__________________________________________________________________________
PREMIER STRATEGIC GROWTH FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 2, 1996
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Strategic Growth Fund (the "Fund"), dated January 2, 1996, 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.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . B-13
Management Agreement . . . . . . . . . . . . . . . . . B-16
Purchase of Fund Shares. . . . . . . . . . . . . . . . B-18
Distribution Plan and Shareholder Services Plan. . . . B-20
Redemption of Fund Shares. . . . . . . . . . . . . . . B-22
Shareholder Services . . . . . . . . . . . . . . . . . B-23
Determination of Net Asset Value . . . . . . . . . . . B-27
Dividends, Distributions and Taxes . . . . . . . . . . B-27
Portfolio Transactions . . . . . . . . . . . . . . . . B-29
Performance Information. . . . . . . . . . . . . . . . B-30
Information About the Fund . . . . . . . . . . . . . . B-31
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . B-31
Appendix . . . . . . . . . . . . . . . . . . . . . . . B-32
Financial Statements . . . . . . . . . . . . . . . . . B-36, B-48
Report of Independent Auditors . . . . . . . . . . . . B-47
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
American, European and Continental Depositary Receipts. The Fund may
invest in American Depositary Receipts, European Depositary Receipts and
Continental Depositary Receipts through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of
the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of
the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts
in respect of the deposited securities.
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities
acquired by a Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to
be loans by the Fund. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, the Fund will enter into repurchase
agreements only with domestic banks with total assets in excess of $1
billion, or primary government securities dealers reporting to the Federal
Reserve Bank of New York, with respect to securities of the type in which
the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount 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 notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating
agencies, and the Fund may invest in them only if at the time of an
investment the borrower meets the criteria set forth in the Prospectus for
other commercial paper issuers.
Convertible Securities. Although to a lesser extent than with fixed-
income securities generally, the market value of convertible securities
tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the
conversion feature, the market value of convertible securities tends to
vary with fluctuations in the market value of the underlying common stock.
A unique feature of convertible securities is that as the market price of
the underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without
risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.
As fixed-income securities, convertible securities are investments
that provide for a stable stream of income with generally higher yields
than common stocks. As with all fixed-income securities, there can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. Convertible securities,
however, generally offer lower interest or dividend yields than non-
convertible securities of similar quality because of the potential for
capital appreciation. A convertible security, in addition to providing
fixed income, offers the potential for capital appreciation through the
conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no
assurance of capital appreciation, however, because securities prices
fluctuate.
Foreign Government Obligations; Securities of Supranational Entities.
The Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable
quality to the other obligations in which the Fund may invest. Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally,
there will be a lapse of time between the Fund's decision to sell any such
security and the registration of the security permitting sale. During any
such period, the price of the securities will be subject to market
fluctuations. However, where a substantial market of qualified
institutional buyers has developed for certain unregistered securities
purchased by the Fund pursuant to Rule 144A under the Securities Act of
1933, as amended, the Fund intends to treat such securities as liquid
securities in accordance with procedures approved by the Fund's Board.
Because it is not possible to predict with assurance how the market for
specific restricted securities sold pursuant to Rule 144A will develop,
the Fund's Board has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level
of illiquidity in its investment portfolio during such period.
Zero Coupon Securities. The Fund may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The Fund also may invest in zero coupon
securities issued by corporations and financial institutions which
constitute a proportionate ownership of the issuer's pool of underlying
U.S. Treasury securities. A zero coupon security pays no interest to its
holder during its life and is sold at a discount to its face value at
maturity. The amount of the discount fluctuates with the market price of
the security. 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. The Fund currently intends to invest less than 5%
of its assets in zero coupon securities.
Management Policies
Leverage. For borrowings for investment purposes, the Investment
Company Act of 1940, as amended (the "1940 Act"), requires the Fund to
maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the required coverage should decline as a result of
market fluctuations or other reasons, the Fund may be required to sell
some of its portfolio securities within three days to reduce the amount of
its borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Fund also may be required to maintain minimum average balances
in connection with such borrowing or pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate. To the extent the Fund
enters into a reverse repurchase agreement, the Fund will maintain in a
segregated custodial account cash or U.S. Government securities or other
high quality liquid debt securities at least equal to the aggregate amount
of its reverse repurchase obligations, plus accrued interest, in certain
cases, in accordance with releases promulgated by the Securities and
Exchange Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund.
Short-Selling. 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 Fund will incur a loss if the price of the
security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security; it will realize a gain if
the security declines in price between those dates.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Fund's net assets. The Fund may not sell
short the securities of any single issuer listed on a national securities
exchange to the extent of more than 5% of the value of the Fund's net
assets. The Fund may not sell short the securities of any class of an
issuer if, as a result of such sale, the Fund would have sold short in the
aggregate more than 5% of the outstanding securities of that class.
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will 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, it will: (a) maintain a segregated account, containing cash or
U.S. Government securities, at such a level that the amount deposited in
the account plus the amount deposited with the broker as collateral will
equal the current value of the security sold short; or (b) otherwise cover
its short position.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board must terminate the
loan and regain the right to vote the securities if a material event
adversely affecting the investment occurs.
Derivatives. The Fund may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide
a cheaper, quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a Fund to increase, decrease
or change the level of risk to which its portfolio is exposed in much the
same way as the Fund can increase, decrease or change the risk of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
margin requirements) operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency defaults,
there is relatively little counterparty credit risk associated with
Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an
over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and
the International Monetary Market of the Chicago Mercantile Exchange, or
on exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited. Foreign markets may offer advantages such as trading
opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than
domestic markets. For example, some foreign exchanges are principal
markets so that no common clearing facility exists and an investor may
look only to the broker for performance of the contract. In addition, any
profits that the Fund might realize in trading could be eliminated by
adverse changes in the exchange rate, or the Fund could incur losses as a
result of those changes. Transactions on foreign exchanges may include
both commodities which are traded on domestic exchanges and those which
are not. Unlike trading on domestic commodity exchanges, trading on
foreign commodity exchanges is not regulated by the Commodity Futures
Trading Commission.
Engaging in these transactions involves risk of loss to 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 ability
of the Manager to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if 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 cash or
high quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of
limiting the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell stock
index futures contracts. A stock index future obligates the Fund to pay
or receive an amount of cash equal to a fixed dollar amount specified in
the futures contract multiplied by the difference between the settlement
price of the contract on the contract's last trading day and the value of
the index based on the stock prices of the securities that comprise it at
the opening of trading in such securities on the next business day.
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.
The Fund may purchase and sell currency futures. A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.
Options--In General. The Fund may purchase and write (i.e., sell)
call or put options with respect to specific securities. A call option
gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period.
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 cash or other securities. A put option
written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of
the option are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken. The principal reason for writing
covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. 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.
Specific Options Transactions. The Fund may purchase and sell call
and put options in respect of specific securities (or groups or "baskets"
of specific securities) or stock indices listed on national securities
exchanges or traded in the over-the-counter market. An option on a stock
index is similar to an option in respect of specific securities, except
that settlement does not occur by delivery of the securities comprising
the index. Instead, the option holder receives an amount of cash if the
closing level of the stock index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. Thus, the effectiveness of purchasing or
writing stock index options will depend upon price movements in the level
of the index rather than the price of a particular stock.
The Fund may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying
currency at a price which is expected to be lower or higher than the spot
price of the currency at the time the option is exercised or expires.
The Fund may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps
in pursuit of its investment objective. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest (for example, an exchange of floating-rate
payments for fixed-rate payments) denominated in U.S. dollars or foreign
currency. Equity index swaps involve the exchange by the Fund with
another party of cash flows based upon the performance of an index or a
portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These
options typically are purchased in privately negotiated transactions from
financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability
of the Manager to predict correctly movements in the prices of individual
stocks or the stock market generally. To the extent such 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 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 that will be received on a
forward commitment or when-issued security are fixed at the time the Fund
enters into the commitment. However, the Fund does not make a payment
until it receives delivery from the other party to the transaction. The
Fund will make commitments to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable. A
segregated account of the Fund consisting of cash, cash equivalents or
U.S. Government securities or other high quality liquid debt securities at
least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
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 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
Lower Rated Securities. The Fund is permitted to invest in
securities rated below Baa by Moody's Investors Service, Inc. ("Moody's")
and below BBB by Standard & Poor's Ratings Group ("S&P" and with Moody's,
the "Rating Agencies") and as low as Caa by Moody's or CCC by S&P. Such
securities, though higher yielding, are characterized by risk. See in the
Fund's Prospectus "Description of the Fund--Investment Considerations and
Risks--Lower Rated Securities" for a discussion of certain risks and the
"Appendix" for a general description of the Rating Agencies' ratings.
Although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
securities. The Fund will rely on the Manager's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are
higher rated securities. These securities generally are considered by the
Rating Agencies to be, 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.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities
of such issuers generally is greater than is the case with the higher
rated securities. For example, during an economic downturn or a sustained
period of rising interest rates, highly leveraged issuers of these
securities may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also
may be affected adversely by specific corporate developments, forecasts,
or the unavailability of additional financing. The risk of loss because
of default by the issuer is significantly greater for the holders of these
securities because such securities generally are unsecured and often are
subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio
and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of these securities. In such cases, judgment may
play a greater role in valuation because less reliable, objective data may
be available.
These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely
the market for such securities and may have an adverse impact on the value
of such securities. In addition, it is likely that any such economic
downturn could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon and increase the
incidence of default for such securities.
The Fund may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues.
The Fund has no arrangement with any persons concerning the acquisition of
such securities, and the Manager will review carefully the credit and
other characteristics pertinent to such new issues.
Lower rated zero coupon securities and pay-in-kind bonds in which the
Fund may invest up to 5% of its total assets, involve special
considerations. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon securities and
pay-in-kind bonds. Such zero coupon securities, pay-in-kind or delayed
interest 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.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 8 as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. Investment restrictions number 9 through 16
are not fundamental policies and may be changed by a vote of a majority of
the Fund's Board at any time. The Fund may not:
1. Investment more than 25% of its assets in investments in any
particular industry or industries (including banking), provided
that, when the Fund has adopted a temporary defensive posture,
there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
2. Invest in commodities, except that the Fund may purchase and
sell futures contracts, including those relating to indices, and
options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil and gas interests,
but the Fund may purchase and sell securities that are secured
by real estate and may purchase and sell securities issued by
companies that invest or deal in real estate.
4. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the
value of the Fund's total assets). For purposes of this
Investment Restriction, the entry into options, forward
contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not
constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements. However,
the Fund may lend its portfolio securities in an amount not to
exceed 33-1/3% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the
Fund's Board.
6. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of
portfolio securities.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities
permitted in Investment Restriction Nos. 2, 4, 11 and 12 may be
deemed to give rise to a senior security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward
contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
9. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor)
if such purchase would cause the value of the Fund's investments
in all such companies to exceed 5% of the value of its total
assets.
10. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the
securities it owns in its portfolio as a shareholder in
accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent
related to the deposits of assets in escrow in connection with
portfolio transactions, such as in connection with writing
covered options and the purchase of securities on a when-issued
or delayed-delivery basis and collateral and initial or
variation margin arrangements with respect to options, futures
contracts, including those relating to indices, and options on
futures contracts or indices.
12. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of
Additional Information.
13. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which
are illiquid, if, in the aggregate, more than 15% of the value
of the Fund's net assets would be so invested.
14. Invest in securities of other investment companies, except to
the extent permitted under the 1940 Act.
15. Purchase or retain the securities of any issuer if the officers
or Board members of the Fund or the officers or directors of the
Manager individually own beneficially more than 1/2 of 1% of the
securities of such issuer or together own beneficially more than
5% of the securities of such issuer.
16. Purchase warrants in excess of 5% of its net assets; however, no
more than 2% of the value of the Fund's net assets may be
invested in warrants which are not listed on the New York or
American Stock Exchange. For purposes of this restriction, such
warrants shall be valued at the lower of cost or market, except
that warrants acquired by the Fund in units or attached to
securities shall not be included within this 5% restriction.
If a percentage restriction is adhered to at the time of investment,
a later change in percentage resulting from a change in values or assets
will not constitute a violation of such restriction.
While not fundamental policies, the Fund has undertaken to comply
with the following limitations for the purpose of registering the Fund's
shares for sale in certain states. The Fund will: (a) not invest in oil,
gas and other mineral leases, (b) not invest in real estate limited
partnerships, and (c) consider as not readily marketable the securities of
foreign issuers which are not listed on a recognized domestic or foreign
exchange and for which a bonafide market does not exist at the time of
purchase or subsequent valuation.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its investors, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
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. Each Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Trustees of the Fund
GORDON J. DAVIS, Trustee. Since October 1994, a senior partner with the
firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September 1994,
Mr. Davis was a senior partner with the law firm of Lord Day & Lord,
Barrett Smith. From 1978 to 1983, Commissioner of Parks and
Recreation for the City of New York. He is also a Director of
Consolidated Edison, a utility company, and Phoenix Home Life
Insurance Company and a member of various other corporate and not-
for-profit boards. He is 54 years old and his address is 241 Central
Park West, New York, New York 10023.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino also is Chairman of the Board of Directors of the Noel
Group, Inc., a venture capital company; a director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, Belding
Heminway Company, Inc., Curtis Industries, Inc., Simmons Outdoor
Corporation and Staffing Resources, Inc.; and a trustee of Bucknell
University. He is 52 years old and his address is 200 Park Avenue,
New York, New York 10166.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer of AT&T
Investment Management Corporation. He is also a trustee of Corporate
Property Investors, a real estate investment company. He is 56 years
old and his address is One Oak Way, Berkeley Heights, New Jersey
07922.
LYNN MARTIN, Trustee. Holder of the Davee Chair at the J.L. Kellogg
Graduate School of Management, Northwestern University. During the
Spring Semester 1993, she was a Visiting Fellow at the Institute of
Policy, Kennedy School of Government, Harvard University. She also
is a consultant to the international accounting firm of Deloitte &
Touche, and chairwoman of its Council on the Advancement of Women.
From January 1991 through January 1993, she served as Secretary of
the United States Department of Labor. From 1981 to 1991, she was
United States Congresswoman for the State of Illinois. She also is a
Director of Harcourt General Corporation, a publishing, insurance,
and retailing company, and a Director of Ameritech Corporation, a
telecommunications and information company, and Ryder Systems
Incorporated, a transportation company. She is 56 years old and her
address is 3750 Lake Shore Drive, Chicago, Illinois 60613.
EUGENE McCARTHY, Trustee. Writer and columnist; former Senator from
Minnesota from 1958-1970. He is also a director of Harcourt Brace
Jovanovich, Inc., Publisher. He is 79 years old and his address is
271 Hawlin Road, Woodville, Virginia 22749.
DANIEL ROSE, Trustee. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic-American Enterprise
Fund, which will make equity investments and loans, and provide
technical business assistance to new business concerns in the Baltic
states. He is also Chairman of the Housing Committee of the Real
Estate Board of New York, Inc. and a trustee of Corporate Property
Investors, a real estate company. He is 66 years old and his address
is c/o Rose Associates, Inc., 380 Madison Avenue, New York, New York
10017.
SANDER VANOCUR, Trustee. Since January 1994, Visiting Professional
Scholar at the Freedom Forum Amendment Center at Vanderbilt
University. Since January 1992, President of Old Owl Communications,
a full-service communications firm, and since November 1989, a
Director of the Damon Runyon-Walter Winchell Cancer Research Fund.
From June 1986 to December 1991, he was a Senior Correspondent of ABC
News and, from October 1986 to December 1991, he was Anchor of the
ABC News program "Business World," a weekly business program on the
ABC television network. Mr. Vanocur joined ABC News in 1977. He is
67 years old and his address is 2928 P Street, N.W., Washington, D.C.
20007.
ANNE WEXLER, Trustee. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also
a director of American Cyanamid Company, Alumax, The Continental
Corporation, Comcast Corporation, The New England Electric System,
NOVA and a member of the board of the Carter Center of Emory
University, the Council of Foreign Relations, the National Parks
Foundation, the Visiting Committee of the John F. Kennedy School of
Government at Harvard University and the Board of Visitors of the
University of Maryland School of Public Affairs. She is 65 years old
and her address is c/o The Wexler Group, 1317 F Street, N.W.,
Washington, D.C. 20004.
REX WILDER, Trustee. Financial Consultant. He is 75 years old and his
address is 290 Riverside Drive, New York, New York 10025.
Shareholder meetings will not be held for the purpose of electing
Board members unless and until such time as less than a majority of the
Board holding office have been elected by shareholders, at which time the
Board members then in office will call a meeting of shareholders for the
election of Board members. Under the 1940 Act, shareholders of record of
not less than two-thirds of the outstanding shares of the Fund may remove
a Board member through a declaration in writing or by vote cast in person
or by proxy at a meeting called for that purpose. The Board is required
to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Board member when requested in writing to
do so by the shareholders of record of not less than 10% of the Fund's
outstanding shares.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the
Fund who are not "interested persons" of the Fund, as defined in the 1940
Act, will be selected and nominated by the Board members who are not
"interested persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of
the Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee
of one-half the amount paid to them as Board members. For the fiscal year
ended December 31, 1994, the aggregate amount of compensation paid to each
Board member by the Fund and all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) were
as follows:
<TABLE>
<CAPTION>
(3) (5)
(2) Pension or (4) Total Compensation
(1) Aggregate Retirement Benefits Estimated Annual from Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
- --------------- ------------------ -------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Gordon J. Davis $3,500 none none $ 29,602 (26)
Joseph S. DiMartino $4,375** none none $445,000 (94)**
David P. Feldman $3,250 none none $ 85,631 (28)
Lynn Martin $3,250 none none $ 26,852 (12)
Eugene McCarthy $3,500 none none $ 29,403 (12)
Daniel Rose $3,250 none none $ 62,006 (22)
Sander Vanocur $3,500 none none $ 62,006 (22)
Anne Wexler $1,181 none none $ 26,329 (17)
Rex Wilder $3,500 none none $ 29,403 (12)
</TABLE>
_____________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $602 for all Board members as a group.
** Estimated amounts for the year ended December 31, 1995.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 31 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System. He is 30 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was manager of the High Performance Fabric Division
of Springs Industries Inc. He is 33 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 60 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Dreyfus Partnership Management, Inc., the Fund's predecessor fund's
Non-Managing General Partner, and the Fund's Trustees and officers, as a
group, owned more than 1%, but less than 5%, of the outstanding shares of
limited partnership interest of the Fund's predecessor fund, Dreyfus
Strategic Growth, L.P., on December 18, 1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated November 6, 1995 with the Fund, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is
approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or the Manager, by vote
cast in person at a meeting called for the purpose of voting 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 voting securities, or, on 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:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President,
Chief Operating Officer and a director; Stephen E. Canter, Vice Chairman
and Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman--Distribution and a director; Philip L. Toia, Vice Chairman--
Operations and Administration and a director; Barbara E. Casey, Vice
President--Dreyfus Retirement Services; Diane M. Coffey, Vice President--
Corporate Communications; Elie M. Genadry, Vice President--Institutional
Sales; William F. Glavin, Jr., Vice President--Corporate Development;
Henry D. Gottmann, Vice President--Retail Sales and Service; Mark N.
Jacobs, Vice President--Legal and Secretary; Daniel C. Maclean, Vice
President and General Counsel; Jeffrey N. Nachman, Vice President--Mutual
Fund Accounting; Andrew S. Wasser, Vice President--Information Services;
Katherine C. Wickham, Vice President--Human Resources; Maurice Bendrihem,
Controller; Elvira Oslapas, Assistant Secretary; and Mandell L. Berman,
Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M.
Smerling and David B. Truman, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the
Fund's Board. The Manager is responsible for investment decisions, and
provides the Fund with portfolio managers who are authorized by the Board
to execute purchases and sales of securities. The Fund's portfolio
managers are Michael Schonberg and Wolodymyr Wronskyj. 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. All purchases and
sales are reported for the Board's review at the meeting subsequent to
such transactions.
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 also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
may deem 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: taxes, interest, loan commitment
fees, dividends and interest paid on securities sold short, brokerage fees
and commissions, if any, fees of Board members who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Manager or any of its affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and distribution to existing shareholders and any
extraordinary expenses. In addition, Class B and Class C shares are
subject to an annual distribution fee and Class A, Class B and Class C
shares are subject to an annual service 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 .75 of 1%
of the value of the Fund's average daily net assets. For the fiscal years
ended December 31, 1992, 1993 and 1994, the management fees payable by the
Fund to the Manager were $396,412, $322,015 and $556,411, respectively.
For the fiscal years 1992 and 1993, these fees were reduced by $34,768 and
$27,775, respectively, as a result of the expense limitation provisions of
the Agreement and undertakings by the Manager, resulting in net management
fees paid of $361,644 in fiscal 1992 and $294,240 in fiscal 1993.
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.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the
Premier Family of Funds, for the funds in the Dreyfus Family of Funds and
for certain other investment companies. In some states, banks or other
financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
For the period from August 24, 1994 through December 31, 1994, the
Distributor retained no payments from sales loads on Fund shares. For the
fiscal years ended December 31, 1992 and 1993 and for the period from
January 1, 1994 through August 23, 1994, Dreyfus Service Corporation, as
the Fund's distributor during such period, retained $119,914, $60,189 and
$1,111,127, respectively, from sales loads on Fund shares.
Sales Loads--Class A. 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 Internal Revenue Code of 1986, as amended (the "Code") although more
than one beneficiary is involved; or a group of accounts established by or
on behalf of the employees of an employer or affiliated employers pursuant
to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k), and 457 of the Code); or
an organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of
Class A shares of the Fund aggregating less than $50,000 subject to the
current schedule of sales charges set forth in the Fund's Prospectus at a
price based upon the net asset value of the Fund's Class A shares* on
December 31, 1994:
NET ASSET VALUE per Share. . . . . . . . . . . . .$39.37
Per Share Sales Charge - 4.5%
of offering price (4.7% of
net asset value per share) . . . . . . . . . . .$ 1.85
Per Share Offering Price to
the Public. . . . . . . . . . . . . . . . . .$41.22
___________________________
* Class A shares purchased by shareholders beneficially owning Fund shares
on December 31, 1995 are subject to a different sales load schedule, as
described under "How to Buy Fund Shares--Class A Shares" in the
Prospectus.
TeleTransfer Privilege. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 P.M., New York time, on any
business day that Dreyfus Transfer, Inc., the Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock Exchange
are open for business will be credited to the shareholder's Fund account
on the next bank business day following such purchase order. Purchase
orders made after 4:00 P.M., New York time, on any business day the
Transfer Agent and the New York Stock Exchange are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use TeleTransfer, payments for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same
bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares--TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"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
Class B and Class C shares, pursuant to which the Fund pays the
Distributor for distributing Class B and Class C shares. 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 the relevant Class of shares may bear for distribution pursuant
to the Distribution Plan without such shareholders' approval 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 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 cast in person at a meeting called for the purpose of voting on the
Distribution Plan. The Distribution Plan was last so approved on July 17,
1995. As to the relevant Class, the Distribution Plan may be terminated
at any time by vote of a majority of the Board members who are not
"interested persons" and have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreements entered into
in connection with the Distribution Plan or by vote of the holders of a
majority of such Class of shares.
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. Under the Shareholder Services Plan, the Distributor may make
payments to certain financial institutions (which may include banks),
securities dealers and other financial industry professionals
(collectively, "Service Agents") in respect of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board members for their review. In addition, the
Shareholder Services Plan provides that it may be amended only with the
approval of the Board members, and by the Board members who are neither
"interested persons" (as defined in the 1940 Act) of the Fund nor have any
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services Plan
is subject to annual approval by such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Shareholder
Services Plan. The Shareholder Services Plan was so approved on July 17,
1995. 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.
Prior Service Plans. As of August 1, 1995, the Fund terminated its
then-existing service plan that had been in effect from August 24, 1994.
That service plan, adopted pursuant to Rule 12b-1 under the 1940 Act,
provided that the Fund (i) reimburse the Distributor for payments to
Service Agents for distributing Fund shares and servicing shareholder
accounts ("Servicing") and (ii) pay the Manager, Dreyfus Service
Corporation and any affiliate of either of them (collectively, "Dreyfus")
for advertising and marketing relating to the Fund and for Servicing, at
an aggregate annual rate of .25% of the value of the Fund's total assets.
Under such plan, for the period August 24, 1994 through December 31, 1994,
the total amount payable by the Fund was $97,988, of which $ 72,106 was
payable to Dreyfus for advertising and marketing the Fund's shares and
Servicing, and $16,734 was reimbursed to the Distributor for payments made
to Service Agents. In addition, the Fund paid $9,148 for preparing,
printing and distributing prospectuses and statements of additional
information and for costs associated with implementing and operating such
plan.
As of August 24, 1994, the Fund terminated its then-existing service
plan, which provided for payments to be made to Dreyfus Service
Corporation, the Fund's distributor prior to such date, for advertising,
marketing and distributing the Fund's shares and for Servicing at an
annual rate of .25% of the value of the Fund's total assets. For the
period from January 1, 1994 through August 23, 1994, the total amount
charged to the Fund under such plan was $106,446, of which $96,631 was
charged for advertising, marketing and distributing Fund shares and
Servicing and $9,815 was payable by the Fund for preparing, printing and
distributing prospectuses and statements of additional information and
operating the plan. Dreyfus Service Corporation paid $11,724 of this
amount to Service Agents.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt if the Transfer Agent receives the
redemption request in proper form. Redemption proceeds ($1,000 minimum)
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or
Shareholder Services Form, or to a correspondent bank if the investor's
bank is not a member of the Federal Reserve System. Fees ordinarily are
imposed by such bank and usually are borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
TeleTransfer Privilege. Investors should be aware that if they have
also selected the TeleTransfer Privilege, any request for a wire
redemption will be effected as a TeleTransfer transaction through the
Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days
after receipt of the redemption request. See "Purchase of Fund
Shares--TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such as member
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 Board reserves the right to make payments in whole or 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 sold such securities, brokerage charges would be
shareholders.
Suspension of Redemption. 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
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by the Manager. 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 that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds, and for
purposes of calculating CDSC rates and conversion periods, if
any, will be deemed to have been held since the date the shares
being exchanged were initially purchased.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, an investor or the investor's Service Agent
acting on the investor's 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 Fund shareholders automatically,
unless the investor checks the applicable "No" box on the Account
Application, indicating that the investor specifically refuses this
privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, or a
representative of the investor's 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.
Exchanges of Class R shares held by a Retirement Plan may be made
only between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for shares of the fund into which the exchange is
being made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under
a Simplified Employee Pension Plan ("SEP-IRAs") with only one participant,
the minimum initial investment is $750. To exchange shares held in
corporate plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same Class of the funds in the
Dreyfus Family of Funds. To exchange shares held in a personal retirement
plan account, the shares exchanged must have a current value of at least
$100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of the Fund, shares of the
same Class of another fund in the Premier Family of Funds or the Dreyfus
Family of Funds. This Privilege is available only for existing accounts.
With respect to Class R shares held by a Retirement Plan, exchanges may be
made only between the investor's Retirement Plan account in one fund and
such investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of
this Privilege is effective three business days following notification by
the investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are
made in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between
IRA accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
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. The Fund Exchanges services or
the Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan. Class B or Class C shares withdrawn pursuant to the
Automatic Withdrawal Plan will be subject to any applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest on the
payment date their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is 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 by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with
a sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
the shares of other funds that impose a CDSC and the applicable
CDSC, if any, will be imposed upon redemption of such shares.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
also are available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum or subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is ordinarily $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Portfolio securities, including
covered call options written by the Fund, are valued at the last sale
price on the securities exchange or national securities market on which
such securities primarily are traded. Securities not listed on an
exchange or national securities market, or securities in which there were
no transactions, are valued at the average of the most recent bid and
asked prices, except in the case of open short positions where the asked
price is used for valuation purposes. Bid price is used when no asked
price is available. Market quotations for foreign securities in foreign
currencies are translated into U.S. dollars at the prevailing rates of
exchange. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as
determined in good faith or in accordance with procedures established by
the Fund's Board. Because of the need to obtain prices as of the close of
trading on various exchanges throughout the world, the calculation of net
asset value does not take place contemporaneously with the determination
of prices of certain of the portfolio securities. Expenses and fees,
including the management fee, are accrued daily and taken into account for
the purpose of determining the net asset value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
It is expected that the Fund will qualify as a "regulated investment
company" under the Code, if 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 securities
gains to the extent that such income and gains are distributed to
shareholders in accordance with applicable provisions of the Code. The
term "regulated investment company" does not imply the supervision of
management or investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of the shares
below the cost of the investment. Such a dividend or distribution would
be a return of investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares
of the Fund for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as long-term capital loss to the extent of the
capital gain distribution received.
Depending upon the composition of the Fund's income, the entire
amount or a portion of the dividends paid by the Fund from net investment
income may qualify for the dividends received deduction allowable to
qualifying U.S. corporate shareholders ("dividends received deduction").
In general, dividend income of the Fund distributed to qualifying
corporate shareholders will be eligible for the dividends received
deduction only to the extent that the Fund's income consists of dividends
paid by U.S. corporations. However, Section 246(c) of the Code provides
that if a qualifying corporate shareholder has disposed of Fund shares not
held for more than 46 days and has received a dividend from net investment
income with respect to such shares, the portion designated by the Fund as
qualifying for the dividends received deduction will not be eligible for
such shareholder's dividends received deduction. In addition, the Code
provides other limitations with respect to the ability of a qualifying
corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.
The Fund may qualify for and may make an election permitted under
Section 853 of the Code so that shareholders may be eligible to claim a
credit or deduction on their Federal income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid or incurred by the Fund to foreign
countries (which taxes relate primarily to investment income). The Fund
may make an election under Section 853, provided that more than 50% of the
value of the Fund's total assets at the close of the taxable year consists
of securities in foreign corporations, and the Fund satisfies the
applicable distribution provisions of the Code. The foreign tax credit
available to shareholders is subject to certain limitations imposed by the
Code.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gains and losses. However, a portion of the
gain or loss realized from the disposition of foreign currencies
(including foreign currency denominated bank deposits) and non-U.S. dollar
denominated securities (including debt instruments and certain forward
contracts and options) may be treated as ordinary income or loss under
Section 988 of the Code. In addition, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276. Finally, all
or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258.
"Conversion transactions" are defined to include certain forward, futures,
option and straddle transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of such contracts
and options as well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value,
resulting in additional gain or loss to such Fund characterized in the
manner described above.
Offsetting positions held by the Fund involving certain foreign
currency forward contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively
traded personal property. The tax treatment of "straddles" is governed by
Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Sections 1256 and 988 of the Code.
As such, all or a portion of any short or long-term capital gain from
certain "straddle" transactions may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of
its engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles"
were governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, to the extent the "straddle" and conversion transaction rules apply
to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and conversion transaction rules,
short-term capital loss on "straddle" positions may be recharacterized as
long-term capital loss, and long-term capital gains may be treated as
short-term capital gains or ordinary income.
If the Fund invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain federal income taxes on the Portfolio. In
addition, gain realized from the sale or other disposition of PFIC
securities may be treated as ordinary income under Section 1291 of the
Code.
PORTFOLIO TRANSACTIONS
The Manager supervises the placement of orders on behalf of the Fund
for the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the best judgment of
the Manager and in a manner deemed fair and reasonable to investors. The
primary consideration is prompt execution of orders at the most favorable
net price. Subject to this consideration, the brokers selected will
include those that supplement the Manager's research facilities with
statistical data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of services
required to be performed by the Manager and the fee of the Manager is not
reduced as a consequence of the receipt of such supplemental information.
Such information may be useful to the Manager in serving both the Fund and
other funds which it manages and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to
the Manager in carrying out its obligation to the Fund. Brokers also will
be selected because of their ability to handle special executions such as
are involved in large block trades or broad distributions, provided the
primary consideration is met. Large block trades may, in certain cases,
result from two or more funds managed by the Manager being engaged
simultaneously in the purchase or sale of the same security. Certain of
the Fund's transactions in securities of foreign issuers may not benefit
from the negotiated commission rates available to the Fund for
transactions in securities of domestic issuers. Foreign exchange
transactions are made with banks or institutions in the interbank market
at prices reflecting a mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year, as well as within a
year. High turnover rates are likely to result in comparatively greater
brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by the Manager based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services. In connection with its
portfolio securities transactions for the fiscal years ended December 31,
1992, 1993 and 1994 the Fund paid total brokerage commissions of $279,216,
$293,548 and $529,184, respectively. These amounts do not include gross
spreads and concessions in connection with principal transactions which,
where determinable, totalled $287,308, $628,917 and $74,132 for the fiscal
years ended December 31, 1992, 1993 and 1994, respectively. None of the
aforementioned amounts was paid to the Distributor.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The average annual total returns for Class A for the 1, 5 and 8.263
year periods ended June 30, 1995 was -12.40%, 4.83% and 11.36%,
respectively. Average annual total return is calculated by determining
the ending redeemable value of an investment purchased at maximum offering
price 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 assume 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.
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 (maximum
offering price in the case of Class A) 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 load with respect
to Class A shares or any applicable CDSC with respect to Class B shares,
which, if reflected, would reduce the performance quoted. The total
return for Class A for the period March 27, 1987 (commencement of
operations) through June 30, 1995, based on maximum offering price per
share, was 143.35%. Based on net asset value per share, the total return
for Class A was 154.87% for this period.
Class B, Class C and Class R shares had not been offered as of the
date of the financials and, therefore, no performance data is provided for
Class B, Class C and Class R.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
Effective January 1, 1996 the Fund began operating as a Massachusetts
business trust.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian of the Fund's investments. Dreyfus Transfer, Inc., a
wholly-owned subsidiary of the Manager, is located at One American Express
Plaza, Providence, Rhode Island 02903, and serves as 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 during the month, and is reimbursed for certain out-of-pocket
expenses. Neither the Transfer Agent nor The Bank of New York nor Dreyfus
Transfer, Inc. has any part in determining the investment policies of the
Fund or which securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, 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, have been selected as auditors of the Fund.
APPENDIX
Description of Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Services, Inc. ("Moody's") ratings:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
S&P's letter ratings may be modified by the addition of a plus (+) or
a minus (-) sign designation, which is used to show relative standing
within the major rating categories, except in the AAA (Prime Grade)
category.
Commercial Paper 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.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and, therefore,
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS--21.7% SHARES VALUE
------------- -------------
<S> <C> <C>
CONSUMER DURABLES--2.6% Cavalier Homes 21,700 $ 235,987
Chrysler............................... 10,000 490,000
General Motors......................... 20,000 845,000
Leggett & Platt........................ 25,000 875,000
Shaw Industries........................ 10,000 148,750
-------------
2,594,737
-------------
CONSUMER
NON-DURABLES--1.3% Chic by H.I.S.......................... (a) 25,000 237,500
Reebok International................... 26,000 1,027,000
-------------
1,264,500
-------------
CONSUMER SERVICES--1.7% Cedar Fair, L.P 50,000 1,475,000
Renaissance Communications............. 7,500 208,125
-------------
1,683,125
-------------
ENERGY--.6% Camco International 33,000 622,875
-------------
FINANCE--4.2% Allied Group 15,000 371,250
First Colony........................... 80,000 1,790,000
FirstFed Michigan...................... 20,000 410,000
Frontier Insurance Group............... 30,000 656,250
Salomon................................ 10,000 375,000
20th Century Industries................ 50,000 525,000
-------------
4,127,500
-------------
HEALTH CARE--2.3% Bard (C.R.) 10,000 270,000
McKesson............................... 10,000 326,250
National Health Laboratories Holdings... 10,000 132,500
Physician Corp. of America........... (a) 60,000 1,230,000
Unilab............................... (a) 80,000 320,000
-------------
2,278,750
-------------
PROCESS INDUSTRIES--1.6% Longview Fibre 45,000 708,750
Temple-Inland.......................... 20,000 902,500
-------------
1,611,250
-------------
PRODUCER
MANUFACTURING--1.6% Mark IV Industries..................... 50,000 987,500
Pentair................................ 14,000 591,500
-------------
1,579,000
-------------
RETAIL TRADE--1.5% Fay's 15,000 97,500
Federated Department Stores.......... (a) 25,000 481,250
Government Technology Services....... (a) 55,000 591,250
House of Fabrics..................... (a) 100,000 112,500
Perry Drug Stores.................... (a) 13,000 143,000
-------------
1,425,500
-------------
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
TECHNOLOGY--1.3% JetForm (a) 10,000 $ 72,500
Microsoft............................ (a) 20,000 1,222,500
-------------
1,295,000
-------------
TRANSPORTATION--3.0% American President Cos 40,000 1,010,000
CSX.................................... 15,000 1,044,375
Overseas Shipholding Group............. 40,000 920,000
-------------
2,974,375
-------------
TOTAL COMMON STOCKS
(cost $22,100,951)................... $21,456,612
=============
PRINCIPAL
SHORT-TERM INVESTMENTS--74.4% AMOUNT
-------------
U.S. TREASURY BILLS: 4.75%, 1/5/95 (b) $15,774,000 $15,765,668
4.98%, 1/12/95......................... 7,667,000 7,655,334
5.01%, 1/19/95....................... (b) 11,063,000 11,035,273
5.15%, 2/2/95.......................... 2,342,000 2,331,279
5.18%, 3/2/95.......................... 169,000 167,541
5.37%, 3/16/95....................... (c) 36,028,000 35,630,311
5.35%, 3/23/95......................... 1,040,000 1,027,481
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $73,612,887)................... $73,612,887
=============
TOTAL INVESTMENTS (cost $95,713,838)........................................ 96.1% $95,069,499
====== =============
CASH AND RECEIVABLES (NET) ......................................... 3.9% $ 3,824,210
====== =============
NET ASSETS.................................................................. 100.0% $98,893,709
====== =============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions.
(c) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES DECEMBER 31,1994
MARKET VALUE UNREALIZED
NUMBER OF COVERED APPRECIATION
FINANCIAL FUTURES SOLD SHORT CONTRACTS BY CONTRACTS EXPIRATION AT 12/31/94
- -------------------------------- ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 108 ($24,912,900) March '95 $86,591
==========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF SECURITIES SOLD SHORT DECEMBER 31, 1994
COMMON STOCKS SHARES VALUE
- ----------------- ------- -------------
<S> <C> <C>
Advanced Micro Devices...................................................... 25,000 $ 621,875
American Express............................................................ 5,000 147,500
Applied Materials........................................................... 20,000 845,000
Caremark International...................................................... 40,000 685,000
Caterpillar................................................................. 5,000 275,625
Cerner...................................................................... 2,000 88,250
Circus Circus Enterprises................................................... 10,000 232,500
Cobra Golf.................................................................. 30,000 1,072,500
Columbia/HCA Healthcare..................................................... 20,000 730,000
Compaq Computer............................................................. 5,000 197,500
Computer Associates International........................................... 5,000 242,500
Conrail..................................................................... 5,000 252,500
Cracker Barrel Old Country Store............................................ 40,000 740,000
Dresser Industries.......................................................... 10,000 188,750
EMC......................................................................... 10,000 216,250
FHP International........................................................... 5,000 128,750
FMC......................................................................... 5,000 288,750
Hasbro...................................................................... 5,000 146,250
HEALTHSOUTH Rehabilitation.................................................. 5,000 185,000
Illinois Tool Works......................................................... 5,000 218,750
Mentor Graphics............................................................. 10,000 152,500
Microsoft................................................................... 2,500 152,812
Molten Metal Technology..................................................... 12,500 203,125
Motorola.................................................................... 5,000 289,375
National Gaming............................................................. 2,000 24,000
Oracle Systems.............................................................. 2,000 88,250
Oxford Health Plans......................................................... 20,000 1,585,000
PacifiCare Health Systems, Cl. B............................................ 10,000 660,000
Quantum Health Resources.................................................... 15,000 431,250
Schwab (Charles)............................................................ 10,000 348,750
Scientific-Atlanta.......................................................... 5,000 105,000
Sequent Computer Systems.................................................... 5,000 98,750
Southland................................................................... 50,000 225,000
Sports & Recreation......................................................... 22,500 579,375
Symbol Technologies......................................................... 5,000 154,375
U.S. HealthCare............................................................. 5,000 206,250
United Healthcare........................................................... 5,000 225,625
Varity...................................................................... 10,000 362,500
-------------
TOTAL SECURITES SOLD SHORT
(proceeds $12,747,227).................................................. $13,395,187
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $95,713,838)_see statement...................................... $ 95,069,499
Cash.................................................................... 74,492
Receivable from brokers for proceeds on securities sold short........... 12,747,227
Receivable for investment securities sold............................... 6,183,666
Dividends and interest receivable....................................... 93,328
Receivable for futures variation margin_Note 4(a)....................... 86,591
Receivable for shares of Partnership Interest sold...................... 19,399
Prepaid expenses........................................................ 25,124
--------------
114,299,326
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 63,818
Due to Distributor...................................................... 21,273
Securities sold short, at value
(proceeds $12,747,227)_see statement.................................. 13,395,187
Payable for investment securities purchased............................. 1,518,890
Payable for shares of Partnership Interest redeemed..................... 254,298
Loan commitment fees and interest payable............................... 6,086
Accrued expenses........................................................ 146,065 15,405,617
------------- --------------
NET ASSETS ................................................................ $ 98,893,709
==============
REPRESENTED BY:
Paid-in capital......................................................... $ 62,180,631
Accumulated undistributed investment income_net......................... 14,195,798
Accumulated undistributed net realized gain on investments and
foreign currency transactions......................................... 23,722,988
Accumulated net unrealized depreciation on investments and securities sold
short (including $86,591 net unrealized appreciation on financial
futures)_Note 4(b).................................................... (1,205,708)
--------------
NET ASSETS at value applicable to 2,512,129 outstanding shares of
Partnership Interest, equivalent to $39.37 per share
(unlimited number of Limited Partners).................................. $ 98,893,709
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Interest.............................................................. $ 2,470,764
Cash dividends (net of $7,806 foreign taxes withheld at source)....... 342,296
------------
TOTAL INCOME...................................................... $ 2,813,060
EXPENSES:
Management fee_Note 3(a).............................................. 556,411
Investor servicing costs_Note 3(b).................................... 290,005
Professional fees..................................................... 81,352
Dividends on securities sold short.................................... 79,317
Prospectus and investors' reports_Note 3(b)........................... 66,182
Loan commitment fees and interest expense_Note 2...................... 37,318
Custodian fees........................................................ 35,708
Managing General Partners' fees and expenses_Note 3(c)................ 26,428
Registration fees..................................................... 25,614
Miscellaneous......................................................... 1,914
------------
TOTAL EXPENSES.................................................... 1,200,249
------------
INVESTMENT INCOME--NET............................................ 1,612,811
------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments_Note 4(a):
Long transactions (including options transactions and
foreign currency transactions).................................... $(2,020,684)
Short sale transactions............................................... 1,126,186
Net realized (loss) on forward currency exchange contracts_Note 4(a):
Long transactions..................................................... (546,537)
Short transactions.................................................... (145,207)
Net realized gain on financial futures_Note 4(a):
Long transactions..................................................... 673,555
Short transactions.................................................... 2,525,630
------------
NET REALIZED GAIN..................................................... 1,612,943
Net unrealized (depreciation) on investments (including options transactions), foreign
currency transactions, forward currency exchange contracts and securities sold
short (including $122,841 net unrealized appreciation on financial futures) (3,309,863)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (1,696,920)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (84,109)
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................... $ 338,723 $ 1,612,811
Net realized gain on investments........................................ 5,737,378 1,612,943
Net unrealized appreciation (depreciation) on investments for the year.. 3,373,357 (3,309,863)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 9,449,458 (84,109)
------------- -------------
PARTNERSHIP INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 3,226,194 72,386,547
Cost of shares redeemed................................................. (12,043,177) (18,806,148)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM PARTNERSHIP INTEREST TRANSACTIONS (8,816,983) 53,580,399
------------- -------------
TOTAL INCREASE IN NET ASSETS...................................... 632,475 53,496,290
NET ASSETS:
Beginning of year....................................................... 44,764,944 45,397,419
------------- -------------
End of year (including undistributed investment income_net:
$12,582,987 in 1993 and $14,195,798 in 1994).......................... $45,397,419 $98,893,709
============ =============
SHARES SHARES
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 93,622 1,799,462
Shares redeemed......................................................... (367,091) (475,280)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (273,469) 1,324,182
============ =============
</TABLE>
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated January 2, 1996.
See notes to financial statements.
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. Osprey Funds
Management, a Maryland Limited Partnership ("Osprey") serves as the Fund's
sub-investment adviser. Effective January 1, 1995, Osprey, will no longer
serve as the Fund's sub-investment adviser. As of such date, the Manager will
assume the day-to-day management of the Fund's investments. Dreyfus Service
Corporation, until August 24, 1994, acted as the distributor of the Fund's
shares. As of December 31, 1994, Dreyfus Partnership Management, Inc. held
30,207 shares. Dreyfus Service Corporation and Dreyfus Partnership
Management, Inc. are wholly-owned subsidiaries of the Manager. Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Managing General
Partners. Short-term investments are carried at amortized cost, which
approximates value. Investments denominated in foreign currencies are
translated to U.S. dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized on securities transactions, the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities at fiscal year end,
resulting from changes in exchange rates.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) DISTRIBUTIONS TO INVESTORS: Distributions from investment income-net
and distributions from net realized capital gains may be allocated and paid
annually after the end of the year in which earned.
(E) INCOME TAXES: As a partnership, the Fund itself will not be subject
to Federal, State and City income taxes. Instead, each investor will be
allocated, and subject to tax on, his distributive share of the Fund's
income. Therefore, no income tax provision is required.
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
Effective December 1, 1994, in accordance with an agreement with a bank,
the Fund may borrow up to $25 million under a short-term unsecured line of
credit. In connection therewith, the Fund has agreed to pay commitment fees
at an annual rate of .125 of 1% on the total line of credit. Prior to
December 1, 1994, in accordance with an agreement with a bank, the Fund could
borrow up to $10 million under a short-term unsecured line of credit.
Interest on borrowings is charged at rates which are related to Federal Funds
rates in effect from time to time.
At December 31, 1994, there were no outstanding borrowings under the line
of credit.
The average daily amount of short-term debt outstanding during the year
ended December 31, 1994 was approximately $556,000, with a related weighted
average annualized interest rate of 6.22%. The maximum amount borrowed at any
time during the year ended December 31, 1994 was $10 million.
NOTE 3--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Manager and
Osprey have agreed that if in any full year the Fund's aggregate expenses,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also contemplates loan
commitment fees and dividends and interest accrued on securities sold short),
and extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund, the Manager and Osprey will bear the excess
expense in proportion to their management fee and sub-investment advisory fee
to the extent required by state law. The most stringent state expense
limitation applicable to the Fund presently requires reimbursement of expenses
in any full year that such expenses (exclusive of distribution expenses and
certain expenses as described above) exceed 2 1/2% of the first $30 million,
2% of the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations. There was no expense reimbursement for the year ended
December 31, 1994.
Pursuant to a Sub-Investment Advisory Agreement between the Manager and
Osprey, the sub-investment advisory fee is payable monthly by the Manager and
computed on the average daily value of the Fund's net assets at the following
annual rates:
AVERAGE NET ASSETS OSPREY
----------------------- --------------
0 up to $25 million..................... .15 of 1%
$25 up to $75 million................... .25 of 1%
$75 up to $200 million.................. .30 of 1%
$200 up to $300 million................. .35 of 1%
in excess of $300 million............... .375 of 1%
The Distributor retained $1,111,127 during the year ended December 31,
1994 from commissions earned on sales of Fund shares.
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) On August 3, 1994, Fund investors approved a revised Service Plan
(the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the Distributor for
payments to third parties for distributing the Fund's shares and servicing
investor accounts and (b) pays the Manager, Dreyfus Service Corporation or
any affiliate (collectively "Dreyfus") for advertising and marketing relating
to the Fund and servicing investor accounts, at an annual rate of .25 of 1%
of the value of the Fund's average daily net assets. Each of the Distributor
and Dreyfus may pay Service Agents (a securities dealer, financial
institution or other industry professional) a fee in respect of the Fund's
shares owned by investors with whom the Service Agent has a servicing
relationship or for whom the Servicing Agent is the dealer or holder of
record. Each of the Distributor and Dreyfus determine the amounts to be paid
to Service Agents to which it will make payments and the basis on which such
payments are made. The Plan also separately provides for the Fund to bear the
costs of preparing, printing and distributing certain of the Fund's
prospectuses and statements of additional information and costs associated
with implementing and operating the Plan, not to exceed the greater of
$100,000 or .005 of 1% of the Fund's average net assets for any full year.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay the Dreyfus Service Corporation at an annual rate
of .25 of 1% of the value of the Fund's average daily net assets, for costs
and expenses in connection with advertising, marketing and distributing the
Fund's shares and for servicing investor accounts. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's shares owned by clients of the Service Agent. The Prior Service
Plan also separately provides for the Fund to bear the costs of preparing,
printing and distributing certain of the Fund's prospectuses and statements
of additional information and costs associated with implementing and
operating the Plan, not to exceed the greater of $100,000 or .005 of 1% of
the Fund's average daily net assets for any full year.
During the year ended December 31, 1994, $97,988 was charged to the Fund
pursuant to the Plan and $106,446 was charged pursuant to the prior Service
Plan.
(C) Prior to August 24, 1994, certain officers and Managing General
Partners of the Fund were "affiliated persons," as defined in the Act, of the
Investment Adviser and/or Dreyfus Service Corporation. Each Managing General
Partner who is not an "affiliated person" receives an annual fee of $2,500
and an attendance fee of $250 per meeting.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities, forward currency exchange contracts and options transactions,
during the year ended December 31, 1994:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------- -----------------
<S> <C> <C>
Long transactions.................... $ 73,306,252 $ 70,783,831
Short sale transactions.............. 68,803,950 81,124,174
----------------- -----------------
TOTAL.............................. $142,110,202 $151,908,005
================ ===============
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
security. The Fund would realize a gain if the price of the security declines
between those dates. Until the Fund replaces the borrowed security, the Fund
will maintain daily, a segregated account with a broker and custodian, of
cash and/or U.S. Government securities sufficient to cover its short
position. Securities sold short at December 31, 1994 and their related market
values and proceeds are set forth in the Statement of Securities Sold Short.
When executing forward currency exchange contracts, the Fund is obligated
to buy or sell a foreign currency at a specified rate on a certain date in
the future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. At December 31, 1994, there were no forward
currency exchange contracts outstanding.
In addition, the following table summarizes the Fund's call/put options
written transactions for the year ended December 31, 1994:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
----------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
------------ -------------- ------------ ----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding December 31, 1993..... 11 $ 322,414
Contracts written........................... 39,086 680,392
------------ --------------
39,097 1,002,806
------------ --------------
Contracts Terminated:
Closed.................................... 14,435 677,761 $414,849 $262,912
Expired................................... 24,662 325,045 ---- 325,045
------------ -------------- ------------ -----------
Total contracts terminated............ 39,097 1,002,806 $414,849 $587,957
------------ -------------- ========== ============
Contracts outstanding December 31, 1994..... --- $ ----
============ ============
</TABLE>
As a writer of call options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes
in the price of the financial instrument underlying the option. Generally,
the Fund would incur a gain, to the extent of the premium, if the price of
the underlying financial instrument decreases between the date the option is
written and the date on which the option is terminated. Generally, the Fund
would realize a loss, if the price of the financial instrument increases
between those dates. At December 31, 1994, there were no call options written
outstanding.
As a writer of put options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. Generally, the Fund would incur a
gain, to the extent of the premium, if the price of the underlying financial
instrument increases between the date the option is written and the date on
which the option is terminated. Generally, the Fund would realize a loss, if
the price of the financial instrument declines between those dates. At
December 31, 1994, there were no put options written outstanding.
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund is engaged in trading restricted options, which are not exchange
traded. The Fund's exposure to credit risk associated with counter party
nonperformance on these investments is typically limited to the unrealized
gains inherent in such investments that are recognized in the statement of
assets and liabilities. At December 31, 1994, there were no restricted
options outstanding.
The Fund is engaged in trading financial futures contracts. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments (see the Statement of Financial Futures). Investments
in financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in the market value of the contract at the close of
each day's trading. Accordingly, variation margin payments are made or
received to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments
require initial margin deposits with a custodian, which consist of cash or
cash equivalents, up to approximately 10% of the contract amount. The amount
of these deposits is determined by the exchange or Board of Trade on which
the contract is traded and is subject to change.
(B) At December 31, 1994, accumulated net unrealized depreciation on
investments was $1,205,708, consisting of $1,427,892 gross unrealized
appreciation and $2,633,600 gross unrealized depreciation.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS STRATEGIC GROWTH, L.P.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
INVESTORS AND MANAGING GENERAL PARTNERS
DREYFUS STRATEGIC GROWTH, L.P.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Strategic Growth, L.P., including the statements of investments,
financial futures and securities sold short, as of December 31, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Strategic Growth, L.P. at December 31, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Logo Signature)
(Ernst & Young LLP)
New York, New York
February 2, 1995
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF INVESTMENTS JUNE 30, 1995 (UNAUDITED)
COMMON STOCKS-52.7% SHARES VALUE
------- -----
<S> <C> <C>
ENERGY-5.0% Baker Hughes........................... 50,000 $ 1,025,000
Camco International.................... 33,000 771,375
Rowan Cos.............................. (a) 225,000 1,828,125
-----------
3,624,500
-----------
FINANCE-17.3% Allied Group........................... 15,000 427,500
CMAC Investment........................ 30,000 1,301,250
CNA Financial.......................... (a) 10,600 915,575
Commerzbank AG......................... 8,500 2,027,862
Deutsche Bank AG....................... 40,000 1,941,663
Dresdner Bank AG....................... 70,000 2,011,319
First Colony........................... 80,000 1,920,000
MGIC Investment........................ 25,000 1,171,875
20th Century Industries................ (a) 60,000 750,000
-----------
12,467,044
-----------
HEALTH CARE-1.3% Bard (C.R.)............................ 30,000 900,000
----------
PRODUCER
MANUFACTURING-4.7% Baan, N.V.............................. 7,000 216,125
Pentair................................ 14,000 609,000
Trafalgar House PLC.................... 3,600,000 2,580,660
----------
3,405,785
----------
RETAIL TRADE-3.3% Circle K................................ 87,000 1,468,125
Fay's.................................. 15,000 114,375
Federated Department Stores............ (a) 25,000 643,750
House of Fabrics....................... (a) 100,000 112,500
-----------
2,338,750
-----------
TECHNOLOGY-7.1%. JetForm................................ (a) 50,000 812,500
Palmer Wireless........................ 100,000 1,637,500
Transaction Systems Architects, Cl. A.. 20,000 515,000
Unisys................................. (a) 200,000 2,175,000
-----------
5,140,000
-----------
TRANSPORTATION-11.9% Alaska Air Group........................ (a) 175,000 3,215,625
Veba AG................................ 13,500 5,324,772
-----------
8,540,397
-----------
UTILITIES-2.1% Comsat, Ser. I......................... 75,000 1,471,875
-----------
TOTAL COMMON STOCKS
(cost $ 34,337,495).................. $37,888,351
===========
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1995 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-49.4% AMOUNT VALUE
_______ ______
U.S. TREASURY BILLS: 5.56%, 7/6/95.......................... $ 3,519,000 $ 3,516,431
5.58%, 7/20/95......................... 257,000 256,301
5.58%, 7/27/95......................... 833,000 829,877
5.55%, 8/3/95.......................... (b) 13,524,000 13,459,085
5.36%, 8/17/95......................... 6,547,000 6,500,647
5.33%, 8/24/95......................... 1,535,000 1,522,582
5.53%, 8/31/95......................... (b,c) 9,568,000 9,480,261
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $35,559,582) $35,565,184
===========
TOTAL INVESTMENTS (cost $69,897,077).................................. 102.1% $73,453,535
===========
LIABILITIES, LESS CASH AND RECEIVABLES................................. (2.1%) $ (1,531,029)
===========
NET ASSETS.................................................................. 100.0% $71,922,506
===========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions.
(c) Partially held by the custodian in a segregated account as
collateral for open financial futures positions.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES JUNE 30, 1995 (UNAUDITED)
MARKET VALUE UNREALIZED
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES SOLD SHORT CONTRACTS BY CONTRACTS EXPIRATION AT 6/30/95
-------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Standard & Poor's 500........................ 150 $(41,036,250) September `95 $(407,425)
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF SECURITIES SOLD SHORT JUNE 30, 1995 (UNAUDITED)
COMMON STOCKS SHARES VALUE
------- ------
<S> <C> <C>
Circuit City Stores......................................................... 10,000 $ 316,250
Hasbro...................................................................... 5,000 158,750
Illinois Tool Works......................................................... 5,000 275,000
Lam Research................................................................ 10,000 640,000
Manpower.................................................................... 20,000 510,000
Mattel...................................................................... 12,500 325,000
Mentor Graphics............................................................. 10,000 172,500
Micro Warehouse............................................................. 10,000 460,000
Molten Metal Technology..................................................... 12,500 290,625
Novellus Systems............................................................ 10,000 677,500
Oracle...................................................................... 3,000 115,875
PacifiCare Health Systems, Cl. B............................................ 10,000 510,000
Scientific-Atlanta.......................................................... 5,000 110,000
Sensormatic Electronics..................................................... 20,000 710,000
Sun Microsystems............................................................ 10,000 485,000
Symbol Technologies......................................................... 5,000 191,875
---------
TOTAL SECURITES SOLD SHORT
(proceeds $4,760,112)................................................... $5,948,375
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $69,897,077)-see statement...................................... $73,453,535
Cash.................................................................... 83,874
Receivable for investment securities sold............................... 12,800,216
Receivable from brokers for proceeds on securities sold short........... 4,760,112
Receivable for futures variation margin-Note 4(a)....................... 97,500
Dividends and interest receivable....................................... 3,922
Receivable for shares of Partnership Interest sold...................... 2,522
Prepaid expenses........................................................ 31,711
-------
91,233,392
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 62,287
Due to Distributor...................................................... 3,565
Bank loans payable-Note 2............................................... 6,500,000
Payable for shares of Partnership Interest redeemed..................... 6,285,798
Securities sold short, at value
(proceeds $4,760,112)-see statement................................... 5,948,375
Payable for investment securities purchased............................. 202,263
Net unrealized (depreciation) on forward currency
exchange contracts-Note 4(a).......................................... 165,065
Loan commitment fees and interest payable............................... 41,615
Accrued expenses........................................................ 101,918 19,310,886
-------- ----------
NET ASSETS.................................................................. $71,922,506
===========
REPRESENTED BY:
Paid-in capital......................................................... $37,725,830
Accumulated undistributed investment income-net......................... 15,596,948
Accumulated undistributed net realized gain on investments and
foreign currency transactions......................................... 16,804,023
Accumulated net unrealized appreciation on investments and securities sold
short [including $(407,425) net unrealized (depreciation) on financial
futures]-Note 4(b).......................................................... 1,795,705
---------
NET ASSETS at value applicable to 1,881,384 outstanding shares of
Partnership Interest, equivalent to $38.23 per share
(unlimited number of Limited Partners)...................................... $71,922,506
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 1,974,178
Cash dividends........................................................ 165,301
-----------
TOTAL INCOME...................................................... $ 2,139,479
EXPENSES:
Management fee-Note 3(a).............................................. 330,755
Investor servicing costs-Note 3(b).................................... 202,368
Interest expense-Note 2............................................... 58,244
Professional fees..................................................... 46,680
Registration fees..................................................... 26,527
Managing General Partners' fees and expenses-Note 3(c)................ 20,046
Loan commitment fees-Note 2........................................... 15,712
Custodian fees........................................................ 14,714
Dividends on securities sold short.................................... 13,600
Prospectus and investors' reports-Note 3(b)........................... 7,615
Miscellaneous......................................................... 2,068
-----------
TOTAL EXPENSES.................................................... 738,329
----------
INVESTMENT INCOME-NET............................................. 1,401,150
----------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 4(a):
Long transactions (including options transactions
and foreign currency transactions)................................ $ (216,103)
Short sale transactions............................................... (149,257)
Net realized (loss) on forward currency exchange contracts-Note 4(a);
Short transactions.................................................... (202,263)
Net realized gain (loss) on financial futures-Note 4(a):
Long transactions..................................................... 73,099
Short transactions.................................................... (6,424,441)
-----------
NET REALIZED (LOSS)................................................... (6,918,965)
Net unrealized appreciation on investments (including options
transactions), foreign currency transactions, forward currency
exchange contracts and securities sold short [including
($494,017) net unrealized (depreciation) on financial futures].............. 3,001,413
----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (3,917,552)
----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(2,516,402)
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1995
1994 (UNAUDITED)
--------- ----------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................. $ 1,612,811 $ 1,401,150
Net realized gain (loss) on investments........................... 1,612,943 (6,918,965)
Net unrealized appreciation (depreciation) on investments for the period (3,309,863) 3,001,413
------- ----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... (84,109) (2,516,402)
------- ----------
PARTNERSHIP INTEREST TRANSACTIONS:
Net proceeds from shares sold..................................... 72,386,547 3,149,457
Cost of shares redeemed........................................... (18,806,148) (27,604,258)
------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM
PARTNERSHIP INTEREST TRANSACTIONS........................... 53,580,399 (24,454,801)
------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 53,496,290 (26,971,203)
NET ASSETS:
Beginning of period............................................... 45,397,419 98,893,709
------- ----------
End of period (including undistributed investment income_net:
$14,195,798 in 1994 and $15,596,948 in 1995).................... $ 98,893,709 $ 71,922,506
============ =============
SHARES SHARES
-------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold....................................................... 1,799,462 80,791
Shares redeemed................................................... (475,280) (711,536)
-------- ----------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING................... 1,324,182 (630,745)
============ =============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GROWTH, L.P.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Partnership Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1995
--------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 (UNAUDITED)
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $29.37 $27.27 $36.19 $30.63 $38.22 $39.37
---- ---- ---- ---- ---- ------
INVESTMENT OPERATIONS:
Investment income-net................. 2.37 2.07 1.38 2.21 .87(1) 2.64
Net realized and unrealized gain
(loss) on investments............... (4.47) 6.85 (6.94) 5.38 .28 (3.78)
---- ---- ---- ---- ---- ------
TOTAL FROM INVESTMENT OPERATIONS.... (2.10) 8.92 (5.56) 7.59 1.15 (1.14)
---- ---- ---- ---- ---- ------
Net asset value, end of period........ $27.27 $36.19 $30.63 $38.22 $39.37 $38.23
===== ===== ===== ====== ====== ======
TOTAL INVESTMENT RETURN(2)................ (7.15%) 32.71% (15.36%) 24.78% 3.01% (2.90%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to
average net assets.................. 1.50%(4) 1.50%(4) 1.50%(4) 1.59%(4) 1.46% .73%(3)
Ratio of interest expense, loan commitment
fees and dividends on securities sold
short to average net assets............... .96% .08% .22% .03% .16% .10%(3)
Ratio of net investment income to
average net assets.................. 1.79% 1.48% .83% .79% 2.17% 1.58%(3)
Decrease reflected in above expense ratios
due to undertaking by the Manager... -- -- -- .06% -- --
Portfolio Turnover Rate............... 188.16% 95.49% 209.38% 301.07% 269.41% 154.14%(3)
Net Assets, end of period (000's Omitted) $60,383 $61,063 $44,765 $45,397 $98,894 $71,923
(1) Based on an average of shares outstanding at each month end.
(2) Exclusive of sales load.
(3) Not annualized.
(4) Net of expenses reimbursed.
See notes to financial statements.
</TABLE>
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. Premier
Mutual Fund Services, Inc. (the "Distributor") acts as the Fund's
distributor. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which in
turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company
of which is Boston Institutional Group, Inc. As of June 30, 1995, Dreyfus
Partnership Management Inc. held 27,634 shares. Dreyfus Service Corporation
and Dreyfus Partnership Management, Inc. are wholly-owned subsidiaries of the
Manager. The Manager is a direct subsidiary of Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Managing General
Partners. Investments denominated in foreign currencies are translated to
U.S. dollars at the prevailing rates of exchange.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from change in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) DISTRIBUTIONS TO INVESTORS: Distributions from investment income-net
and distributions from net realized capital gains may be allocated and paid
annually after the end of the year in which earned.
(E) INCOME TAXES: As a partnership, the Fund itself will not be subject
to Federal, State and City
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
income taxes. Instead, each investor will be allocated, and subject to tax
on, his distributive share of the Fund's income. Therefore, no income tax
provision is required.
NOTE 2-BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
$25 million under a short-term unsecured line of credit. In connection
therewith, the Fund has agreed to pay commitment fees at an annual rate of
.125 of 1% on the total line of credit. Interest on borrowings is charged at
rates which are related to Federal Funds rates in effect from time to time.
Outstanding borrowings on June 30, 1995 under the line of credit, amounted to
$6.5 million, at an annualized interest rate of 6.96%.
The average daily amount of short-term debt outstanding during the six
months ended June 30, 1995 was approximately $1,652,000, with a related
weighted average annualized interest rate of 7.11%. The maximum amount
borrowed at any time during the six months ended June 30, 1995 was $13.5
million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings
(which, in the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates loan commitment fees and dividends and interest accrued on
securities sold short), and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from payments to be made to the Manager, or the Manager will bear the
amount of such excess to the extent required by state law. The most stringent
state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full year that such expenses (exclusive of
distribution expenses and certain expenses as described above) exceed 2 1/2%
of the first $30 million, 2% of the next $70 million and 1 1/2% of the excess
over $100 million of the average value of the Fund's net assets in accordance
with California "blue sky" regulations. There was no expense reimbursement
for the six months ended June 30, 1995.
Dreyfus Service Corporation retained $7,420 during the six months ended
June 30, 1995 from commissions earned on sales of Fund shares.
(B) Under the Service Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund
(a) reimburses the Distributor for payments to third parties for distributing
the Fund's shares and servicing investor accounts and (b) pays the Manager,
Dreyfus Service Corporation or any affiliate (collectively "Dreyfus") for
advertising and marketing relating to the Fund and servicing investor
accounts, at an annual rate of .25 of 1% of the value of the Fund's average
daily net assets. Each of the Distributor and Dreyfus may pay Service Agents
(a securities dealer, financial institution or other industry professional) a
fee in respect of the Fund's shares owned by investors with whom the Service
Agent has a servicing relationship or for whom the Servicing Agent is the
dealer or holder of record. Each of the Distributor and Dreyfus determine the
amounts, if any, to be paid to Service Agents under the plan and the basis on
which such payments are made. The Plan also separately provides for the Fund
to bear the costs of preparing, printing and distributing certain of the
Fund's prospectuses and statements of additional
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average net
assets for any full year. During the six months ended June 30, 1995, $115,210
was charged to the Fund pursuant to the Plan.
(C) Each Managing General Partner who is not an "affiliated person" as
defined in the Act receives from the Fund an annual fee of $2,500 and an
attendance fee of $250 per meeting. The Chairman of the Board receives an
additional 25% of such compensation.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities, forward currency exchange contracts and options transactions,
during the six months ended June 30, 1995:
PURCHASES SALES
--------- -------
Long transactions................. $48,262,282 $36,145,939
Short sale transactions........... 14,572,867 6,436,494
--------- -------
TOTAL............................. $62,835,149 $42,582,433
=========== ===========
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at current market value. The
Fund would incur a loss if the price of the security increases between the
date of the short sale and the date on which the Fund replaces the borrowed
security. The Fund would realize a gain if the price of the security declines
between those dates. Until the Fund replaces the borrowed security, the Fund
will maintain daily, a segregated account with a broker and custodian, of
cash and/or U.S. Government securities sufficient to cover its short
position. Securities sold short at June 30, 1995 and their related market
values and proceeds are set forth in the Statement of Securities Sold Short.
<TABLE>
<CAPTION>
U.S. DOLLAR
VALUE UNREALIZED
PROCEEDS 6/30/95 (DEPRECIATION)
FORWARD CURRENCY SALE CONTRACTS: -------- -------- ------------
<S> <C> <C> <C>
Swiss Franc, expiring 8/25/95 & 9/13/95................. $11,321,075 $11,445,211 $ (124,136)
British Pound, expiring 8/8/95.......................... 2,917,193 2,958,122 (40,929)
FORWARD CURRENCY SALE CONTRACTS: -------- -------- --------
TOTAL................................................. $14,238,268 $14,403,333 $ (165,065)
FORWARD CURRENCY SALE CONTRACTS: ========== =========== ==========
</TABLE>
When executing forward currency exchange contracts, the Fund
is obligated to buy or sell a foreign currency at a specified
rate on a certain date in the future. With respect to sales of forward
currency exchange contracts, the Fund would incur a loss if the value of the
contract increases between the date the forward contract is opened and the
date the forward contract is closed. The Fund realizes a gain if the value of
the contract decreases between those dates. With respect to purchases of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract decreases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract increases between those dates. The Fund is also exposed
to credit risk associated with counter party nonperformance on these forward
currency exchange contracts which is typically limited to the unrealized
gains on such contracts that are recognized in the statement of assets and
liabilities.
DREYFUS STRATEGIC GROWTH, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Fund is engaged in trading financial futures contracts. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments (see the Statement of Financial Futures). Investments
in financial futures require the Fund to "mark to market" on a daily basis,
which reflects the change in the market value of the contract at the close of
each day's trading. Accordingly, variation margin payments are made or
received to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments
require initial margin deposits with a custodian, which consist of cash or
cash equivalents, up to approximately 10% of the contract amount. The amount
of these deposits is determined by the exchange or Board of Trade on which
the contract is traded and is subject to change. Contracts open at June 30,
1995 and their related unrealized market depreciation are set forth in the
Statement of Financial Futures.
(B) At June 30, 1995, accumulated net unrealized appreciation on
investments was $1,795,705, consisting of $4,150,943 gross unrealized
appreciation and $2,355,238 gross unrealized depreciation.
At June 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
