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. 22 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [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, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
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on (date) pursuant to paragraph (a)(i)
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75 days after filing pursuant to paragraph (a)(ii)
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on (date) pursuant to paragraph (a)(ii) of Rule 485
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Dreyfus Premier Municipal Bond Fund
Investing for income exempt from federal income tax
PROSPECTUS September 1, 2000
(reg.tm)
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.
<PAGE>
The Fund
Dreyfus Premier Municipal Bond Fund
---------------------------------
Ticker Symbols CLASS A: PTEBX
CLASS B: PMUBX
CLASS C: DMBCX
Contents
The Fund
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
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Account Policies 6
Distributions and Taxes 8
Services for Fund Investors 9
Instructions for Regular Accounts 10
For More Information
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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 of 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 bonds are subject to greater credit
risk, including the risk of default, than investment grade bonds;
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, which may cause taxable income. 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 bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's Class A performance from year to
year. Sales loads are not reflected in the chart; if they were, the returns
shown would have been lower. The table compares the fund's average annual total
return to that of the Lehman Brothers Municipal Bond Index, a widely recognized
unmanaged index of long-term municipal bond performance. Of course, past
performance is no guarantee of future results.
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Year-by-year total return AS OF 12/31 EACH YEAR (%)
7.33 13.89 10.00 14.40 -6.41 17.46 3.96 9.59 4.48 -5.82
90 91 92 93 94 95 96 97 98 99
CLASS A SHARES
BEST QUARTER: Q1 '95 +6.60%
WORST QUARTER: Q1 '94 -6.33%
THE FUND'S CLASS A YEAR-TO-DATE TOTAL RETURN AS OF 6/30/00 WAS 2.60%.
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<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
Inception date 1 Year 5 Years 10 Years inception
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<S> <C> <C> <C> <C> <C>
CLASS A (11/26/86) -10.05% 4.69% 6.11% --
CLASS B (1/15/93) -9.84% 4.80% -- 4.53%
CLASS C (7/13/95) -7.38% -- -- 3.04%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX -2.06% 6.91% 6.89% 5.83%*
* 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.
</TABLE>
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>
<TABLE>
<CAPTION>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the tables below.
Fee table
CLASS A CLASS B CLASS C
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SHAREHOLDER TRANSACTION FEES (FEES PAID FROM YOUR ACCOUNT)
Maximum front-end sales charge on purchases
<S> <C> <C> <C>
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
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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 .13 .15 .13
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TOTAL .93 1.45 1.68
* 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>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
CLASS A $541 $733 $942 $1,542
CLASS B
WITH REDEMPTION $548 $759 $992 $1,465**
WITHOUT REDEMPTION $148 $459 $792 $1,465**
CLASS C
WITH REDEMPTION $271 $530 $913 $1,987
WITHOUT REDEMPTION $171 $530 $913 $1,987
** 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 $130
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
Financial Corporation, a global financial services company with approximately
$2.8 trillion of assets under management, administration or custody, including
approximately $521 billion under management. Mellon provides wealth management,
global investment services and a comprehensive array of banking services for
individuals, businesses and institutions. Mellon is headquartered in Pittsburgh,
Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Samuel J. Weinstock has managed the fund since August 1987 and has been employed
by Dreyfus since March 1987.
The fund, Dreyfus and Dreyfus Service Corporation (the fund's distributor) each
have adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
the fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
The Fund 3
<PAGE 3>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
YEAR ENDED APRIL 30,
CLASS A 2000 1999 1998 1997 1996
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PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.33 14.69 14.11 13.85 13.86
Investment operations: Investment income -- net .70 .72 .79 .82 .86
Net realized and unrealized gain (loss)
on investments (1.42) (.15) .66 .27 (.01)
Total from investment operations (.72) .57 1.45 1.09 .85
Distributions: Dividends from investment income -- net (.70) (.72) (.79) (.82) (.86)
Dividends from net realized gain on investments (.16) (.21) (.08) (.01) --
Total distributions (.86) (.93) (.87) (.83) (.86)
Net asset value, end of period 12.75 14.33 14.69 14.11 13.85
Total return (%)* (5.01) 3.96 10.52 8.03 6.08
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .93 .91 .91 .91 .92
Ratio of net investment income to average net assets (%) 5.28 4.96 5.42 5.84 5.98
Portfolio turnover rate (%) 70.39 46.84 26.33 28.17 36.59
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Net assets, end of period ($ x 1,000) 361,567 432,276 447,869 457,327 474,044
* EXCLUSIVE OF SALES CHARGE.
YEAR ENDED APRIL 30,
CLASS B 2000 1999 1998 1997 1996
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PER-SHARE DATA ($)
Net asset value, beginning of period 14.33 14.69 14.11 13.85 13.86
Investment operations: Investment income -- net .63 .65 .72 .75 .78
Net realized and unrealized gain (loss)
on investments (1.41) (.15) .66 .27 (.01)
Total from investment operations (.78) .50 1.38 1.02 .77
Distributions: Dividends from investment income -- net (.63) (.65) (.72) (.75) (.78)
Dividends from net realized gain on investments (.16) (.21) (.08) (.01) --
Total distributions (.79) (.86) (.80) (.76) (.78)
Net asset value, end of period 12.76 14.33 14.69 14.11 13.85
Total return (%)* (5.51) 3.43 9.95 7.49 5.53
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.45 1.42 1.42 1.43 1.43
Ratio of net investment income to average net assets (%) 4.71 4.44 4.89 5.33 5.46
Portfolio turnover rate (%) 70.39 46.84 26.33 28.17 36.59
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Net assets, end of period ($ x 1,000) 52,979 112,583 119,457 109,485 106,931
* EXCLUSIVE OF SALES CHARGE.
4
<PAGE 4>
YEAR ENDED APRIL 30,
CLASS C 2000 1999 1998 1997 1996(1)
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PER-SHARE DATA ($)
Net asset value, beginning of period 14.35 14.71 14.12 13.87 14.28
Investment operations: Investment income -- net .60 .61 .68 .72 .60
Net realized and unrealized gain (loss)
on investments (1.42) (.15) .67 .26 (.41)
Total from investment operations (.82) .46 1.35 .98 .19
Distributions: Dividends from investment income -- net (.60) (.61) (.68) (.72) (.60)
Dividends from net realized gain on investments (.16) (.21) (.08) (.01) --
Total distributions (.76) (.82) (.76) (.73) (.60)
Net asset value, end of period 12.77 14.35 14.71 14.12 13.87
Total return (%)(2) (5.71) 3.16 9.73 7.16 1.56(3)
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.68 1.67 1.69 1.64 1.77(3)
Ratio of net investment income to average net assets (%) 4.52 4.11 4.55 5.01 4.84(3)
Portfolio turnover rate (%) 70.39 46.84 26.33 28.17 36.59
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Net assets, end of period ($ x 1,000) 4,424 8,095 3,019 1,049 340
(1) FROM JULY 13, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996.
(2) EXCLUSIVE OF SALES CHARGE.
(3) ANNUALIZED.
The Fund 5
</TABLE>
<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.
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<TABLE>
<CAPTION>
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
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<S> <C> <C>
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).
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</TABLE>
CLASS B -- CHARGED WHEN YOU SELL SHARES
CDSC as a % of your initial
Years since purchase investment or your redemption
was made (whichever is less)
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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.
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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 shares you own in this
fund, any other Dreyfus Premier fund, or any other fund that is advised by
Founders Asset Management LLC (Founders), an affiliate of Dreyfus, sold with a
sales load, 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 by the fund's
board. The pricing service's procedures are reviewed under the general
supervision of the 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.
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Minimum investments
Initial Additional
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REGULAR ACCOUNTS $1,000 $100; $500 FOR
TELETRANSFER INVESTMENTS
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
A shares 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 shares recently purchased by check,
TeleTransfer or Automatic Asset Builder, please note that:
* if you send a written request to sell such shares, the fund may delay
sending the proceeds for up to eight business days following the purchase of
those shares
* the fund will not honor redemption checks, or process wire, telephone
or TeleTransfer redemption requests, for up to eight business days following the
purchase of those shares
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 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:
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Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
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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.
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For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) 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
the fund into another Dreyfus fund
or certain Founders-advised funds
(not available for IRAs).
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For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from the fund into another
Dreyfus fund or certain
Founders-advised funds.
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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 amount of
any withdrawal does not exceed an
annual rate of 12% of the greater of the
account value at the time of the first
withdrawal under the plan, or at the time
of the subsequent withdrawal.
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 or Founders-advised 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
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
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.
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.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
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]
<PAGE>
[Application p2]
<PAGE>
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 certain 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 (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by e-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
022P0900
<PAGE>
--------------------------------------------------------------------------------
DREYFUS PREMIER MUNICIPAL BOND FUND
CLASS A, CLASS B AND CLASS C SHARES
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 2000
--------------------------------------------------------------------------------
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, 2000, 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-19
How to Buy Shares..........................................................B-22
Distribution Plan and Shareholder Services Plan............................B-27
How to Redeem Shares.......................................................B-29
Shareholder Services.......................................................B-34
Determination of Net Asset Value...........................................B-37
Dividends, Distributions and Taxes.........................................B-38
Portfolio Transactions.....................................................B-40
Performance Information....................................................B-41
Information About the Fund.................................................B-43
Counsel and Independent Auditors...........................................B-45
Appendix...................................................................B-46
<PAGE>
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.
Dreyfus Service Corporation (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. Certain lease obligations may be considered 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, 2000, computed
on a monthly basis, was as follows:
Percentage
Fitch or Moody's or S&P of Value
----- ------- --- ----------
AAA Aaa AAA 30.8%
AA Aa AA 1.1%
A A A 7.1%
BBB Baa BBB 21.5%
BB Ba BB 7.9%
B B B 3.2%
F-1+/F-1 MIG1/VMIG1, P-1 SP-1+,SP-1,
A1+/A1 1.4%
Not Rated Not Rated Not Rated 27.0%*
100%
--------------------------------------------------------------------------------
______________________________
* Included in the Not Rated category are securities comprising 27% 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 (1.8%); AA/Aa (1.2%); A/A (1.2%); BBB/Baa (14.9%);
BB/Ba (4.2%); B/B (.9%); CCC/Caa (.9%); and DDD/C (1.9%).
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.
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 such 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. 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
"high yield" or "junk" bonds). They may be subject to greater risks and 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, the Manager's 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
Dreyfus Service Corporation.................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 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, Inc.), a button packager and distributor,
Century Business Services, Inc. (formerly, International Alliance Services,
Inc.), a provider of various outsourcing functions for small and medium
sized companies, and QuickCAT.com, Inc., a private company engaged in the
development of high speed movement, routing, storage and encryption of data
across all modes of data transport. For more than five years prior to
January 1995, he was President, a director and, until August 1994, Chief
Operating Officer of the Manager and Executive Vice President and a
director of the Distributor. From August 1994 until December 31, 1994, he
was a director of Mellon Financial Corporation. He is 56 years old and his
address is 200 Park Avenue, New York, New York 10166.
CLIFFORD L. ALEXANDER, JR., Board Member. Chairman of the Board and Chief
Executive Officer of The Dun and Bradstreet Corporation and 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, IMS
Health, a service provider of marketing information and information
technology, MCI World Com and Mutual of America Life Insurance Company. He
is 66 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 57 years old and
her address is c/o New York University School of Law, 40 Washington Square
South, New York, New York 10012.
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 67 years old and his address
is 23 East 92nd Street, New York, New York 10128.
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 57 years old and his
address is 70 Lincoln Center Plaza, New York, New York 10023-6583.
The Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
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, 2000, and
by all 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, 1999, 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 $4,688 $642,177 (189)
Clifford L. Alexander, Jr. $4,000 $ 85,378 (43)
Peggy C. Davis $4,000 $ 68,378 (29)
Ernest Kafka $4,000 $ 68,378 (29)
Saul B. Klaman*** $3,270 $ 68,378 (29)
Nathan Leventhal $4,000 $ 68,378 (29)
* 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 $6,926 for all Board members as a group.
*** Emeritus Board member as of January 18, 2000.
Officers of the Fund
STEPHEN E. CANTER, President. President, Chief Operating Officer, Chief
Investment Officer and a director of the Manager, and an officer of other
investment companies advised and administered by the Manager. Mr. Canter
also is a Director or an Executive Committee Member of the other investment
management subsidiaries of Mellon Financial Corporation, each of which is
an affiliate of the Manager. He is 55 years old.
MARK N. JACOBS, Vice President. Vice President, General Counsel and Secretary of
the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 54 years old.
JOSEPH CONNOLLY, Vice President and Treasurer. Director - Mutual Fund Accounting
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 43 years old.
STEVEN F. NEWMAN, Secretary. Associate General Counsel and Assistant Secretary
of the Manager, and an officer of other investment companies advised and
administered by the Manager. He is 51 years old.
MICHAEL A. ROSENBERG, Assistant Secretary. Associate General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. He is 40 years old.
JANETTE E. FARRAGHER, Assistant Secretary. Assistant General Counsel of the
Manager, and an officer of other investment companies advised and
administered by the Manager. She is 37 years old.
GREGORY S. GRUBER, Assistant Treasurer. Senior Accounting Manager - Municipal
Bond Funds of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 41 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
The Fund's Board members and officers, as a group, owned less than 1% of
the Fund's shares outstanding on July 17, 2000.
The following entities held of record 5% or more of the Fund's shares
outstanding on July 17, 2000:
Class B - Merrill Lynch Pierce Fenner & Smith for the Sole Benefit of its
Customers, 4800 Deer Lake Dr E, Jacksonville FL 32246-6484 - 14.29%; Class
C - Merrill Lynch Pierce Fenner & Smith for the Sole Benefit of its
Customers, 4800 Deer Lake Dr E, Jacksonville, Fl 32246-6484 - 44.15%;
Norwest Investment Services, Inc. FB0 020973011, NorthStar Building East,
9th Floor, 608 Second Ave., South, Minneapolis, MN 55479-0162 - 6.51%;
Prudential Securities Inc. FB0 - Mr. William A. Rode & Mrs. Carol R. Rode
JT TEN, 225 S. Hampton Ct, Palatine IL 60067-5825 - 5.46%. A shareholder
who beneficially owns, directly or indirectly, more than 25% of the Fund's
voting securities may be deemed a "control person" (as defined in the 1940
Act) of the Fund.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a global multibank financial 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 largest bank holding companies in the United States
based on total assets.
The Manager provides management services pursuant to a Management
Agreement (the "Agreement") between the Manager and the Fund. The Agreement 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 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; Thomas F. Eggers, Vice Chairman--Institutional and a director;
Lawrence S. Kash, Vice Chairman; J. David Officer, Vice Chairman and a director;
Ronald P. O'Hanley III, Vice Chairman; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior Vice President; Patrice M. Kozlowski, Senior
Vice President--Corporate Communications; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President--Product
Development; Mary Beth Leibig, Vice President--Human Resources; Ray Van Cott,
Vice President--Information Systems; Theodore A. Schachar, Vice President--Tax;
Wendy Strutt, 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 G. McGuinn, Richard W. Sabo
and Richard F. Syron, directors.
The Manager's Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by the Manager. In that regard, portfolio managers
and other investment personnel of the Manager must preclear and report their
personal securities transactions and holdings, which are reviewed for compliance
with the Code of Ethics and are also subject to the oversight of Mellon's
Investment Ethics Committee. Portfolio managers and other investment personnel
of the Manager who comply with the Code of Ethics 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 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 Joseph P. Darcy, A.
Paul Disdier, Douglas J. Gaylor, Joseph Irace, Richard J. Moynihan, Colleen
Meehan, W. Michael Petty, Scott Sprauer, 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 as well as for other funds advised by the Manager.
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 0.55% of the value of the
Fund's average daily net assets. For the fiscal years ended April 30, 1998, 1999
and 2000, the management fees paid amounted to $3,155,724, $3,144,295 and
$2,631,751, 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, a wholly-owned subsidiary of the Manager
located at 200 Park Avenue, New York, New York 10166, serves as the Fund's
distributor on a best efforts basis pursuant to an agreement with the Fund which
is renewable annually. From August 23, 1994 through March 21, 2000, Premier
Mutual Fund Services, Inc. ("Premier") acted as the Fund's distributor. For the
fiscal years ended April 30, 1998 and 1999, and for the period from May 1, 1999
through March 21, 2000, Premier retained $33,805, $29,154, and $15,262,
respectively, from sales loads on Class A shares and $177,747, $166,883 and
$166,638, respectively, from the contingent deferred sales charges ("CDSC") on
Class B shares. For the fiscal years ended April 30, 1998 and 1999 and for the
period from May 1, 1999 through March 21, 2000, Premier retained $294, $2,275
and $6,429, respectively, from the CDSC on Class C shares. For the period March
22, 2000 through April 30, 2000 the Distributor retained $593 from sales loads
on Class A shares, and $65,936 and $151 from CDSC on Class B and Class C shares,
respectively.
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"), 100 Church 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
Builder(R) 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 AS A
---------------------
PRICE PER VALUE PER % OF OFFERING
SHARE SHARE PRICE
------------- ------------- ------------------
Less than $50,000 4.50 4.70 4.25
$50,000 to less than 4.00 4.20 3.75
$100,000....
$100,000 to less than 3.00 3.10 2.75
$250,000....
$250,000 to less than 2.50 2.60 2.25
$500,000....
$500,000 to less than 2.00 2.00 1.75
$1,000,000..
$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, 2000:
NET ASSET VALUE per Share $12.75
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) $.60
----
Per Share Offering Price to
the Public $13.35
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 "How to Redeem Shares." The
Distributor compensates certain Service Agents for selling Class C shares at the
time of purchase from the Distributor's own assets. The proceeds of the CDSC and
the distribution fee, in part, are used to defray these expenses.
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 which are sold with a sales load, shares of certain other funds advised
by the Manager or Founders Asset Management LLC ("Founders"), an affiliate of
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 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 0.50% of the value of the
average daily net assets of Class B and 0.75% 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. 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 period from May 1, 1999 through March 21, 2000, the Fund paid
Premier $354,115 and $42,789, with respect to Class B and Class C, respectively,
pursuant to the Distribution Plan. For the period from March 22, 2000 through
April 30, 2000, the Fund paid the Distributor $30,110 and $3,652 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 0.25% 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 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. 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 period from May 1, 1999 through March 21, 2000, the Fund paid
Premier $888,395, $177,056 and $14,263 with respect to Class A, Class B and
Class C, respectively, pursuant to the Shareholder Services Plan. For the period
from March 22, 2000 through April 30, 2000, the Fund paid the Distributor
$100,263, $15,055 and $1,217 with respect to Class A, Class B and Class C,
respectively, pursuant to the Shareholder Services Plan.
HOW TO REDEEM SHARES
General. The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. However, if you have purchased Fund shares by check, by Dreyfus
TeleTransfer Privilege or through Dreyfus-Automatic Asset Builder(R) and
subsequently submit a written redemption request to the Transfer Agent, the Fund
may delay sending the redemption proceeds for up to eight business days after
the purchase of such shares. In addition, the Fund will not honor redemption
checks under the Checkwriting Privilege, and will reject requests to redeem
shares by wire or telephone or pursuant to the Dreyfus TeleTransfer Privilege,
for a period of eight business days after receipt by the Transfer Agent of the
purchase check, the Dreyfus TeleTransfer purchase or the Dreyfus-Automatic Asset
Builder(R) order against which such redemption is requested. These procedures
will not apply if your shares were purchased by wire payment, or if you
otherwise have a sufficient collected balance in your account to cover the
redemption request. Fund shares may not be redeemed until the Transfer Agent has
received your Account Application.
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 or
Was Made 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 or
Was Made 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.
Checkwriting 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 Checkwriting 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
Checkwriting 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 $500,000 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. 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 shares of the Fund, shares of the same Class of another fund in the Dreyfus
Premier Family of Funds, shares of the same Class of certain funds advised by
Founders, or shares of certain other funds in the Dreyfus Family of Funds, to
the extent such shares are offered for sale in your 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 Touch(R) 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 (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, shares of the same Class of another fund in the
Dreyfus Premier Family of Funds, shares of the same Class of certain funds
advised by Founders or shares of certain other 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 Builder(R). 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. Dreyfus 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, shares of the same Class of certain funds advised by
Founders, or shares of certain other 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 any amount withdrawn under
the plan does not exceed on an annual basis 12% of the greater of (1) the
account value at the time of the first withdrawal under the Automatic Withdrawal
Plan, or (2) the account value at the time of the subsequent withdrawal.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed such amounts will be subject to a CDSC. 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, 2000, 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 immediately available funds ("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.
Dividends usually are paid on the last calendar day of each month and are
automatically reinvested in additional shares of the same Class from which they
were paid at net asset value without a sales load or, at your option, paid in
cash. The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. If you redeem all shares in your
account at any time during the month, all dividends to which you are entitled
will be paid to you along with the proceeds of the redemption. If you are an
omnibus accountholder and indicate in a partial redemption request that a
portion of any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account, such
portion of the accrued dividends will be paid to you along with the proceeds of
the redemption.
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.
If, at the close of each quarter of its taxable year, at least 50% of the
value of the Fund's total assets consists of Federal tax exempt obligations,
then the Fund may designate and pay Federal exempt-interest dividends from
interest earned on all such tax exempt obligations. Such exempt-interest
dividends may be excluded by shareholders of the Fund from their gross income
for Federal income tax purposes. Dividends derived from Taxable Investments,
together with distributions from any net realized short-term securities gains,
generally are taxable as ordinary income for Federal income tax purposes whether
or not reinvested. Distributions from net realized long-term securities gains
generally are taxable as long-term capital gains to a shareholder who is a
citizen or resident of the United States, whether or not reinvested and
regardless of the length of time the shareholder has held his or her shares.
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 gains and losses. However, all or a portion of the gains
realized from the disposition of certain market discount bonds will be treated
as ordinary income. In addition, all or a portion of the gain realized from
engaging in "conversion transactions" (generally including certain transactions
designed to convert ordinary income into capital gain) may be treated as
ordinary income.
Gain or loss, if any, realized by the Fund from certain financial futures
and options transactions ("Section 1256 contracts") 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 Section 1256 contracts as well as from
closing transactions. In addition, any Section 1256 contracts 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
as described above.
Offsetting positions held by the Fund involving certain futures and options
transactions with respect to actively traded personal property may be
considered, for tax purposes, to constitute "straddles." To the extent the
straddle rules apply to positions established by the Fund, losses realized by
the Fund may be deferred to the extent of unrealized gain in the offsetting
position. In addition, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gains on
straddle positions may be treated as short-term capital gains or ordinary
income. Certain of the straddle positions held by the Fund may constitute "mixed
straddles." The Fund may make one or more elections with respect to the
treatment of "mixed straddles," resulting in different tax consequences. In
certain circumstances, the provisions governing the tax treatment of straddles
override or modify certain of the provisions discussed above.
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, 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.
Investment by the Fund in securities issued or acquired at a discount, or
providing for deferred interest or for payment of interest in the form of
additional obligations, could, under special tax rules, affect the amount,
timing and character of distributions to shareholders by causing the Fund to
recognize income prior to the receipt of cash payment. 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 Manager's opinion 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,
1998, 1999 and 2000 was 26.33%, 46.84% and 70.39%, 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 $26,550.
PERFORMANCE INFORMATION
Current yield for the 30-day period ended April 30, 2000 for Class A was
5.09%, for Class B was 4.86% and for Class C was 4.64%. 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 2000 Federal tax rate of 39.6%, the tax equivalent yield for
the 30-day period ended April 30, 2000 for Class A was 8.43%, for Class B was
8.05% and for Class C was 7.68%. 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, 2000 for Class A was -9.31%, 3.62% and 6.29%, respectively. The
average annual total return for the 1, 5 and 7.30 year periods ended April 30,
2000 for Class B was -9.07%, 3.72% and 4.53%, respectively. The average annual
total return for the 1 and 4.81 year periods ended April 30, 2000 for Class C
was -6.60% and 3.10%, 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 total return for Class A for the period November 26, 1986 (commencement
of operations) through April 30, 2000 was 118.46%. Based on net asset value per
share, the total return for Class A was 128.77% for this period. The total
return for Class B for the period January 15, 1993 (commencement of initial
offering of Class B shares) through April 30, 2000 was 38.18%. The total return
for Class C for the period July 13, 1995 (commencement of initial offering of
Class C shares) through April 30, 2000 was 15.80%. 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 any applicable
CDSC) and dividing the result by the net asset value (maximum offering price in
the case of Class A) 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. The total return for Class B shares takes into
consideration a conversion to Class A shares after six years. Since the periods
covered for Class B and Class C are beyond the period for which a CDSC would be
applied, no CDSC is factored into the aggregate total return quoted above for
Class B and Class C.
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 or marketing Fund shares, including data from Lipper Analytical
Services, Inc., Bank Rate Monitor(TM), N. Palm Beach, FL 33408, IBC's Money Fund
Report(TM), Morningstar, Inc. and other industry publications. Advertising
materials for the Fund also 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. From time to time, advertising
materials for the Fund also may refer to statistical or other information
concerning trends relating to investment companies, as compiled by industry
associations such as the Investment Company Institute, and/or to studies
performed by the Manager or its affiliates, such as "The Dreyfus Tax Informed
Investing Study" or "The Dreyfus Gender Investment Comparison Study" or such
other studies.
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 $22
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.
<PAGE>
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 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 rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what generally are known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A
Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds rated Baa are considered as medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba
Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate, and therefore not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B
Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa
Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds rated Ca present obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C
Bonds rated C are the lowest rated class of bonds, and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
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.
<PAGE>
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
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(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.
(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) Form of Distribution Agreement and Forms of Service of Agreements.
(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.
(o) Rule 18f-3 Plan.
(p) Code of Ethics
<PAGE>
Item 23. Exhibits. - List (continued)
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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
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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,
filed as Exhibit (b) hereto 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 Form of Distribution Agreement filed as
Exhibit (e) hereto.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser.
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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 and distributor of other
investment companies advised and administered by Dreyfus. 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
<TABLE>
<CAPTION>
Name and Position
With Dreyfus Other Businesses Position Held Dates
<S> <C> <C> <C>
CHRISTOPHER M. CONDRON Franklin Portfolio Director 1/97 - Present
Chairman of the Board Associates,
and LLC*
Chief Executive
Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Director 1/97 - Present
Holdings, Inc.*
Certus Asset Advisors Director 6/95 - Present
Corp.**
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, Executive Committee 1/98 - Present
LLP+ Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, Executive 1/98 - Present
LLP+ Committee
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Director 5/95 - Present
Inc.* President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating 3/98 - Present
Officer 3/98 - Present
President 11/94 - 3/98
Vice Chairman
Mellon Financial Chief Operating 1/99 - Present
Corporation+ Officer 1/99 - Present
President 1/98 - Present
Director 11/94 - 1/99
Vice Chairman
Founders Asset Chairman 12/97 - Present
Management, Director 12/97 - Present
LLC****
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, Executive Committee 1/98 - 8/98
LLP+ Member
CHRISTOPHER M. CONDRON Laurel Capital Advisors+ Trustee 10/93 - 1/98
Chairman and Chief
Executive Officer Boston Safe Deposit and Director 5/93 - Present
(Continued) Trust
Company*
The Boston Company President 6/89 - 1/97
Financial Director 6/89 - 1/97
Strategies, Inc. *
MANDELL L. BERMAN Self-Employed Real Estate 11/74 - Present
Director 29100 Northwestern Highway Consultant,
Suite 370 Residential
Southfield, MI 48034 Builder and
Private Investor
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Director 6/91 - Present
Corporation+
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Director 2/81 - Present
Inc.
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN E. CANTER Dreyfus Investment Chairman of the 1/97 - Present
President, Chief Advisors, Inc.++ Board 5/95 - Present
Operating Director 5/95 - Present
Officer, Chief President
Investment
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, Executive 1/99 - Present
LLP+ Committee
Member
Mellon Equity Associates, Executive Committee 1/99 - Present
LLP+ Member
Franklin Portfolio Director 2/99 - Present
Associates,
LLC*
Franklin Portfolio Director 2/99 - Present
Holdings, Inc.*
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
STEPHEN E. CANTER Founders Asset Management, Member, Board of 12/97 - Present
President, Chief LLC**** Managers
Operating Acting Chief 7/98 - 12/98
Officer, Chief Executive
Investment Officer
Officer, and Director
(CONTINUED)
The Dreyfus Trust Director 6/95 - Present
Company+++ Chairman 1/99 - Present
President 1/99 - Present
Chief Executive 1/99 - Present
Officer
THOMAS F. EGGERS Dreyfus Service Chief Executive 3/00 - Present
Vice Chairman - Corporation++ Officer
Institutional and Chairman of
And Director the 4/96 - 3/00
Board 9/96 - Present
Executive Vice
President
Director
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Director 1/00 - Present
Advisors, Inc.
Dreyfus Service Director 3/99 - Present
Organization,
Inc.++
Dreyfus Insurance Agency Director 3/99 - Present
of
Massachusetts, Inc. +++
Dreyfus Brokerage Director 11/97 - 6/98
Services, Inc.
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Financial Senior Vice 1/99 - Present
Director Corporation+ Chairman 1/90 - Present
Chief Financial 6/92 - 1/99
Officer 1/90 - 5/98
Vice Chairman
Treasurer
Mellon Bank, N.A.+ Senior Vice 3/98 - Present
Chairman 6/92 - 3/98
Vice Chairman 1/90 - Present
Chief Financial
Officer
Mellon EFT Services Director 10/98 - Present
Corporation
Mellon Bank Center, 8th
Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th
Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Vice President 5/93 - Present
Inc.*
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations
Center
4500 New Linden Hill Road
Wilmington, DE 19808
STEVEN G. ELLIOTT Allomon Corporation Director 12/87 - Present
Director (Continued) Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Controller 10/90 - 2/99
Corporation Director 9/88 - 2/99
500 Grant Street Vice President 9/88 - 2/99
Pittsburgh, PA 15258 Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. 1/88 - Present
Officer 8/87 - Present
Chief Executive 8/87 - Present
Officer 8/87 - Present
Director
President
Mellon Overseas Director 4/88 - Present
Investments
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Director 1/99 - Present
Inc.+
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Chairman 11/97 - 2/99
Services, Inc. Chief Executive 11/97 - 2/98
401 North Maple Ave. Officer
Beverly Hills, CA
Dreyfus Service Director 1/95 - 2/99
Corporation++ President 9/96 - 3/99
Dreyfus Precious Metals, Director 3/96 - 12/98
Inc.+++ President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Director 1/97 - 4/99
Inc. ++
Dreyfus Insurance Agency Chairman 5/97 - 3/99
of President 5/97 - 3/99
Massachusetts, Inc.++++ Director 5/97 - 3/99
The Dreyfus Trust Chairman 1/97 - 1/99
Company+++ President 2/97 - 1/99
Chief Executive 2/97 - 1/99
Officer 12/94 - Present
Director
LAWRENCE S. KASH The Dreyfus Consumer Chairman 5/97 - 6/99
Vice Chairman Credit President 5/97 - 6/99
(Continued) Corporation++ Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Chairman 12/95 - 1/99
Advisors, Chief Executive 12/95 - 1/99
Inc. Officer 12/95 - 1/99
Wilmington, DE President
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice 6/92 - Present
President
Laurel Capital Advisors, Chairman 1/98 - 8/98
LLP+ Executive Committee 1/98 - 8/98
Member
Chief Executive 1/98 - 8/98
Officer 1/98 - 8/98
President
Laurel Capital Advisors, Trustee 12/91 - 1/98
Inc. + Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Director 5/93 - Present
Inc.* President 5/93 - Present
Boston Safe Deposit & Director 6/93 - 1/99
Trust Co.+ Executive Vice 6/93 - 4/98
President
MARTIN G. MCGUINN Mellon Financial Chairman 1/99 - Present
Director Corporation+ Chief Executive 1/99 - Present
Officer 1/98 - Present
Director 1/90 - 1/99
Vice Chairman
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive 3/98 - Present
Officer 1/98 - Present
Director 1/90 - 3/98
Vice Chairman
Mellon Leasing Vice Chairman 12/96 - Present
Corporation+
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
J. DAVID OFFICER Dreyfus Service President 3/00 - Present
Vice Chairman Corporation++ Executive Vice 5/98 - 3/00
And Director President 3/99 - Present
Director
Dreyfus Service Director 3/99 - Present
Organization,
Inc.++
Dreyfus Insurance Agency Director 5/98 - Present
of
Massachusetts, Inc.++++
Dreyfus Brokerage Chairman 3/99 - Present
Services, Inc.
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Director 10/98 - Present
Inc.++
Mellon Residential Director 4/97 - Present
Funding Corp. +
Mellon Trust of Florida, Director 8/97 - Present
N.A.
2875 Northeast 191st
Street
North Miami Beach, FL
33180
Mellon Bank, NA+ Executive Vice 7/96 - Present
President
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company President 8/96 - 6/99
Financial Director 8/96 - 6/99
Services, Inc.*
Boston Safe Deposit and Director 7/96 - Present
Trust President 7/96 - 1/99
Company*
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the
Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Director 3/98 - Present
Bank
1399 SW 1st Ave., Suite
400
Miami, Florida
Boston Group Holdings, Director 12/97 - Present
Inc.*
Dreyfus Financial Director 9/96 - Present
Services Corp. +
J. DAVID OFFICER Dreyfus Investment Director 4/96 - Present
Vice Chairman and Services
Director (Continued) Corporation+
RICHARD W. SABO Founders Asset Management President 12/98 - Present
Director LLC**** Chief Executive 12/98 - Present
Officer
Prudential Securities Senior Vice 07/91 - 11/98
New York, NY President 07/91 - 11/98
Regional Director
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive 6/99 - Present
Waltham, MA 02454-9046 Officer
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive 4/94 - 6/99
New York, NY 10006 Officer
RONALD P. O'HANLEY Franklin Portfolio Director 3/97 - Present
Vice Chairman Holdings, Inc.*
Franklin Portfolio Director 3/97 - Present
Associates,
LLC*
Boston Safe Deposit and Executive Committee 1/99 - Present
Trust Member
Company* Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management Executive 10/98 - Present
LTD Committee
(UK) Member 10/98 - Present
London, England Director
Mellon Asset Management Non-Resident 11/98 - Present
(Japan) Co., LTD Director
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Chairman 6/97 - Present
INC.* Director 2/97 - Present
Pareto Partners Partner 5/97 - Present
271 Regent Street Representative
London, England W1R 8PP
Mellon Capital Management Director 2/97 -Present
Corporation***
Certus Asset Advisors Director 2/97 - Present
Corp.**
RONALD P. O'HANLEY Mellon Bond Associates; Trustee 1/98 - Present
Vice Chairman LLP+ Chairman 1/98 - Present
(Continued)
Mellon Equity Associates; Trustee 1/98 - Present
LLP+ Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
STEPHEN R. BYERS Dreyfus Service Senior Vice 3/00 - Present
Director of Corporation++ President 5/97 - 11/99
Investments and Gruntal & Co., LLC Executive Vice 5/97 - 11/99
Senior Vice President New York, NY President 5/97 - 11/99
Partner
Executive Committee 5/97 -
11/99 Member Board of
Directors 5/97 - 11/99 Member
5/97 - 6/99 Treasurer Chief
Financial Officer
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Director 3/96 - Present
Company+++
The TruePenny President 10/98 - Present
Corporation++ Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Chief Financial 3/99 - Present
Controller Company+++ Officer 9/98 - Present
Treasurer 3/97 - Present
Director
Dreyfus Service Chief Financial 12/98 - Present
Corporation++ Officer
Dreyfus Consumer Credit Treasurer 10/98 - Present
Corp. ++
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Vice President 10/98 - Present
Corporation++
Dreyfus Precious Metals, Treasurer 10/98 - 12/98
Inc. +++
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Vice President 10/98 - Present
Corporation++
Trotwood Hunters Site A Vice President 10/98 - Present
Corp. ++
WILLIAM H. MARESCA Dreyfus Transfer, Inc. Chief Financial 5/98 - Present
Controller One American Express Officer
(Continued) Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant 3/93 - 3/99
Treasurer
Dreyfus Insurance Agency Assistant Treasurer 5/98 - Present
of
Massachusetts, Inc.++++
WILLIAM T. SANDALLS, Dreyfus Transfer, Inc. Chairman 2/97 - Present
JR. One American Express
Executive Vice Plaza,
President Providence, RI 02903
Dreyfus Service Director 1/96 - Present
Corporation++ Executive Vice 2/97 - Present
President 2/97 - 12/98
Chief Financial
Officer
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Director 1/96 - 10/98
Inc.++ Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company Director 1/96 - Present
+++
Dreyfus Service Treasurer 10/96 - 3/99
Organization,
Inc.++
Dreyfus Insurance Agency Director 5/97 - 3/99
of Treasurer 5/97 - 3/99
Massachusetts, Inc.++++ Executive Vice 5/97 - 3/99
President
DIANE P. DURNIN Dreyfus Service Senior Vice 5/95 - 3/99
Vice President - Corporation++ President -
Product Marketing and
Development Advertising
Division
PATRICE M. KOZLOWSKI NONE
Senior Vice President
- Corporate
Communications
MARY BETH LEIBIG NONE
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Vice President -Tax 10/96 - Present
Vice President - Tax Corporation++
The Dreyfus Consumer Chairman 6/99 - Present
Credit President 6/99 - Present
Corporation ++
THEODORE A. SCHACHAR Dreyfus Investment Vice President - 10/96 - Present
Vice President - Tax Advisors, Tax
(Continued) Inc.++
Dreyfus Precious Metals, Vice President - 10/96 - 12/98
Inc. +++ Tax
Dreyfus Service Vice President - 10/96 - Present
Organization, Tax
Inc.++
WENDY STRUTT None
Vice President
RICHARD TERRES None
Vice President
RAYMOND J. VAN COTT Mellon Financial Vice President 7/98 - Present
Vice-President - Corporation+
Information Systems
Computer Sciences Vice President 1/96 - 7/98
Corporation
El Segundo, CA
JAMES BITETTO The TruePenny Secretary 9/98 - Present
ASSISTANT SECRETARY Corporation++
Dreyfus Service Assistant Secretary 8/98 - Present
Corporation++
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 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 2930 East Third Avenue,
Denver, Colorado 80206.
+ 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.
</TABLE>
Item 27. Principal Underwriters
-------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Funds, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Opportunity Funds
68) Dreyfus Premier Worldwide Growth Fund, Inc.
69) Dreyfus Premier Municipal Bond Fund
70) Dreyfus Premier New York Municipal Bond Fund
71) Dreyfus Premier State Municipal Bond Fund
72) Dreyfus Premier Value Equity Funds
73) Dreyfus Short-Intermediate Government Fund
74) Dreyfus Short-Intermediate Municipal Bond Fund
75) The Dreyfus Socially Responsible Growth Fund, Inc.
76) Dreyfus Stock Index Fund
77) Dreyfus Tax Exempt Cash Management
78) The Dreyfus Premier Third Century Fund, Inc.
79) Dreyfus Treasury Cash Management
80) Dreyfus Treasury Prime Cash Management
81) Dreyfus Variable Investment Fund
82) Dreyfus Worldwide Dollar Money Market Fund, Inc.
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Funds, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Funds, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
<TABLE>
<CAPTION>
Positions and
Name and principal Offices with
Business address Positions and offices with the Distributor Registrant
---------------- ------------------------------------------ ----------
<S> <C> <C>
Thomas F. Eggers * Chief Executive Officer and Chairman of the None
Board
J. David Officer * President and Director None
Stephen Burke * Executive Vice President None
Charles Cardona * Executive Vice President None
Anthony DeVivio ** Executive Vice President None
David K. Mossman ** Executive Vice President None
Jeffrey N. Nachman *** Executive Vice President and Chief Operations None
Officer
William T. Sandalls, Jr. * Executive Vice President and Director None
Wilson Santos ** Executive Vice President and Director of None
Client Services
William H. Maresca * Chief Financial Officer None
Ken Bradle ** Senior Vice President None
Stephen R. Byers * Senior Vice President None
Frank J. Coates * Senior Vice President None
Joseph Connolly * Senior Vice President Vice President
and Treasurer
William Glenn * Senior Vice President None
Michael Millard ** Senior Vice President None
Mary Jean Mulligan ** Senior Vice President None
Bradley Skapyak * Senior Vice President None
Jane Knight * Chief Legal Officer and Secretary None
Stephen Storen * Chief Compliance Officer None
Jeffrey Cannizzaro * Vice President - Compliance None
Maria Georgopoulos * Vice President - Facilities Management None
William Germenis Vice President - Compliance None
Walter T. Harris * Vice President None
Janice Hayles * Vice President None
Hal Marshall * Vice President - Compliance None
Paul Molloy * Vice President None
Theodore A. Schachar * Vice President - Tax None
James Windels * Vice President None
James Bitetto * Assistant Secretary None
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY
11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills,
CA 90210.
</TABLE>
<PAGE>
Item 28. Location of Accounts and Records
------- --------------------------------
1. Bank of New York
100 Church Street
New York, New York 10007
2. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
3. 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 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
3rd day of August, 2000.
DREYFUS PREMIER MUNICIPAL BOND FUND
BY: /s/Stephen E. Canter*
---------------------
STEPHEN E. CANTER, 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/ Stephen E. Canter* President (Principal Executive 8/03/00
______________________________ Officer)
Stephen E. Canter
/s/ Joseph Connolly* Treasurer (Principal Accounting 8/03/00
______________________________ and Financial Officer)
Joseph Connolly
/s/Joseph S. DiMartino* Chairman of the Board 8/03/00
-----------------------------
Joseph S. DiMartino
/s/Clifford L. Alexander, Jr.* Board member 8/03/00
------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Board member 8/03/00
------------------------------
Peggy C. Davis
/s/Ernest Kafka* Board member 8/03/00
------------------------------
Ernest Kafka
/s/Nathan Leventhal* Board member 8/03/00
------------------------------
Nathan Leventhal
*BY: /s/Janette E. Farragher
-----------------------
Janette E. Farragher,
Attorney-in-Fact
DREYFUS PREMIER MUNICIPAL BOND FUND
INDEX OF EXHIBITS
-------------------------
ITEM PAGE
----- ------
(23) Exhibits:
(b) By-Laws, as amended
(e) Form of Distribution Agreement and Forms of
Service Agreements
(j) Consent of Independent Auditors
(o) Rule 18f-3 Plan
(p) Code of Ethics
Other Exhibits
(a) Powers of Attorney
(b) Certificate of Assistant Secretary
