning of the period for Class A shares or without giving
effect to any applicable CDSC at the end of the period for Class B or Class C
shares. Calculations based on the net asset value per share do not reflect
the deduction of the applicable sales charge on Class A shares which, if
reflected, would reduce the performance quoted.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time
in advertising the Fund's shares, including data from Lipper Analytical
Services, Inc., Moody's Bond Survey Bond Index, Lehman Brothers Municipal
Bond Index, Morningstar, Inc. and other industry publications.
General Information
The Fund was organized as an unincorporated business trust under
the laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated June 4, 1986, and
commenced operations on November 26, 1986. Before July 2, 1990, the Fund's
name was Premier Tax Exempt Bond Fund and, before March 31, 1997, its name
was Premier Municipal Bond Fund. The Fund is authorized to issue an unlimited
number of shares of beneficial interest, par value $.001 per share. The
Fund's shares are classified into three classes _ Class A, Class B and Class
C. Each share has one vote and shareholders will vote in the aggregate and
not by class except as otherwise required by law. Only holders of Class B or
Class C shares, as the case may be, will be entitled to vote on matters
submitted to shareholders pertaining to the Distribution Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Fund or a Trustee. The Trust Agreement provides for indemnification from the
Fund's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
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
Page 19
from the general assets of the Fund. The Fund intends to conduct its
operations in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund. As discussed under
"Management of the Fund" in the Statement of Additional Information, the Fund
ordinarily will not hold shareholder meetings; however, shareholders under
certain circumstances may have the right to call a meeting of shareholders for
the purpose of voting to remove Trustees.
The Transfer Agent maintains a record of your ownership and sends
you confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by
writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
Page 20
Appendix
Investment Techniques
Borrowing Money _ The Fund is permitted to borrow to the extent permitted
under the 1940 Act, which permits an investment company to borrow in an
amount up to 331/3% of the value of its total assets. The Fund currently
intends to borrow money only for temporary or emergency (not leveraging)
purposes in an amount up to 15% of the value of the Fund's total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of the value of the Fund's total assets, the
Fund will not make any additional investments.
Short-Selling _ In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of that 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 at the market price at the time of replacement. The price at
such time may be more or less than the price at which the security was sold
by the Fund, which would result in a loss or gain, respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Fund's net assets. The Fund may not sell short
the securities of any single issuer listed on a national securities exchange
to the extent of more than 5% of the value of the Fund's net assets. The Fund
may not make a short sale which results in the Fund having sold short in the
aggregate more than 5% of the outstanding securities of any class of an
issuer.
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will the Fund have more than 15%
of the value of its net assets in deposits on short sales against the box.
Use of Derivatives _ The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund _ Investment Considerations and
Risks _ Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies _ Management Policies _ Derivatives" in the Statement of
Additional Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
the market conditions incorrectly, such investments may lower the Fund's
return or result in a loss. The Fund also could experience losses if its
Derivatives were poorly correlated with its other investments, or if the Fund
were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable
changes in the prices for Derivatives.
Although the Fund is not a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in such Derivatives.
The Fund may invest in futures contracts and options with respect thereto for
hedging purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Fund may write
(i.e., sell) covered call and put option contracts to the extent of 20% of
the value of its net assets at the time such option contracts are written.
When required by the Securities and Exchange Commission, The Fund will set
aside permissible liquid assets in a segregated account to cover its
obligations relating to its transactions in Derivatives. To maintain this
required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
Derivative position at a reasonable price.
Lending Portfolio Securities _ The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest 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 331/3 % 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 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.
Page 21
Forward Commitments _ The Fund may purchase Municipal Obligations and other
securities on a forward commitment or when-issued basis, which means delivery
and payment take place a number of days after the date of the commitment to
purchase. The payment obligation and the interest rate receivable on a
forward commitment or when-issued security are fixed when the Fund enters
into the commitment, but the Fund does not make payment until it receives
delivery from the counterparty. The Fund will commit to purchase such
securities only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is deemed
advisable. A segregated account of the Fund consisting of permissible liquid
assets at least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
Certain Portfolio Securities
Certain Tax Exempt Obligations _ The Fund may purchase floating and variable
rate demand notes and bonds, which are tax exempt obligations ordinarily
having stated maturities in excess of one year, but which permit the holder
to demand payment of principal at any time or at specified intervals.
Variable rate demand notes include master demand notes which are obligations
that permit the Fund to invest fluctuating amounts at varying rates of
interest, pursuant to direct arrangements between the Fund, as lender, and
the borrower. These obligations permit daily changes in the amount borrowed.
Because these obligations are direct lending arrangements between the lender
and borrower, it is not contemplated that such instruments generally will be
traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus accrued
interest. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased by the Fund will meet the quality criteria
established for the purchase of Municipal Obligations.
Tax Exempt Participation Interests _ The Fund may purchase from financial
institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives the Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation interest bears to
the total principal amount of the Municipal Obligation. These instruments may
have fixed, floating or variable rates of interest. If the participation
interest is unrated, it will be backed by an irrevocable letter of credit or
guarantee of a bank that the Fund's Board has determined meets prescribed
quality standards for banks, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest
in the Municipal Obligation, plus accrued interest. As to these instruments, t
he Fund intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity
to meet redemptions, or to maintain or improve the quality of its investment
portfolio.
Tender Option Bonds _ The Fund may purchase tender option bonds. A tender
option bond is a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing interest at a
fixed rate substantially higher than prevailing short-term tax exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing
or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of the Fund,
will consider on an ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligations, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in
payment of principal or interest on the underlying Municipal Obligations and
for other reasons.
Custodial Receipts _ The Fund may purchase custodial receipts representing
the right to receive certain future principal and interest payments on
Municipal Obligations which underlie the custodial receipts. A number of
different arrangements are possible. In a typical custodial receipt
arrangement, an issuer or a third party owner of Municipal Obligations
deposits such obligations with a custodian in exchange for two classes of
custodial receipts. The two classes have different characteristics, but, in
each case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest rate
is adjusted, and ownership changes, based on an auction mechanism. This
class's interest rate generally is expected to be below the coupon rate of
the underlying Municipal Obligations and generally is at a level comparable
to that of a Municipal Obligation of similar quality and having a maturity
equal to the period between interest rate adjustments. The second class bears
interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but
in this case inversely to changes in the rate of interest of the first class.
In no event will the aggregate interest paid with respect to the two classes
exceed the
Page 22
interest paid by the underlying Municipal Obligations. The value
of the second class and similar securities should be expected to fluctuate
more than the value of a Municipal Obligation of comparable quality and
maturity and their purchase by the Fund should increase the volatility of its
net asset value and, thus, its price per share. These custodial receipts are
sold in private placements. The Fund also may purchase directly from issuers,
and not in a private placement, Municipal Obligations having characteristics
similar to custodial receipts. These securities may be issued as part of a
multi-class offering and the interest rate on certain classes may be subject
to a cap or floor.
Stand-By Commitments _ The Fund may acquire "stand-by commitments" with
respect to Municipal Obligations held in its portfolio. Under a stand-by
commitment, the Fund obligates a broker, dealer or bank to repurchase, at the
Fund's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of
a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Fund will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by commitments if
such action is deemed necessary, thus increasing to a degree the cost of the
underlying Municipal Obligation and similarly decreasing such security's
yield to investors. Gains realized in connection with stand-by commitments
will be taxable. 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. The sale by the Fund of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income
by the Fund.
Zero Coupon Securities _ The Fund may invest in zero coupon securities which
are debt securities issued or sold at a discount from their face value which
do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). The amount of
the discount varies depending on the time remaining until maturity or cash
payment date, prevailing interest rates, liquidity of the security and
perceived credit quality of the issuer. Zero coupon securities also may take
the form of debt securities that have been stripped of their unmatured
interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. The
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.
Illiquid Securities _ The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. 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.
Taxable Investments _ From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of the
Fund's net assets) or for temporary defensive purposes, the Fund may invest
in taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within the
two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities; commercial paper rated not
lower than P-1 by Moody's, A-1 by S&P or F-1 by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic banks,
with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase agreements
in respect of any of the foregoing. Dividends paid by the Fund that are
attributable to income earned by the Fund from Taxable Investments will be
taxable to investors. See "Dividends, Distributions and Taxes." Except for
temporary defensive purposes, at no time will more than 20% of the value of
the Fund's net assets be invested in Taxable Investments. Under normal market
conditions, the Fund anticipates that not more than 5% of the value of its
total assets will be invested in any one category of Taxable Investments.
Taxable Investments are more fully described in the Statement of Additional
Information, to which reference hereby is made.
Ratings _ Bonds 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. Bonds rated BB by S&P
are regarded as having predominantly speculative characteristics and, while
such obligations have less near-term vulnerability to default than other
speculative grade debt, they face major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. Bonds
rated BB by Fitch are considered speculative and the payment of principal and
interest may be affected at any time by adverse economic changes. Bonds rated
C by Moody's are regarded as having extremely poor prospects of ever
attaining any real investment standing. Bonds rated D by S&P are in default
and the payment of interest and/or repayment of principal is in arrears.
Bonds rated DDD, DD or D by Fitch are in actual or imminent default, are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the
Page 23
issuer; DDD represents the highest potential for recovery of such bonds; and
D represents the lowest potential for recovery. Such bonds, though high
yielding, are characterized by great risk. See "Appendix" in the Statement of
Additional Information for a general description of Moody's, S&P and Fitch
ratings of Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their opinions as
to the quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. Although these ratings may be an initial criterion for selection of
portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. The Fund's ability to achieve its investment objective may be
more dependent on The Dreyfus Corporation's credit analysis than might be the
case for a fund that invested in higher rated securities.
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended April 30, 1997, computed on
a monthly basis, was as follows:
<TABLE>
<CAPTION>
PERCENTAGE
FITCH MOODY'S S&P OF VALUE
______ ________ _______ _______-
<S> <C> <C> <C>
AAA Aaa AAA 17.6%
A A A 10.3
BBB Baa BBB 36.3
BB Ba BB 11.7
B B B .1
F-1 VMIG1, MIG1, P-1 SP-1, A-1 1.0
Not Rated Not Rated Not Rated 23.0*
____-
100.0%
=====
</TABLE>
* Included in the Not Rated category are securities comprising 23.0%
of the Fund's market value which, while not rated, have been determined by
The Dreyfus Corporation to be of comparable quality to securities in the
following rating categories: AAA/Aaa (.1%); A/A (3.2%); Baa/BBB (12.9%); and
Ba/BB (6.8%).
The actual distribution of the Fund's investments in Municipal
Obligations by ratings on any given date will vary. In addition, the
distribution of the Fund's investments by ratings as set forth above should
not be considered as representative of the Fund's future portfolio
composition.
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus and in the
Fund's official sales literature in connection with the offer of the Fund's
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Fund. This Prospectus
does not constitute an offer in any State in which, or to any person to whom,
such offering may not lawfully be made.
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Copy Rights 1997 Dreyfus Service Corporation 022p090197
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Dreyfus Premier
Municipal Bond fund
Prospectus
September 1, 1997
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