File Nos. 33-7496
811-4764
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 21 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [X]
(Check appropriate box or boxes.)
DREYFUS PREMIER MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
____ immediately upon filing pursuant to paragraph (b)
X on September 1, 1999 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
Dreyfus Premier
Municipal Bond
Fund
Investing for income exempt
from federal income tax
Prospectus September 1, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Fund
Dreyfus Premier Municipal Bond Fund
Ticker Symbols Class A: PTEBX
Class B: PMUBX
Class C: DMBCX
Contents
The Fund
Goal/Approach Inside cover
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
Account Policies 6
Distributions and Taxes 8
Services for Fund Investors 9
Instructions for Regular Accounts 10
For More Information
Information on the fund's recent strategies and holdings can be found in the
current annual/semiannual report. See back cover.
Goal/Approach
The fund seeks to maximize current income exempt from federal income tax to
the extent consistent with the preservation of capital. To pursue this goal,
the fund normally invests substantially all of its assets in municipal bonds
that provide income exempt from federal income tax.
The fund will invest at least 70% of its assets in investment grade municipal
bonds or the unrated equivalent as determined by Dreyfus. For additional
yield, it may invest up to 30% of its assets in municipal bonds rated below
investment grade ("high yield" or "junk" bonds) or the unrated equivalent as
determined by Dreyfus.
The portfolio manager buys and sells bonds based on credit quality, financial
outlook and yield potential. Bonds with deteriorating credit quality are
potential sell candidates, while those offering
higher yields are potential buy candidates.
Concepts to understand
Municipal bonds: debt securities that provide income free from federal income
tax. Municipal bonds are typically divided into two types:
* general obligation bonds, which are secured by the full
faith and credit of the issuer and its taxing power
* revenue bonds, which are payable from the revenue derived
from a specific revenue source, such as charges for water and
sewer service or highway tolls
Investment grade bonds: independent rating organizations analyze and evaluate
a bond issuer's credit history and ability to repay debts. Based on their
assessment, they assign letter grades that reflect the issuer's
creditworthiness. AAA or Aaa represents the highest credit rating, AA/Aa the
second highest, and so on down to D, for defaulted debt. Bonds rated BBB or
Baa and above are considered investment grade.
[Page]
Main Risks
Prices of bonds tend to move inversely with changes in interest rates. While
a rise in rates may allow the fund to invest for higher yields, the most
immediate effect is usually a drop in bond prices and, therefore, in the
fund's share price as well. As a result, the value of your investment in the
fund could go up and down, which means that you could lose money.
Other risk factors could have an effect on the fund's performance:
* if an issuer fails to make timely interest or
principal payments, or if there is a decline in the
credit quality of a bond or a perception of a decline, the
bond's value could fall, potentially lowering the fund's
share price
* lower-rated, higher-yielding municipal obligations are
subject to greater credit risk, including the risk of
default, than investment grade obligations; lower-rated bonds
tend to be more volatile and less liquid
Although the fund's objective is to generate income exempt from federal
income tax, interest from some of its holdings may be subject to the federal
alternative minimum tax.
Other potential risks
The fund, at times, may invest in certain derivatives, such as futures and
options. Derivatives can be illiquid and highly sensitive to changes in their
underlying security, interest rate or index and, as a result, can be highly
volatile. A small investment in certain derivatives could have a potentially
large impact on the fund's performance.
Past Performance
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's Class A performance from year to year. T
he performance figures do not reflect sales loads, and would be lower if they
did. The second table compares the fund's performance over time to that of
the Lehman Brothers Municipal Bond Index, a widely recognized unmanaged index
of municipal bond performance. These returns include applicable sales loads.
Both tables assume the reinvestment of dividends. Of course, past performance
is no guarantee of future results.
Year-by-year total return as of 12/31 each year (%)
Class A shares
9.94 7.33 13.89 10.00 14.40 -6.41 17.46 3.96 9.59 4.48
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q1 '95 +6.60%
Worst Quarter: Q1 '94 -6.33%
The fund's Class A year-to-date total return as of 6/30/99 was -2.03%.
Average annual total return as of 12/31/98
<TABLE>
Since
Inception date 1 Year 5 Years 10 Years inception
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (11/26/86) -0.25% 4.56% 7.77% -
Class B (1/15/93) 0.02% 4.65% - 6.25%
Class C (7/13/95) 2.64% - - 5.96%
Lehman Brothers
Municipal Bond Index 6.48% 6.22% 8.22% 7.21%*
* Based on the life of Class B. For comparative purposes, the value of the
index on 12/31/92 is used as the beginning value on 1/15/93.
</TABALE>
What this fund is - and isn't
This fund is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it
cannot offer guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund 1
[Page 1]
Expenses
As an investor, you pay certain fees and expenses in connection with the
fund, which are described in the tables below.
Fee table
</TABLE>
<TABLE>
Class A Class B Class C
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder transaction fees (fees paid from your account)
Maximum front-end sales charge on purchases
as a % of offering price 4.50 none none
Maximum contingent deferred sales charge (CDSC)
as a % of purchase or sale price, whichever is less none* 4.00 1.00
Annual fund operating expenses (expenses paid from fund assets)
% of average daily net assets
Management fees .55 .55 .55
Rule 12b-1 fee none .50 .75
Shareholder services fee .25 .25 .25
Other expenses .11 .12 .12
Total .91 1.42 1.67
* Shares bought without an initial sales charge as part of an investment of
$1 million or more may be charged a CDSC of 1.00% if redeemed within one year.
</TABLE>
<TABLE>
Expense example
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $539 $727 $931 $1,519
Class B
with redemption $545 $749 $976 $1,436**
without redemption $145 $449 $776 $1,436**
Class C
with redemption $270 $526 $907 $1,976
without redemption $170 $526 $907 $1,976
** Assumes conversion of Class B to Class A at end of the sixth year
following the date of purchase.
</TABLE>
This example shows what you could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses.
Because actual return and expenses will be different, the example is for
comparison only.
Concepts to understand
Management fee: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operation.
Rule 12b-1 fee: the fee paid to the fund's distributor to finance the sale of
Class B and Class C shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Shareholder services fee: a fee paid to the fund's distributor for
shareholder account service and maintenance.
Other expenses: fees paid by the fund for miscellaneous items such as
transfer agency, custody, professional and registration fees.
2
[Page 2]
Management
The investment adviser for the fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$120 billion in over 160 mutual fund portfolios. For the past fiscal year,
the fund paid Dreyfus a management fee at the annual rate of 0.55% of the
fund's average daily net assets. Dreyfus is the primary mutual fund business
of Mellon Bank Corporation, a broad-based financial services company with a
bank at its core. With more than $389 billion of assets under management and
$1.9 trillion of assets under administration and custody, Mellon provides a
full range of banking, investment and trust products and services to
individuals, businesses and institutions. Mellon is headquartered in
Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that
discipline and consistency are important to investment success. For each
fund, Dreyfus seeks to establish clear guidelines for portfolio management
and to be systematic in making decisions. This approach is designed to
provide each fund with a distinct, stable identity.
Samuel J. Weinstock has managed the fund since August 1987 and has been
employed by Dreyfus since March 1987.
Dreyfus has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by Dreyfus employees does not
disadvantage any Dreyfus-managed fund. Dreyfus portfolio managers and other
investment personnel who comply with the Policy's preclearance and disclosure
procedures may be permitted to purchase, sell or hold certain types of
securities which also may be or are held in the fund(s) they advise.
Concepts to understand
Year 2000 issues: the fund could be adversely affected if the computer
systems used by Dreyfus and the fund's other service providers do not
properly process and calculate date-related information from and after
January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact
on the value of the fund's investments and its share price.
The Fund 3
[Page 3]
Financial Highlights
The following tables describe the performance of each share class for the
fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
Year Ended April 30,
Class A 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 14.69 14.11 13.85 13.86 13.81
Investment operations: Investment income - net .72 .79 .82 .86 .84
Net realized and unrealized gain (loss)
on investments (.15) .66 .27 (.01) .05
Total from investment operations .57 1.45 1.09 .85 .89
Distributions: Dividends from investment income - net (.72) (.79) (.82) (.86) (.84)
Dividends from net realized gain
on investments (.21) (.08) (.01) - -
Total distributions (.93) (.87) (.83) (.86) (.84)
Net asset value, end of period 14.33 14.69 14.11 13.85 13.86
Total return (%)* 3.96 10.52 8.03 6.08 6.72
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .91 .91 .91 .92 .92
Ratio of net investment income to average net assets (%) 4.96 5.42 5.84 5.98 6.16
Portfolio turnover rate (%) 46.84 26.33 28.17 36.59 38.60
Net assets, end of period ($ x 1,000) 432,276 447,869 457,327 474,044 495,616
* Exclusive of sales load.
Year Ended April 30,
Class B 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
Per-Share Data ($)
Net asset value, beginning of period 14.69 14.11 13.85 13.86 13.81
Investment operations: Investment income - net .65 .72 .75 .78 .77
Net realized and unrealized gain
(loss) on investments (.15) .66 .27 (.01) .05
Total from investment operations .50 1.38 1.02 .77 .82
Distributions: Dividends from investment income - net (.65) (.72) (.75) (.78) (.77)
Dividends from net realized gain
on investments (.21) (.08) (.01) - -
Total distributions (.86) (.80) (.76) (.78) (.77)
Net asset value, end of period 14.33 14.69 14.11 13.85 13.86
Total return (%)* 3.43 9.95 7.49 5.53 6.15
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.42 1.42 1.43 1.43 1.44
Ratio of net investment income to average net assets (%) 4.44 4.89 5.33 5.46 5.62
Portfolio turnover rate (%) 46.84 26.33 28.17 36.59 38.60
Net assets, end of period ($ x 1,000) 112,583 119,457 109,485 106,931 99,411
* Exclusive of sales load.
4
[Page 4]
Year Ended April 30,
Class C 1999 1998 1997 1996 1
- ---------------------------------------------------------------------------------------------------------------------------------
Per-Share Data ($)
Net asset value, beginning of period 14.71 14.12 13.87 14.28
Investment operations: Investment income - net .61 .68 .72 .60
Net realized and unrealized gain (loss)
on investments (.15) .67 .26 (.41)
Total from investment operations .46 1.35 .98 .19
Distributions: Dividends from investment income - net (.61) (.68) (.72) (.60)
Dividends from net realized gain on investments (.21) (.08) (.01) -
Total distributions (.82) (.76) (.73) (.60)
Net asset value, end of period 14.35 14.71 14.12 13.87
Total return (%) 2 3.16 9.73 7.16 1.56 3
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.67 1.69 1.64 1.77 3
Ratio of net investment income to average net assets (%) 4.11 4.55 5.01 4.84 3
Portfolio turnover rate (%) 46.84 26.33 28.17 36.59
Net assets, end of period ($ x 1,000) 8,095 3,019 1,049 340
1 From July 13, 1995 (commencement of initial offering) to April 30, 1996.
2 Exclusive of sales load.
3 Annualized.
</TABLE>
The Fund 5
[Page 5]
Your Investment
Account Policies
The Dreyfus Premier Funds are designed primarily for people who are investing
through a third party, such as a bank, broker-dealer or financial adviser. Third
parties with whom you open a fund account may impose policies, limitations and
fees which are different from those described here.
You will need to choose a share class before making your initial investment.
In making your choice, you should weigh the impact of all potential costs
over the length of your investment, including sales charges and annual fees.
For example, in some cases, it can be more economical to pay an initial sales
charge than to choose a class with no initial sales charge but higher annual
fees and a contingent deferred sales charge (CDSC).
* Class A shares may be appropriate for investors who prefer to pay
the fund's sales charge up front rather than upon the sale of their
shares, want to take advantage of the reduced sales charges
available on larger investments and/or have a longer-term investment
horizon
* Class B shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a longer-term investment horizon
* Class C shares may be appropriate for investors who wish to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a shorter-term investment horizon
Your financial representative can help you choose the share class that is
appropriate for you.
Share class charges
Each share class has its own fee structure. In some cases, you may not have
to pay a sales charge to buy or sell shares. Consult your financial
representative or the SAI to see if this may apply to you. Shareholders
owning Class B shares on or prior to November 30, 1996, may be eligible for a
lower CDSC.
Sales charges
Class A - charged when you buy shares
Sales charge Sales charge
deducted as a % as a % of your
Your investment of offering price net investment
- ------------------------------------------------------------------------------
Less than $50,000 4.50% 4.70%
$50,000 - $99,999 4.00% 4.20%
$100,000 - $249,999 3.00% 3.10%
$250,000 - $499,999 2.50% 2.60%
$500,000 - $999,999 2.00% 2.00%
$1 million or more* 0.00% 0.00%
* A 1.00% CDSC may be charged on any shares sold within one year of purchase
(except shares bought through dividend reinvestment).
Class B - charged when you sell shares
CDSC as a % of your initial
Time since you bought investment or your redemption
the shares you are selling (whichever is less)
- ------------------------------------------------------------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
More than 6 years Shares will automatically
convert to Class A
Class B shares also carry an annual Rule 12b-1 fee of 0.50% of the class's
average daily net assets.
Class C - charged when you sell shares
A 1.00% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% of the class's
average daily net assets.
Reduced Class A sales charge
Letter of intent: lets you purchase Class A shares over a 13-month period and
receive the same sales charge as if all shares had been purchased at once.
Right of accumulation: lets you add the value of any Class A, B or C shares in
this fund or any other Dreyfus Premier fund sold with a sales load that you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
Consult the Statement of Additional Information (SAI) or your financial
representative for more details.
6
[Page 6]
Buying shares
The net asset value (NAV) of each class is generally calculated as of the
close of trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m.
Eastern time) every day the exchange is open. Your order will be priced at the
next NAV calculated after your order is accepted by the fund's transfer agent or
other authorized entity. The fund's investments are generally valued based on
fair value as determined by an independent pricing service approved and
supervised by the fund's board. Because the fund seeks tax-exempt income, it is
not recommended for purchase in IRAs or other qualified plans.
Orders to buy and sell shares received by dealers by the close of trading on
the NYSE and transmitted to the distributor or its designee by the close of
its business day (normally 5:15 p.m. Eastern time) will be based on the NAV
determined as of the close of trading on the NYSE that day.
Minimum investments
Initial Additional
- ------------------------------------------------------------------
Regular accounts $1,000 $100; $500 for
TeleTransfer investments
Dreyfus automatic $100 $100
investment plans
All investments must be in U.S. dollars. Third-party checks cannot be
accepted. You may be charged a fee for any check that does not clear. Maximum
TeleTransfer purchase is $150,000 per day.
Concepts to understand
Net asset value (NAV): the market value of one share, computed by dividing
the total net assets of a fund or class by its shares outstanding. The fund's
Class Ashares are offered to the public at NAV plus a sales charge. Classes B
and C are offered at NAV, but generally are subject to higher annual
operating expenses and a CDSC.
Selling shares
You may sell (redeem) shares at any time through your financial
representative, or you can contact the fund directly. Your shares will be
sold at the next NAV calculated after your order is accepted by the fund's
transfer agent or other authorized entity. Any certificates representing fund
shares being sold must be returned with your redemption request. Your order
will be processed promptly, and you will generally receive the proceeds within
a week.
To keep your CDSC as low as possible, each time you request to sell shares we
will first sell shares that are not subject to a CDSC, and then those subject
to the lowest charge. The CDSC is based on the lesser of the original
purchase cost or the current market value of the shares being sold, and is
not charged on shares you acquired by reinvesting your dividends. There are
certain instances when you may qualify to have the CDSC waived. Consult your
financial representative or the SAI for details.
Before selling or writing a check against recently purchased shares, please
note that if the fund has not yet collected payment for the shares you are
selling, it may delay sending the proceeds for up to eight business days or
until it has collected payment.
Written sell orders
Some circumstances require written sell orders along with signature
guarantees. These include:
* amounts of $1,000 or more on accounts whose address
has been changed within the last 30 days
* requests to send the proceeds to a different payee or
address Written sell orders of $100,000 or more must
also be signature guaranteed.
A signature guarantee helps protect against fraud. You can obtain one from
most banks or securities dealers, but not from a notary public. For joint
accounts, each signature must be guaranteed. Please call us to ensure that your
signature guarantee will be processed correctly.
Your Investment 7
[Page 7]
Account Policies (continued)
General policies
Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
The fund reserves the right to:
* refuse any purchase or exchange request that could
adversely affect the fund or its operations, including
those from any individual or group who, in the fund's
view, is likely to engage in excessive trading (usually
defined as more than four exchanges out of the fund within a
calendar year)
* refuse any purchase or exchange request in excess of 1%
of the fund's total assets
* change or discontinue its exchange privilege, or
temporarily suspend this privilege during
unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very
large redemptions, excessive trading or during
unusual market conditions)
The fund also reserves the right to make a "redemption in kind" - payment in
portfolio securities rather than cash - if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; accounts participating in automatic
investment programs; accounts opened through a financial institution.
If your account falls below $500, the fund may ask you to increase your
balance. If it is still below $500 after 30 days, the fund may close your
account and send you the proceeds.
Distributions and Taxes
The fund usually pays its shareholders dividends from its net investment
income once a month, and distributes any net capital gains it has realized
once a year. Each share class will generate a different dividend because each
has different expenses. Your distributions will be reinvested in the fund
unless you instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
The fund anticipates that virtually all of its income dividends will be
exempt from federal income tax. You may, however, have to pay state and
local taxes. In addition, any dividends paid from interest on taxable
investments or short-term capital gains will be taxable as ordinary income.
Any distributions of long-term capital gains will be taxable as such. The tax
status of any distribution is the same regardless of how long you have been
in the fund and whether you reinvest your distributions or take them in cash.
In general, distributions are federally taxable as follows:
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- ------------------------------------------------------------------------
Income Generally Generally
dividends tax exempt tax exempt
Short-term Ordinary Ordinary
capital gains income rate income rate
Long-term
capital gains 10% 20%
The tax status of your dividends and distributions will be detailed in your
annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of fund shares, including through the checkwriting
privilege, may generate a tax liability.
The table above also can provide a guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains" applies to
fund shares sold or exchanged up to 12 months after buying them. "Long-term
capital gains" applies to shares sold or exchanged after 12 months.
8
[Page 8]
Services for fund Investors
The third party through whom you purchased fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You can set up most of these services with your
application, or by calling your financial representative or 1-800-554-4611.
For investing
Dreyfus Automatic
Asset Builder For making automatic investments
Registration Mark from a designated bank account.
Dreyfus Government For making automatic investments
Direct Deposit from your federal employment,
Privilege Social Security or other regular
federal government check.
Dreyfus Dividend For automatically reinvesting the
Sweep dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
For exchanging shares
Dreyfus Auto- For making regular exchanges
Exchange Privilege from one Dreyfus fund into
another.
For selling shares
Dreyfus Automatic For making regular withdrawals
Withdrawal Plan from most Dreyfus funds. There will
be no CDSC on Class B shares, as long as the
amounts withdrawn do not exceed 12% annually of the
account value at the time the
shareholder elects to participate in the plan.
Checkwriting privilege (Class A only)
You may write redemption checks against your account for Class A shares in
amounts of $500 or more. These checks are free; however, a fee will be
charged if you request a stop payment or if the transfer agent cannot honor a
redemption check due to insufficient funds or another valid reason. Please do
not postdate your checks or use them to close your account.
Exchange privilege
You can exchange shares worth $500 or more from one class of the fund into
the same class of another Dreyfus Premier fund. You can request your exchange
by contacting your financial representative. Be sure to read the current
prospectus for any fund into which you are exchanging before investing. Any
new account established through an exchange will generally have the same
privileges as your original account (as long as they are available). There is
currently no fee for exchanges, although you may be charged a sales load when
exchanging into any fund that has a higher one.
TeleTransfer privilege
To move money between your bank account and your Dreyfus fund account with a
phone call, use the TeleTransfer privilege. You can set up TeleTransfer on
your account by providing bank account information and following the
instructions on your application, or contacting your financial
representative.
Reinvestment privilege
Upon written request you can reinvest up to the number of Class A or B shares
you redeemed within 45 days of selling them at the current share price
without any sales charge. If you paid a CDSC, it will be credited back to
your account. This privilege may be used only once.
Account statements
Every fund investor automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Your Investment 9
[Page 9]
Instructions for regular accounts
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
By Telephone
Wire Have your bank send your
investment to The Bank of New York,
with these instructions:
* ABA# 021000018
* DDA# 8900119292
* the fund name
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number.
Return your application with the
account number on the application.
Automatically
With an initial investment Indicate
on your application which automatic
service(s) you want. Return your
application with your investment.
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your
account number on your check.
Mail the slip and a check to:
Name of Fund
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
Wire Have your bank send your
investment to The Bank of New York,
with these instructions:
* ABA# 021000018
* DDA# 8900119292
* the fund name
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
Electronic check Same as wire, but insert
"1111" before your account number.
TeleTransfer Request TeleTransfer on your
application. Call us to request your transaction.
All services Call us or your financial
representative to request a form to add any
automatic investing service (see "Services
for Fund Investors"). Complete and return
the form along with any other required
materials.
TO SELL SHARES
Write a redemption check (Class A only) or
write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other
documentation, if required (see page 7).
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 6587, Providence, RI 02940-6587
Attn: Institutional Processing
Wire Call us or your financial representative
to request your transaction. Be sure the fund
has your bank account information on file.
Proceeds will be wired to your bank.
TeleTransfer Call us or your financial
representative to request your transaction.
Be sure the fund has your bank account
information on file. Proceeds will be sent to
your bank by electronic check.
Check Call us or your financial representative
to request your transaction. A check will be
sent to the address of record.
Automatic Withdrawal Plan Call us or your
financial representative to request a form to
add the plan. Complete the form, specifying
the amount and frequency of withdrawals
you would like.
Be sure to maintain an account balance of
$5,000 or more.
To open an account, make subsequent investments or to
sell shares, please contact your financial representative
or call toll free in the U.S. 1-800-554-4611.
Make checks payable to: The Dreyfus Family of Funds.
Concepts to understand
Wire transfer: for transferring money from one financial institution to
another. Wiring is the fastest way to move money, although your bank may
charge a fee to send or receive wire transfers. Wire redemptions from the
fund are subject to a $1,000 minimum.
Electronic check: for transferring money out of a bank account. Your
transaction is entered electronically, but may take up to eight business days
to clear. Electronic checks usually are available without a fee at all
Automated Clearing House (ACH) banks.
10
[Page 10]
[Application p1]
[Application p2]
NOTES
[Page]
For More Information
Dreyfus Premier
Municipal Bond Fund
SEC file number: 811-4764
More information on this fund is available free
upon request, including the following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio
holdings and contains a letter from the fund's
manager discussing recent market conditions,
economic trends and fund strategies that significantly
affected the fund's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies.
A current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
By telephone
Call your financial representative or 1-800-554-4611
By mail Write to:
The Dreyfus Premier Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
On the Internet Text-only versions of fund documents can
be viewed online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public
Reference Room in Washington, DC (phone 1-800-SEC-0330)
or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009.
Copy Rights 1999 Dreyfus Service Corporation 022P0999
DREYFUS PREMIER MUNICIPAL BOND FUND
CLASS A, CLASS B AND CLASS C SHARES
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 1999
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Premier Municipal Bond Fund (the "Fund"), dated September 1, 1999,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611.
The Fund's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing in the Annual Report are
incorporated by reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund B-2
Management of the Fund B-16
Management Arrangements B-20
How to Buy Shares B-23
Distribution Plan and Shareholder Services Plan B-28
How to Redeem Shares B-30
Shareholder Services B-34
Determination of Net Asset Value B-38
Dividends, Distributions and Taxes B-39
Portfolio Transactions B-41
Performance Information B-42
Information About the Fund B-44
Counsel and Independent Auditors B-46
Appendix B-47
DESCRIPTION OF THE FUND
The Fund is a Massachusetts business trust that commenced operations on
November 26, 1987. The Fund is an open-end management investment company,
known as a municipal bond fund. The Fund is a diversified fund, which means
that, with respect to 75% of its total assets, the Fund will not invest more
than 5% of its assets in the securities of any single issuer.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the Fund's Prospectus.
Municipal Obligations. The Fund will invest at least 80% of the value
of its net assets (except when maintaining a temporary defensive position)
in Municipal Obligations. Municipal Obligations are debt obligations issued
by states, territories and possessions of the United States and the District
of Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities, the interest from
which, in the opinion of bond counsel to the issuer, is exempt from Federal
income tax. Municipal Obligations generally include debt obligations issued
to obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and
notes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. 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.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation and rating of the issue.
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, the 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.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the event
of foreclosure might prove difficult. The staff of the Securities and
Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully the
Fund's investment in such securities with particular regard to: (1) the
frequency of trades and quotes for the lease obligation; (2) the number of
dealers willing to purchase or sell the lease obligation and the number of
other potential buyers; (3) the willingness of dealers to undertake to make
a market in the lease obligation; (4) the nature of the marketplace trades,
including the time needed to dispose of the lease obligation, the method of
soliciting offers and the mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may
deem relevant. In addition, in evaluating the liquidity and credit quality
of a lease obligation that is unrated, the Fund's Board has directed the
Manager to consider: (a) whether the lease can be canceled; (b) what
assurance there is that the assets represented by the lease can be sold; (c)
the strength of the lessee's general credit (e.g., its debt, administrative,
economic, and financial characteristics); (d) the likelihood that the
municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an "event of nonappropriation"); (e)
the legal recourse in the event of failure to appropriate; and (f) such
other factors concerning credit quality as the Manager may deem relevant.
The Fund will not invest more than 15% of the value of its net assets in
lease obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 12" below.
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 Manager, on behalf of the
Fund, will consider on an ongoing basis the creditworthiness of the issuer
of the underlying Municipal Obligation, 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 Obligation
and for other reasons.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will
not have the effect of creating taxable income for the Fund. Based on the
tender option bond agreement, the Fund expects to be able to value the
tender option bond at par; however, the value of the instrument will be
monitored to assure that it is valued at fair value.
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 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 its 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.
Ratings of Municipal Obligations. The Fund will invest at least 70% of
the value of its net assets in Municipal Obligations which, in the case of
bonds, are rated no lower than Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P") or Fitch IBCA,
Inc. ("Fitch" and, together with Moody's and S&P, the "Rating Agencies").
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 the
Rating Agencies. The Fund also may invest in securities which, while not
rated, are determined by the Manager 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 will be
considered to have the rating so determined.
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended April 30,
1999, computed on a monthly basis, was as follows:
Fitch or Moody's or S&P Percentage
of Value
AAA Aaa AAA 20.6%
AA Aa AA 1.7%
A A A 10.8%
BBB Baa BBB 24.7%
BB Ba BB 9.7%
B B B 2.5%
F-1+/F-1 VMIG1/MIG1, P-1 SP-1+,SP-1,
A1+/A1 .9
Not Rated Not Rated Not Rated 29.1*
___________
100%
Subsequent to its purchase by the Fund, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. Neither event will require the
sale of such Municipal Obligations by the Fund, but the Manager will
consider such event in determining whether the Fund should continue to hold
the Municipal Obligations. To the extent that the ratings given by the
Rating Agencies for Municipal Obligations may change as a result of changes
in such organizations or their rating systems, the Fund will attempt to use
comparable ratings as standards for its investments in accordance with the
investment policies contained in the Prospectus and this Statement of
Additional Information. The ratings of the Rating Agencies 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 are not absolute standards of quality. Although these
ratings may be an initial criterion for selection of portfolio investments,
the Manager also will evaluate these securities and the creditworthiness of
the issuers of such securities.
* Included in the Not Rated category are securities comprising 29.1% of
the Fund's market value, which while not rated, all have been
determined by the Manager to be of comparable quality to securities in
the following rating categories: AAA/Aaa (7.9%); AA/Aa (.7%); A/A
(.9%); BBB/Baa (13.6%); BB/Ba (1.5%); B/B (.9%); CCC/Caa (1.6%) and
DDD/D (2.0%).
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. These securities may include securities that are not readily
marketable, such as 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 that 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 a Rating Agency; 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 $1 billion 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. 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.
Investment Techniques
The following information supplements and should be read in conjunction
with the Fund's Prospectus. The Fund's use of certain of the investment
techniques described below may give rise to taxable income.
Borrowing Money. The Fund is permitted to borrow to the extent
permitted under the Investment Company Act of 1940, as amended (the "1940
Act"), which permits an investment company to borrow in an amount up to 33-
1/3% 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 its 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 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 the
security. To complete the transaction, the Fund must borrow the security to
make delivery to the buyer. The Fund is obligated to replace the security
borrowed by purchasing it subsequently at the market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Fund, which would result in a loss or
gain, respectively.
Securities will not be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed
25% of the value of the Fund's net assets. The Fund may not 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. At no time will more than
15% of the value of the Fund's net assets be in deposits on short sales
against the box.
Until the Fund closes its short position or replaces the borrowed
security, the Fund will: (a) segregate permissible liquid assets in an
amount that, together with the amount deposited with the broker as
collateral, always equals the current value of the security sold short; or
(b) otherwise cover its short position.
Lending Portfolio Securities. 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 33-
1/3% of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities. Such
loans are terminable by the Fund at any time upon specified notice. The
Fund might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the
Fund. In connection with its securities lending transactions, the Fund may
return to the borrower or a third party which is unaffiliated with the Fund,
and which is acting as a "placing broker," a part of the interest earned
from the investment of collateral received for securities loaned.
Derivatives. The Fund may invest in, or enter into, derivatives, such
as options and futures, for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities. However,
derivatives may entail investment exposures that are greater than their cost
would suggest, meaning that a small investment in derivatives could have a
large potential impact on the Fund's performance.
If the Fund invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its
derivatives were poorly correlated with its other investments, or if the
Fund were unable to liquidate its position because of an illiquid secondary
market. The market for many derivatives is, or suddenly can become,
illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for derivatives.
Although the Fund will not be a commodity pool, certain derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in such derivatives.
The Fund may invest in futures contracts and options with respect thereto
for hedging purposes without limit. However, the Fund may not invest in
such contracts and options for other purposes if the sum of the amount of
initial margin deposits and premiums paid for unexpired options with respect
to such contracts, other than for bona fide hedging purposes, exceeds 5% of
the liquidation value of the Fund's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the
5% limitation.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
derivatives. Exchange-traded derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such derivatives.
This guarantee usually is supported by a daily variation margin system
operated by the clearing agency in order to reduce overall credit risk. As
a result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with derivatives purchased on an
exchange. By contrast, no clearing agency guarantees over-the-counter
derivatives. Therefore, each party to an over-the-counter derivative bears
the risk that the counterparty will default. Accordingly, the Manager will
consider the creditworthiness of counterparties to over-the-counter
derivatives in the same manner as it would review the credit quality of a
security to be purchased by the Fund. Over-the-counter derivatives are less
liquid than exchange-traded derivatives since the other party to the
transaction may be the only investor with sufficient understanding of the
derivative to be interested in bidding for it.
Futures Transactions--In General. The Fund may enter into futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade. Engaging in
these transactions involves risk of loss to the Fund which could adversely
affect the value of the Fund's net assets. Although the Fund intends to
purchase or sell futures contracts only if there is an active market for
such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant
market, and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the securities
being hedged and the price movements of the futures contract. For example,
if the Fund uses futures to hedge against the possibility of a decline in
the market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate permissible
liquid assets to cover its obligations relating to its transactions in
derivatives. To maintain this required cover, the Fund may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a derivative position at a reasonable price. In
addition, the segregation of such assets will have the effect of limiting
the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell interest rate
futures contracts. An interest rate future obligates the Fund to purchase
or sell an amount of a specific debt security at a future date at a specific
price.
Options--In General. The Fund may invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put options
with respect to interest rate futures contracts. 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. A
call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy, the underlying security or securities
at the exercise price at any time during the option period, or at a specific
date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating permissible liquid assets. A put option written
by the Fund is covered when, among other things, the Fund segregates
permissible liquid assets having a value equal to or greater than the
exercise price of the option to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize,
through the receipt of premiums, a greater return than would be realized on
the underlying securities alone. The Fund receives a premium from writing
covered call or put options which it retains whether or not the option is
exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered call
option writer, the Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent the
Manager's predictions are incorrect, the Fund may incur losses.
Future Developments. The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or Statement of Additional
Information.
Forward Commitments. The Fund may purchase Municipal Obligations and
other securities on a forward commitment or when-issued basis, which means
that delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when
the Fund enters into the commitment, but 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. The Fund will segregate permissible liquid
assets at least equal at all times to the amount of the Fund's purchase
commitments.
Municipal Obligations and other securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e. appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of
the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a forward commitment or
when-issued basis may expose the Fund to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on
a forward commitment or when-issued basis can involve the additional risk
that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when the
Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value
per share.
Investment Considerations and Risks
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 Manager 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 Internal Revenue Code of 1986, as amended
(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.
Lower Rated Bonds. The Fund may invest up to 30% of the value of its
net assets in higher yielding (and, therefore, higher risk) debt securities
such as those rated below investment grade by the Rating Agencies (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 Municipal Obligations. See the Appendix for a
general description of the Rating Agencies' ratings of Municipal
Obligations. 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. The Fund will rely on the Manager's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
You should be aware that the market values of many of these bonds tend
to be more sensitive to economic conditions than are higher rated securities
and will fluctuate over time. These bonds generally are considered by the
Rating Agencies to be, on balance, predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of
the obligation and generally will involve more credit risk than securities
in the higher rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market price
and yield and the Fund's ability to dispose of particular issues when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for the Fund to obtain accurate market quotations
for purposes of valuing the Fund's portfolio and calculating its net asset
value. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of these
securities. In such cases, judgment may play a greater role in valuation
because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession would disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities, and could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon which would increase
the incidence of default for such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any person concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon bonds and pay-in-kind bonds, in which the Fund
may invest up to 5% of its total assets. Zero coupon bonds and pay-in-kind
bonds carry an additional risk in that, unlike bonds which pay interest
throughout the period to maturity, the Fund will realize no cash until the
cash payment date unless a portion of such securities are sold and, if the
issuer defaults, the Fund may obtain no return at all on its investment.
See "Dividends, Distributions and Taxes."
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.
Simultaneous Investments. Investment decisions for the Fund are made
independently from those of other investment companies advised by the
Manager. If, however, such other investment companies desire to invest in,
or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or
received by the Fund.
Investment Restrictions
The Fund's investment objective is a fundamental policy, which cannot
be changed without approval by the holders of a majority (as defined in the
1940 Act) of the Fund's outstanding voting shares. In addition, the Fund
has adopted investment restrictions numbered 1 through 10 as fundamental
policies. Investment restrictions numbered 11 and 12 are not fundamental
policies and may be changed by a vote of a majority of the Fund's Board
members at any time. The Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus and those
arising out of transactions in futures and options.
2. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). Transactions in futures and options and the entry
into short sales transactions do not involve any borrowing for purposes of
this restriction.
3. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in futures, including those related
to indices, and options on futures or indices.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available, and except to the extent the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein or prevent the Fund from
purchasing and selling futures contracts, including those related to
indices, and options on futures contracts or indices.
6. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above and
in the Fund's Prospectus; however, the Fund may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its total
assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the
Fund's Board members.
7. Invest more than 15% of its assets in the obligations of any one
bank for temporary defensive purposes, or invest more than 5% of its assets
in the obligations of any other issuer, except that up to 25% of the value
of the Fund's total assets may be invested, and securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities may
be purchased, without regard to any such limitations. Notwithstanding the
foregoing, to the extent required by the rules of the Securities and
Exchange Commission, the Fund will not invest more than 5% of its assets in
the obligations of any one bank, except that up to 25% of the value of the
Fund's total assets may be invested without regard to such limitation.
8. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
11. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings. The deposit
of assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed-delivery
basis and collateral arrangements with respect to initial or variation
margin for futures contracts and options on futures contracts or indices
will not be deemed to be pledges of the Fund's assets.
12. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests that are not subject
to the demand feature described in the Fund's Prospectus and floating and
variable rate demand obligations as to which no secondary market exists and
the Fund cannot exercise the demand feature described in the Fund's
Prospectus on less than seven days' notice), if, in the aggregate, more than
15% of the value of its net assets would be so invested.
For purposes of Investment Restriction No. 8, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."
If a percentage restriction is adhered to at the time of investment, a
later increase in percentage resulting from a change in values or assets
will not constitute a violation of such restriction.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Fund
and those companies that furnish services to the Fund. These companies are
as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
a director of The Noel Group, Inc., a venture capital company (for
which, from February 1995 until November 1997, he was Chairman of the
Board), The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, Carlyle
Industries, Inc. (formerly, Belding Heminway Company, Inc.), a button
packager and distributor, Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, and Century Business
Services, Inc. (formerly, International Alliance Services, Inc.), a
provider of various outsourcing functions for small and medium sized
companies. For more than five years prior to January 1995, he was
President, a director and, until August 1994, Chief Operating Officer
of the Manager and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager and,
until August 24, 1994, the Fund's distributor. From August 1994 until
December 31, 1994, he was a director of Mellon Bank Corporation. He is
55 years old and his address is 200 Park Avenue, New York, New York
10166.
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981, Mr.
Alexander served as Secretary of the Army and Chairman of the Board of
the Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
Cognizant Corporation, a service provider of marketing information and
information technology, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company
and TLC Beatrice International Holdings, Inc. He is 64 years old and
his address is 400 C Street, N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Board Member. Shad Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served for
three years as a judge in the courts of New York State; was engaged for
eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. She is 55 years old and her address is c/o
New York University School of Law, 40 Washington Square South, New
York, New York 10011.
ERNEST KAFKA, Board Member. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
For more than the past five years, Dr. Kafka has held numerous
administrative positions, including President of The New York
Psychoanalytic Society, and has published many articles on subjects in
the field of psychoanalysis. He is 65 years old and his address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Board Member. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November, 1992. He also
served as an Economist to the Board of Governors of the Federal Reserve
System and on several Presidential Commissions and has held numerous
consulting and advisory positions in the fields of economics and
housing finance. He is 78 years old and his address is 431-B Dedham
Street, The Gables, Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Board Member. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of
New York City from September 1979 to March 1984 and Commissioner of the
Department of Housing Preservation and Development of New York City
from February 1978 to September 1979. Mr. Leventhal was an associate
and then a member of the New York law firm of Poletti Freidin Prashker
Feldman and Gartner from 1974 to 1978. He was Commissioner of Rent and
Housing Maintenance for New York City from 1972 to 1973. Mr. Leventhal
served as Chairman of Citizens Union, an organization which strives to
reform and modernize city and state government from June 1994 until
June 1997. He is 55 years old and his address is 70 Lincoln Center
Plaza, New York, New York 10023-6583.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Board members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board members
who are not "interested persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year ended
April 30, 1999, and by all other funds in the Dreyfus Family of Funds for
which such person was a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation)* for the year
ended December 31, 1998, was as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund** Board Member
Joseph S. DiMartino $6,250 $619,660 (93)
Clifford L. Alexander, Jr. $5,000 $ 80,918 (17)
Peggy C. Davis $5,000 $ 64,000 (15)
Ernest Kafka $5,000 $ 57,500 (15)
Saul B. Klaman $5,000 $ 64,000 (15)
Nathan Leventhal $5,000 $ 64,000 (15)
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
** Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,580 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 41 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
38 years old.
*FREDERICK C. DEY, Vice President and Assistant Treasurer and Assistant
Secretary. Vice President, New Business Development of Funds
Distributor, Inc., since September 1994, and an officer of other
investment companies advised or administered by the Manager. From 1988
to August 1994, he was Manager of High Performance Fabrics Division of
Springs Industries, Inc., where he was responsible for sales and
marketing. He is 37 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President of the Distributor and Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
*JOHN P. COVINO, Vice President and Assistant Treasurer. Vice President and
Treasury Group Manager of Treasury Servicing and Administration of
Funds Distributor, Inc., since December 1998. From December 1995 to
November 1998, he was employed by Fidelity Investments where he held
multiple positions in their Institutional Brokerage Group. Prior to
joining Fidelity, he was employed by SunGard Brokerage systems where he
was responsible for the technology and development of the accounting
product group. He is 35 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. She is 34
years old.
*GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. He is 43 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 36 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. He is 29 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 33 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 26 years old.
*KAREN JACOPPO-WOOD, Vice President and Assistant Secretary. Vice President
and Senior Counsel of Funds Distributor, Inc., since February 1997, and
an officer of other investment companies advised or administered by the
Manager. From June 1994 to January 1996, she was Manager of SEC
Registration at Scudder, Stevens & Clark, Inc. Prior to June 1994, she
was a senior paralegal at The Boston Company Advisors, Inc. She is 32
years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
March 1990 to May 1996, she was employed by U.S. Trust Company of New
York where she held various sales and marketing positions. She is 37
years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166, except those officers indicated by an (*), whose address is
60 State Street, Boston, Massachusetts 02109.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on July 15, 1999.
The following entities held of record or beneficially 5% or more of the
Fund's shares outstanding on July 15, 1999:
Class B - MLPF&S for the Sole Benefit of its Customers, 4800 Deer Lake
Dr E Fl 3, Jacksonville FL 32246 - 12.96%; Class C - MLPF&S for the
Sole Benefit of its Customers, 4800 Deer Lake Dr E Fl 3, Jacksonville,
Fl 32246 - 69.71%
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Federal
Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is approved
by a majority of the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Agreement was approved by shareholders on August 3, 1994 and was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting
held on July 21, 1999. The Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board or by vote of the holders of a majority of
the Fund's outstanding shares, or, on not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Lawrence S. Kash, Vice Chairman and a director; J.
David Officer, Vice Chairman and a director; Thomas F. Eggers, Vice Chairman-
- -Institutional and a director; Ronald P. O'Hanley III, Vice Chairman;
William T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Diane P. Durnin, Vice President--
Product Development; Patrice M. Kozlowski, Vice President--Corporate
Communications; Mary Beth Leibig, Vice President--Human Resources; Andrew S.
Wasser, Vice President--Information Systems; Theodore A. Schachar, Vice
President; Wendy Strutt, Vice President; Richard Terres, Vice President;
William H. Maresca, Controller; James Bitetto, Assistant Secretary; Steven
F. Newman, Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt,
Steven G. Elliot, Martin C. McGuinn, Richard W. Sabo and Richard F. Syron,
directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides
the Fund with portfolio managers who are authorized by the Fund's Board to
execute purchases and sales of securities. The Fund's portfolio managers
are A. Paul Disdier, Joseph P. Darcy, Douglas J. Gaylor, Richard J.
Moynihan, W. Michael Petty, Jill C. Shaffro, Samuel J. Weinstock and Monica
S. Wieboldt. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for the Fund and for other funds advised by the Manager.
The Manager has a personal securities trading policy (the "Policy")
which restricts the personal securities transactions of its employees. Its
primary purpose is to ensure that personal trading by the Manager's
employees does not disadvantage any fund managed by the Manager. Under the
Policy, the Manager's employees must preclear personal transactions in
securities not exempt under the Policy. In addition, the Manager's
employees must report their personal securities transactions and holdings,
which are reviewed for compliance with the Policy. In that regard, the
Manager's portfolio managers and other investment personnel also are subject
to the oversight of Mellon's Investment Ethics Committee. Portfolio
managers and other investment personnel of the Manager who comply with the
Policy's preclearance and disclosure procedures and the requirements of the
Committee may be permitted to purchase, sell or hold securities which also
may be or are held in fund(s) they manage or for which they otherwise
provide investment advice.
The Manager maintains office facilities on behalf of the Fund, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services to the
Fund. The Manager may pay the Distributor for shareholder services from the
Manager's own assets, including past profits but not including the
management fee paid by the Fund. The Distributor may use part or all of
such payments to pay Service Agents (as defined below) in respect of these
services. The Manager also may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include, without limitation, the following:
taxes, interest, loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any, fees of Board
members who are not officers, directors, employees or holders of 5% or more
of the outstanding voting securities of the Manager, Securities and Exchange
Commission fees and state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside auditing and
legal expenses, costs of independent pricing services, costs of maintaining
the Fund's existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, costs of
shareholders' reports and meetings, and any extraordinary expenses. In
addition, shares of each Class are subject to an annual service fee and
Class B and Class C shares are subject to an annual distribution fee. See
"Distribution Plan and Shareholder Services Plan."
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .55% of the value
of the Fund's average daily net assets. For the fiscal years ended April
30, 1997, 1998 and 1999, the management fees payable amounted to $3,180,718,
$3,155,724 and $3,144,295, respectively.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a monthly
basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
Distributor. The Distributor, located at 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's distributor on a best efforts
basis pursuant to an agreement which is renewable annually.
For the fiscal years ended April 30, 1997, 1998 and 1999, the
Distributor retained $32,137, $33,805 and $29,154, respectively, from sales
loads on Class A shares and $248,884, $177,747 and $166,883, respectively,
from contingent deferred sales charges ("CDSC") on Class B shares. For the
fiscal years ended April 30, 1997, 1998 and 1999, the Distributor retained
$6,468, $294 and $2,275, respectively, from the CDSC on Class C shares.
The Distributor, at its expense, may provide promotional incentives to
dealers that sell shares of funds advised by the Manager which are sold with
a sales load, such as the Dreyfus Premier Funds. In some instances, these
incentives may be offered only to certain dealers who have sold or may sell
significant amounts of shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the
Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's
transfer and dividend disbursing agent. Under a transfer agency agreement
with the Fund, the Transfer Agent arranges for the maintenance of
shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses.
The Bank of New York (the "Custodian"), 90 Washington Street, New York,
New York 10286, is the Fund's custodian. The Custodian has no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund. Under a custody agreement with the Fund,
the Custodian holds the Fund's securities and keeps all necessary accounts
and records. For its custody services, the Custodian receives a monthly fee
based on the market value of the Fund's assets held in custody and receives
certain securities transactions charges.
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
Manager or any of its affiliates or subsidiaries, directors of the Manager,
Board members of a fund advised by the Manager, including members of the
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.
Service Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in the Fund's Prospectus and this Statement of
Additional Information, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should
consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments must
be at least $100. The Fund reserves the right to vary further the initial
and subsequent investment minimum requirements at any time.
Fund shares also may be purchased through Dreyfus-Automatic Asset
Builderr and Dreyfus 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.
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 the Fund's
investments, see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m.,
New York time) on 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 dealer's
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day.
Class A Shares. The public offering price for Class A shares is the
net asset value per share of that Class plus a sales load as shown below:
Total
Sales
Load
As a % of As a % of Dealers'
Amount of Transaction offering net asset reallowance
price per value per as a % of
share share offering
price
Less than $50,000 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more -0- -0- -0-
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 scale of sales loads applies to purchases of Class A shares made
by any "purchaser," which term includes an individual and/or spouse
purchasing securities for his, her or their own account or for the account
of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account
(including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Code)
although more than one beneficiary is involved; or a group of accounts
established by or on behalf of the employees of an employer or affiliated
employers pursuant to an employee benefit plan or other program (including
accounts established pursuant to Sections 403(b), 408(k), and 457 of the
Code); or an organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying
redeemable securities of a registered investment company and provided that
the purchases are made through a central administration or a single dealer,
or by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of
Class A shares aggregating less than $50,000 subject to the schedule of
sales charges set forth above at a price based upon the net asset value of
the Fund's Class A shares on April 30, 1999:
NET ASSET VALUE per Share $14.33
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $.68
Per Share Offering Price to
the Public $15.01
Full-time employees of NASD member firms and full-time employees of
other financial institutions which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage related or clearing arrangement with an NASD member firm or
financial institution with respect to the sale of such shares) may purchase
Class A shares for themselves directly or pursuant to an employee benefit
plan or other program, or for their spouses or minor children, at net asset
value, provided they have furnished the Distributor with such information as
it may request from time to time in order to verify eligibility for this
privilege. This privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time employees are
eligible to purchase Class A shares at net asset value. In addition, Class
A shares are offered at net asset value to full-time or part-time employees
of the Manager or any of its affiliates or subsidiaries, directors of the
Manager, Board members of a fund advised by the Manager, including members
of the 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 Manager or its
affiliates. The purchase of Class A shares of the Fund must be made within
60 days of such redemption and the shareholder must have been subject to an
initial sales charge or a contingent deferred sales charge with respect to
such redeemed shares.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i) qualified separate accounts maintained by
an insurance company pursuant to the laws of any State or territory of the
United States, (ii) a State, county or city or instrumentality thereof,
(iii) a charitable organization (as defined in Section 501(c)(3) of the
Code) investing $50,000 or more in Fund shares, and (iv) a charitable
remainder trust (as defined in Section 501(c)(3) of the Code).
Class B Shares. The public offering price for Class B shares is the
net asset value per share of that Class. No initial sales charge is imposed
at the time of purchase. A CDSC is imposed, however, on certain redemptions
of Class B shares as described in the Fund's Prospectus and in this
Statement of Additional Information under "How to Redeem Shares--Contingent
Deferred Sales Charge--Class B Shares." The Distributor compensates certain
Service Agents for selling Class B shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution
fee, in part, are used to defray these expenses.
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative net
asset values for shares of each such Class. Class B shares that have been
acquired through the reinvestment of dividends and distributions will be
converted on a pro rata basis together with other Class B shares, in the
proportion that a shareholder's Class B shares converting to Class A shares
bears to the total Class B shares not acquired through the reinvestment of
dividends and distributions.
Class C Shares. The public offering price for Class C shares is the
net asset value per share of that Class. No initial sales charge is imposed
at the time of purchase. A CDSC is imposed, however, on redemptions of
Class C shares made within the first year of purchase. See "Class B Shares"
above and "How to Redeem Shares."
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 Manager which
are sold with a sales load and shares acquired by a previous exchange of
such shares (hereinafter referred to as "Eligible Funds"), by you and any
related "purchaser" as defined above, where the aggregate investment,
including such purchase, is $50,000 or more. If, for example, you
previously purchased and still hold Class A shares, or shares of any other
Eligible Fund or combination thereof, with an aggregate current market value
of $40,000 and subsequently purchase Class A shares or shares of an Eligible
Fund having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4.0% 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.
Using Federal Funds. The Transfer Agent or the Fund may attempt to
notify you upon receipt of checks drawn on banks that are not members of the
Federal Reserve System as to the possible delay in conversion into Federal
Funds (monies of member banks within the Federal Reserve System which are
held on deposit at a Federal Reserve Bank) and may attempt to arrange for a
better means of transmitting the money. If you are a customer of a Selected
Dealer and your order to purchase Fund shares is paid for other than in
Federal Funds, the Selected Dealer, acting on your behalf, will complete the
conversion into, or itself advance, Federal Funds generally on the business
day following receipt of your order. The order is effective only when so
converted and received by the Transfer Agent. An order for the purchase of
Fund shares placed by you with sufficient Federal Funds or a cash balance in
your brokerage account with a Selected Dealer will become effective on the
day that the order, including Federal Funds, is received by the Transfer
Agent.
Dreyfus TeleTransfer Privilege. You may purchase shares by telephone
if you have checked the appropriate box and supplied the necessary
information on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between the
bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is
an Automated Clearing House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time.
Purchase orders received by 4:00 p.m., New York time, on any day the
Transfer Agent and the New York Stock Exchange are open for business will
be credited to the shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00 p.m., New
York time, on any day the Transfer Agent and the New York Stock Exchange
are open for business, or orders made on Saturday, Sunday or any Fund
holiday (e.g., when the New York Stock Exchange is not open for business),
will be credited to the shareholder's Fund account on the second bank
business day following such purchase order. To qualify to use the Dreyfus
TeleTransfer Privilege, the initial payment for purchase of shares must be
drawn on, and redemption proceeds paid to, the same bank and account as are
designated on the Account Application or Shareholder Services Form on file.
If the proceeds of a particular redemption are to be wired to an account at
any other bank, the request must be in writing and signature-guaranteed.
See "How to Redeem Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. You may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class B and Class C shares are subject to a Distribution Plan and Class
A, Class B and Class C shares are subject to a Shareholder Services Plan.
Distribution Plan. Rule 12b-1 (the "Rule"), adopted by the Securities
and Exchange Commission under the 1940 Act, provides, among other things,
that an investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
has adopted such a plan (the "Distribution Plan") with respect to the Fund's
Class B and Class C shares, pursuant to which the Fund pays the Distributor
for distributing each such Class of shares a fee at the annual rate of .50%
of the value of the average daily net assets of Class B and .75% of the
average daily net assets of Class C. The Fund's Board believes that there
is a reasonable likelihood that the Distribution Plan will benefit the Fund
and holders of Class B and Class C shares.
A quarterly report of the amounts expended under the Distribution Plan,
and the purposes for which such expenditures were incurred, must be made to
the Board for its review. In addition, the Distribution Plan provides that
it may not be amended to increase materially the costs which holders of
Class B or Class C shares may bear for distribution pursuant to the
Distribution Plan without the approval of such shareholders and that other
material amendments of the Distribution Plan must be approved by the Board,
and by the Board members who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Manager and have no direct or indirect
financial interest in the operation of the Distribution Plan, or in any
agreements entered into in connection with the Distribution Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution Plan is subject to annual approval by such
vote of the Board members cast in person at a meeting called for the purpose
of voting on the Distribution Plan. The Distribution Plan was last so
approved at a meeting held on July 21, 1999. As to each of Class B and
Class C, the Distribution Plan may be terminated at any time (i) by vote of
a majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution
Plan or (ii) by vote of the holders of a majority of such Class.
For the fiscal year ended April 30, 1999, the Fund was charged $604,681
and $47,348, with respect to Class B and Class C, respectively, pursuant to
the Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan, pursuant to which the Fund pays the Distributor for the provision of
certain services to the holders of Class A, Class B and Class C shares a fee
at the annual rate of .25% 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 such shareholder accounts. Under the
Shareholder Services Plan, the Distributor may make payments to certain
financial institutions (which may include banks), Selected Dealers and other
financial industry professionals (collectively, "Service Agents") in respect
of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board for its review. In addition, the Shareholder
Services Plan provides that material amendments must be approved by the
Fund's Board, and by the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan, by
vote cast in person at a meeting called for the purpose of considering such
amendments. The Shareholder Services Plan is subject to annual approval by
such vote of the Board members cast in person at a meeting called for the
purpose of voting on the Shareholder Services Plan. The Shareholder
Services Plan was last so approved on July 21, 1999. As to each Class of
shares, the Shareholder Services Plan is terminable at any time by vote of a
majority of the Board members who are not "interested persons" and who have
no direct or indirect financial interest in the operation of the Shareholder
Services Plan, or in any agreements entered into in connection with the
Shareholder Services Plan.
For the fiscal year ended April 30, 1999, the Fund was charged
$1,111,102, $302,340 and $15,783 with respect to Class A, Class B and Class
C, respectively, pursuant to the Shareholder Services Plan.
HOW TO REDEEM SHARES
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 the Class B
shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of your Class B
shares above the dollar amount of all your payments for the purchase of
Class B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be
applied to the then-current net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge
will depend on the number of years for the time you purchased the Class B
shares until the time of redemption of such shares. Solely for purposes of
determining the number of years from the time of any payment for the
purchase of Class B shares, all payments during a month will be aggregated
and deemed to have been made on the first day of the month.
The 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:
Year Since CDSC as a % of
Purchase Payment Amount Invested
Was Made or
Redemption
Proceeds
First 4.00
Second 4.00
Third 3.00
Fourth 3.00
Fifth 2.00
Sixth 1.00
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:
Year Since CDSC as a % of
Purchase Payment Amount Invested
Was Made or
Redemption
Proceeds
First 3.00
Second 3.00
Third 2.00
Fourth 2.00
Fifth 1.00
Sixth 0.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible
rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net asset value
of Class B shares above the total amount of payments for the purchase of
Class B shares made during the preceding six years (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 the investment.
Assuming at the time of the redemption the net asset value had appreciated
to $12 per share, the value of the investor's shares would be $1,260 (105
shares at $12 per share). The CDSC would not be applied to the value of the
reinvested dividend shares and the amount which represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260)
would be charged at a rate of 4% (the applicable rate in the second year
after purchase) for a total CDSC of $9.60.
Contingent Deferred Sales Charge--Class C Shares. 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 70 1/2 in the case of an IRA or Keogh plan or custodial account pursuant to
Section 403(b) of the Code, and (e) redemptions pursuant to the Automatic
Withdrawal Plan, as described below. If the Fund's Board determines to
discontinue the waiver of the CDSC, the disclosure herein will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased prior
to the termination of such waiver will have the CDSC waived as provided in
the Fund's Prospectus or this Statement of Additional Information at the
time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Service Agent must notify the Distributor.
Any such qualification is subject to confirmation of your entitlement.
Check Redemption Privilege--Class A Only. The Fund provides Redemption
Checks ("Checks") to investors in Class A shares automatically upon opening
an account unless you specifically refuse the Check Redemption Privilege by
checking the applicable "No" box on the Account Application. Checks will be
sent only to the registered owner(s) of the account and only to the address
of record. The Check Redemption Privilege may be established for an
existing account by a separate signed Shareholder Services Form. The
Account Application or Shareholder Services Form must be manually signed by
the registered owner(s). Checks are drawn on your Fund account and may be
made payable to the order of any person in an amount of $500 or more. When
a Check is presented to the Transfer Agent for payment, the Transfer Agent,
as your agent, will cause the Fund to redeem a sufficient number of full and
fractional Class A shares in your account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of the
Check will be returned to you. You generally will be subject to the same
rules and regulations that apply to checking accounts, although election of
this Privilege creates only a shareholder-transfer agent relationship with
the Transfer Agent.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the Check, all
postdated Checks which are dated within six months of presentment for
payment, if they are otherwise in good order.
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Check upon your request or if the Transfer Agent cannot honor a
Check due to insufficient funds or other valid reason. If the amount of the
Check is greater than the value of the Class A shares in your account, the
Check will be returned marked insufficient funds. Checks should not be used
to close an account.
This Privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding
on redemptions. Any Check written on an account which has become subject to
backup withholding on redemptions will not be honored by the Transfer Agent.
Redemption Through a Selected Dealer. If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected Dealer.
If the Selected Dealer transmits the redemption request so that it is
received by the Transfer Agent prior to the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m., New York time), the
redemption request will be effective on that day. If a redemption request
is received by the Transfer Agent after the close of trading on the floor of
the New York Stock Exchange, the redemption request will be effective on the
next business day. It is the responsibility of the Selected Dealer to
transmit a request so that it is received in a timely manner. The proceeds
of the redemption are credited to your account with the Selected Dealer.
See "How to Buy Shares" for a discussion of additional conditions or fees
that may be imposed upon redemption.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by
dealers by the close of trading on the floor of the New York Stock Exchange
on any business day and transmitted to the Distributor or its designee prior
to the close of its business day (normally 5:15 p.m., New York time) are
effected at the price determined as of the close of trading on the floor of
the New York Stock Exchange on that day. Otherwise, the shares will be
redeemed at the next determined net asset value. It is the responsibility
of the Selected Dealer to transmit orders on a timely basis. The Selected
Dealer may charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at any time.
Reinvestment Privilege. Upon written request, you may reinvest up to
the number of Class A 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
reinstatement, with respect to Class B shares, or Class A shares if such
shares were subject to a CDSC, your account will be credited with an amount
equal to CDSC previously paid upon redemption of the Class A or Class B
shares reinvested. The Reinvestment Privilege may be exercised only once.
Dreyfus TeleTransfer Privilege. You may request by telephone that
redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an ACH member may be designated. Holders of jointly registered
Fund or bank accounts may redeem through the Dreyfus TeleTransfer Privilege
for transfer to their bank account not more than $250,000 within any 30-day
period. Redemption proceeds will be on deposit in your account at an ACH
member bank ordinarily two business days after receipt of the redemption
request. You should be aware that if you have selected the Dreyfus
TeleTransfer Privilege, any request for a wire redemption will be effected
as a Dreyfus TeleTransfer transaction through the ACH system unless more
prompt transmittal specifically is requested. See "How to Buy Shares--
Dreyfus TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians and may accept other suitable
verification arrangements from foreign investors, such as consular
verification.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission and is a fundamental policy of the Fund which may not be changed
without shareholder approval. In the case of requests for redemption in
excess of such amount, the Fund's Board reserves the right to make payments
in whole or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sells such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. Clients of certain Service Agents may purchase, in
exchange for Class A, Class B or Class C shares of the Fund, shares of the
same class of certain other funds managed or administered by the Manager, to
the extent such shares are offered for sale in such client's state of
residence. Shares of the same Class of such other funds purchased by
exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds offered without a sales load
will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), but if the sales load applicable to the
Offered Shares exceeds the maximum sales load that could have been
imposed in connection with the Purchased Shares (at the time the
Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
E. Shares of funds subject to a CDSC that are exchanged for
shares of another fund will be subject to the higher applicable
CDSC of the two funds, and for purposes of calculating CDSC rates
and conversion periods, if any, will be deemed to have been held
since the date the shares being exchanged were initially
purchased.
To accomplish an exchange under item D above, your Service Agent must
notify the Transfer Agent of your prior ownership of such Class A shares and
your account number.
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 for an Exchange Account only can
be made into certain other funds manage or administered by the Manager. No
CDSC is charged when an investor exchanges into an Exchange Account;
however, the applicable CDSC will be imposed when shares are redeemed from
an Exchange Account or other applicable Fund account. Upon redemption, the
applicable CDSC will be calculated without regard to the time such shares
were held in an Exchange Account. See "How to Redeem Shares." Redemption
proceeds for Exchange Account shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for the Dreyfus Auto-Exchange
Privilege, Dreyfus Dividend Sweep and the Automatic Withdrawal Plan.
To request an exchange, your Service Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
The ability to issue exchange instructions by telephone is given to all
shareholders automatically, unless you check the applicable "No" box on the
Account Application, indicating that you specifically refuse this privilege.
By using the Telephone Exchange Privilege, you authorize the Transfer Agent
to act on telephonic instructions (including over The Dreyfus Touchr
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. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal administrative fee in
accordance with rules promulgated by the Securities and Exchange Commission.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
being required for shares of the same Class of the fund into which the
exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits you to purchase, in exchange for Class A, Class B or Class C shares
of the Fund, shares of the same Class of another fund in the Dreyfus Premier
Family of Funds or certain funds in the Dreyfus Family of Funds of which you
are a shareholder. This Privilege is available only for existing accounts.
Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by you. You will be notified if your account falls below the
amount designated to be exchanged under this Privilege. In this case, your
account will fall to zero unless additional investments are made in excess
of the designated amount prior to the next Auto-Exchange transaction.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. Shares may be exchanged only
between accounts having identical names and other identifying designations.
The Fund Exchanges service or the Dreyfus Auto-Exchange Privilege may be
modified or terminated at any time upon notice to shareholders.
Dreyfus-Automatic Asset Builderr. Dreyfus-Automatic Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000
per transaction) at regular intervals selected by you. Fund shares are
purchased by transferring funds from the bank account designated by you.
Dreyfus Government Direct Deposit Privilege. Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the U.S.
Government automatically deposited into your Fund account. You may deposit
as much of such payments as you elect.
Dreyfus Dividend Options. Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from the Fund in shares of the same Class of another fund in the
Dreyfus Premier Family of Funds or certain funds in the Dreyfus Family of
Funds of which you are a shareholder. Shares of the same Class of other
funds purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid with respect to Class A
shares by a fund may be invested without imposition of a sales
load in Class A shares of other funds offered without a sales
load.
B. Dividends and distributions paid with respect to Class A
shares by a fund which does not charge a sales load may be
invested in Class A shares of other funds sold with a sales load,
and the applicable sales load will be deducted.
C. Dividends and distributions paid with respect to Class A
shares by a fund which charges a sales load may be invested in
Class A shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), but if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged by the
fund from which dividends or distributions are being swept
(without giving effect to any reduced loads), the difference will
be deducted.
D. Dividends and distributions paid by a fund with respect to
Class B or Class C shares may be invested without imposition of
any applicable CDSC in the same Class of shares of other funds and
the relevant Class of shares of such other funds will be subject
on redemption to any applicable CDSC.
Dreyfus Dividend ACH permits you to transfer electronically dividends
or dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
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.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated at any time by you, the Fund or the
Transfer Agent. Shares for which share 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 shareholders account will be subject to a CDSC on the amounts exceeding
12% of the initial account value. Withdrawals of 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 of the Fund held in escrow to realize the difference. Signing a
Letter of Intent does not bind you to purchase, or the Fund to sell, the
full amount indicated at the sales load in effect at the time of signing,
but you must complete the intended purchase to obtain the reduced sales
load. At the time you purchase Class A shares, you must indicate your
intention to do so under a Letter of Intent. Purchase pursuant to a Letter
of Intent will be made at the then-current net asset value plus the
applicable sales load in effect at the time such Letter of Intent was
executed.
DETERMINATION OF NET ASSET VALUE
Valuation of Portfolio Securities. The Fund's investments are valued
each business day by an independent pricing service (the "Service") approved
by the Fund's Board. When, in the judgment of the Service, quoted bid
prices for investments are readily available and are representative of the
bid side of the market, these investments are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such
securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other investments (which
constitute a majority of the portfolio securities) are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. The Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Fund's officers under the general supervision of the
Fund's Board. Expenses and fees, including the management fee (reduced by
the expense limitation, if any) and fees pursuant to the Shareholder
Services Plan, with respect to Class A, Class B and Class C shares, and fees
pursuant to the Distribution Plan, with respect to Class B and Class C
shares only, are accrued daily and are taken into account for the purpose of
determining the net asset value of the relevant Class of shares. Because of
the difference in operating expenses incurred by each Class, the per share
net asset value of each Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that the Fund qualified as a "regulated investment
company" under the Code for the fiscal year ended April 30, 1999, and the
Fund intends to continue to so qualify so long as such qualification is in
the best interests of its shareholders. As a regulated investment company,
the Fund will pay no Federal income tax on net investment income and net
realized capital gains to the extent that such income and gains are
distributed to shareholders in accordance with applicable provisions of the
Code. To qualify as a regulated investment company, the Fund must
distribute to its shareholders at least 90% of its net income (consisting of
net investment income from tax exempt obligations and taxable obligations,
if any, and net short-term capital gains) and must meet certain asset
diversification and other requirements. If the Fund did not qualify as a
regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. The term "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
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 Federal Funds are received by the
Transfer Agent. 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.
The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. Dividends usually are paid on the
last 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. 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. All expenses are
accrued daily and deducted before declaration of dividends to investors.
If you elect to receive dividends and distributions in cash and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest
such dividend or distribution and all future dividends and distributions
payable to you in additional Fund shares at net asset value. No interest
will accrue on amounts represented by uncashed distribution or redemption
checks.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of his shares
below the cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated under
"Distributions and Taxes" in the Prospectus. In addition, the Code provides
that if a shareholder has not held his shares for more than six months (or
such shorter period as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be disallowed
to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code. In
addition, all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "Conversion transactions" are defined to include certain forward,
futures, option and "straddle" transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures and options
as well as from closing transactions. In addition, any such futures or
options remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to the Fund characterized as described above.
Offsetting positions held by the Fund involving certain futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, override or modify the provisions of Section 1256 of
the Code. As such, all or a portion of any short- or long-term capital gain
from certain "straddle" and/or conversion transactions may be
recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in certain futures contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options transactions comprising a part of such "straddles" were governed by
Section 1256 of the Code. The Fund may make one or more elections with
respect to "mixed straddles." Depending on which election is made, if any,
the results to the Fund may differ. If no election is made, to the extent
the "straddle" rules apply to positions established by the Fund, losses
realized by the Fund will be deferred to the extent of unrealized gain in
the offsetting position. Moreover, as a result of the "straddle" and the
conversion transaction rules, short-term capital losses on "straddle"
positions may be recharacterized as long-term capital losses, and long-term
capital gains on straddle positions may be treated as short-term capital
gains or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally apply if the Fund either (1) holds an appreciated financial
position with respect to stock, certain debt obligations, or partnership
interests ("appreciated financial position") and then enters into a short
sale, futures, forward, or offsetting notional principal contract
(collectively, a "Contract") respecting the same or substantially identical
property or (2) holds an appreciated financial position that is a Contract
and then acquires property that is the same as, or substantially identical
to, the underlying property. In each instance, with certain exceptions, the
Fund generally will be taxed as if the appreciated financial position were
sold at its fair market value on the date the Fund enters into the financial
position or acquires the property, respectively. Transactions that are
identified as hedging or straddle transactions under other provisions of the
Code can be subject to the constructive sale provisions.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such
portion in order to maintain its qualification as a regulated investment
company. In such case, the Fund may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases
and sales usually are placed with those dealers from which it appears that
the best price or execution will be obtained. Usually no brokerage
commissions, as such, are paid by the Fund for such purchases and sales,
although the price paid usually includes an undisclosed compensation to the
dealer acting as agent. The prices paid to underwriters of newly-issued
securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms and may be
selected based upon their sales of shares of the Fund or other funds
managed, advised or administered by the Manager or its affiliates.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses of
its research department.
The Fund's portfolio turnover rate for the fiscal years ended April 30,
1997, 1998 and 1999 was 28.17%, 26.33% and 46.84%, respectively. The Fund
anticipates that its annual portfolio turnover rate generally will not
exceed 100%, but the turnover rate will not be a limiting factor when the
Fund deems it desirable to sell or purchase securities. Therefore,
depending upon market conditions, the Fund's annual portfolio turnover rate
may exceed 100% in particular years.
The aggregate amount of transactions during the last fiscal year in
newly issued debt instruments in fixed price public offerings directed to an
underwriter in consideration of, among other things, research services
provided was $4,100,000.
PERFORMANCE INFORMATION
Current yield for the 30-day period ended April 30, 1999 for Class A
was 4.04%, for Class B was 3.72% and for Class C was 3.50%. Current yield
is computed pursuant to a formula which operates as follows: The amount of
the Fund's expenses accrued for the 30-day period (net of reimbursements) is
subtracted from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) during the period. That result is
then divided by the product of: (a) the average daily number of shares
outstanding during the period that were entitled to receive dividends, and
(b) the maximum offering price per share in the case of Class A or the net
asset value per share in the case of Class B or Class C on the last day of
the period less any undistributed earned income per share reasonably
expected to be declared as a dividend shortly thereafter. The quotient is
then added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result
by 2.
Based upon a 1999 Federal tax rate of 39.6%, the tax equivalent yield
for the 30-day period ended April 30, 1999 for Class A was 6.69%, for Class
B was 6.16% and for Class C was 5.79%. Tax equivalent yield is computed by
dividing that portion of the current yield (calculated as described above)
which is tax exempt by 1 minus a stated tax rate and adding the quotient to
that portion, if any, of the yield that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The
tax equivalent yield figure, however, does not reflect the potential effect
of any state or local (including, but not limited to, county, district or
city) taxes, including applicable surcharges. In addition, there may be
pending legislation which could affect such stated tax rate or yield. Each
investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.
The average annual total return for the 1, 5 and 10 year periods ended
April 30, 1999 for Class A was -0.70%, 6.06% and 7.48%, respectively. The
average annual total return for the 1, 5 and 6.29 year periods ended April
30, 1999 for Class B was -0.48%, 6.17% and 6.12%, respectively. The average
annual total return for the 1 and 3.8 year periods ended April 30, 1999 for
Class C was 2.18% and 5.55%, respectively. Average annual total return is
calculated by determining the ending redeemable value of an investment
purchased at net asset value (maximum offering price in the case of Class A)
per share with a hypothetical $1,000 payment made at the beginning of the
period (assuming the reinvestment of dividends and distributions), dividing
by the amount of the initial investment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and subtracting 1
from the result. A Class' average annual total return figures calculated in
accordance with such formula provides that in the case of Class A the
maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or in the case of Class B or Class C the
maximum applicable CDSC has been paid upon redemption at the end of the
period.
The aggregate total return excluding sales load, for the period
November 26, 1986 (commencement of operations) through April 30, 1999 for
Class A was 140.84%. The total return net of sales load for Class A was
129.99% for this period. The aggregate total return for the period January
15, 1993 (commencement of initial offering of Class B shares) through April
30, 1999 for Class B was 45.30%. Without giving effect to the applicable
CDSC, the aggregate total return for Class B was 45.30% for this period.
The total return for Class C for the period from July 13, 1995 (commencement
of initial offering of Class C) through April 30, 1999 was 22.80%. Without
giving effect to the applicable CDSC, the total return for Class C was
22.80% for this period. Total return is calculated by subtracting the
amount of the Fund's net asset value (maximum offering price in the case of
Class A) per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period) and dividing
the result by the maximum offering price per share at the beginning of the
period. Total return also may be calculated based on the net asset value
per share at the beginning of the period instead of the maximum offering
price per share at the beginning of the period for Class A shares or without
giving effect to any applicable CDSC at the end of the period for Class B or
Class C shares. In such cases, the calculation would not reflect the
deduction of the sales charge, which, if reflected, would reduce the
performance quoted.
From time to time, the Fund may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and not as being representative of the
Fund's past or future 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. From time to
time, advertising materials for the Fund may refer to or discuss then-
current or past economic conditions, developments and/or events, including
those relating to or arising from actual or proposed tax legislation,
statistical or other information concerning trends relating to investment
companies, as compiled by industry associations, such as the Investment
Company Institute and Morningstar ratings and related analysis supporting
such ratings. Advertising materials for the Fund also may include
biographical information relating to its portfolio managers and may refer
to, or include, commentary by a portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
INFORMATION ABOUT THE FUND
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive or subscription rights and are freely
transferable.
The Fund is organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts. Under Massachusetts law,
shareholders could, under certain circumstances, be held personally liable
for the obligations of the Fund. However, the Fund's Agreement and
Declaration of Trust ("Trust Agreement") disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer
be given in the agreement, obligation or instrument entered into or executed
by the Fund or a Board member. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of any
shareholder 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 from the general
assets of the Fund. The Fund intends to conduct its operations in a way so
as to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Fund shareholders may remove a Board member by the
affirmative vote of two-thirds of the Fund's outstanding voting shares. In
addition, the Board will call a meeting of shareholders for the purpose of
electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term
market movements. A pattern of frequent purchases and exchanges can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and its shareholders. Accordingly, if
the Fund's management determines that an investor is following a market-
timing strategy or is otherwise engaging in excessive trading, the Fund,
with or without prior notice, may temporarily or permanently terminate the
availability of Fund Exchanges, or reject in whole or part of any purchase
or exchange request, with respect to such investor's account. Such
investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of the Fund during any calendar year or who makes exchanges that appear
to coincide with a market-timing strategy may be deemed to be engaged in
excessive trading. Accounts under common ownership or control will be
considered as one account for purposes of determining a pattern of excessive
trading. In addition, the Fund may refuse or restrict purchase or exchange
requests by any person or group if, in the judgment of the Fund's
management, the Fund would be unable to invest the money effectively in
accordance with its investment objective and policies or could otherwise be
adversely affected or if the Fund receives or anticipates receiving
simultaneous orders that may significantly affect the Fund (e.g., amounts
equal to 1% or more of the Fund's total assets). If an exchange request is
refused, the Fund will take no other action with respect to the shares until
it receives further instructions from the investor. The Fund may delay
forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus Auto-
Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange
requests based on their separate components--redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case,
the redemption request would be processed at the Fund's next determined net
asset value but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the proceeds
of the redemption, which may result in the purchase being delayed.
To offset the relatively higher costs of servicing smaller accounts,
the Fund will charge regular accounts with balances below $2,000 an annual
fee of $12. The valuation of accounts and the deductions are expected to
take place during the last four months of each year. The fee will be waived
for any investor whose aggregate Dreyfus mutual fund investments total at
least $25,000, and will not apply to IRA accounts or to accounts
participating in automatic investment programs or opened through a
securities dealer, bank or other financial institution, or to other
fiduciary accounts.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
The Manager's legislative efforts led to the 1976 Congressional
amendment to the Code permitting an incorporated mutual fund to pass through
tax exempt income to its shareholders. The Manager offered to the public
the first incorporated tax exempt fund and currently manages or administers
over $24 billion in tax exempt assets.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, has been selected as independent auditors of the Fund.
APPENDIX
Description of certain S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between an A and BBB rating is that the latter
shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among the
factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or payment of
principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus designation to show relative standing within
the major rating categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3
The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
B
Issues rated B are regarded as having only an adequate capacity for
timely payment; such capacity may be damaged by changing conditions or
short-term adversities.
C
This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Generally, Moody's provides either a generic rating or a rating with a
numerical modifier of 1 for the bonds in the generic rating category Aa.
Moody's also provides numerical modifiers of 2 and 3 in this category for
bond issues in the health care, higher education and other not-for-profit
sectors; the modifier 1 indicates that the issue ranks in the higher end of
that generic rating category; the modifier 2 indicates that the issue is in
the mid-range of that generic category; and the modifier 3 indicates that
the issue is in the low end of that generic category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize
the difference between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to
the fact that the source of payment may be limited to the external liquidity
with no or limited legal recourse to the issuer in the event the demand is
not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirements for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of interest
and/or principal payments. Such bonds are extremely speculative and should
be valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36 months
or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
Demand Bond or Notes Ratings
Certain demand securities empower the holder at his option to require
the issuer, usually through a remarketing agent, to repurchase the security
upon notice at par with accrued interest. This is also referred to as a put
option. The ratings of the demand provision may be changed or withdrawn at
any time if, in Fitch's judgment, changing circumstances warrant such
action.
Fitch demand provision ratings carry the same symbols and related
definitions as its short-term ratings.
_______________________________
DREYFUS PREMIER MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits
_______ __________
(a) Registrant's Amended and Restated Agreement and Declaration
of Trust is incorporated by reference to Exhibit (1) of Post-
Effective Amendment No. 13 to the Registration Statement on Form
N-1A, filed on July 12, 1995, and Exhibit (1)(b) of Post-Effective
Amendment No. 18 to the Registration Statement on Form N-1A, filed
on August 13, 1997.
(b) Registrant's By-Laws, as amended, are incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A, filed on June 22, 1994.
(d) Management Agreement is incorporated by reference to Exhibit
(5) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on July 12, 1995.
(e) Distribution Agreement is incorporated by reference to Exhibit (6) of
Post-Effective Amendment No. 13 to the Registration Statement on Form
N-1A, filed on July 12, 1995. Forms of Service Agreement are
incorporated by reference to Exhibit 6(b) and 6(c) of Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A, filed on
July 12, 1995.
(g) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit 8(a) of Post-Effect Amendment No. 13 to the
Registration Statement on Form N-1A, filed on July 12, 1996. Sub-
Custodian Agreements are incorporated by reference to Exhibit 8(b)
of Post-Effective Amendment No. 12 to the Registration Statement
on Form N-1A, filed on June 22, 1994.
(h) Shareholder Services Plan is incorporated by reference to
Exhibit (9) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on July 12, 1995.
(i) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A, filed on July 12, 1995.
(j) Consent of Independent Auditors.
(m) Rule 12b-1 Plan is incorporated by reference to Exhibit (15)
of Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A, filed on July 12, 1995.
(n) Rule 18f-3 Plan is incorporated by reference to Exhibit 18 of
Post-Effective Amendment No. 18 to the Registration Statement on
Form N-1A, filed on August 13, 1997.
Item 23. Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Certificate of Assistant Secretary.
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
Reference is made to Article VIII of the Registrant's Amended
and Restated Declaration of Trust incorporated by reference to
Exhibit (1) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on July 12, 1995. The application of
these provisions is limited by Article 10 of the Registrant's By-
Laws, as amended, incorporated by reference to Exhibit (2) of Post-
Effective Amendment No. 12 to the Registration Statement on Form N-
1A, filed on June 22, 1994, and by the following undertaking set
forth in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be
permitted to trustees, officers and controlling
persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a
claim for indemnification is against such
liabilities (other than the payment by the
registrant of expenses incurred or paid by a
trustee, officer or controlling person of the
registrant in the successful defense of any such
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in
connection with the securities being registered,
the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling
precedent, submit to a court of appropriate
jurisdiction the question whether such
indemnification by it is against public policy as
expressed in such Act and will be governed by the
final adjudication of such issue.
Reference is also made to the Distribution Agreement
incorporated by reference to Exhibit (6)(a) of Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A, filed
on July 12, 1995.
Item 26. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser and manager for sponsored investment
companies registered under the Investment Company Act of 1940
and as an investment adviser to institutional and individual
accounts. Dreyfus also serves as sub-investment adviser to
and/or administrator of other investment companies. Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus,
serves primarily as a registered broker-dealer. Dreyfus
Investment Advisors, Inc., another wholly-owned subsidiary,
provides investment management services to various pension
plans, institutions and individuals.
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
Name and
Position Other Businesses Position Held Dates
With Dreyfus
Christopher M. Franklin Portfolio Director 1/97 -
Condron Associates, LLC* Present
Chairman of the
Board and Director
Chief Executive TBCAM Holdings, President 10/97 -
Officer Inc.* Chairman Present
10/97 -
Director 6/98
Chairman 10/97 -
The Boston Company President 6/98
Asset Management,
LLC* President 1/98 -
Chairman Present
1/98 -
The Boston Company 6/98
Asset Management, Partner 1/98 -
Inc.* Representative 6/98
9/95 -
Pareto Partners 1/98
271 Regent Street Director 4/95 -
London, England W1R 1/98
8PP
Director
Franklin Portfolio 11/95 -
Holdings, Inc.* Director 5/97
Certus Asset Executive
Advisors Corp.** Committee 1/97 -
Member Present
Mellon Capital
Management Trustee
Corporation*** 6/95
Executive -Present
Mellon Bond Committee
Associates, LLP+ Member 5/95
-Present
Trustee
Mellon Bond
Associates+ Director 1/98 -
President Present
Mellon Equity
Associates, LLP+ Director
Chief 5/95 -
Operating 1/98
Mellon Equity Officer
Associates+ President 1/98 -
Vice Chairman Present
Boston Safe
Advisors, Inc. * Chief
Operating 5/95 -
Officer 1/98
Mellon Bank, N.A. + President
Director 5/95 -
Vice Chairman Present
5/95 -
Present
Mellon Bank
Corporation+ 1/99 -
Present
3/98 -
Present
3/98 -
Present
11/94 -
3/98
1/99 -
Present
1/99 -
Present
1/98 -
Present
11/94 -
1/99
Christopher M. The Boston Company, Vice Chairman 1/94 -
Condron Inc.* Director Present
Chairman and 5/93 -
Chief Executive Exec. Present
Officer Laurel Capital Committee
(Continued) Advisors, LLP+ Member 1/98 -
8/98
Trustee
Laurel Capital
Advisors+ 10/93 -
Director 1/98
Boston Safe Deposit
and Trust President 5/93
Company* Director -Present
The Boston Company
Financial 6/89 -
Strategies, Inc. * Present
6/89 -
Present
Mandell L. Self-Employed Real Estate 11/74 -
Berman 29100 Northwestern Consultant, Present
Director Highway Residential
Suite 370 Builder and
Southfield, MI 48034 Private
Investor
Burton C. DeVlieg Bullard, Director 1/93 -
Borgelt Inc. Present
Director 1 Gorham Island
Westport, CT 06880
Director
Mellon Bank 6/91 -
Corporation+ Director Present
Mellon Bank, N.A. + Director 6/91 -
Present
Dentsply
International, Inc. 2/81 -
570 West College Director Present
Avenue
York, PA
Quill Corporation 3/93 -
Lincolnshire, IL Present
Stephen E. Dreyfus Investment Chairman of 1/97 -
Canter Advisors, Inc.++ the Board Present
President, Chief Director 5/95 -
Operating President Present
Officer, Chief Newton Management 5/95 -
Investment Limited Director Present
Officer, and London, England
Director 2/99 -
Mellon Bond Executive Present
Associates, LLP+ Committee
Member
1/99 -
Mellon Equity Executive Present
Associates, LLP+ Committee
Member
1/99 -
Franklin Portfolio Director Present
Associates, LLC*
Director
Franklin Portfolio 2/99 -
Holdings, Inc.* Director Present
The Boston Company 2/99 -
Asset Management, Director Present
LLC*
Director 2/99 -
TBCAM Holdings, Present
Inc.*
Mellon Capital 2/99 -
Management Present
Corporation***
1/99 -
Present
Stephen E. Founders Asset Member, Board 12/97 -
Canter Management, LLC of Managers Present
President, Chief 2930 East Third Ave. Acting Chief
Operating Denver, CO 80206 Executive 7/98 -
Officer, Chief Officer 12/98
Investment
Officer, and The Dreyfus Trust Director
Director Company+++ 6/ 95 -
(Continued) Present
Thomas F. Eggers Dreyfus Service Executive Vice 4/96 -
Vice Chairman - Corporation++ President Present
Institutional Director 9/96 -
and Director Present
Founders Asset Member, Board
Management, LLC of Managers 2/99 -
2930 East Third Present
Avenue
Denver, CO 80206
Steven G. Mellon Bank Senior Vice 1/99 -
Elliott Corporation+ Chairman Present
Director Chief 1/90 -
Financial Present
Officer 6/92 -
Vice Chairman 1/99
Mellon Bank, N.A.+ Treasurer 1/90 -
5/98
Senior Vice
Chairman 3/98 -
Mellon EFT Services Vice Chairman Present
Corporation Chief 6/92 -
Mellon Bank Center, Financial 3/98
8th Floor Officer 1/90 -
1735 Market Street Present
Philadelphia, PA Director
19103 10/98 -
Present
Mellon Financial
Services
Corporation #1 Director
Mellon Bank Center, Vice President
8th Floor 1/96 -
1735 Market Street Present
Philadelphia, PA 1/96 -
19103 Present
Vice President
Boston Group
Holdings, Inc.* Treasurer
APT Holdings 5/93 -
Corporation Present
Pike Creek
Operations Center Director 12/87 -
4500 New Linden Hill Present
Road
Wilmington, DE 19808
Controller
Allomon Corporation Director
Two Mellon Bank Vice President 12/87 -
Center Treasurer Present
Pittsburgh, PA 15259
Principal
Collection Services Exec. Officer
Corporation Chief 10/90 -
500 Grant Street Financial 2/99
Pittsburgh, PA 15258 Officer 9/88 -
Director 2/99
President 9/88 -
Mellon Financial 2/99
Company+ Director 9/88 -
Chairman 2/99
President
Chief 1/88 -
Executive Present
Mellon Overseas Officer 8/87 -
Investments Present
Corporation+ Director 8/87 -
Present
8/87 -
Present
Mellon International
Investment 4/88 -
Corporation+ Present
7/89 -
11/97
4/88 -
11/97
4/88 -
11/97
9/89 -
8/97
Steven G. Mellon Financial Treasurer 12/87 -
Elliott Services Present
Director Corporation # 5+
(Continued) Director
Mellon Financial 1/99 -
Markets, Inc.+ Director Present
Mellon Financial 1/99 -
Services Corporation Present
#17 Director
Fort Lee, NJ
Mellon Mortgage Director 1/99 -
Company Present
Houston, TX
Mellon Ventures, 1/99 -
Inc. + Present
Lawrence S. Kash Dreyfus Investment Director 4/97 -
Vice Chairman Advisors, Inc.++ Present
And Director
Dreyfus Brokerage Chairman
Services, Inc. Chief 11/97 -
401 North Maple Ave. Executive Present
Beverly Hills, CA Officer 11/97 -
Present
Dreyfus Service
Corporation++ Director
President 1/95 -
2/99
Dreyfus Precious Director 9/96 -
Metals, Inc.++ + President 3/99
Director 3/96 -
Dreyfus Service President 12/98
Organization, Inc.++ 10/96 -
Director 12/98
Seven Six Seven
Agency, Inc. ++ Chairman 12/94 -
President Present
Dreyfus Insurance Director 1/97 -
Agency of Present
Massachusetts, Chairman
Inc.++++ President 1/97 -
Chief Present
Executive
The Dreyfus Trust Officer 5/97 -
Company+++ Director Present
5/97 -
Chairman Present
President 5/97 -
Director Present
The Dreyfus Consumer
Credit Member, Board 1/97 -
Corporation++ of Managers 1/99
2/97 -
1/99
Founders Asset Chairman 2/97 -
Management, LLC Chief 1/99
2930 East Third Executive 12/94 -
Avenue Officer Present
Denver, CO. 80206 President
5/97 -
The Boston Company Director Present
Advisors, President 5/97 -
Inc. Present
Wilmington, DE Executive Vice 12/94 -
President Present
The Boston Company,
Inc.* Chairman 12/97 -
Executive Present
Committee
Mellon Bank, N.A.+ Member
Chief
Laurel Capital Executive 12/95 -
Advisors, LLP+ Officer Present
President 12/95 -
Present
12/95 -
Present
5/93 -
Present
5/93 -
Present
6/92 -
Present
1/98 -
8/98
1/98 -
8/98
1/98 -
8/98
1/98 -
8/98
Lawrence S. Kash Laurel Capital Trustee 12/91 -
Vice Chairman Advisors, Inc. + Chairman 1/98
And Director President and 9/93 -
(Continued) CEO 1/98
12/91 -
Boston Group Director 1/98
Holdings, Inc.* President
5/93 -
Present
5/93 -
Present
Martin G. Mellon Bank Chairman 1/99 -
McGuinn Corporation+ Chief Present
Director Executive 1/99 -
Officer Present
Director 1/98 -
Vice Chairman Present
Mellon Bank, N. A. + 1/90 -
Chairman 1/99
Chief
Executive 3/98 -
Officer Present
Mellon Leasing Director 3/98 -
Corporation+ Vice Chairman Present
1/98 -
Mellon Bank (DE) Vice Chairman Present
National 1/90 -
Association Director 3/98
Wilmington, DE
12/96 -
Mellon Bank (MD) Present
National Director
Association 4/89 -
Rockville, Maryland 12/98
Mellon Financial Vice President
Corporation (MD)
Rockville, Maryland 1/96 -
4/98
9/86 -
10/97
J. David Officer Dreyfus Service Executive Vice 5/98 -
Vice Chairman Corporation++ President Present
And Director Director 3/99 -
Present
Dreyfus Insurance Director
Agency of 5/98 -
Massachusetts, Present
Inc.++++ Director
Seven Six Seven Director 10/98 -
Agency, Inc.++ Present
Director
Mellon Residential 4/97 -
Funding Corp. + Present
Mellon Trust of Executive Vice 8/97 -
Florida, N.A. President Present
2875 Northeast 191st
Street Vice Chairman
North Miami Beach, Director
FL 33180 7/96 -
Director Present
Mellon Bank, NA+
1/97 -
The Boston Company, President Present
Inc.* Director 7/96 -
Present
President
Mellon Preferred Director 11/96 -
Capital Present
Corporation* Director
President
RECO, Inc.* 11/96 -
Present
11/96 -
The Boston Company Present
Financial
Services, Inc.* 8/96 -
Present
Boston Safe Deposit 8/96 -
and Trust Present
Company*
7/96 -
Present
7/96 -
1/99
J. David Officer Mellon Trust of New Director 6/96 -
Vice Chairman York Present
and 1301 Avenue of the
Director Americas
(Continued) New York, NY 10019 Director
6/96 -
Mellon Trust of Present
California
400 South Hope
Street Executive Vice
Suite 400 President
Los Angeles, CA 2/94 -
90071 Director Present
Mellon Bank, N.A.+ 3/98 -
Present
Mellon United Director
National Bank
1399 SW 1st Ave., Director
Suite 400 12/97 -
Miami, Florida Director Present
Boston Group 9/96 -
Holdings, Inc.* Present
Dreyfus Financial 4/96 -
Services Corp. + Present
Dreyfus Investment
Services
Corporation+
Richard W. Sabo Founders Asset President 12/98 -
Director Management LLC Chief Present
2930 East Third Executive 12/98 -
Avenue Officer Present
Denver, CO. 80206
Prudential Senior Vice 07/91 -
Securities President 11/98
New York, NY Regional 07/91 -
Director 11/98
Richard F. Syron American Stock Chairman 4/94 -
Director Exchange Chief Present
86 Trinity Place Executive 4/94 -
New York, NY 10006 Officer Present
Ronald P. Franklin Portfolio Director 3/97 -
O'Hanley Holdings, Inc.* Present
Vice Chairman Chairman
TBCAM Holdings, Director 6/98 -
Inc.* Present
Chairman 10/97 -
Director Present
The Boston Company
Asset Director 6/98 -
Management, LLC* Present
1/98 -
The Boston Company Chairman 6/98
Asset Director
Management, Inc. * 2/97 -
Partner 12/97
Boston Safe Representative
Advisors, Inc. *
6/97 -
Present
Pareto Partners Director 2/97 -
271 Regent Street Present
London, England W1R
8PP Director 5/97 -
Present
Mellon Capital Trustee
Management Chairman
Corporation***
Trustee 5/97 -
Certus Asset Chairman Present
Advisors Corp.**
Director
Mellon Bond 2/97 -
Associates+ Present
2/97 -
Mellon Equity Present
Associates+ 2/97 -
Present
Mellon-France 2/97 -
Corporation+ Present
2/97 -
Present
3/97 -
Present
Ronald P. Laurel Capital Trustee 3/97 -
O'Hanley Advisors+ Present
Vice Chairman
(Continued)
Mark N. Jacobs Dreyfus Investment Director 4/97 -
General Counsel, Advisors, Inc.++ Secretary Present
Vice President, 10/77 -
and The Dreyfus Trust Director 7/98
Secretary Company+++
President 3/96 -
The TruePenny Director Present
Corporation++
Director 10/98 -
Present
Dreyfus Service 3/96 -
Organization, Inc.++ Present
3/97 -
Present
William H. The Dreyfus Trust Director 3/97 -
Maresca Company+++ Present
Controller Chief
Dreyfus Service Financial 12/98 -
Corporation++ Officer Present
Dreyfus Consumer Treasurer 10/98 -
Credit Corp. ++ Present
Treasurer
Dreyfus Investment 10/98 -
Advisors, Inc. ++ Present
Vice President
Dreyfus-Lincoln,
Inc. 10/98 -
4500 New Linden Hill Present
Road Vice President
Wilmington, DE 19808
Treasurer
The TruePenny 10/98 -
Corporation++ Vice President Present
Dreyfus Precious Vice President 10/98 -
Metals, Inc. +++ 12/98
Vice President
The Trotwood 10/98 -
Corporation++ Chief Present
Financial
Trotwood Hunters Officer 10/98 -
Corporation++ Present
Trotwood Hunters 10/98 -
Site A Corp. ++ Assistant Present
Treasurer
Dreyfus Transfer, 5/98 -
Inc. Present
One American Express Assistant
Plaza, Treasurer
Providence, RI 02903
3/93 -
Dreyfus Service Present
Organization, Inc.++
Dreyfus Insurance 5/98 -
Agency of Present
Massachusetts,
Inc.++++
William T. Dreyfus Transfer, Chairman 2/97 -
Sandalls, Jr. Inc. Present
Executive Vice One American Express
President Plaza,
Providence, RI 02903 Director
Executive Vice 1/96 -
Dreyfus Service President Present
Corporation++ Chief 2/97 -
Financial Present
Officer 2/97-
12/98
Dreyfus Investment Director
Advisors, Inc.++ Treasurer 1/96 -
Present
1/96 -
10/98
William T. Dreyfus-Lincoln, Director 12/96 -
Sandalls, Jr. Inc. President Present
Executive Vice 4500 New Linden Hill 1/97 -
President Road Present
(Continued) Wilmington, DE 19808 Director
Treasurer
Seven Six Seven 1/96 -
Agency, Inc.++ Director 10/98
Vice President 10/96 -
Treasurer 10/98
The Dreyfus Consumer
Credit Corp.++ President 1/96 -
Director Present
1/96 -
Dreyfus Partnership Director Present
Management, Inc.++ Executive Vice 1/97 -
President 10/98
Dreyfus Service Treasurer
Organization, 1/97 -
Inc.++ Director 6/97
Treasurer 1/96 -
Executive Vice 6/97
Dreyfus Insurance President
Agency of 1/96 -
Massachusetts, 6/97
Inc.++++ 1/96 -
6/97
10/96-
Present
5/97 -
Present
5/97-
Present
5/97 -
Present
Diane P. Durnin Dreyfus Service Senior Vice 5/95 -
Vice President - Corporation++ President - 3/99
Product Marketing and
Development Advertising
Division
Patrice M. None
Kozlowski
Vice President -
Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Dreyfus Service Vice President 10/96 -
Schachar Corporation++ -Tax Present
Vice President -
Tax Dreyfus Investment Vice President 10/96 -
Advisors, Inc.++ - Tax Present
Dreyfus Precious Vice President 10/96 -
Metals, Inc. +++ - Tax 12/98
Dreyfus Service Vice President 10/96 -
Organization, Inc.++ - Tax Present
Wendy Strutt None
Vice President
Richard Terres None
Vice President
Andrew S. Wasser Mellon Bank Vice President 1/95 -
Vice-President - Corporation+ Present
Information
Systems
James Bitetto The TruePenny Secretary 9/98 -
Assistant Corporation++ Present
Secretary Assistant
Dreyfus Service Secretary 8/98 -
Corporation++ Present
Assistant
Dreyfus Investment Secretary 7/98 -
Advisors, Inc.++ Present
Dreyfus Service Assistant
Organization, Inc.++ Secretary 7/98 -
Present
Steven F. Newman Dreyfus Transfer, Vice President 2/97 -
Assistant Inc. Director Present
Secretary One American Express Secretary 2/97 -
Plaza Present
Providence, RI 02903 Secretary 2/97 -
Assistant Present
Dreyfus Service Secretary
Organization, Inc.++ 7/98 -
Present
5/98 -
7/98
_______________________________
* The address of the business so indicated is One Boston Place, Boston,
Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450,
San Francisco, California 94104.
***The address of the business so indicated is 595 Market Street, Suite
3000, San Francisco, California 94105.
+ The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York,
New York 10166.
+++The address of the business so indicated is 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street,
Boston, Massachusetts 02109
Item 27. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Debt and Equity Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus U.S. Treasury Intermediate Term Fund
60) Dreyfus U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Municipal Bond Fund
71) Dreyfus Premier New York Municipal Bond Fund
72) Dreyfus Premier State Municipal Bond Fund
73) Dreyfus Premier Value Fund
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund, Inc.
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) Founders Funds, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Funds, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President and
Assistant Treasurer
Jean M. O'Leary+ Assistant Vice President, None Assistant
Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Stephanie D. Pierce++ Vice President Vice President,
Assistant Secretary
and Assistant
Treasurer
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 28. Location of Accounts and Records
_______ ________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
_______ ____________
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement under Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 12th day of August, 1999.
DREYFUS PREMIER MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
/s/Marie E. Connolly* President (Principal Executive, 8/12/99
______________________________ Financial and Accounting Officer)
Marie E. Connolly and Treasurer
/s/Joseph S. DiMartino* Chairman of the Board 8/12/99
_____________________________
Joseph S. DiMartino
/s/Clifford L. Alexander, Jr.* Board member 8/12/99
______________________________
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Board member 8/12/99
______________________________
Peggy C. Davis
/s/Ernest Kafka* Board member 8/12/99
______________________________
Ernest Kafka
/s/Saul B. Klaman* Board member 8/12/99
______________________________
Saul B. Klaman
/s/Nathan Leventhal* Board member 8/12/99
______________________________
Nathan Leventhal
*BY: __________________________
Stephanie Pierce,
Attorney-in-Fact
DREYFUS PREMIER MUNICIPAL BOND FUND
INDEX OF EXHIBITS
_________________________
ITEM PAGE
_____ ______
(23) Exhibits:
(j) Consent of Independent Auditors
Other Exhibits
(a) Power of Attorney
(b) Certificate of Assistant Secretary
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of
our report dated June 2, 1999, which is incorporated by reference,
in this Registration Statement (Form N-1A No. 33-7496) of Dreyfus
Premier Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
August 11, 1999
Item 23.(b)
Other Exhibits (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Douglas G. Conroy, Frederick C. Dey, Christopher J.
Kelley, Kathleen K. Morrisey, Stephanie Pierce, Karen Jacoppo-Wood and Elba
Vasquez and each of them, with full power to act without the other, his or
her true and lawful attorney-in-fact and agent, with name, place and stead,
in any and all capacities (until revoked in writing) to sign any and all
amendments to the Registration Statement of Dreyfus Premier Municipal Bond
Fund (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/Clifford L. Alexander, Jr. June 1, 1999
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Clifford L. Alexander, Jr.
/s/Peggy C. Davis June 1, 1999
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Peggy C. Davis
/s/Joseph S. DiMartino June 1, 1999
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Joseph S. DiMartino
/s/Ernst Kafka June 1, 1999
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Ernst Kafka
/s/Saul B. Klaman June 1, 1999
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Saul B. Klaman
/s/Nathan Leventhal June 1, 1999
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Nathan Leventhal
Item 23. (b)
Other Exhibits (b)
DREYFUS PREMIER MUNICIPAL BOND FUND
Certificate of Assistant Secretary
The undersigned, Stephanie Pierce, Vice President, Assistant Treasurer
and Assistant Secretary of Dreyfus Premier Municipal Bond Fund (the "Fund"),
hereby certifies that set forth below is a copy of the resolution adopted by
the Fund's Board authorizing the signing by Margaret W. Chambers, Marie E.
Connolly, Douglas C. Conroy, Frederick C. Dey, Christopher J. Kelly,
Kathleen K. Morrisey, Stephanie Pierce, Karen Jacoppo-Wood and Elba Vasquez
on behalf of the proper officers of the Fund pursuant to a power of
attorney:
RESOLVED, that the Registration Statement and any
and all amendments and supplements thereto, may be
signed by any one of Margaret W. Chambers, Marie E.
Connolly, Douglas G. Conroy, Frederick C. Dey,
Christopher J. Kelley, Kathleen K. Morrisey, Stephanie
Pierce, Karen Jacoppo-Wood and Elba Vasquez as the
attorney-in-fact for the proper officers of the Fund,
with full power of substitution and resubstitution; and
that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved, and
that such attorneys-in-fact, and each of them, shall
have the full power and authority to do and perform each
and every act and thing requisite and necessary to be
done in connection with such Registration Statement and
any and all amendments and supplements thereto, as fully
to all intents and purposes as the officer, for whom he
or she is acting as attorney-in-fact, might or could do
in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Fund on June 28, 1999.
/s/ Stephanie Pierce
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Stephanie Pierce
Vice President, Assistant
Treasurer and Assistant
Secretary
