Registration No. 811-5270
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_/
Pre-Effective Amendment No. _____ /_/
Post-Effective Amendment No. 35 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 36
THE DREYFUS/LAUREL FUNDS, INC.
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(Exact Name of Registrant as Specified in Charter)
200 Park Avenue - 55th floor
New York, New York 10166
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(Address of Principal Executive Office) (ZIP Code)
Registrant's Telephone Number, including area code: (800) 225-5267
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John E. Pelletier
Secretary
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue - 55th floor
New York, New York 10166
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
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As soon as possible after this Post-Effective Amendment becomes effective.
It is proposed that this filing will become effective (check
appropriate box):
/X/ Immediately upon filing /_/ on (date) pursuant to paragraph
pursuant to paragraph (b) (b)
/_/ 60 days after filing pursuant /_/ on (date) pursuant to
to paragraph (a)(1) paragraph (a)(1)
/_/ 75 days after filing pursuant /_/ on (date) pursuant to
to paragraph (a)(2) paragraph (a)(2)
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940, accordingly no fee is payable herewith. A
Rule 24f-2 Notice for the Registrant's most recent fiscal year ended
October 31, 1994 was filed with the Commission on December 30, 1994.
Dreyfus/Laurel Cross-Reference Sheet Pursuant to Rule 495(a)
----------------------------------------------------
Items in
Part A of
Form N-1A Caption Prospectus Caption
------ ------- ------------------
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The Fund;
Distribution and Service
Plans; How to Exchange
Your Investment From One
Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
Items in
Part B of Statement of Additional
Form N-1A Information Caption
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information
History
13. Investment Objectives and Investment Information
Policies and Risk Factors;
Investment Limitations
14. Management of the Fund Directors and Officers
15. Control Persons and Controlling Shareholders;
Principal Holders of Principal Shareholders;
Securities Directors and Officers;
Investment Management and
Other Services
16. Investment Advisory and Investment Management and
Other Services Other Services
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other See Prospectus -- "Cover
Securities Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Funds; The Dreyfus/Laurel
Funds, Inc."
19. Purchase, Redemption and Investment Management and
Pricing of Securities Other Services; Net Asset
Being Offered Value
20. Tax Status Dividends, Other
Distributions and Taxes
21. Underwriters Investment Management and
Other Services
Calculation of Performance Calculations
Performance Data
22. Financial Statements Financial Statements
Dreyfus
Cross-Reference Sheet Pursuant to Rule 495(a)
---------------------------------------------
Items in
Part A of
Form N-1A
Caption Prospectus Caption
------ ------- ------------------
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objective and
Registrant Policies; Further
Information About The
Fund
5. Management of the Fund Further Information About
The Fund; Management
6. Capital Stock and Other Cover Page; Investor
Securities Line; Distributions;
Taxes;
7. Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to Invest in The Fund;
Distribution Plan; How to
Exchange Your Investment
From One Fund to Another;
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings N.A.
Items in
Part B of Statement of Additional
Form N-1A Information Caption
------ -----------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information
History
13. Investment Objectives and Investment Information
Policies and Risk Factors;
Investment Limitations
14. Management of the Fund Directors and Officers
15. Control Persons and Controlling Shareholders;
Principal Holders of Principal Shareholders;
Securities Directors and Officers;
Investment Management and
Other Services
16. Investment Advisory and Investment Management and
Other Services Other Services
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other See Prospectus -- "Cover
Securities Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Funds; The Dreyfus/Laurel
Funds, Inc."
19. Purchase, Redemption and Investment Management and
Pricing of Securities Other Services; Net Asset
Being Offered Value
20. Tax Status Dividends, Other
Distributions and Taxes
21. Underwriters Investment Management and
Other Services
Calculation of Performance Calculations
Performance Data
22. Financial Statements Financial Statements
THE DREYFUS/LAUREL FUNDS, INC.
CONTENTS OF POST-EFFECTIVE AMENDMENT
This post-effective amendment to the registration statement of The
Dreyfus/Laurel Funds, Inc.* contains the following documents:
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendment
Part A - Prospectus
- Dreyfus Bond Market Index Fund
- Dreyfus International Equity Allocation Fund
- Dreyfus/Laurel Short Term Government Securities Fund
- Dreyfus/Laurel Prime Money Market Fund
- Dreyfus/Laurel U.S. Treasury Money Market Fund
- Dreyfus/Laurel Tax-Exempt Money Market Fund
- Dreyfus/Laruel Institutional Prime Money Market Fund
- Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund
- Dreyfus/Laurel Institutional Government Money Market
Fund
- Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund
- Dreyfus/Laurel Institutional Short-Term Bond Fund
Part B - Statement of Additional Information
- Dreyfus Bond Market Index Fund
- Dreyfus International Equity Allocation Fund
- Dreyfus/Laurel Short Term Government Securities Fund
- Dreyfus/Laurel Prime Money Market Fund
- Dreyfus/Laurel U.S. Treasury Money Market Fund
- Dreyfus/Laurel Tax-Exempt Money Market Fund
- Dreyfus/Laurel Institutional Prime Money Market Fund
- Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund
- Dreyfus/Laurel Institutional Government Money Market
Fund
- Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund
- Dreyfus/Laurel Institutional Short-Term Bond Fund
Part C - Other Information
Signature Page - The Dreyfus/Laurel Funds, Inc.
Exhibits
____________
*The currently effective prospectuses and statements of additional
information for each of the following series of the Registrant are not
affected by this Amendment:
- Dreyfus Disciplined Stock Fund
- Dreyfus Disciplined Midcap Stock Fund
- Dreyfus S&P 500 Stock Index Fund
- Dreyfus Equity Income Fund
- Dreyfus European Fund
- Premier Balanced Fund
- Premier Small Company Stock Fund
- Premier Limited Term Income Fund
THE DREYFUS/LAUREL FUNDS, INC.
(formerly The Laurel Funds, Inc.)
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PROSPECTUS APRIL 10, 1995
DREYFUS BOND MARKET INDEX FUND
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DREYFUS BOND MARKET INDEX FUND (THE "FUND"), FORMERLY CALLED THE
"LAUREL BOND MARKET INDEX FUND," IS A SEPARATE PORTFOLIO OF THE
DREYFUS/LAUREL FUNDS, INC., AN OPEN-END, DIVERSIFIED MANAGEMENT INVESTMENT
COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL FUND. THE FUND SEEKS TO REPLICATE
THE TOTAL RETURN OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF
OF CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP
AT SUCH INSTITUTION OR TO CUSTOMERS WHO HAVE RECEIVED AND HOLD SHARES OF THE
FUND DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR RELATIONSHIP.
INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE FUND'S
DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER FINANCIAL
INSTITUTIONS ("AGENTS") THAT HAVE ENTERED INTO A SELLING AGREEMENT WITH THE
FUND'S DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM FUND SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED APRIL 10, 1995
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY,
WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144 OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
EXPENSE SUMMARY................................. 4
FINANCIAL HIGHLIGHTS............................ 5
DESCRIPTION OF THE FUND......................... 7
MANAGEMENT OF THE FUND.......................... 13
HOW TO BUY FUND SHARES.......................... 14
SHAREHOLDER SERVICES............................ 17
HOW TO REDEEM FUND SHARES....................... 20
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)........ 23
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES........ 23
PERFORMANCE INFORMATION......................... 24
GENERAL INFORMATION............................. 25
Page 2
This Page Intentionally Left Blank
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
--------------- --------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................ none none
Maximum Sales Load Imposed on Reinvestments............ none none
Deferred Sales Load.................................... none none
Redemption Fee......................................... none none
Exchange Fee........................................... none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets
Management Fee ........................................ 0.40% 0.40%
12b-1 Fee(1)........................................... 0.25% none
Other Expenses(2)...................................... 0.00% 0.00%
______ ______
Total Fund Operating Expenses ......................... 0.65% 0.40%
EXAMPLE:
An investor would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period:
INVESTOR SHARES CLASS R SHARES
--------------- --------------
1 YEAR $ 7 $ 4
3 YEARS $21 $13
5 YEARS N/A $22
10 YEARS N/A $51
- -----------------------------
(1) See "Distribution Plan (Investor Shares Only)" for a description of the
Fund's Distribution Plan for the Investor Class.
(2) Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to the Fund's allocable portion
of such fees and expenses, which are estimated to be .02% of the Fund's net
assets (See "Management of the Fund.")
</TABLE>
- -------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors' return on
an annual basis. Long-term investors in Investor shares could pay more in
12b-1 fees than the economic equivalent of paying the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. ("NASD"). The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Agents may charge their clients
direct fees for effecting transactions in Fund shares; such fees are not
reflected in the foregoing table. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan (Investors Shares Only)."
The Company understands that banks, brokers, dealers or other
financial institutions (including Dreyfus and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Fund's
Investor shares for various services provided in connection with a client's
account. These fees would be in addition to any amounts received by an Agent
under its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. (the "Distributor"). The Agreement requires each Agent to disclose to
its clients any compensation payable to such Agent by the Distributor and any
other compensation payable by the client for various services provided in
connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor share or Class
R share outstanding through each fiscal period and should be read in
conjunction with the financial statements and related notes that appear in
the Fund's Annual Report dated October 31, 1994 which is incorporated by
reference in the SAI and has been audited by KPMG Peat Marwick LLP,
independent accountants, whose report appears in the Fund's Annual Report.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.*
PERIOD
ENDED
10/31/94#
----------
<S> <C> <C>
Net asset value, beginning of period $9.44
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.24
Net realized and unrealized loss on investments (0.28)
------
TOTAL FROM INVESTMENT OPERATIONS (0.04)
LESS DISTRIBUTIONS:
Distributions from net investment income (0.25)
------
Net asset value, end of period $9.15
======
TOTAL RETURN++ (0.46)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $38
Ratio of operating expenses to average net assets 0.65% +
Ratio of net investment income to average net assets 4.81% +
Portfolio turnover rate 188%
- -----------------------
* The Fund commenced selling Investor shares on April 28, 1994.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation began
serving as the Fund's investment manager.
</TABLE>
Page 5
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.*
PERIOD
ENDED
10/31/94#
----------
<S> <C> <C>
Net asset value, beginning of period $10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income** 0.49
Net realized and unrealized loss on investments (0.85)
-------
TOTAL FROM INVESTMENT OPERATIONS (0.36)
LESS DISTRIBUTIONS:
Distributions from net investment income (0.49)
-------
Net asset value, end of period $9.15
========
TOTAL RETURN++ (3.68)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $4,464
Ratio of operating expenses to average net assets*** 0.40% +
Ratio of net investment income to average net assets 5.05% +
Portfolio turnover rate 188%
- -----------------------
* The Fund commenced operations on November 30, 1993. Effective April 28,
1994, the Fund began selling Investor shares and the shares existing prior
to April 28, 1994 were designated Trust Shares. On October 17, 1994, Trust
Shares were redesignated as Class R shares.
** Net investment income before reimbursement of expenses by investment
adviser for the period ended October 31, 1994 was $.39 per share.
*** Annualized expense ratio before reimbursement of expenses by
investment adviser for the period ended October 31, 1994 was 1.41%.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation began serving
as the Fund's investment manager.
</TABLE>
Page 6
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and
Class R shares. (Class R shares of the Fund were formerly called Trust
Shares.) Investor shares and Class R shares are identical, except as to the
services offered to and the expenses borne by each Class. Class R shares are
sold primarily to Banks acting on behalf of customers having a qualified
trust or investment account or relationship at such institution. Investor
shares are primarily sold to retail investors by the Fund's Distributor and by
Agents that have entered into a Selling Agreement with the Fund's
Distributor. If shares of the Fund are held in an account at a Bank or with
an Agent, such Bank or Agent may require you to place all Fund purchase,
exchange and redemption orders through them. All Banks and Agents have agreed
to transmit transaction requests to the Fund's transfer agent or to the
Fund's Distributor. Distribution and shareholder services paid by Investor
shares will cause Investor shares to have a higher expense ratio and pay
lower dividends than Class R shares.
INVESTMENT OBJECTIVE
The Fund seeks to replicate the total return of the Lehman
Brothers Government/Corporate Bond Index (the "Index"). There can be no
assurance that the Fund will meet its investment objective.
MANAGEMENT POLICIES
The Fund is not managed according to traditional methods of
"active" investment management, which involve the buying and selling of
securities based upon economic, financial and market analysis and investing
judgment. Instead, the Fund utilizes a "passive" investment approach,
attempting to duplicate the investment performance of the Index through the
use of statistical procedures.
The Index is intended to measure the performance of the domestic
fixed-rate investment grade debt market. The Index is composed of (i) all
public obligations of the U.S. Government, its agencies and instrumentalities
(excluding "flower" bonds and pass-through issues such as GNMA Certificates)
and (ii) all publicly issued, fixed-rate, nonconvertible, investment grade,
dollar-denominated, SEC-registered obligations of domestic corporations,
foreign governments and supranational organizations. All non-U.S. Government
issues in the Index are rated at least Baa by Moody's Investors Service, Inc.
("Moody's") or, if unrated by Moody's, BBB by Standard & Poor's Ratings Group
("Standard & Poor's"). As of November 30, 1994, 4,130 issues were included in
the Index, representing $2.768 trillion in market value. U.S. Treasury and
agency issues represented 77.2% of the total market value, with corporate
issues representing the balance of 22.8%. The average maturity of the Index
was 9.3 years. The inclusion of a security in the Index does not imply that
Lehman Brothers believes the security to be an attractive investment, nor is
Lehman Brothers affiliated with the Fund.
Because of the large number of issues included in the Index, the
Fund cannot invest in all such issues. Instead, the Fund holds a
representative sample of the securities in the Index, selecting one or two
issues to represent an entire "class" or type of securities in the Index. At
a minimum, the Fund seeks to hold securities which reflect the weighting of
the major asset classes in the Index - U.S. Treasury and agency issues and
corporate issues. As the Fund's assets increase, these classes will be further
delineated along the lines of sector, term-to-maturity, coupon and credit
rating. This sampling technique is expected to be an effective means of
substantially duplicating the income and capital returns provided by the
securities comprising the Index. As the Fund grows, the correlation between
the performance of the Fund and the Index is expected to be .95 or higher. A
correlation of 1.00 would indicate perfect correlation.
Securities rated BBB by Standard & Poor's or Baa by Moody's are
considered by those rating agencies to be "investment grade" securities,
although Moody's considers securities rated Baa to have speculative
characteristics. Further, while bonds rated BBB by Standard & Poor's exhibit
adequate
Page 7
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and principal
for debt in this category than debt in higher rated categories. The Fund will
dispose in a prudent and orderly fashion of bonds whose ratings drop below
these minimum ratings.
The Fund invests 80% or more of its total assets in securities
included in the Index. The Fund may purchase such securities on a when-issued
or delayed-delivery basis. For the purpose of maintaining liquidity, the Fund
may invest up to 20% of its assets in: (1) U.S. Treasury bills, notes and
bonds; (2) other obligations issued or guaranteed as to interest and
principal by the U.S. Government, its agencies and instrumentalities; (3)
instruments of U.S. and foreign banks, including certificates or deposit,
banker's acceptances, time deposits and Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"); (5) commercial paper of U.S. and foreign companies, rated
A-1 at the time of purchase by Standard & Poor's, Prime-1 by Moody's, F-1 by
Fitch Investors Services, Inc. ("Fitch"), Duff 1 by Duff & Phelps, Inc.
("Duff & Phelps") or A1 by IBCA, Inc. ("IBCA"); (6) floating rate securities;
(7) variable amount master demand notes; (8) repurchase agreements; (9)
reverse repurchase agreements; (10) when-issued transactions; and (11)
Eurodollar bonds and notes. The Fund will invest in these securities for
defensive purposes, such as to hedge against an anticipated decline in the
market price of fixed income securities. The Fund may lend securities in an
amount not to exceed 331/3% of its total assets. The Fund may also enter into
futures contracts and options to a limited extent. The Fund will invest in
futures contracts or options or money market instruments as part of a
temporary defensive strategy, such as lowering the Fund's investment in
securities comprising the Index to protect against potential market declines.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the
Fund may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to
borrow money for temporary administrative purposes and to pledge its assets
in connection with such borrowings.
SECURITIES LENDING. To increase return on Fund securities, the
Fund may lend its portfolio securities to broker-dealers and other
institutional investors pursuant to agreements requiring that the loans be
continuously secured by collateral equal at all times in value to at least
the market value of the securities loaned. There may be risks of delay in
receiving additional collateral or in recovering the securities loaned or
even a loss of rights to the collateral should the borrower of the securities
fail financially. Securities loans, however, are made only to borrowers
deemed by Dreyfus to be of good standing and when, in its judgment, the
income to be earned from the loan justifies the attendant risks.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S. Government
Securities on a when-issued basis or may purchase or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by
the Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the marketplace, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transaction. The Fund will establish
a segregated account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to
achieve the Fund's investment objective by investing all of the Fund's net
investable assets in another investment company having the
Page 8
same investment objective and substantially the same investment policies and
restrictions as those applicable to the Fund. Shareholders of the Fund will
be given at least 30 days' prior notice of any such investment. Such
investment would be made only if the directors determine it to be in the best
interest of the Fund and its shareholders. In making that determination, the
Company's directors will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although the Fund believes that the directors will not approve
an arrangement that is likely to result in higher costs, no assurance is
given that costs will be materially reduced if this option is implemented.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may
attempt to reduce the overall level of investment risk of particular
securities and attempt to protect itself against adverse market movements by
investing in futures, options and other derivative instruments. These include
the purchase and writing of options on securities (including index options)
and options on foreign currencies and investing in futures contracts for the
purchase or sale of instruments based on financial indices, including
interest rate indices or indices of U.S. or foreign governments, equity or
fixed income securities ("futures contracts"), options on futures contracts,
forward contracts and swaps, and swap-related products such as equity index
swap contracts, interest rate swaps, currency swaps, caps, collars and
floors.
The use of futures, options, forward contracts and swaps exposes
the Fund to additional investment risks and transaction costs. If Dreyfus
incorrectly analyzes market conditions or does not employ the appropriate
strategy with respect to these instruments, the Fund could be left in a less
favorable position than if such instruments had not been used. Additional
risks inherent in the use of futures, options, forward contracts and swaps
include: imperfect correlation between the price of futures, options and
forward contracts and movements in the prices of the securities or currencies
being hedged; the possible absence of a liquid secondary market for any
particular instrument at any time; and the possible need to defer closing out
certain hedged positions to avoid adverse tax consequences. The Fund may not
purchase put and call options that are traded on a national stock exchange in
an amount exceeding 5% of its net assets. Further information on the use of
futures, options and other derivative instruments, and the associated risks,
is contained in the SAI.
CERTAIN PORTFOLIO SECURITIES
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated A-1 at the time of purchase by Standard & Poor's, Prime-1 by
Moody's, F-1 by Fitch, Duff 1 by Duff & Phelps or A1 by IBCA.
FIXED INCOME SECURITIES. The Fund may invest in fixed-income
securities to achieve its investment objective. In periods of declining
interest rates, the Fund's yield (its income from portfolio investments over
a stated period of time) may tend to be higher than prevailing market rates,
and in periods of rising interest rates, the yield of the Fund may tend to be
lower. Also when interest rates are falling, the inflow of net new money to
the Fund from the continuous sales of its shares will likely be invested in
portfolio instruments producing lower yield than the balance of the Fund's
portfolio, thereby reducing the yield of the Fund. In periods of rising
interest rates, the opposite can be true. The net asset value of the Fund
investing in fixed-income securities also may change as general levels of
interest rates fluctuate. When interest rates increase, the value of a
portfolio of fixed-income securities can
Page 9
be expected to decline. Conversely, when interest rates decline, the value of
a portfolio of fixed-income securities can be expected to increase.
FOREIGN SECURITIES. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, future political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the yield on
such securities.
GNMA CERTIFICATES. The Fund may invest in Government National
Mortgage Association Certificates ("GNMA Certificates"). GNMA Certificates
are mortgage-backed securities representing part ownership of a pool of
mortgage loans. These loans are made by mortgage bankers, commercial banks,
savings and loans associations, and other lenders and are either insured by
the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool" or group of such mortgages is assembled and, after
being approved by GNMA, is offered to investors through securities dealers.
Once approved by GNMA, the timely payment of interest and principal on each
mortgage is guaranteed by the full faith and credit of the U.S. Government.
Although the mortgage loans in a pool underlying a GNMA Certificate will have
maturities of up to 30 years, the average life of a GNMA Certificate will be
substantially less because the mortgages will be subject to normal principal
amortization and also may be prepaid prior to maturity. Prepayment rates vary
widely and may be affected by changes in mortgage interest rates. In periods
of falling interest rates, the rate of prepayment on higher interest mortgage
rates tends to increase, thereby shortening the actual average life of the
GNMA Certificate. Conversely, when interest rates are rising, the rate of
prepayment tends to decrease, thereby lengthening the average life of the
GNMA Certificate. Reinvestment of prepayments may occur at higher or lower
rates than the original yield on the certificates. Due to the prepayment
feature and the need to reinvest prepayments of principal at current rates,
GNMA Certificates with underlying mortgages bearing higher interest rates can
be less effective than typical non-callable bonds of similar maturities at loc
king in yields during periods of declining interest rates, although they may
have comparable risks of decline in value during periods of rising interest
rates.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than
15% of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale.) The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but that can
be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Directors or by Dreyfus pursuant to guidelines established by the Board of
Directors. The Board or Dreyfus will consider availability of reliable price
information and other relevant information in making such determinations.
Page 10
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors, such as
the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be
pursuant to registration or an exemption therefrom. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities from the Fund
or other holder.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities
issued by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S. Government
or backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, GNMA, General Services Administration and Maritime
Administration. Investments may also be made in U.S. Government obligations
that do not carry the full faith and credit guarantee, such as those issued
by the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or other instrumentalities.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by the
Fund and a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from the Fund at a specified price and date or upon
demand. This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed under "Certain Portfolio Securities_Illiquid
Securities."
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
fund securities is deemed by Dreyfus to be disadvantageous. Under a reverse
repurchase agreement, the Fund: (i) transfers possession of fund securities
to a bank or broker-dealer in return for cash in an amount equal to a
percentage of the securities' market value; and (ii) agrees to repurchase the
securities at a future date by repaying the cash with interest. Cash or
liquid high-grade debt securities held by the Fund equal in value to the
repurchase price including any accrued interest will be maintained in a
segregated account while a reverse repurchase agreement is in effect.
ECDS, ETDS AND YANKEE CDS. The Fund may invest in ECDs, ETDs and
Yankee CDs. ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks.
Page 11
ETDs are U.S. dollar-denominated time deposits in a foreign branch of a U.S.
bank or a foreign bank. Yankee CDs are certificates of deposit issued by a
U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States. ECDs, ETDs and Yankee CDs are subject to somewhat different
risks than are the obligations of domestic banks. See "Foreign Securities."
EURODOLLAR BONDS AND NOTES. The Fund may invest in Eurodollar
bonds and notes. Eurodollar bonds and notes are obligations which pay
principal and interest in U.S. dollars held in banks outside the United
States, primarily in Europe. Investments in Eurodollar bonds and notes involve
risks that differ from investments in securities of domestic issuers. See
"Foreign Securities."
FLOATING RATE SECURITIES. The Fund may invest in floating rate
securities. A floating rate security provides for the automatic adjustment of
its interest whenever a specified interest rate changes. Interest rates on
these securities are ordinarily tied to, and are a percentage of, a widely
recognized interest rate, such as the yield on 90-day U.S. Treasury bills or
the prime rate of a specified bank. These rates may change as often as twice
daily. Generally, changes in interest rates will have a smaller effect on the
market value of floating rate securities than on the market value of
comparable fixed income obligations. Thus, investing in variable and floating
rate securities generally allows less opportunity for capital appreciation
and depreciation than investing in comparable fixed income securities.
VARIABLE AMOUNT MASTER DEMAND NOTES. The Fund may invest in
variable amount master demand notes. Variable amount master demand notes are
unsecured obligations that are redeemable upon demand and are typically
unrated. These instruments are issued pursuant to written agreements between
their issuers and holders. The agreements permit the holders to increase
(subject to an agreed maximum) and the holders and issuers to decrease the
principal amount of the notes, and specify that the rate of interest payable
on the principal fluctuates according to an agreed-upon formula. If an issuer
of a variable amount master demand note were to default on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of a secondary market and might, for this or other reasons, suffer a
loss to the extent of the default. The Fund will only invest in variable
amount master demand notes issued only by entities that Dreyfus finds
creditworthy.
PORTFOLIO TURNOVER. While securities are purchased for the Fund
on the basis of potential for replicating the total return of the Index and
not for short-term trading profits, the Fund's turnover rate may exceed 100%.
A portfolio turnover rate of 100% would occur, for example, if all the
securities held by the Fund were replaced once in a period of one year. A
higher rate of portfolio turnover involves correspondingly greater brokerage
commissions and other expenses that must be borne directly by the Fund and,
thus, indirectly by its shareholders. In addition, a high rate of portfolio
turnover may result in the realization of larger amounts of short-term
capital gains that, when distributed to the Fund's shareholders, are taxable
to them as ordinary income. Nevertheless, securities transactions for the
Fund will be based only upon investment considerations and will not be
limited by any other considerations when Dreyfus deems it appropriate to make
changes in the Fund's assets.
RISK FACTORS
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. The SAI describes all of the
Fund's fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
Page 12
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the investment
policies and restrictions described in this Prospectus and the SAI. Should
the Fund determine that any such commitment is no longer in the best interest
of the Fund, it may consider terminating sales of its shares in the states
involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus
supervises and assists in the overall management of the Fund's affairs under
an Investment Management Agreement with the Fund, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for the provision by one or more third parties of, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As the Fund's investment manager, Dreyfus manages the
Fund by making investment decisions based on the Fund's investment objective,
policies and restrictions.
The Fund is managed by Laurie Carroll. Ms. Carroll is a Senior
Vice President and portfolio manager for Mellon Bank. She has been with
Mellon Bank since 1986. Ms. Carroll has been employed by Dreyfus as portfolio
manager of the Fund since October 17, 1994.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $193 billion in assets as of
December 31, 1994, including $70 billion in mutual fund assets. As of
December 31, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $654 billion in assets, including approximately $74 billion in
mutual fund assets.
Under the Investment Management Agreement, the Fund has agreed to
pay Dreyfus a monthly fee at the annual rate of 0.40 of 1% of the value of
the Fund's daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
Directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and
expenses of the non-interested Directors (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee in an amount
equal to the Fund's allocable share of such fees and expenses. In order to
compensate Dreyfus for paying virtually all of the Fund's expenses, the
Fund's investment management fee is higher than the investment advisory fees
paid by most investment companies. Most, if not all, such companies also pay
for additional non-investment advisory expenses that are not paid by such
companies' investment advisers. From time to time, Dreyfus may waive (either
voluntarily or pursuant to applicable state limitations) a portion of the
investment management fees payable by the Fund. From April 4, 1994, to
October 17, 1994, the Fund was advised by Mellon Bank under the Investment
Management Agreement. For the period from November 30, 1993 (commencement of
operations) to April 3, 1994, the Fund paid its investment adviser, Mellon
Bank, 0.00% (annualized) of its average daily net assets in investment
advisory fees (net of expenses reimbursed), under the Fund's previous
investment advisory contract (such contract covered only the
Page 13
provision of investment advisory and certain specified administrative
services). For the period from April 4, 1994 through the fiscal year ended
October 31, 1994, the Fund paid Mellon Bank or Dreyfus 0.40% (annualized) of
its average daily net assets in investment management fees, less fees and
expenses of the non-interested Directors (including counsel fees).
For the fiscal year ended October 31, 1994, total operating
expenses (excluding Rule 12b-1 fees) (net of expenses reimbursed) of the Fund
were 0.40% (annualized) of the average daily net assets of each class for
both the Investor and Class R shares. Without the reimbursements, operating
expenses would have been higher.
In addition, Investor shares may be subject to certain
distribution fees. See "Distribution Plan (Investor Shares Only)."
Dreyfus may pay the Fund's distributor for shareholder services
from Dreyfus' own assets, including past profits but not including the
management fee paid by the Fund. The Fund's distributor may use part or all
of such payments to pay Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective,
policies and restrictions, the Fund may invest in securities of companies
with which Mellon Bank has a lending relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR-Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian and fund accountant. The Fund's
Transfer and Dividend Disbursing Agent is The Shareholder Services Group,
Inc. (the "Transfer Agent"), a subsidiary of First Data Corporation, One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL_Investor shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into Selling
Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. In
addition, holders of Class R shares of the Fund who have held their shares
since April 4, 1994, may continue to purchase Class R shares of the Fund
whether or not they otherwise would be eligible to do so. A Retirement Plan
is a certain qualified or non-qualified employee benefit plan or other
program, including pension, profit-sharing and other deferred compensation
plans, whether established by corporations, partnerships, non-profit entities
or state and local governments ("Retirement Plan"). Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
Page 14
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, Board members of a fund advised by
Dreyfus including members of the Company's Board, or the spouse or minor
child of any of the foregoing, the minimum initial investment is $1,000. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Fund reserves
the right to offer Fund shares without regard to minimum purchase
requirements to employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
Retirement Plans. These limitations apply with respect to participants at the
plan level and, therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors
should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement
plan accounts, both initial and subsequent investments should be sent to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427. Neither initial nor subsequent investments should be made by
third party check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON ONLY TO A
DREYFUS FINANCIAL CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL
BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR THE LOCATION OF THE NEAREST
DREYFUS FINANCIAL CENTER, PLEASE CALL ONE OF THE TELEPHONE NUMBERS LISTED
UNDER "GENERAL INFORMATION."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA # as shown below, for purchase of Fund shares in your
name:
DDA# 043680 Dreyfus Bond Market Index Fund/Investor shares;
DDA# 043672 Dreyfus Bond Market Index Fund/Class R shares.
The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, you should call 1-800-645-6561 after you
have completed the wire payment in order to obtain your Fund account number.
You should include your Fund account number on the Fund's Account Application
and promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further infor-
Page 15
mation about remitting funds in this manner from your bank. All
payments should be made in U.S. dollars and, to avoid fees and delays, should
be drawn only on U.S. banks. A charge will be imposed if any check used for
investment in your account does not clear. The Fund makes available to
certain large institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit & Trust Co. with instructions to credit
your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "4460" for
Investor shares and "4450" for Class R shares.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE ("NAV")_An investment portfolio's NAV refers to
the worth of one share. The NAV for Investor shares and Class R shares is
computed by adding, with respect to such Class of shares, the value of the
Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by number of
shares of that Class outstanding. The valuation of assets for determining NAV
for the Fund may be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at a fair value as determined in good
faith in accordance with procedures established by the Board of Directors.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors.
Pursuant to a determination by the Board of Directors that such
value represents fair value, debt securities with maturities of 60 days or
less held by the Fund are valued at amortized cost. When a security is valued
at amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument.
Page 16
NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"), as of the close of business of the
regular session of the NYSE (usually 4 p.m. Eastern Time). Investments and
requests to exchange or redeem shares received by the Fund in proper form
before the close of business on the NYSE (usually 4 p.m., Eastern Time) are
effective on, and will receive the price determined on, that day (except
purchase orders made through the Dreyfus TELETRANSFER Privilege, which are
effective one business day after your call). Investment, exchange and
redemption requests received after the close of the NYSE are effective on and
receive the share price determined on the next business day.
The NAV of most shares of investment portfolios advised by
Dreyfus (other than money market funds) is published in leading newspapers
daily. The yield of most Dreyfus money market funds is published weekly in
leading financial publications and daily in most local newspapers. The NAV of
any Dreyfus Fund may also be obtained by calling 1-800-645-6561.
The public offering price of Investor shares and Class R shares
is the NAV of that Class.
DREYFUS TELETRANSFER PRIVILEGE _You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfe
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not
be available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of
the same or comparable class of certain other funds managed or administered
by Dreyfus, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS,
EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless you check the relevant "No"
box on the Account Application, indicating that you specifically refuse this
privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a Shareholder Services Form, also available by calling
1-800-645-6561. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
Page 17
or, if calling from overseas, 1-401-455-3306. See "How to Redeem Fund
Shares_Procedures." Upon an exchange, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege and the dividends and distributions payment option
(except for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however, a
sales load may be charged with respect to exchanges of Investor shares into
funds sold with a sales load. If you are exchanging Investor shares into a
fund that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nominal
fee in accordance with rules promulgated by the SEC. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
fund exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly
(on a semi-monthly, monthly, quarterly or annual basis), in exchange for
shares of the Fund, in shares of the same class of certain other funds in the
Dreyfus Family of Funds of which you are currently an investor. WITH RESPECT
TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however, a sales load may be charged with respect to exchanges of Investor
shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss. For more information concerning this Privilege
and the funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561.
Page 18
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically
dividends or dividends and capital gain distributions, if any, paid by the
Fund in shares of the same class of certain other funds in the Dreyfus Family
of Funds of which you are an investor. Shares of the other fund will be
purchased at the then-current NAV; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you
to transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an ACH member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction)
by having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
Page 19
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal
of a specified dollar amount (minimum of $50) on either a quarterly or
monthly basis if you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus sponsored
retirement plans, may permit certain participants to establish an automatic
withdrawal plan from such Retirement Plans. Participants should consult their
Retirement Plan sponsor and tax adviser for details. Such a withdrawal plan
is different than the Automatic Withdrawal Plan. An application for the
Automatic Withdrawal Plan can be obtained by calling 1-800-645-6561. The
Automatic Withdrawal Plan may be ended at any time by the shareholder, the Fun
d or the Transfer Agent. Shares for which certificates have been issued may
not be redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL_You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined NAV as described below. If you hold Fund shares
of more than one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of shares to be
redeemed or if you own fewer shares of the Class than specified to be
redeemed, the redemption request may be delayed until the Transfer Agent
receives further instructions from you or your Service Agent.
The Fund imposes no charges when shares are redeemed directly
through the Distributor. Agents or other institutions may charge their
clients a nominal fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU
HAVE PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE
Page 20
OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option
upon not less than 45 days' written notice if the net asset value of your
account is $500 or less and remains so during the notice period.
PROCEDURES_You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege, or through the Dreyfus
TELETRANSFER Privilege. Other redemption procedures may be in effect for
clients of certain Agents and institutions. The Fund makes available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's NAV may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you
may redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to the Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. REDEMPTION REQUESTS MAY BE
DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL CENTER. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR
THE LOCATION OF THE NEAREST DREYFUS FINANCIAL CENTER, PLEASE CALL THE TELEPHON
E NUMBER LISTED UNDER "GENERAL INFORMATION." Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion
Page 21
Signature Program, the Securities Transfer Agents Medallion Program ("STAMP"),
and the Stock Exchanges Medallion Program. For more information with respect
to signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. to establish the Wire Redemption Privilege, you
must check the appropriate box and supply the necessary information on the
Fund's Account Application or file a Shareholder Services Form with the
Transfer Agent. You may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to
your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of only up to $250,000 wired within any 30-day
period. You may telephone redemption requests by calling 1-800-221-4060 or,
if calling from overseas, 1-401-455-3306. The Fund reserves the right to
refuse any redemption request, including requests made shortly after a change
of address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at anytime by the Transfer Agent
or the Fund. The Fund's SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares
(maximum $150,000 per day) by telephone if you checked the appropriate box on
the Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The redemption proceeds will be paid by check and mailed
to your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. This Privilege may be modified or
terminated at anytime by the Transfer Agent or the Fund. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which certificates
have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate box
and supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between your Fund account and the bank account designated
in one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus
TELETRANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Fund reserves the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
Page 22
DISTRIBUTION PLAN
(INVESTOR SHARES ONLY)
Investor shares are subject to a Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Investor shares of the Fund bear some of the cost of selling those shares
under the Plan pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Plan allows the Fund to spend annually up to 0.25% of its average daily net
assets attributable to Investor shares to compensate Dreyfus Service
Corporation, an affiliate of Dreyfus, for shareholder servicing activities
and the Distributor for shareholder servicing activities and for activities
or expenses primarily intended to result in the sale of Investor shares of
the Fund. The Plan allows the Distributor to make payments from the Rule
12b-1 fees it collects from the Fund to compensate Agents that have entered
into Selling Agreements ("Agreements") with the Distributor. Under the
Agreements, the Agents are obligated to provide distribution related services
with regard to the Fund and/or shareholder services to the Agent's clients
that own Investor shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under
the Plan at any time, and payments are subject to the continuation of the
Fund's Plan and the Agreements described above. From time to time, the
Agents, the Distributor and the Fund may agree to voluntarily reduce the
maximum fees payable under the Plan. See the SAI for more details on the
Plan.
Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays monthly dividends from its net
investment income, if any, and distributes net realized gains, if any, once a
year, but it may make distributions on a more frequent basis to comply with
the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized gains unless capital loss carryovers, if any,
have been utilized or have expired. Investors other than qualified Retirement
Plans may choose whether to receive dividends and other distributions in cash
or to reinvest them in additional Fund shares; dividends and other
distributions paid to qualified Retirement Plans are reinvested automatically
in additional Fund shares at NAV. All expenses are accrued daily and deducted
before declaration of dividends to investors. Dividends paid by each Class
will be calculated at the same time and in the same manner and will be in the
same amount, except that the expenses attributable solely to a particular
Class will be borne exclusively by that Class. Investor shares will receive
lower per share dividends than Class R shares because of the higher expenses
borne by the Investor shares. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated
investment company" under the Code so long as such qualification is in the
best interests of its shareholders. Such qualification will relieve the Fund
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund will be taxable to U.S. shareholders,
including certain non-qualified Retirement Plans, as ordinary income whether
received in cash or reinvested in Fund shares. Distributions from the Fund's
net realized long-term capital gains will be taxable to such shareholders as
long-term capital gains for Federal income tax purposes, regardless of how
long the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in Fund shares. The net
capital gain of an individual generally will not be subject to Federal
Page 23
income tax at a rate in excess of 28%. Dividends and other distributions also
may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund to a foreign investor generally are subject
to U.S. withholding tax at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions
from net realized long-term capital gains paid by the Fund to a foreign
investor, as well as the proceeds of any redemptions from a foreign
investor's account, regardless of the extent to which gain or loss may be
realized, generally will not be subject to U.S. withholding tax. However,
such distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other
distributions will be mailed to you annually. You also will receive periodic
summaries of your account which will include information as to dividends and
distributions from net realized, long-term capital gains, if any, paid during
the year.
Dividends paid by the Fund to qualified Retirement Plans
ordinarily will not be subject to taxation until the proceeds are distributed
from the Retirement Plans. The Fund will not report to the IRS dividends paid
to such plans. Generally, distributions from qualified Retirement Plans,
except those representing returns of non-deductible contributions thereto,
will be taxable as ordinary income and, if made prior to the time the
participant reaches age 59-1/2, generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribution
from such a Retirement Plan (other than certain governmental or church plans)
for any taxable year following the year in which the participant reaches age
70-1/2 is less than the "minimum required distribution" for that taxable
year, an excise tax equal to 50% of the deficiency may be imposed by the IRS.
The administrator, trustee or custodian of such a Retirement Plan will be
responsible for reporting distributions from such plans to the IRS. Moreover,
certain contributions to a qualified Retirement Plan in excess of the amounts
permitted by law may be subject to an excise tax.
With respect to individual investors and certain non-qualified
Retirement Plans, Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized long-term capital gains and the proceeds of
any redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct or
that such shareholder has not received notice from the IRS of being subject
to backup withholding as a result of a failure to properly report taxable
dividend or interest income on a Federal income tax return. Furthermore, the
IRS may notify the Fund to institute backup withholding if the IRS determines
a shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax withheld as
a result of backup withholding does not constitute an additional tax imposed
on the record owner of the account and may be claimed as a credit on the
record owner's Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of taxable investment
income and capital gains.
You should consult your tax advisers regarding specific questions
as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the
Page 24
shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were reinvested
in shares of the same Class. These figures also take into account any
applicable service and distribution fees. As a result, at any given time,
the performance of the Investor shares should be expected to be lower than
that of Class R. Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period. Advertisem
ents of the Fund's performance will include the Fund's average annual total
return for one, five and ten year periods, or for shorter periods depending
upon the length of time during which the Fund has operated. Computations of
average annual total return for periods of less than one year represent an
annualization of the Fund's actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the NAV at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the maximum public offering price per Class of such share on the last day of
that period. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Class of shares with bank deposits, savings
accounts, and similar investment alternatives which often provide an agreed-up
on or guaranteed fixed yield for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, the Index, CDA Technologies Indexes, the Consumer Price Index, and
the Dow Jones Industrial Average. Performance rankings as reported in CHANGING
TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL,
IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR,
MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT,
FORBES, FORTUNE, BARRON'S and similar publications may also be used in
comparing the Fund's performance. Furthermore, the Fund may quote its shares'
total returns and yields in advertisements or in shareholder reports. The
Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
GENERAL INFORMATION
The Company was incorporated in Maryland on August 6, 1987 under
the name The Laurel Funds, Inc., and changed its name to The Dreyfus/Laurel
Funds, Inc. on October 17, 1994. The Company is registered with the SEC under
the 1940 Act, as a diversified, open-end management
Page 25
investment company. The Company has an authorized capitalization of 25
billion shares of $0.001 par value stock with equal voting rights. The Fund
is a portfolio of the Company. The Fund's shares are classified into two
classes_Investor shares and Class R shares. The Company's Articles of
Incorporation permit the Board of Directors to create an unlimited number of
investment portfolios (each a"fund").
Each share (regardless of Class) has one vote. All shares of all
funds (and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Investor shares will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan relating to that Class.
At March 31, 1995, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the Fund's
outstanding voting shares, and is deemed, under the 1940 Act, to be a
controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of
Directors or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Company to
hold a special meeting of shareholders for purposes of removing a Director
from office and for any other proper purpose. Company shareholders may remove
a Director by the affirmative vote of a majority of the Company's voting
shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and will
send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free 1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 26
DREYFUS
Bond Market
Index Fund
Prospectus
(Lion Logo)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
310/710p1041095
- ------------------------------------------------------------------------------
PROSPECTUS APRIL 10, 1995
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
- ------------------------------------------------------------------------------
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND (THE "FUND"), FORMERLY
CALLED THE "LAUREL INTERNATIONAL EQUITY ALLOCATION
FUND," IS A SEPARATE PORTFOLIO OF THE DREYFUS/LAUREL FUNDS, INC., AN OPEN-END,
DIVERSIFIED MANAGEMENT INVESTMENT COMPANY (THE
"COMPANY"), KNOWN AS A MUTUAL FUND. THE FUND'S OBJECTIVE IS TO EXCEED THE
TOTAL RETURN OF THE MORGAN STANLEY CAPITAL INTERNATIONAL -- EUROPE AUSTRALIA
FAR EAST (MSCI EAFE) INDEX THROUGH ACTIVE STOCK SELECTION, COUNTRY ALLOCATION
AND CURRENCY ALLOCATION.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLONBANK, N.A. AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF OF
CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP AT
SUCH INSTITUTION OR TO CUSTOMERS WHO HAVE RECEIVED AND HOLD SHARES OF THE
FUND DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR RELATIONSHIP.
INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE FUND'S
DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER FINANCIAL
INSTITUTIONS ("AGENTS") THAT HAVE ENTERED INTO A SELLING AGREEMENT WITH THE
FUND'S DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM FUND SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
--------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED APRIL 10, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY,
WRITE TO THE FUND AT 144 GLENNCURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
--------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
EXPENSE SUMMARY................................. 4
FINANCIAL HIGHLIGHTS............................ 5
DESCRIPTION OF THE FUND......................... 6
MANAGEMENT OF THE FUND.......................... 12
HOW TO BUY FUND SHARES.......................... 14
SHAREHOLDER SERVICES............................ 17
HOW TO REDEEM FUND SHARES....................... 20
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)........ 22
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES........ 22
PERFORMANCE INFORMATION......................... 24
GENERAL INFORMATION............................. 25
Page 2
[This Page Intentionally Left Blank]
Page 3
EXPENSE SUMMARY
<TABLE>
<CAPTION>
INVESTOR SHARES CLASS R SHARES
--------------- --------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................ none none
Maximum Sales Load Imposed on Reinvestments............ none none
Deferred Sales Load.................................... none none
Redemption Fee......................................... none none
Exchange Fee........................................... none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee ........................................ 1.50% 1.50%
12b-1 Fee(1)........................................... 0.25% none
Other Expenses(2)...................................... 0.00% 0.00%
------ ------
Total Fund Operating Expenses ......................... 1.75% 1.50%
EXAMPLE:
An investor would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period:
INVESTOR SHARES CLASS R SHARES
--------------- --------------
1 YEAR $18 $15
3 YEARS $55 $47
5 YEARS N/A N/A
10 YEARS N/A N/A
(1) See "Distribution Plan (Investor Shares Only) for a description of the
Fund's Distribution Plan for the Investor Class.
(2) Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager is
contractually required to reduce its Management Fee in an amount equal to the
Fund's allocable portion of such fees and expenses, which are estimated to be
0.02% of the Fund's average net assets. (See "Management of the Fund.")
</TABLE>
- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors' return on
an annual basis. Long-term investors in Investor shares could pay more in
12b-1 fees than the economic equivalent of paying the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. ("NASD"). The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Agents may charge their clients
direct fees for effecting transactions in Fund shares; such fees are not
reflected in the foregoing table. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan (Investor Shares Only)."
The Company understands that banks, brokers, dealers or other
financial institutions (including Dreyfus and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Fund's
Investor shares for various services provided in connection with a client's
account. These fees would be in addition to any amounts received by an Agent
under its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. (the "Distributor"). The Agreement requires each Agent to disclose to
its clients any compensation payable to such Agent by the Distributor and any
other compensation payable by the client for various services provided in
connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The table below is based upon a single Investor share or
Class R share outstanding throughout each fiscal period and should be read in
conjunction with the financial statements and related notes that appear in
the Fund's Annual Report dated October 31, 1994, which is incorporated by
reference in the SAI. The financial statements included in the Fund's Annual
Report for the period ended October 31, 1994 have been audited by KPMG Peat
Marwick LLP, independent accountants, whose report appears in the Fund's
Annual Report.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
<TABLE>
<CAPTION>
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.*
PERIOD
ENDED
10/31/94#
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.00
--------
Income from investment operations:
Net investment income 0.01
Net realized and unrealized gain on investments 0.05
--------
Total from investment operations 0.06
--------
Net asset value, end of period $10.06
========
Total Return++ 0.60%
--------
Ratios to average net assets/Supplemental data:
Net Assets, end of period (in 000's) $71
Ratio of expenses to average net assets 1.74%+
Ratio of net investment income to average net assets 1.98%
Portfolio turnover rate 0%
- ----------------------------------------------------------------------------------------------------------------
*The Fund commenced selling Investor shares on August 12, 1994.
+ Annualized
++ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation began serving
the Fund's investment manager.
</TABLE>
Page 5
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
<TABLE>
<CAPTION>
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.*
PERIOD
ENDED
10/31/94#
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.00
--------
Income from investment operations:
Net investment income 0.02
Net realized and unrealized gain on investments 0.04
--------
Total from investment options 0.06
--------
Net asset value, end of period $10.06
=========
Total Return++ 0.60%
--------
Ratios to average net assets/Supplemental data:
Net Assets, end of period (in 000's) $11,844
Ratio of expenses to average net assets 1.50%+
Ratio of net investment income to average net assets 2.22%+
Portfolio turnover rate 0%
- ----------------------------------------------------------------------------------------------------------------
* The Fund commenced selling Trust Shares on August 12, 1994. Effective
October 17, 1994 the Fund's Trust Shares were redesignated as
Class R shares.
+ Annualized
++ Total return represents aggregate total return for the period
indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation began serving as
the Fund's investment manager.
</TABLE>
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and
Class R shares. (Class R shares of the Fund were formerly called Trust
Shares.) Investor shares and Class R shares are identical, except as to the
services offered to and the expenses borne by each Class. Class R shares are
sold primarily to Banks acting on behalf of customers having a qualified
trust or investment account or relationship at such institution. Investor
shares are primarily sold to retail investors by the Fund's Distributor and by
Agents that have entered into a Selling Agreement with the Fund's
Distributor. If shares of the Fund are held in an account at a Bank or with
an Agent, such Bank or Agent may require you to place all Fund purchase,
exchange and redemption orders through them. All Banks and Agents have agreed
to transmit transaction requests to the Fund's transfer agent or to the
Fund's Distributor. Distribution and shareholder services paid by Investor
shares will cause Investor shares to have a higher expense ratio and pay
lower dividends than Class R shares.
INVESTMENT OBJECTIVE
The Fund's objective is to exceed the total return of the Morgan
Stanley Capital International--Europe Australia Far East (MSCI EAFE) Index
benchmark (the "Benchmark") through active stock selection, country
allocation and currency allocation. The Fund is not an index fund and its
investments are not representative of the proportions or weightings of the
Benchmark. In addition to investing in securities in countries representing
the Benchmark, the Fund may invest up to 20% of its assets in securities in em
erging markets countries. There can be no assurance that the Fund will meet
its investment objective. Under normal circumstances, the Fund will invest at
least 65% of its assets in equity securities of issuers in at least three
countries outside of the United States.
Page 6
MANAGEMENT POLICIES
The Benchmark is a diversified, capitalization-weighted index of
equity securities of companies located in Australia and 13 countries of
Europe and 5 countries of the Far East. The countries represented in the
Benchmark are: Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Italy, Japan, the Netherlands, New Zealand, Norway,
Singapore/Malaysia, Spain, Sweden, Switzerland, and the United Kingdom. The
Fund may also invest in securities of other countries added to the Benchmark
from time to time. Stocks in the Benchmark are selected to represent
proportionally each country and each major industrial sector within each
country. Each stock in the Benchmark is weighted according to its market
value as a percentage of the total market value of all stock in the
Benchmark.
The investment process utilized by Dreyfus or the Fund's
sub-adviser, S.A.M. Finance, S.A. ("CCF S.A.M."), in structuring the Fund has
four basic components: (1) country allocation, (2) stock selection, (3)
currency allocation, and (4) portfolio construction and risk control. These
components employ a combination of quantitative research using proprietary
financial models and fundamental research from specialists in Paris, Tokyo,
and San Francisco.
Under normal circumstances, the Fund expects to be fully invested
in securities of issuers in countries included in the Benchmark, securities
of emerging market countries, and derivative securities, except for such
amounts as are needed to meet short-term cash needs and redemptions and
amounts pending investment. These amounts may be held as cash or temporarily
invested in high quality short-term debt instruments of the U.S. or foreign
governments, their agencies and instrumentalities and repurchase agreements.
No more than 20% of the total assets of the Fund will be invested in the
securities of emerging market countries, including Argentina, Brazil, Chile,
People's Republic of China, Colombia, Czech Republic, Greece, Korea, Hungary,
India, Indonesia, Israel, Jordan, Mexico, Pakistan, Peru, Philippines,
Poland, Portugal, Sri Lanka, Taiwan, Thailand, Turkey, and Venezuela, subject
to the satisfaction of regulatory standards for the custody of assets and
securities clearance systems. The Fund may also invest in securities of other
emerging markets added to the Benchmark from time to time. Each emerging
market country is analyzed from a macroeconomic and financial perspective
giving equal consideration to four factors: (1) the relative and historical ma
rket valuation, (2) the currency risk, (3) the outlook for economic growth,
and (4) the country political risk.
The Fund may invest in forward foreign currency exchange
contracts, futures contracts, options on securities and on foreign
currencies, currency indices, futures contracts, and securities indices to
adjust its risk exposure relative to the Benchmark and to its investment in
emerging countries. CCF S.A.M. will manage currency exposure for the Fund
utilizing its proprietary currency allocation model and will determine the
Fund's under-or-over weighting relative to the Benchmark utilizing its
international country allocation model. Dreyfus will control and monitor the
total risk of the portfolio, including the country and currency exposure
resulting from the implementation of its country and currency models.
In no event will the Fund purchase securities which would cause
25% or more of the market value of the Fund's total assets to be invested in
securities of one or more issuers having their principal business activities
in the same industry. This limit does not apply with respect to the Fund's
investments in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund has a non-fundamental investment
limitation which provides that in no event will it purchase securities which
would cause more than 25% of the market value of its total assets to be
invested in securities issued or guaranteed by a single government or its
agencies and instrumentalities. The Fund may also invest in commercial paper
and may lend portfolio securities. Under unusual circumstances, such as
drastic political or economic changes, severe social unrest or acts of war,
the Fund may be primarily invested in securities of U.S. companies, and
securities of the U.S. Government, its agencies, instrumentalities and
municipalities.
Page 7
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the
Fund may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to
borrow money for temporary administrative purposes and to pledge its assets
in connection with such borrowings.
SECURITIES LENDING. To increase return on Fund securities, the
Fund may lend its portfolio securities to broker-dealers and other
institutional investors pursuant to agreements requiring that the loans be
continuously secured by collateral equal at all times in value to at least
the market value of the securities loaned. There may be risks of delay in
receiving additional collateral or in recovering the securities loaned or
even a loss of rights to the collateral should the borrower of the securities
fail financially. Securities loans, however, are made only to borrowers
deemed by Dreyfus or CCF S.A.M. to be of good standing and when, in its
judgment, the income to be earned from the loan justifies the attendant
risks.
CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in currency
exchange transactions. Generally, the Fund's foreign currency exchange
transactions will be conducted on a spot basis at the spot rate then
prevailing for purchasing or selling currencies in the foreign exchange
market. The Fund may, to a limited extent, deal in forward foreign currency
exchange contracts involving currencies of the different countries in which
it will invest as a hedge against possible variations in the foreign exchange
rates between these currencies. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future
date (up to one year) and price set at the time of the contract. The Fund's
dealings in forward foreign currency exchange contracts are limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
exchange contracts with respect to specific receivables (including dividends)
or payables of the Fund accruing in connection with the ownership, purchase
and sale of its portfolio securities and the sale and redemption of shares of
the Fund. Position hedging is the sale of forward foreign currency contracts
with respect to portfolio security positions denominated or quoted in such
foreign currency. The Fund will not enter into or maintain a position in such
contracts if their consummation would obligate the Fund to deliver an amount
of foreign currency greater than the value of the Fund's assets denominated
or quoted in, or currency convertible into, such currency.
Forward contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specified security or
securities index or currency at a specified future time and at a specified
price. Forward contracts differ from futures contracts as the terms of the
contract are not standardized and forward contracts are not traded on
regulated exchanges. Transactions are executed over the counter. If the
counterparty defaults, the Fund might incur a loss. Dreyfus or CCF S.A.M.
seeks to minimize the risk of loss through forward contracts by analyzing the
creditworthiness of the counterparty under forward contract agreements. The
Fund's use of forward contracts will be restricted to the purchase or sale of
foreign currency. The Fund will selectively employ currency forward contracts
in order to hedge currency risk allocated with investments in foreign equity
securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S. Government
Securities on a when-issued basis or may purchase or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by
the Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the marketplace, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date
Page 8
may be greater than those obtained in the sale transaction. The Fund will
establish a segregated account consisting of cash, U.S. Government Securities
or other high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to
achieve the Fund's investment objective by investing all of the Fund's net
investable assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at least
30 days' prior notice of any such investment. Such investment would be made
only if the Directors determine it to be in the best interest of the Fund and
its shareholders. In making that determination, the Company's Directors will
consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Fund believes that the Directors will not approve an arrangement that is
likely to result in higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.
FUTURES AND OPTIONS. The Fund may attempt to reduce the overall
level of investment risk of particular securities and attempt to protect the
Fund against adverse market movements by investing in futures and options.
This includes the purchase and writing of options on securities (including
index options) and options on foreign currencies and investing in futures
contracts for the purchase or sale of instruments based on financial indices,
including interest rate indices or indices of U.S. or foreign governments,
equity or fixed income securities ("futures contracts"), options on futures
contracts, and forward contracts.
The use of futures, option, and forward contracts exposes the
Fund to additional investment risks and transaction costs. If Dreyfus or CCF
S.A.M. incorrectly analyzes market conditions or does not employ the
appropriate strategy with respect to these instruments, the Fund could be
left in a less favorable position. Additional risks inherent in the use of
futures, options, and forward contracts include: imperfect correlation
between the price of futures, options and forward contracts and movements in
the prices of the securities or currencies being hedged; the possible absence
of a liquid secondary market for any particular instrument at any time; and
the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences. The Fund may not purchase put and call options that
are traded on a national stock exchange in an amount exceeding 5% of its net
assets. Further information on the use of futures and options and the
associated risks, is contained in the SAI.
The Fund may purchase and write call and put options on foreign
currencies for the purpose of hedging against changes in future currency
exchange rates. Call options convey the right to buy the underlying currency
at a predetermined price which may be lower than the spot price of the
currency at the time the option expires. Put options convey the right to sell
the underlying currency at a price which may be higher than the spot price of
the currency at the time the option expires. Currency options traded on U.S.
or other exchanges may be subject to position limits which may limit the
ability of the Fund to reduce foreign currency risk using such options.
Further, there may be an imperfect correlation between the change in a spot
price of a foreign currency and the prices of futures and option contracts.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller and generally do not have as much market liquidity as exchange-traded
options.
CERTAIN PORTFOLIO SECURITIES
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper
Page 9
backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated A-1 at the time of purchase by Standard & Poor's Ratings
Group, Prime-1 by Moody's Investors Service, Inc., F-1 by Fitch Investors
Service, Inc., Duff 1 by Duff & Phelps, Inc., or A1 by IBCA, Inc.
FOREIGN SECURITIES. The Fund will purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, future political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. The net
asset value of the Fund's shares generally will fluctuate. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the yield on
such securities.
Among the foreign securities in which the Fund may invest are
those issued by companies located in developing countries, which are
countries in the initial stages of their industrialization cycles. Investing
in the equity and debt markets of developing countries involves exposure to
economic structures that are generally less diverse and less mature, and to
political systems that can be expected to have less stability, than those of
developed countries. The markets of developing countries historically have
been more volatile than the markets of the more mature economies of developed
countries, but often have produced higher rates of return to investors.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than
15% of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale.) The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). The Fund may also purchase securities that
are not registered under the Securities Act of 1933, as amended, but that can
be sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Directors or by Dreyfus pursuant to guidelines established by the Board of
Directors. The Board or Dreyfus will consider availability of reliable price
information and other relevant information in making such determinations.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors, such as
the Fund, that agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be
pursuant to registration or an exemption therefrom. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
Page 10
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of Fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities from the Fund
or other holder.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities
issued by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by the
Fund and a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from the Fund at a specified price and date or upon
demand. This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed under "Certain Portfolio Securities _ Illiquid
Securities."
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S. Government
or backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration and Maritime Administration. Investments may also be made in
U.S. Government obligations that do not carry the full faith and credit
guarantee, such as those issued by the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation, or other instrumentalities.
PORTFOLIO TURNOVER. While securities are purchased for the Fund
on the basis of potential for exceeding the total return of the Benchmark and
not for short-term trading profits, the Fund's turnover rate may exceed 100%.
A portfolio turnover rate of 100% would occur, for example, if all the
securities held by the Fund were replaced once in a period of one year. A
higher rate of portfolio turnover (100% or more) involves correspondingly
greater brokerage commissions and other expenses that must be borne directly
by the Fund and, thus, indirectly by its shareholders. In addition, a high
rate of portfolio turnover may result in the realization of larger amounts of
short-term capital gains that, when distributed to the Fund's shareholders,
are taxable to them as ordinary income. Nevertheless, securities transactions
for the Fund will be based only upon investment considerations and will not
be limited by any other considerations when Dreyfus deems it appropriate to
make changes in the Fund's assets.
RISK FACTORS
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. The SAI describes all of the
Fund's fundamental and non-fundamental restrictions.
Page 11
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the investment
policies and restrictions described in this Prospectus and the SAI. Should
the Fund determine that any such commitment is no longer in the best interest
of the Fund, it may consider terminating sales of its shares in the states
involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus
supervises and assists in the overall management of the Fund's affairs under
an Investment Management Agreement with the Fund, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for the provision by one or more third parties of, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As the Fund's investment manager, Dreyfus manages the
Fund by making investment decisions based on the Fund's investment objective,
policies and restrictions.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $193 billion in assets as of
December 31, 1994, including $70 billion in mutual fund assets. As of
December 31, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $654 billion in assets, including approximately $74 billion in
mutual fund assets.
Under the Investment Management Agreement, the Fund has agreed to
pay Dreyfus a monthly fee at the annual rate of 1.50% of the value of the
Fund's daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
Directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and
expenses of the non-interested Directors (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee in an amount
equal to the Fund's allocable share of such fees and expenses. In order to
compensate Dreyfus for paying virtually all of the Fund's expenses, the
Fund's investment management fee is higher than the investment advisory fees
paid by most investment companies. Most, if not all, such companies also pay
for additional non-investment advisory expenses that are not paid by such
companies' investment advisers. From time to time, Dreyfus may waive (either
voluntarily or pursuant to applicable state limitations) a portion of the
investment management fees payable by the Fund. From April 4, 1994, to
October 17, 1994, the Fund was advised by Mellon Bank under the Investment
Management Agreement. For the period from August 12, 1994 through October 31,
1994, the Fund paid Mellon Bank or Dreyfus 1.50% (annualized) of its average
daily net assets in investment management fees, less fees and expenses of the
Page 12
non-interested Directors (including counsel fees).
For the fiscal period ended October 31, 1994, total operating
expenses (excluding Rule 12b-1 fees) (net of expenses reimbursed) of the Fund
were 1.50% (annualized) of the average daily net assets of each class for
both the Investor and Class R shares. Without the reimbursements, operating
expenses would have been higher.
CCF S.A.M. (115 Avenue des Champs-Elysees, Paris, France 75008)
provides investment advice and portfolio management services to the Fund in
its capacity as sub-adviser to the Fund. A wholly owned subsidiary of Credit
Commercial de France ("CCF"), CCF S.A.M. is a French corporation organized in
1989, and has been a registered investment adviser since February, 1993. CCF
was founded in 1894, and is one of Europe's largest commercial banks with 370
offices in France as well as 40 others around the world of which 10 are
located in European countries. CCF's European investment management business
dates back to 1945 and it currently manages over $30 billion divided between
210 open-end mutual funds and over 100 commingled investment portfolios out
of offices in Paris, London, Geneva, Milan and Tokyo. CCF S.A.M. specializes
in active quantitative asset management based on a structured investment
process. CCF S.A.M.'s offices are located in Paris, France and it currently
advises $2 billion in assets worldwide.
The Fund's portfolio manager is Patrice Conxicouer of CCF S.A.M.
Mr. Conxicouer has been a portfolio manager with CCF S.A.M. since 1992. He
specializes in international equities and fixed income instruments. He joined
CCF in 1990 as a trainee in quantitative fund management.
Pursuant to the sub-advisory agreement among the Company, CCF
S.A.M., and Dreyfus, CCF S.A.M. will receive an advisory fee at the annual
rate of .25% of the Fund's average daily net assets. Payment of the fee is
the obligation of Dreyfus and not of the Fund.
For the fiscal period ended October 31, 1994, Dreyfus or Mellon
Bank paid CCF S.A.M. advisory fees of .25% of average daily net assets.
In addition, Investor shares may be subject to certain
distribution fees. See "Distribution Plan (Investor Shares Only)."
Dreyfus may pay the Fund's distributor for distribution services
from Dreyfus' own assets, including past profits but not including the
management fee paid by the Fund. The Fund's distributor may use part or all
of such payments to pay Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective,
policies and restrictions, the Fund may invest in securities of companies
with which Mellon Bank has a lending relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR--Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian and fund accountant.. The Fund's
Transfer and Dividend Disbursing Agent is The Shareholder Services Group,
Inc. (the "Transfer Agent"), a subsidiary of First Data Corporation, One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
Page 13
HOW TO BUY FUND SHARES
GENERAL--Investor shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into Selling
Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. A
Retirement Plan is a certain qualified or non-qualified employee benefit plan
or other program, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships, non-pro
fit entities or state and local governments ("Retirement Plan"). Class R
shares may be purchased for a Retirement Plan only by a custodian, trustee,
investment manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, Board members of a fund advised by
Dreyfus including members of the Company's Board, or the spouse or minor
child of any of the foregoing, the minimum initial investment is $1,000. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Fund reserves
the right to offer Fund shares without regard to minimum purchase
requirements to employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
Retirement Plans. These limitations apply with respect to participants at the
plan level and, therefore, do not directly affect the amount that may be
invested in the Fund by a Retirement Plan. Participants and plan sponsors
should consult their tax advisers for details.
You may purchase Fund shares by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement
plan accounts, both initial and subsequent investments should be sent to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427. Neither initial nor subsequent investments should be made by
third party check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON ONLY TO A
DREYFUS FINANCIAL CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL
BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR
Page 14
THE LOCATION OF THE NEAREST DREYFUS FINANCIAL CENTER, PLEASE CALL ONE OF THE
TELEPHONE NUMBERS LISTED UNDER "GENERAL INFORMATION."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA # as shown below, for purchase of Fund shares in your
name:
DDA# 043702 Dreyfus International Equity Allocation Fund/Investor
shares;
DDA# 043699 Dreyfus International Equity Allocation Fund/Class R
shares.
The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, you should call 1-800-645-6561 after you
have completed the wire payment in order to obtain your Fund account number.
You should include your Fund account number on the Fund's Account Application
and promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank. All
payments should be made in U.S. dollars and, to avoid fees and delays, should
be drawn only on U.S. banks. A charge will be imposed if any check used for
investment in your account does not clear. The Fund makes available to
certain large institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH to Boston Safe Deposit & Trust Co. with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
Fund account number PRECEDED BY THE DIGITS "4480" for Investor shares and "447
0" for Class R shares.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE ("NAV")--An investment portfolio's NAV refers to
the worth of one share. The NAV for Investor shares and Class R shares is
computed by adding, with respect to such Class of shares, the value of the
Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by number of
shares of that Class outstanding. The valuation of assets for determining NAV
for the Fund may be summarized as follows:
Page 15
Equity securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the current bid is used. An equity security which is
listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security by CCF S.A.M.
All other equity securities not so traded are valued at the last sales price
prior to the time of valuation.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors.
Pursuant to a determination by the Board of Directors that such
value represents fair value, debt securities with maturities of 60 days or
less held by the Fund are valued at amortized cost. When a security is valued
at amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument.
For purposes of determining the Fund's NAV, all assets and
liabilities initially expressed in foreign currency values will be converted
into U.S. dollar values at the mean between the bid and offered quotations of
such currencies against U.S. dollars as last quoted by any recognized dealer.
If an event were to occur after the value of a portfolio instrument was so
established but before the NAV is determined which is likely to materially
change the NAV, then the portfolio instrument would be valued using fair
value considerations established by the Company's Board of Directors. Because
of the need to obtain prices as of the close of trading of the Western
European exchanges, the calculation of NAV does not take place
contemporaneously with the determination of the prices of the majority of the
Fund's securities.
NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"), as of the close of business of the
regular session of the NYSE (usually 4 p.m. Eastern Time). Investments and
requests to exchange or redeem shares received by the Fund in proper form
before the close of business on the NYSE (usually 4 p.m., Eastern Time) are
effective on, and will receive the price determined on, that day (except
purchase orders made through the Dreyfus TELETRANSFER Privilege, which are
effective one business day after your call). Investment, exchange and
redemption requests received after the close of the NYSE are effective on and
receive the share price determined on the next business day.
The NAV of most shares of investment portfolios advised by
Dreyfus (other than money market funds) is published in leading newspapers
daily. The yield of most Dreyfus money market funds is published weekly in
leading financial publications and daily in most local newspapers. The NAV of
any Dreyfus Fund may also be obtained by calling 1-800-645-6561.
The public offering price of Investor shares and Class R shares
is the NAV of that Class.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfe
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
Page 16
SHAREHOLDER SERVICES
The services and privileges described under this heading may not
be available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of
the same or comparable class of certain other funds managed or administered
by Dreyfus, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS,
EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless you check the relevant "No"
box on the Account Application, indicating that you specifically refuse this
privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a Shareholder Services Form, also available by calling
1-800-645-6561. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if calling from overseas, 1-401-455-3306. See "How to Redeem Fund
Shares_Procedures." Upon an exchange, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege and the dividends and distributions payment option
(except for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however, a
sales load may be charged with respect to exchanges of Investor shares into
funds sold with a sales load. If you are exchanging Investor shares into a
fund that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nominal
fee in accordance with rules promulgated by the SEC. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
fund exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
Page 17
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly
(on a semi-monthly, monthly, quarterly or annual basis), in exchange for
shares of the Fund, in shares of the same class of certain other funds in the
Dreyfus Family of Funds of which you are currently an investor. WITH RESPECT
TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however, a sales load may be charged with respect to exchanges of Investor
shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss. For more information concerning this Privilege
and the funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427 and the notification will be effective three business
days following receipt. The Fund may modify or terminate this Privilege at
any time or charge a service fee. No such fee currently is contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically
dividends or dividends and capital gain distributions, if any, paid by the
Fund in shares of the same class of certain other funds in the Dreyfus Family
of Funds of which you are an investor. Shares of the other fund will be
purchased at the then-current NAV; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you
to transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
Page 18
account. Only an account maintained at a domestic financial institution which
is an ACH member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction)
by having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal
of a specified dollar amount (minimum of $50) on a monthly or quarterly if
you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus sponsored
retirement plans, may permit certain participants to establish an automatic
withdrawal plan from such Retirement Plans. Participants should consult their
Retirement Plan sponsor and tax adviser for details. Such a withdrawal plan
is different than the Automatic Withdrawal Plan. An application for the
Automatic Withdrawal Plan can be obtained by calling 1-800-645-6561. The
Automatic Withdrawal Plan may be ended at any time by the shareholder, the Fun
d or the Transfer Agent. Shares for which certificates have been issued may
not be redeemed through the Automatic Withdrawal Plan.
Page 19
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined NAV as described below. If you hold Fund shares
of more than one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of shares to be
redeemed or if you own fewer shares of the Class than specified to be redeemed
, the redemption request may be delayed until the Transfer Agent receives
further instructions from you or your Service Agent.
The Fund imposes no charges when shares are redeemed directly
through the Distributor. Agents or other institutions may charge their
clients a nominal fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU
HAVE PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option
upon not less than 45 days' written notice if the net asset value of your
account is $500 or less and remains so during the notice period.
PROCEDURES--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege or through the Dreyfus TELETRANS
FER Privilege. Other redemption procedures may be in effect for clients of
certain Agents and institutions. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption pr
ivilege or Telephone Exchange Privilege, which is granted automatically
Page 20
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's NAV may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you
may redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for the
Dreyfus retirement plan accounts to The Dreyfus Trust Company, Custodian,
P.O. Box 6427, Providence, Rhode Island 02940-6427. REDEMPTION REQUESTS MAY
BE DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL CENTER. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. FOR THE LOCATION OF THE NEAREST DREYFUS FINANCIAL CENTER, PLEASE
CALL THE TELEPHONE NUMBER LISTED UNDER "GENERAL INFORMATION." Redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. The Transfer Agent has
adopted standards and procedures pursuant to which signature-guarantees in
proper form generally will be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP"), and the Stock
Exchanges Medallion Program. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. To establish the Wire Redemption Privilege, you
must check the appropriate box and supply the necessary information on the
Fund's Account Application or file a Shareholder Services Form with the
Transfer Agent. You may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to
your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of only up to $250,000 wired within any 30-day
period. You may telephone redemption requests by calling 1-800-221-4060 or,
if calling from overseas, 1-401-455-3306. The Fund reserves the right to
refuse any redemption request, including requests made shortly after a change
of address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at anytime by the Transfer Agent
or the Fund. The Fund's SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares
(maximum $150,000 per day) by telephone if you checked the appropriate box on
the Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The redemption proceeds will be paid by check and mailed
Page 21
to your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. This Privilege may be modified or
terminated at anytime by the Transfer Agent or the Fund. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which certificates
have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate box
and supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between your Fund account and the bank account designated
in one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus TELETR
ANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Fund reserves the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
DISTRIBUTION PLAN
(INVESTOR SHARES ONLY)
Investor shares are subject to a Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Investor shares of the Fund bear some of the cost of selling those shares
under the Plan. The Plan allows the Fund to spend annually up to 0.25% of its
average daily net assets attributable to Investor shares to compensate
Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing activities
and for activities primarily intended to result in the sale of Investor
shares of the Fund. The Plan allows the Distributor to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements") with the Distributor. Under
the Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under
the Plan at any time, and payments are subject to the continuation of the
Fund's Plan and the Agreements described above. From time to time, the
Agents, the Distributor and the Fund may agree to voluntarily reduce the
maximum fees payable under the Plan. See the SAI for more details on the
Plan.
Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net investment income
and distributes net realized gains, if any, once a year, but it may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
Page 22
realized gains unless capital loss carryovers, if any, have been utilized or
have expired. Investors other than qualified Retirement Plans may choose wheth
er to receive dividends and other distributions in cash or to reinvest them
in additional Fund shares; dividends and other distributions paid to
qualified Retirement Plans are reinvested automatically in additional Fund
shares at NAV. All expenses are accrued daily and deducted before declaration
of dividends to investors. Dividends paid by each Class will be calculated at
the same time and in the same manner and will be in the same amount, except
that the expenses attributable solely to a particular Class will be borne
exclusively by that Class. Investor shares will receive lower per share
dividends than Class R shares because of the higher expenses borne by the
Investor shares. See "Expense Summary."
It is expected that the Fund will qualify as a "regulated
investment company" under the Code so long as such qualification is in the
best interests of its shareholders. Such qualification will relieve the Fund
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund will be taxable to U.S. shareholders,
including certain non-qualified Retirement Plans, as ordinary income whether
received in cash or reinvested in Fund shares. Distributions from the Fund's
net realized long-term capital gains will be taxable to such shareholders as
long-term capital gains for Federal income tax purposes, regardless of how
long the shareholders have held their Fund shares and whether such
distributions are received in cash or reinvested in Fund shares. The net
capital gain of an individual generally will not be subject to Federal income
tax at a rate in excess of 28%. Dividends and other distributions also may be
subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund to a foreign investor generally are subject
to U.S. withholding tax at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions
from net realized long-term capital gains paid by the Fund to a foreign
investor, as well as the proceeds of any redemptions from a foreign
investor's account, regardless of the extent to which gain or loss may be
realized, generally will not be subject to U.S. withholding tax. However,
such distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and other
distributions will be mailed to you annually. You also will receive periodic
summaries of your account which will include information as to dividends and
distributions from net realized, long-term capital gains, if any, paid during
the year.
Dividends paid by the Fund to qualified Retirement Plans
ordinarily will not be subject to taxation until the proceeds are distributed
from the Retirement Plans. The Fund will not report to the IRS dividends paid
to such plans. Generally, distributions from qualified Retirement Plans,
except those representing returns of non-deductible contributions thereto,
will be taxable as ordinary income and, if made prior to the time the
participant reaches age 59-1/2, generally will be subject to an additional tax
equal to 10% of the taxable portion of the distribution. If the distribution
from such a Retirement Plan (other than certain governmental or church plans)
for any taxable year following the year in which the participant reaches age
701/2 is less than the "minimum required distribution" for that taxable year,
an excise tax equal to 50% of the deficiency may be imposed by the IRS. The
administrator, trustee or custodian of such a Retirement Plan will be
responsible for reporting distributions from such plans to the IRS. Moreover,
certain contributions to a qualified Retirement Plan in excess of the amounts
permitted by law may be subject to an excise tax.
Page 23
With respect to individual investors and certain non-qualified
Retirement Plans, Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized long-term capital gains and the proceeds of
any redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct or
that such shareholder has not received notice from the IRS of being subject
to backup withholding as a result of a failure to properly report taxable
dividend or interest income on a Federal income tax return. Furthermore, the
IRS may notify the Fund to institute backup withholding if the IRS determines
a shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax withheld as
a result of backup withholding does not constitute an additional tax imposed
on the record owner of the account and may be claimed as a credit on the
record owner's Federal income tax return.
The Fund may be subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of taxable investment
income and capital gains.
You should consult your tax advisers regarding specific questions
as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by
the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable service and
distribution fees. As a result, at any given time, the performance of the
Investor shares should be expected to be lower than that of Class R.
Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period. Advertisem
ents of the Fund's performance will include the Fund's average annual total
return for one, five and ten year periods, or for shorter periods depending
upon the length of time during which the Fund has operated. Computations of
average annual total return for periods of less than one year represent an
annualization of the Fund's actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the NAV at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the maximum public offering price per Class of such share on the last day of
that period. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Class of shares with bank deposits, savings
accounts, and similar investment alternatives which often provide an agreed-up
on or guaranteed fixed yield for a stated period of time.
Page 24
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, Morgan Stanley Capital International Europe Australia Far East
Index, CDA Technologies Indexes, the Consumer Price Index, and the Dow Jones
Industrial Average. Performance rankings as reported in CHANGING TIMES,
BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL,
IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR,
MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT,
FORBES, FORTUNE, BARRON'S and similar publications may also be used in
comparing the Fund's performance. Furthermore, the Fund may quote its shares'
total returns and yields in advertisements or in shareholder reports. The
Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
GENERAL INFORMATION
The Company was incorporated in Maryland on August 6, 1987 under
the name The Laurel Funds, Inc., and changed its name to The Dreyfus/Laurel
Funds, Inc. on October 17, 1994. The Company is registered with the SEC under
the 1940 Act, as an open-end, diversified management investment company. The
Company has an authorized capitalization of 25 billion shares of $0.001 par
value stock with equal voting rights. The Fund is a portfolio of the Company.
The Fund's shares are classified into two classes_Investor shares and Class R
shares. The Company's Articles of Incorporation permit the Board of Directors
to create an unlimited number of investment portfolios (each a "fund").
Each share (regardless of Class) has one vote. All shares of all
funds (and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Investor shares will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan relating to that Class.
At March 31, 1995, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the Fund's
outstanding voting shares, and is deemed, under the 1940 Act, to be a
controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of
Directors or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Company to
hold a special meeting of shareholders for purposes of removing a Director
from office and for any other proper purpose. Company shareholders may remove
a Director by the affirmative vote of a majority of the Company's voting
shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
Page 25
The Transfer Agent maintains a record of your ownership and will
send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144 or by calling toll
free 1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 26
International
Equity Allocation
Fund
PROSPECTUS
Copy Rights 1995 Dreyfus Service Corporation
323/723p1041095
- -------------------------------------------------------------------------------
PROSPECTUS APRIL 10, 1995
DREYFUS/LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------
DREYFUS/LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND (THE "FUND"),
FORMERLY CALLED THE "LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND," IS A
SEPARATE PORTFOLIO OF THE DREYFUS/LAUREL FUNDS, INC., AN OPEN-END,
DIVERSIFIED MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL
FUND. THE FUND SEEKS A HIGH LEVEL OF CURRENT INCOME BY INVESTING IN U.S.
GOVERNMENT AND AGENCY OBLIGATIONS WITH REMAINING MATURITIES OF FIVE YEARS OR
LESS.
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. AND ITS AFFILIATES)("BANKS") ACTING ON BEHALF OF
CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP AT
SUCH INSTITUTION, OR TO INVESTORS WHO HAVE RECEIVED AND HOLD SHARES OF THE
FUND DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR RELATIONSHIP.
INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS BY THE FUND'S
DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER FINANCIAL
INSTITUTIONS ("AGENTS") THAT HAVE ENTERED INTO A SELLING AGREEMENT WITH THE
FUND'S DISTRIBUTOR.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUND ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDERS SERVICING FEES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
--------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED APRIL 10, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY,
WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
--------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
EXPENSE SUMMARY............................. 4
FINANCIAL HIGHLIGHTS........................ 5
DESCRIPTION OF THE FUND..................... 6
MANAGEMENT OF THE FUND...................... 10
HOW TO BUY FUND SHARES...................... 11
SHAREHOLDER SERVICES........................ 14
HOW TO REDEEM FUND SHARES................... 17
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).... 19
PERFORMANCE INFORMATION..................... 20
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES.... 21
GENERAL INFORMATION......................... 22
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
---------------- ----------------
<S> <C> <C>
SHAREHOLDERS TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases....................... none none
Maximum Sales Load Imposed on Reinvestments................... none none
Deferred Sales Load........................................... none none
Redemption Fee................................................ none none
Exchange Fee.................................................. none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fee................................................ 0.55% 0.55%
12b-1 Fees (1)................................................ 0.25% none
Other Expenses (2)............................................ 0.00% 0.00%
------- -------
Total Fund Operating Expenses................................. 0.80% 0.55%
EXAMPLES
You would pay the following on
a $1,000 investment, assuming (1) a
5% annual return and (2) redemption
at the end of each time period: INVESTOR SHARES CLASS R SHARES
----------------- ----------------
1 Year $ 8 $ 6
3 Years $26 $18
5 Years N/A N/A
10 Years N/A N/A
</TABLE>
- ----------------
(1)See "Distribution Plan (Investor Shares Only") for a description of the
Fund's Distribution Plan for the Investor Class.
(2)Does not include fees and expenses of the non-interested directors
(including counsel). The investment manager is
contractually required to reduce its Management Fee in an amount equal to the
Fund's allocable portion of such fees and expenses, which are estimated to be
..02% of the Fund's net assets (See "Management of the Fund.")
- -------------------------------------------------------------------------------
The amounts listed in the example shOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY
AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- -------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Long-term investors in Investor shares could pay more in 12b-1 fees
than the economic equivalent of paying the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc. The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may be in
effect. Certain agents may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of the Fund," "How to Buy Fund Shares" and
"Distribution Plan (Investor Shares Only)."
The Fund understands that banks, brokers, dealers or other financial
institutions (including Mellon Bank and its affiliates) (collectively
"Agents'') may charge fees to their clients who are owners of the Fund's
Investor shares for various services provided in connection with a client's
account. These fees would be in addition to any amounts received by an Agent
under its selling Agreement ("Agreement'') with Premier Mutual Fund Services,
Inc. (the "Distributor"). The Agreement requires each Agent to disclose to
its clients any compensation payable to such Agent by the Distributor and any
other compensation payable by the clients for various services provided in
connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor share and Class R share of
the Fund outstanding for the period ending October 31, 1994 and should be
read in conjunction with the financial statements and related notes that
appear in the Fund's Annual Report dated October 31, 1994. The financial
statements included in the Fund's Annual Report are incorporated by reference
into the SAI and have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report appears in the Fund's Annual Report. Further
information about the Fund's performance is contained in the Fund's Annual
Report which may be obtained without charge.
<TABLE>
DREYFUS/LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*#
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.00
--------
Income from investment operations:
Net investment income 0.18
Less distribution:
Distributions from net investment income (0.18)
--------
Net asset value, end of period $10.00
=======
Total return 1.84%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 38
Ratio of operating expenses to average net assets 0.80%+
Ratio of net income to average net assets 3.30%+
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Investor Shares on April 12, 1994.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. Prior to October 17, 1994, Mellon Bank, N.A.
served as the Fund's investment manager.
Page 5
<TABLE>
DREYFUS/LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*#
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.00
--------
Income from investment operations:
Net investment income 0.20
Less distribution:
Distributions from net investment income (0.20)
--------
Net asset value, end of period $10.00
=======
Total return 2.04%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 805
Ratio of operating expenses to average net assets 0.55%
Ratio of net investment income to average net assets 3.55%
- ------------------------------------------------------------------------------------------------------------------
* The Fund commenced selling Trust Shares on April 6, 1994. Effective
October 17, 1994, the Trust Class of shares were reclassified as Class R
Shares.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. Prior to October 17, 1994, Mellon Bank, N.A.
served as the Fund's investment manager.
</TABLE>
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Investor shares and Class R
shares. (Class R shares of the Fund were formerly called Trust Shares.)
Investor shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to Banks acting on behalf of customers having a qualified trust or
investment account or relationship at such institution, or to customers who
have received and hold shares of the Fund distributed to them by virtue of
such an account or relationship. Investor shares are primarily sold to retail
investors by the Distributor and by Agents that have entered into a Selling
Agreement with the Distributor. If shares of the Fund are held in an account
at a Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit transaction requests to the Fund's transfer
agent or to the Distributor. Distributor and shareholder servicing paid by
Investor shares will cause Investor shares to have a higher expense ratio and
pay lower dividends than Class R.
INVESTMENT OBJECTIVE
The Fund seeks a high level of current income by investing in U.S.
Government and agency obligations with remaining maturities of five years or
less. There can be no assurance that the Fund will meet its investment
objective.
MANAGEMENT POLICIES
The Fund will invest 65% or more of its total assets in U.S.
Government and agency obligations. Generally, the Fund's securities will have
a total dollar-weighted average maturity of eighteen months to
Page 6
three years.
The Fund's investments may also include securities which are not guaranteed
by the U.S. Government, its agencies or instrumentalities. For purposes of
maintaining liquidity, the Fund may also invest in: (1) repurchase
agreements, (2) reverse repurchase agreements, (3) commercial paper and (4)
when-issued transactions. The Fund may lend securities in an amount not to
exceed 33 1/3% of total assets.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the Fund
may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
SECURITIES LENDING. To increase return on Fund securities, the Fund
may lend its portfolio securities to broker-dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market
value of the securities loaned. There may be risks of delay in receiving
additional collateral or in recovering the securities loaned or even a loss
of rights to the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by Dreyfus to
be of good standing and when, in its judgment, the income to be earned from
the loan justifies the attendant risks.
WHEN ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure
advantageous prices or yields, the Fund may purchase U.S. Government
securities on a when-issued basis or may purchase or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by
the Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the market place, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transactions. The Fund will establish
a segregated account consisting of cash, U.S. Government securities or other
high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to achieve
the Fund's investment objective by investing all of the Fund's assets in
another investment company having the same investment objective and
substantially the same investment policies and restrictions as those
applicable to the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment. Such investment would be made only
if the Directors determine it to be in the best interest of the Fund and its
shareholders. In making that determination, the Directors will consider,
among other things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the Fund believes
that the Directors will not approve an arrangement that is likely to result
in higher costs, no assurance is given that costs will be materially reduced
if this option is implemented.
CERTAIN PORTFOLIO SECURITIES
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated A-1 at the time of purchase by Standard & Poor's Ratings
Group, Prime-1 by Moody's Investors Service, Inc., F-1 by Fitch Investors
Service, Inc., Duff 1 by Duff & Phelps, Inc. or A1 by IBCA, Inc.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
A repurchase agree-
Page 7
ment involves the purchase of a security by the Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from the Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
limit stated below under "Illiquid Securities."
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
Fund securities is deemed by Dreyfus to be disadvantageous. Under a reverse
repurchase agreement, the Fund: (i) transfers possession of Fund securities
to a bank or broker-dealer in return for cash in an amount equal to a
percentage of the securities' market value; and (ii) agrees to repurchase the
securities at a future date by repaying the cash with interest. Cash or
liquid high-grade debt securities held by the Fund equal in value to the
repurchase price including any accrued interest will be maintained in a
segregated account while a reverse repurchase agreement is in effect.
GNMA CERTIFICATES. The Fund may invest in Government National
Mortgage Association ("GNMA'') securities ("GNMA Certificates''). GNMA
Certificates are mortgage-backed securities representing part ownership of a
pool of mortgage loans. These loans are made by mortgage bankers, commercial
banks, savings and loan associations, and other lenders and are either
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool'' or group of such mortgages is assembled and, after
being approved by GNMA, is offered to investors through securities dealers.
Once approved by GNMA, the timely payment of interest and principal on each
mortgage is guaranteed by the full faith and credit of the U.S. Government.
Although the mortgage loans in a pool underlying a GNMA Certificate will have
maturities of up to 30 years, the average life of a GNMA Certificate will be
substantially less because the mortgages will be subject to normal principal
amortization and also may be prepaid prior to maturity. Prepayment rates vary
widely and may be affected by changes in mortgage interest rates. In periods
of falling interest rates, the rate of prepayment on higher interest mortgage
rates tends to increase, thereby shortening the actual average life of the
GNMA Certificate. Conversely, when interest rates are rising, the rate of
prepayment tends to decrease, thereby lengthening the average life of the
GNMA Certificate. Reinvestment of prepayments may occur at higher or lower
rates than the original yield on the Certificates. Due to the prepayment
feature and the need to reinvest prepayments of principal at current rates,
GNMA Certificates with underlying mortgages bearing higher interest rates can
be less effective than typical non-callable bonds of similar maturities at
locking in yields during periods of declining interest rates, although they
may have comparable risks of decline in value during periods of rising
interest rates.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). The Fund may invest in commercial
obligations issued in reliance on the so-called "private placement''
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended ("Section 4(2) paper''). The Fund may also purchase
securities that are not registered under the Securities Act of 1933, as
amended, but which can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities''). Liquidity
determinations with respect to Section 4(2) paper and Rule 144A securities
will be made by the Board of Directors as required. The Board will consider
availability of reliable price information and other relevant information in
making such determinations. Section 4(2) paper is restricted as to
disposition under the federal securities laws, and generally is sold to
institutional investors such as the Fund that agree that they are purchasing
the paper for investment and not with a view to public distribution. Any
resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assis-
Page 8
tance of the issuer or investment dealers who make a market in
the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a
particular investment in Section 4(2) paper or Rule 144A securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities.
MORTGAGE PASS-THROUGH CERTIFICATES. The Fund may invest in Mortgage
Pass-Through Certificates. Mortgage pass-through certificates are issued by
governmental, government-related and private organizations and are backed by
pools of mortgage loans. These mortgage loans are made by lenders such as
savings and loan associations, mortgage bankers, commercial banks and others
to residential home buyers throughout the United States. The securities are
"pass-through'' securities because they provide investors with monthly
payments of principal and interest which in effect are a "pass-through'' of
the monthly payments made by the individual borrowers on the underlying
mortgage loans. The principal governmental issuer of such securities is the
GNMA, which is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development. Government-related issuers
include the Federal Home Loan Mortgage Corporation ("FHLMC'') and the Federal
National Mortgage Association ("FNMA''), both of which are
government-sponsored corporations owned entirely by private stockholders.
Certificates created by Government-related issuers may not be guaranteed by
the U.S. government, its agencies, or instrumentalities. Commercial banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers also create pass-through pools of
conventional residential mortgage loans. Such issuers may be the originators
of the underlying mortgage loans as well as the guarantors of the
mortgage-related securities. The market value of mortgage-related securities
depends on, among other things, the level of interest rates, the
certificates' coupon rates and the payment history of underlying mortgage
loans. For further information, see the SAI.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended (the "1940 Act''). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations issued
or guaranteed as to both principal and interest by the U.S. Government or
backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, GNMA, General Services Administration and Maritime
Administration. Investments may also be made in U.S. Government obligations
that do not carry the full faith and credit guarantee, such as those issued
by FNMA, FHLMC or other instrumentalities.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on
the basis of potential for current income and not for short-term trading
profits, the Fund's turnover rate may exceed 100%. A portfolio turnover rate
of 100% would occur, for example, if all the securities held by the Fund were
replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses
which must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result in
the realization of larger amounts of short-term capital gains which, when
distributed to the Fund's shareholders, are taxable to them as ordinary
income. Nevertheless, security transactions for each Fund will be based only
upon investment considerations and will not be limited by any other
considerations when Dreyfus deems it appropriate to make changes in the
Fund's assets.
RISK FACTORS
Page 9
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. The SAI describes all of the
Fund's fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's shares in certain states,
the Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of the
Fund, it may consider terminating sales of its shares in the states involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises
and assists in the overall management of the Fund's affairs under an
Investment Management Agreement with the Fund, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. As the Fund's investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies and
restrictions.
The Fund is managed by Laurie Carroll. Ms. Carroll is a Senior Vice
President and portfolio manager at Mellon Bank. Ms. Carroll has been employed
by Mellon Bank since 1986. Ms. Carroll is also a portfolio manager at Dreyfus
and has been employed by Dreyfus since October 17, 1994.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $193 billion in assets as of
December 31, 1994, including $76 billion in mutual fund assets. As of
December 31, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $654 billion in assets, including approximately $74 billion in
mutual fund assets.
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee, at the annual rate of .55 of 1% of the Fund's average
daily net assets. Dreyfus pays all of the Fund's expenses, except brokerage
fees, taxes, interest, fees and expenses of the non-interested Directors
(including counsel fees), Rule 12b-1 fees (if applicable) and extraordinary
expenses. Although Dreyfus does not pay for the fees and expenses of the
non-interested Directors (including counsel fees), Dreyfus is contractually
required to reduce its investment management fee in an amount equal to the
Fund's allocable share of such expenses. In order to compensate Dreyfus for
paying virtually all of the Fund's expenses, the Fund's investment management
fee is higher than the investment advisory fees paid by most investment
companies. Most if not all, such companies also pay for additional
non-investment advisory expenses that are not paid by such companies'
Page 10
investment adviser. From time to time, Dreyfus may waive (either voluntarily
or pursuant to applicable state limitations) a portion of the investment
management fees payable by the Fund.
In addition, Investor shares may be subject to certain distribution
and service fees. See "Distribution Plan (Investor Shares only)."
Dreyfus may pay the Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Distributor may use part or all of such payments to
pay Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective, policies
and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR--Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian and fund accountant. The Fund's
Transfer and Dividend Disbursing Agent is The Shareholder Services Group,
Inc. (the "Transfer Agent"), a subsidiary of First Data Corporation, One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. is the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL-- Investor shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into Selling
Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. A
Retirement Plan is a certain qualified or non-qualified employee benefit plan
or other program, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("Retirement Plan"). Class
R shares may be purchased for a Retirement Plan only by a custodian, trustee,
investment manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, board members of a fund advised by
Dreyfus including members of the Company's board, or the spouse or minor
child of any of the foregoing, the minimum initial investment in $1,000. For
full-
Page 11
time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Fund reserves
the right to offer Fund shares without regard to minimum purchase
requirements to employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or account
information can be transmitted in a manner and form acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to Retirement
Plans. These limitations apply with respect to participants at the plan level
and, therefore, do not directly affect the amount that may be invested in the
Fund by a Retirement Plan. Participants and plan sponsors should consult
their tax advisers for details.
You may purchase Fund shares by check or wire or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application
indicating which Class of shares is being purchased. For subsequent
investments, your Fund account number should appear on the check and an invest-
ment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement plan accounts,
both initial and subsequent investments should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427.
Neither initial nor subsequent investments should be made by third party
check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL
CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY
UPON RECEIPT THEREBY. FOR THE LOCATION OF THE NEAREST DREYFUS FINANCIAL
CENTER, PLEASE CALL ONE OF THE TELEPHONE NUMBERS LISTED UNDER "GENERAL
INFORMATION."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA # as shown below, for purchase of Fund shares in your
name:
DDA# 043494 Dreyfus/Laurel Short-Term Government Securities
Fund/Investor shares;
DDA# 043486 Dreyfus/Laurel Short-Term Government Securities
Fund/Class R shares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, you should call 1-800-645-6561 after completing your
wire payment in order to obtain your Fund account number. Please include your
Fund account number on the Fund's Account Application and promptly mail the
Account Application to the Fund, as no redemptions will be permitted until
the Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only on U.S. banks
.. A charge will be imposed if any check used for investment in your account
does not clear. The Fund makes available to certain large institutions the
ability to issue purchase instructions through compatible computer
facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit &Trust Co. with instructions to credit your
Fund account. The instructions must specify your Fund account registration
and Fund account number PRECEDED BY THE DIGITS :
Page 12
"4820" Dreyfus/Laurel Short-Term Government Securities Fund/Investor
shares;
"4830" Dreyfus/Laurel Short-Term Government Securities Fund/Class R
shares.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in The Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE ("NAV") -- An investment portfolio's NAV refers to
the worth of one share. The NAV for Investor shares and Class R shares is
computed by adding, with respect to such Class of shares, the value of the
Fund's investments, cash, and other assets attributable to that Class,
deducting liabilities of the Class and dividing the result by the number of
shares of that Class outstanding. The valuation of assets for determining NAV
for the Fund may be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the mean of the latest bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the latest bid
and asked prices but will be valued at the last sale price if required by
regulations of the SEC. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in good
faith in accordance with procedures established by the Board of Directors.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors.
Pursuant to a determination by the Board of Directors that such value
represents fair value, debt securities with maturities of 60 days or less
held by the Fund are valued at amortized cost. When a security is valued at
amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument.
NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"), as of the close of business of the
regular session of the NYSE (usually 4 p.m., Eastern Time). Investments and
requests to exchange or redeem shares received by the Fund in proper form
before the close of business on the NYSE (usually 4 p.m., Eastern Time) are
effective on, and will receive the share price determined on, that day
(except purchase orders made through the Dreyfus TELETRANSFER Privilege,
which are effective one business day after your call). Investment, exchange
and redemption requests received after the close of the NYSE are effective on
and receive the share price determined on the next business day.
Page 13
The NAV of most shares of investment portfolios advised by Dreyfus
(other than money market funds) is published in leading newspapers daily. The
yield of most Dreyfus money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of any Dreyfus
fund may also be obtained by calling 1-800-645-6561.
The public offering price of Investor shares and Class R shares is
the NAV per share of that Class.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the Transfe
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the
same class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. WITH
RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE
ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of Personal
Retirement Plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "No" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, or by a
separate Shareholder Services Form, also available by calling 1-800-645-6561.
If you previously have established the Telephone Exchange Privilege, you may
telephone exchange instructions by calling 1-800-221-4060 or, if calling from
overseas, 1-401-455-3306. See "How to Redeem Fund Shares_Procedures." Upon
an exchange, the following shareholder services and privileges, as applicable
and where available, will be automatically carried over to the fund into
which the exchange is made: Telephone Exchange Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and
the dividends and distributions payment option (except for Dividend Sweep)
selected by the investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges of Investor shares into funds
sold with a sales load. If you are exchanging Investor
Page 14
shares into a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nominal
fee in accordance with rules promulgated by the SEC. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
fund exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS
R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however a sales load may be charged with respect to exchanges of Investor
shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization by calling 1-800-645-6561 from the Distributor. You may cancel
your participation in this Privilege or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of
Page 15
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of certain other funds in the Dreyfus Family of
Funds of which you are an investor. Shares of the other fund will be
purchased at the then-current NAV; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you
to transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an ACH member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these privileges is effective three business days
following receipt. These Privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan.
Page 16
The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus sponsored retirement
plans, may permit certain participants to establish an automatic withdrawal
plan from such Retirement Plans. Participants should consult their Retirement
Plan sponsor and tax adviser for details. Such a withdrawal plan is different
than the Automatic Withdrawal Plan. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. The Automatic
Withdrawal Plan may be ended at any time by the shareholder, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined NAV as described below. If you hold Fund shares of more than
one Class, any request for redemption must specify the Class of shares being
redeemed. If you fail to specify the Class of shares to be redeemed or if you
own fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further instructions
from you or your Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Agents or other institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND
Page 17
YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund
shares will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege or, through the Dreyfus TELETRAN
SFER Privilege. Other redemption procedures may be in effect for clients of
certain Agents and institutions. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's NAV may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. REDEMPTION REQUESTS MAY BE
DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL CENTER. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR
THE LOCATION OF THE NEAREST FINANCIAL CENTER, PLEASE CALL THE TELEPHONE NUMBER
LISTED UNDER "GENERAL INFORMATION." Redemption requests must be signed by
each shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program. For
more information with respect to signature-guarantees, please call one of the
telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record
Page 18
and mailed to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of only up to $250,000 wired within any 30-day
period. You may telephone redemption requests by calling 1-800-221-4060 or, if
calling from overseas, 1-401-455-3306. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. This Privilege may be modified or
terminated at any time by the Transfer Agent or the Fund. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which certificates
have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem Fund shares (minimum
$500 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between your Fund account and the bank account designated in
one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus TELETR
ANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Fund reserves the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)
Investor shares are subject to a Distribution Plan ("the "Plan'')
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1''). Investor
shares of the Fund bear some of the cost of selling these shares under the
Plan. The Plan allows the Fund to spend annually up to 0.25% of its average
daily net assets attributable to Investor shares to compensate Dreyfus
Service Corporation, an affiliate of Dreyfus, for shareholder servicing
activities and the Distributor for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Investor
shares of the Fund. The Plan allows the Distributor to make payments from the
Rule 12b-1 fees it collects from the Fund to compensate Agents that have
entered into Selling Agreements ("Agreements'') with the Distributor. Under
the Agreements, the Agents are obligated to provide distribution related
services with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor shares of the Fund.
Page 19
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. From time to time, the Agents, the
Distributor and the Fund may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be
calculated on the basis of average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by
the Fund during the measuring period were reinvested in shares of the same
Class. These figures also take into account any applicable service and
distribution fees. As a result, at any given time, the performance of the
Investor shares should be expected to be lower than that of Class R Shares.
Performance for each Class will be calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial
payment of $1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of dividends and
other distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would result
in the redeemable value of the investment at the end of the period. Advertisem
ents of the Fund's performance will include the Fund's average annual total
return for one, five and ten year periods, or for shorter periods depending
upon the length of time during which the Fund has operated. Computations of
average annual total return for periods of less than one year represent an
annualization of the Fund's actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and other distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the NAV at the
beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return. Total return also may be calculated by using the NAV at the beginning
of the period for Investor shares.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period by
the maximum public offering price per Class of such share on the last day of
that period. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Class of shares with bank deposits, savings
accounts, and similar investment alternatives which often provide an
agreed-upon or guaranteed fixed yield for a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
ratings, CDA Technologies indexes, indexes created by Lehman Brothers, the
Consumer Price Index and the Dow Jones Industrial Average. Performance
rankings as reported in CHANGING TIMES, BUSINESS WEEK, INSTITUTIONAL
INVESTOR, THE WALL STREET JOURNAL, IBC/DONOGHUE'S MONEY FUND
Page 20
REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR
MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE, BARRON'S and
similar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its shares' total returns and yields in
advertisements or in shareholder reports. The Fund may also advertise
non-standardized performance information, such as total return for periods
other than those required to be shown or cumulative performance data. The
Fund may advertise a quotation of yield or other similar quotation
demonstrating the income earned or distributions made by the Fund.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays monthly (on the first business day
of the following month) dividends from its net investment income, if any and
distributes net realized gains, if any, on an annual basis. The Board of
Directors may elect not to distribute capital gains in whole or in part to
take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gain
distributions in cash, your distributions will be automatically reinvested in
additional shares of the Fund at the NAV. You may change the method of
receiving distributions at any time by writing to the Fund. Checks which are
sent to shareholders who have requested distributions to be paid in cash and
which are subsequently returned by the United States Postal Service as not
deliverable or which remain uncashed for six months or more will be reinvested
in additional Fund shares in the shareholder's account at the then current
NAV. Subsequent Fund distributions will be automatically reinvested in
additional Fund shares in the shareholder's account.
Distributions paid by the Fund with respect to one class of shares
may be greater or less per share than those paid with respect to another
class of shares due to the different expenses of the different classes.
Shares purchased on a day on which the Fund calculates its NAV will
not begin to accrue dividends until the following day. Redemption orders
effected on any particular day will receive all dividends declared through
the day of redemption.
You may elect to have distributions on shares held in an IRA and
403(b) account paid in cash only if you are at least 59 1/2 years old or are
permanently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the Fund will
reduce each share's NAV by the amount of the distribution. Shareholders are
subject to taxes with respect to any such distribution. At any given time,
the value of the Fund's Shares includes the undistributed net gains, if any,
realized by the Fund on the sale of portfolio securities, and undistributed
dividends and interest received, less the Fund's expenses. Because such gains
and income are included in the value of your shares, when they are
distributed the value of your shares is reduced by the amount of the
distribution. Accordingly, if your distribution is reinvested in additional
shares, the distribution has no effect on the value of your investment; while
you own more shares, the value of each share has been reduced by the amount
of the distribution. Likewise, if you take your distribution in cash, the
value of your shares immediately after the distribution plus the cash
received is equal to the value of the shares immediately before the
distribution. For example, if you own a Fund share that immediately before a
distribution has a value of $10, including $2 in undistributed dividends and
capital gains realized by the Fund during the year, and if the $2 is
distributed, the value of the share will decline to $8. If the $2 is
reinvested at $8 per share, you will receive .250 shares, so that, after the
distribution, you will have 1.250 shares at $8 per share, or $10, the same as
before.
The Fund intends to qualify for treatment as a regulated investment
company under the Code so that it will be relieved of federal income tax on
that part of its investment company taxable income (consisting generally of
taxable net investment income, net short-term capital gain) and net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) that is distributed to its shareholders.
Page 21
Dividends from the Fund's investment company taxable income are
taxable to you as ordinary income to the extent of the Fund's earnings and
profits. Distributions by the Fund of net capital gain, when designated as
such, are taxable to you as long-term capital gains, regardless of the length
of time you have owned your Shares.
Dividends and other distributions are taxable to you regardless of
whether they are received in cash or reinvested in additional Fund shares,
even if the value of your shares is below your cost. If you purchase shares
shortly before a taxable distribution, you must pay income taxes on the
distribution even though the value of your investment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the Fund. If
these portfolio securities are subsequently sold and the gains are realized,
they will, to the extent not offset by capital losses, be paid to you as a
capital gain distribution and will be taxable to you.
Dividends paid by the Fund to qualified retirement plans ordinarily
will not be subject to taxation until the proceeds are distributed from the
retirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except those
representing returns of non-deductible contributions thereto, will be taxable
as ordinary income and, if made prior to the time the participant reaches age
59 1/2, generally will be subject to an additional tax equal to 10% of the
taxable portion of the distribution. If the distribution from such a
retirement plan (other than certain governmental or church plans) for any
taxable year following the year in which the participant reaches age 70 1/2
is less than the "minimum required distribution'' for that taxable year, an
excise tax equal to 50% of the deficiency may be imposed by the IRS. The
administrator, trustee or custodian of such a retirement plan will be
responsible for reporting such distributions from such plans to the IRS.
Moreover, certain contributions to a qualified retirement plan in excess of
the amounts permitted by law may be subject to an excise tax.
In January of each year, the Fund will send you a Form 1099-DIV
notifying you of the status for federal income tax purposes of your
distributions for the preceding year.
You must furnish the Fund with your taxpayer identification number
("TIN'') and state whether you are subject to withholding for prior
under-reporting, certified under penalties of perjury as prescribed by the
Code and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is required
to withhold a portion of all dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct TIN; withholding
from dividends and capital gain distributions also is required for such
shareholders who otherwise are subject to backup withholding.
The Fund will be subject to a 4% nondeductible excise tax to the
extent it fails to distribute by the end of any calendar year substantially
all of its taxable ordinary income for that year and capital gain net income
for the one-year period ending on October 31 of that year, plus certain other
amounts. The Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Fund and its shareholders; see the SAI
for a further discussion. There may be other federal, state or local tax
considerations applicable to a particular investor. You therefore are urged
to consult your own tax adviser.
GENERAL INFORMATION
The Company was incorporated in Maryland on August 6, 1987 under the
name The Laurel Funds, Inc. and changed its name to The Dreyfus/Laurel Funds,
Inc. on October 17, 1994. The Company is registered with the SEC under the
1940 Act as an open-end, diversified, management investment company. The
Company has an authorized capitalization of 25 billion shares of $0.001 par
value stock with equal voting rights. The Company's Articles of Incorporation
permit the Directors to create an unlimited number of investment portfolios
(each a "fund''). The Fund offered by this Prospectus currently issues two
classes of shares designated "Investor'' and "Class R'' shares.
Page 22
Each share (regardless of Class) has one vote. All shares of a fund
(and Classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or classes, in which case only the shareholders of the
affected fund or classes are entitled to vote, each as a separate class. Only
holders of Investor shares will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan relating to that Class.
At March 31, 1995, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the Company's
outstanding voting shares, and is deemed, under the 1940 Act, to be a
controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office and
for any other proper purpose. Company shareholders may remove a Director by
the affirmative vote of a majority of the Company's outstanding voting
shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 23
Dreyfus/Laurel Short-Term Government Securities Fund
PROSPECTUS
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
309/709p1041095
- -------------------------------------------------------------------------------
PROSPECTUS APRIL 10, 1995
DREYFUS/LAUREL PRIME MONEY MARKET FUND
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
- -------------------------------------------------------------------------------
THIS PROSPECTUS DESCRIBES THE THREE INVESTMENT PORTFOLIOS LISTED
BELOW (EACH A "FUND" COLLECTIVELY THE "FUNDS" OR THE "MONEY MARKET FUNDS") OF
THE DREYFUS/LAUREL FUNDS, INC. (FORMERLY THE LAUREL FUNDS, INC.), AN
OPEN-END, DIVERSIFIED MANAGEMENT INVESTMENT COMPANY (THE "COMPANY") THAT IS
PART OF THE DREYFUS FAMILY OF FUNDS. THIS PROSPECTUS DESCRIBES TWO CLASSES OF
SHARES--INVESTOR SHARES AND CLASS R SHARES (COLLECTIVELY, THE "SHARES")--OF
THE FUNDS.
THE DREYFUS/LAUREL PRIME MONEY MARKET FUND SEEKS A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH STABILITY OF PRINCIPAL BY INVESTING IN
HIGH-GRADE MONEY MARKET INSTRUMENTS.
THE DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND SEEKS INCOME EXEMPT
FROM FEDERAL INCOME TAX CONSISTENT WITH STABILITY OF PRINCIPAL BY INVESTING
IN TAX-EXEMPT MUNICIPAL OBLIGATIONS.
THE DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND SEEKS A HIGH LEVEL
OF CURRENT INCOME CONSISTENT WITH STABILITY OF PRINCIPAL BY INVESTING IN
DIRECT OBLIGATIONS OF THE U.S. TREASURY AND REPURCHASE AGREEMENTS SECURED BY
SUCH OBLIGATIONS.
THE MONEY MARKET FUNDS SEEK TO MAINTAIN A STABLE NET ASSET VALUE
("NAV") OF $1.00 PER SHARE. INVESTMENTS IN THESE MONEY MARKET FUNDS ARE
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO
ASSURANCE THAT THESE MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUNDS ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDERS SERVICING FEES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUNDS' INVESTMENT MANAGER. THE
DREYFUS CORPORATION IF REFERRED TO AS "DREYFUS."
--------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUNDS THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED APRIL 10, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE, FOR A FREE COPY,
WRITE TO THE FUNDS AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
--------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
ALL MONEY MARKET FUNDS INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH EACH FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUNDS' PROSPECTUS. EACH FUND PAYS MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUNDS, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUNDS ARE
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF ITS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
(Continued from page 1)
BY THIS PROSPECTUS, THE FUNDS ARE OFFERING INVESTOR SHARES AND CLASS
R SHARES. (CLASS R SHARES OF THE FUNDS WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK, N.A. AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF
OF CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP
AT SUCH INSTITUTION. INVESTOR SHARES ARE PRIMARILY SOLD TO RETAIL INVESTORS
BY THE FUNDS' DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND
OTHER FINANCIAL INSTITUTIONS ("AGENTS") THAT HAVE ENTERED INTO A SELLING
AGREEMENT WITH THE FUNDS' DISTRIBUTOR.
TABLE OF CONTENTS
Page
EXPENSE SUMMARY................................... 4
FINANCIAL HIGHLIGHTS.............................. 5
DESCRIPTION OF THE FUNDS.......................... 11
MANAGEMENT OF THE FUNDS........................... 19
HOW TO BUY FUND SHARES............................ 21
SHAREHOLDER SERVICES.............................. 24
HOW TO REDEEM FUND SHARES......................... 27
DISTRIBUTION PLAN (INVESTOR SHARES ONLY).......... 30
PERFORMANCE INFORMATION........................... 30
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES.......... 31
GENERAL INFORMATION............................... 33
Page 2
[This PageIntentionally Left Blank]
Page 3
EXPENSE SUMMARY
The purpose of the following table is to help you understand the various
costs and expenses that you, as a Shareholder, will bear directly or
indirectly in connection with an investment in the Investor or Class R Shares
of the Money Market Funds. (See "Management of the Funds.")
<TABLE>
<CAPTION>
INVESTOR SHARES CLASS R SHARES
---------------- ----------------
<S> <C> <C>
SHAREHOLDERS TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases....................... none none
Maximum Sales Load Imposed on Reinvestments................... none none
Deferred Sales Load........................................... none none
Redemption Fee................................................ none none
Exchange Fee.................................................. none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fee................................................ 0.50% 0.50%
12b-1 Fees*................................................... 0.20% none
Other Expenses **............................................. 0.00% 0.00%
------ -------
Total Fund Operating Expenses.................................. 0.70% 0.50%
EXAMPLES
You would pay the following on
a $1,000 investment, assuming (1) a
5% annual return and (2) redemption
at the end of each time period: INVESTOR SHARES CLASS R SHARES
---------------- ----------------
1 Year $ 7 $ 5
3 Years $22 $16
5 Years N/A $28
10 Years N/A $63
</TABLE>
- --------------------------------
* See "Investor Shares' Distribution Plan" for a description of each
Fund's Plan of Distribution for the Investor Class.
**Does not include fees and expenses of the non-interested directors
(including counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to the Fund's allocable portion
of such fees and expenses, which are estimated to be 0.02% of the Fund's net
assets (See "Management of the Funds.")
- -------------------------------------------------------------------------------
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.
- -------------------------------------------------------------------------------
The Funds understand that banks, brokers, dealers or other financial
institutions (including Mellon Bank and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Fund's
Investor Shares for various services provided in connection with a client's
account. These fees would be in addition to any amounts received by an Agent
under its Selling Agreement ("Agreement") with Premier Mutual Fund Services,
Inc. ("Premier"). The Agreement requires each Agent to disclose to its
clients any compensation payable to such Agent by Premier and any other
compensation payable by the clients for various services provided in
connection with its account.
Long-term shareholders of Investor Shares could pay more in Rule
12b-1 fees than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc.
Page 4
FINANCIAL HIGHLIGHTS
The following financial information for Investor and Class R Shares has been
derived from the financial statements which have been audited by KPMG Peat
Marwick LLP, the independent auditors for The Dreyfus/Laurel Funds, Inc., for
the indicated years or period ended October 31, whose reports accompany such
financial statements that appear in the Fund's Annual Report dated October
31, 1994 and which are incorporated by reference in the SAI. Further
information about the Fund's performance is contained in the Fund's Annual
Report, which may be obtained without charge.
<TABLE>
<CAPTION>
DREYFUS/LAUREL PRIME MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period.................................................... $ 1.00
-----------
Income from investment operations:
Net investment income........................................................... 0.0211
Less distributions:
Dividends from net investment income............................................ (0.0211)
-----------
Net asset value, end of period.......................................................... $ 1.00
Total return............................................................................ 2.14%
==========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............................................ $ 3,611
Ratio of operating expenses to average net assets............................... 0.71%#
Ratio of net investment income to average net assets............................ 3.31%#
- ---------------------------------------------------------------------------------------------------------------------
* The Fund commenced selling Investor Shares on April 6, 1994. Effective
October 17, 1994, The Dreyfus Corporation serves as the Fund's investment
manager. Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager.
Total return represents aggregate total return for the period indicated.
# Annualized.
</TABLE>
Page 5
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS/LAUREL PRIME MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/94*## 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88
---------- ---------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year.............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from
investment operations:
Net investment income 0.0344 0.0280 0.0385 0.0621 0.0820 0.0667 0.0601
Less distributions:
Dividends from net
investment income.... (0.0344) (0.0280) (0.0385) (0.0621) (0.0820) (0.0667) (0.0601)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return........... 3.52% 2.84% 3.92% 6.39% 8.55% 7.95% 6.18%
Ratios to average net
assets/supplemental data:
Net assets, end of year
(in 000's)........... $ 124,754 $103,760 $91,848 $105,329 $93,366 $92,257 $530
Ratio of operating expenses to
average net assets... 0.51% 0.50%** 0.50%** 0.50%** 0.16%** 0.00%** 0.60%#**
Ratio of net investment income
to average net assets 3.51% 2.80% 3.88% 6.13% 8.21% 8.97% 6.69%#
</TABLE>
- ----------------------------------------
* The Fund commenced operations on November 18, 1987. The Fund
commenced selling Investor Shares on April 6, 1994.
Those shares outstanding prior to April 4, 1994 were designated Trust
Shares. Effective as of October 17, 1994, the Fund's Trust Shares were
redesignated Class R Shares.
** For the years or period ended October 31, 1992, 1991, 1990,
1989 and 1988, the investment adviser waived all or a portion of its
advisory fee amounting to $0.0007, $0.0010, $0.0038, $0.0043 and $0.0045
per share, respectively. For the years or period ended October 31, 1993,
1992, 1991, 1990, 1989 and 1988, the investment adviser reimbursed
expenses of the Fund amounting to $0.0036, $0.0027, $0.0018, $0.0026,
$0.0062 and $0.3952 per share, respectively.
Net investment income before expenses reimbursed by the
investment adviser for the year ended October 31, 1994 was $0.0331.
Total return represents aggregate total return for the periods
indicated.
Annualized operating expense ratio before expenses reimbursed by the
investment adviser for the year ended October 31, 1994 was 0.64%.
# Annualized.
## Effective October 17, 1994, The Dreyfus Corporation serves as
the Fund's investment manager. Prior to October 17, 1994, Mellon Bank,
N.A. served as the Fund's investment manager.
Page 6
FINANCIAL HIGHLIGHTS
The following financial information for Investor and Class R Shares has been
derived from the financial statements which have been audited by KPMG Peat
Marwick LLP, the independent auditors for The Dreyfus/Laurel Funds, Inc., for
the indicated years or period ended October 31, whose reports accompany such
financial statements that appear in the Fund's Annual Report dated October
31, 1994 and which are incorporated by reference in the SAI. Further
information about the Fund's performance is contained in the Fund's Annual
Report which may be obtained without charge.
<TABLE>
<CAPTION>
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period.................................................... $1.00
-----------
Income from investment operations:
Net investment income........................................................... 0.0113
Less distributions:
Dividends from net investment income............................................ (0.0122)
-----------
Net asset value, end of period.......................................................... $1.00
============
Total return............................................................................ 1.23%
============
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............................................ $1,161
Ratio of operating expenses to average net assets............................... 0.70%#
Ratio of net investment income to average net assets............................ 2.11%#
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Investor Shares on April 20,
1994.Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager. Prior to October 17, 1994, Mellon Bank, N.A.
served as the Fund's investment manager.
Total return represents aggregate total return for the period
indicated.
# Annualized.
Page 7
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/94*## 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88
---------- ---------- ---------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------- ------ ------ ------ ------
Income from investment operations:
Net investment income.. 0.0228 0.0208 0.0291 0.0454 0.0454 0.0564 0.0592
Less distributions:
Dividends from net
investment income...... (0.0228) (0.0208) (0.0291) (0.0454) (0.0454) (0.0564) (0.0592)
-------- --------- -------- --------- --------- --------- ----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ======
Total return............. 2.29% 2.10% 2.94% 4.64% 5.79% 6.08% 4.22%
====== ====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's) $205,105 $187,830 $184,719 $152,260 $152,260 $88,247 $56,224
Ratio of operating expenses
to average net assets.. 0.51% 0.50%** 0.50%** 0.50%** 0.55%** 0.70%** 0.70%**#
Ratio of net investment income
to average net assets.. 2.30% 2.08% 2.90% 4.49% 5.66% 5.95% 4.61%#
</TABLE>
- ---------------------------------
* The Fund commenced operations on December 10, 1987. The Fund
commenced selling Investor Shares on April 20, 1994. Those shares in
existence prior to April 4, 1994 were designated Trust Shares. Effective
as of October 17, 1994, the Fund's Trust Shares were reclassified as
Class R Shares.
** For the period ended October 31, 1988, the investment adviser
waived a portion of its advisory fee amounting to $0.0040 per share. For
the years or period ended October 31, 1993, 1992, 1991, 1990, 1989 and
1988, the investment adviser reimbursed expenses of the Fund amounting to
$0.0024, $0.0029, $0.0036, $0.0052, $0.0044 and $0.0031 per share,
respectively.
Net investment income before expenses reimbursed by the
investment adviser for the year ended October 31, 1994 was $0.0218.
Total return represents aggregate total return for the periods
indicated.
Annualized operating expense ratio before expenses reimbursed by the
investment adviser for the year ended October 31, 1994 was 0.60%.
# Annualized.
## Effective October 17, 1994, The Dreyfus Corporation serves as
the Fund's investment manager. Prior to October 17, 1994, Mellon Bank,
N.A. served as the Fund's investment manager.
Page 8
FINANCIAL HIGHLIGHTS
The following financial information for Investor and Class R Shares has been
derived from the financial statements which have been audited by KPMG Peat
Marwick LLP, the independent auditors for The Dreyfus/ Laurel Funds, Inc.,
for the indicated years or period ended October 31, whose reports accompany
such financial statements that appear in the Fund's Annual Report dated
October 31, 1994 and which are incorporated by reference in the SAI. Further
information about the Fund's performance is contained in the Fund's Annual
Report, which may be obtained without charge.
<TABLE>
<CAPTION>
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period.................................................... $1.00
-----------
Income from investment operations:
Net investment income................................................................... 0.0185
Less distributions:
Dividends from net investment income.................................................... (0.0195)
-----------
Net asset value, end of period.......................................................... $1.00
===========
Total return............................................................................ 1.96%
===========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).................................................... $1,324
Ratio of operating expenses to average net assets....................................... 0.70%#
Ratio of net investment income to average net assets.................................... 3.42%#
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Investor Shares on April 18, 1994.
Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served
as the Fund's investment manager.
Total return represents aggregate total return for the period
indicated.
# Annualized.
Page 9
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/94*## 10/31/93 10/31/92 10/31/91*
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of year........................... $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- -----------
Income from investment operations:
Net investment income...................................... 0.0331 0.0274 0.0367 0.0424
Less distributions:
Dividends from net investment income....................... (0.0331) (0.0274) (0.0367) (0.0424)
---------- ---------- ---------- -----------
Net asset value, end of year................................. $1.00 $1.00 $1.00 $1.00
========== ======== ======== ========
Total return................................................. 3.37% 2.77% 3.73% 4.32%
========== ======== ======== ========
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's)........................... $228,797 $69,785 $69,187 $45,998
Ratio of operating expenses to average net assets............ 0.50% 0.50%** 0.50%** 0.34%#**
Ratio of net investment income to average net assets......... 3.62% 2.74% 3.63% 5.55%#
</TABLE>
- -----------------
* The Fund commenced operations on February 4, 1991. The Fund
commenced selling Investor Shares on April 18, 1994. Those shares
outstanding prior to April 4, 1994 were designated as Trust Shares.
Effective as of October 17, 1994, the Fund's Trust Shares were
redesignated as Class R Shares.
** For the period ended October 31, 1991, the investment adviser
waived a portion of its advisory fee amounting to $0.0010 per share. For
the years or period ended October 31, 1993, 1992 and 1991, the investment
adviser reimbursed expenses of the Fund amounting to $0.0040, $0.0040 and
$0.0048 per share, respectively.
+ Net investment income before expenses reimbursed by the
investment adviser for the year ended October 31, 1994 was $0.0323.
++ Total return represents aggregate total return for the periods
indicated.
+++ Annualized expense ratio before expenses reimbursed by the investment
adviser for the year ended October 31, 1994 was 0.59%.
# Annualized.
## Effective October 17, 1994, The Dreyfus Corporation serves as
the Fund's investment manager.Prior to October 17, 1994, Mellon Bank,
N.A. served as the Fund's investment manager.
Page 10
DESCRIPTION OF THE FUNDS
GENERAL
By this Prospectus, each Fund is offering Investor Shares and Class R
Shares. (Class R Shares of the Funds were formerly called Trust Shares.)
Investor Shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to bank trust departments and other financial service providers
(including Mellon Bank and its affiliates) ("Banks") acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of a Fund
distributed to them by virtue of such an account or relationship. Investor
Shares are primarily sold to retail investors by the Distributor and by
Agents that have entered into a Selling Agreement with the Distributor. If
shares of a Fund are held in an account at a Bank or with an Agent, such Bank
or Agent may require you to place all Fund purchase, exchange and redemption
orders through them. All Banks and Agents have agreed to transmit transaction
requests to each Fund's transfer agent or to the Distributor. Distributor and
shareholder servicing paid by Investor Shares will cause Investor shares to
have a higher expense ratio and pay lower dividends than Class R.
DREYFUS/LAUREL PRIME MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES
Dreyfus/Laurel Prime Money Market Fund seeks a high level of current
income consistent with stability of principal by investing in high-grade
money market instruments. There can be no assurance that the Dreyfus/Laurel
Prime Money Market Fund will meet its stated investment objective. See "Other
Investment Policies and Risk Factors" for a detailed description of risks and
other Fund investment policies. See "Other Investment Policies and Risk
Factors _ Limiting Investment Risks" for a discussion of the Fund's
investment limitations.
The instruments in which Dreyfus/Laurel Prime Money Market Fund invests
include (1) U.S. Treasury bills, notes and bonds; (2) other obligations
issued or guaranteed as to interest and principal by the U.S. Government, its
agencies and instrumentalities; (3) instruments of U.S. and foreign banks,
including certificates of deposit, banker's acceptances, and time deposits,
and may include Eurodollar Certificates of Deposit ("ECDs"), Yankee
Certificates of Deposit ("Yankee CDs"), and Eurodollar Time Deposits
("ETDs"); (4) commercial paper of U.S. and foreign companies; (5) corporate
obligations; (6) mortgage-related securities backed by U.S. Government
agencies or instrumentalities; (7) variable amount master demand notes; (8)
floating rate notes; and (9) repurchase agreements. The Dreyfus/Laurel Prime
Money Market Fund also may utilize reverse repurchase agreements. (See "Other
Investment Policies and Risk Factors.")
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES
Dreyfus/Laurel Tax-Exempt Money Market Fund seeks income exempt from
federal income tax consistent with stability of principal by investing in
tax-exempt municipal obligations. There can be no assurance that the
Dreyfus/Laurel Tax-Exempt Money Market Fund will meet its stated investment
objective. See "Other Investment Policies and Risk Factors" for a detailed
description of risks and other Fund investment policies. See "Other
Investment Policies and Risk Factors _ Limiting Investment Risks" for discussi
on of the Fund's investment limitations.
Dreyfus/Laurel Tax-Exempt Money Market Fund intends to invest 100%,
and has adopted a policy requiring that it invest at least 80%, of its total
assets in municipal obligations. Debt obligations the
Page 11
interest on which is a
"tax preference item" for purposes of the alternative minimum tax are not
counted toward meeting the 80% test.
TYPES OF MUNICIPAL SECURITIES. Municipal securities are obligations
issued by or on behalf of states, territories and possessions of the United
States and their political subdivisions, agencies, and instrumentalities, the
interest from which is, in the opinion of bond counsel, exempt from regular
federal income tax. The municipal securities in which Dreyfus/Laurel
Tax-Exempt Money Market Fund may invest include: (1) municipal notes,
including tax anticipation and revenue anticipation notes, bond anticipation
notes, construction loan notes and tax-exempt commercial paper; (2)
short-term municipal bonds, including general obligation bonds, revenue
bonds, industrial revenue bonds and private activity bonds; and (3) municipal
leases.
Dreyfus/Laurel Tax-Exempt Money Market Fund may purchase certain
municipal securities, including certain industrial development bonds and
bonds issued after August 7, 1986 to finance "private activities," the
interest on which may constitute a "tax preference item" for purposes of the
alternative minimum tax, even though the interest will continue to be fully
tax-exempt for federal income tax purposes. However, the Dreyfus/Laurel
Tax-Exempt Money Market Fund has no current intention of investing in such
municipal securities. (See "Taxes.")
YIELD FACTORS AND RATINGS. Yields on municipal securities are
dependent on a variety of factors, including the general conditions of the
money market and of the municipal bond and municipal note markets, the size
of a particular offering, the maturity of the obligation and the rating of
the issue. The achievement of the Dreyfus/Laurel Tax-Exempt Money Market
Fund's investment objective is dependent in part on the continuing ability of
the issuers of the municipal securities in which Dreyfus/Laurel Tax-Exempt
Money Market Fund invests to meet their obligations for the payment of
principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors. The possibility exists,
therefore, that, as a result of litigation or other conditions, the ability
of any issuer to pay, when due, the principal of and interest on its
municipal securities may be materially affected.
All of the Dreyfus/Laurel Tax-Exempt Money Market Fund's municipal
securities, including municipal leases, at the time of purchase must present
minimal credit risks and either be backed by the full faith and credit of the
United States or be of high quality as determined in accordance with
procedures adopted by the Board of Directors.
ADDITIONAL INFORMATION. The Dreyfus/Laurel Tax-Exempt Money Market
Fund may invest more than 25% of its assets in industrial development bonds,
in participation interests therein issued by banks and in municipal
securities and other obligations guaranteed by the U.S. Government, its
agencies or instrumentalities. A participation interest gives the
Dreyfus/Laurel Tax-Exempt Money Market Fund an undivided interest in a
municipal bond owned by a bank and generally is backed by the bank's
irrevocable letter of credit or guarantee.
TAXABLE INVESTMENTS. The Dreyfus/Laurel Tax-Exempt Money Market Fund
will attempt to invest 100% of its net assets in municipal securities, the
interest on which, in the opinion of bond counsel, is exempt from regular
federal income tax. The Dreyfus/Laurel Tax-Exempt Money Market Fund also may
under certain circumstances invest up to 20% of the value of its net assets
in certain securities the interest income on which is subject to federal
income tax.
The Dreyfus/Laurel Tax-Exempt Money Market Fund may invest in any of
the following taxable instruments: (1) U.S. Treasury bills, notes and bonds;
(2) other obligations issued or guaranteed as to interest and principal by
the U.S. Government, its agencies and instrumentalities; (3) instruments of
U.S. and foreign banks, including certificates of deposit, banker's
acceptances and time deposits, and
Page 12
may include "ECDs", "Yankee CDs" and
Eurodollar Time Deposits ("ETDs"); (4) commercial paper of U.S and foreign
companies; (5) corporate obligations; (6) mortgage-related securities backed
by U.S. Government agencies or instrumentalities; (7) variable amount master
demand notes; (8) floating rate notes; and (9) repurchase agreements. The
Fund also may utilize reverse repurchase agreements. (See "Other Investment
Policies and Risk Factors.")
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES
Dreyfus/Laurel U.S. Treasury Money Market Fund seeks a high level of
current income consistent with stability of principal by investing in direct
obligations of the U.S. Treasury and repurchase agreements secured by such
obligations. There can be no assurance that the Dreyfus/Laurel U.S. Treasury
Money Market Fund will meet its stated investment objective. See "Other
Investment Policies and Risk Factors" below for a detailed description of
risks and other Fund investment policies. See "Other Investment Policies and
Risk Factors _ Limiting Investment Risks" for discussion of the Fund's
investment limitations.
The Dreyfus/Laurel U.S. Treasury Money Market Fund invests only in
direct obligations of the U.S. Treasury, such as Treasury bills, notes and
bonds, with remaining maturities of 397 days or less, and in repurchase
agreements of duration of 397 days or less secured by direct obligations of
the U.S. Treasury.
OTHER INVESTMENT POLICIES AND RISK FACTORS
BORROWING. Each Fund is authorized, within specified limits, to
borrow money for temporary administrative purposes and to pledge its assets
in connection with such borrowings.
COMMERCIAL PAPER. The Dreyfus/Laurel Prime Money Market and
Dreyfus/Laurel Tax-Exempt Money Market Funds may invest in commercial paper.
These instruments are short-term obligations issued by banks and corporations
that have maturities ranging from 2 to 270 days. Each instrument may be
backed only by the credit of the issuer or may be backed by some form of
credit enhancement, typically in the form of a guarantee by a commercial
bank. Commercial paper backed by guarantees of foreign banks may involve
additional risk due to the difficulty of obtaining and enforcing judgments
against such banks and the generally less restrictive regulations to which
such banks are subject. A Fund will only invest in commercial paper of U.S.
and foreign companies rated A-1 at the time of purchase by Standard & Poor's
Ratings Group, Prime-1 by Moody's Investors Service, Inc. ("Moody's"), F-1 by
Fitch's Investor Service, Inc., Duff 1 by Duff & Phelps, Inc. or A1 by IBCA,
Inc.
ECDS, ETDS AND YANKEE CDS. The Dreyfus/Laurel Prime Money Market and
Dreyfus/Laurel Tax-Exempt Money Market Funds may invest in ECDs, ETDs and
Yankee CDs. ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks. ETDs are U.S. dollar-denominated time
deposits in a foreign branch of a U.S. bank or a foreign bank. Yankee CDs are
certificates of deposit issued by a U.S. branch of a foreign bank denominated
in U.S. dollars and held in the United States. ECDs, ETDs and Yankee CDs are
subject to somewhat different risks than are the obligations of domestic
banks. (See "Foreign Securities.")
EURODOLLAR BONDS AND NOTES. The Dreyfus/Laurel Prime Money Market
Fund may invest in Eurodollar bonds and notes. Eurodollar bonds and notes are
obligations which pay principal and interest in U.S. dollars held in banks
outside the United States, primarily in Europe. Investments in Eurodollar
bonds and notes involve risks that differ from investments in securities of
domestic issuers. (See "Foreign Securities.")
FLOATING RATE SECURITIES. The Dreyfus/Laurel Prime Money Market and
Dreyfus/Laurel Tax-Exempt Money Market Funds may invest in floating rate
securities. A floating rate security provides for the automatic adjustment of
its interest whenever a specified interest rate changes. Interest rates on
Page 13
these securities are ordinarily tied to, and are a percentage of, a widely
recognized interest rate, such as the yield on 90-day U.S. Treasury bills or
the prime rate of a specified bank. These rates may change as often as twice
daily. Generally, changes in interest rates will have a smaller effect on the
market value of floating rate securities than on the market value of
comparable fixed income obligations. Thus, investing in variable and floating
rate securities generally allows less opportunity for capital appreciation
and depreciation than investing in comparable fixed income securities.
FOREIGN SECURITIES. The Dreyfus/Laurel Prime Money Market and
Dreyfus/Laurel Tax-Exempt Money Market Funds may purchase securities of
foreign issuers and may invest in obligations of foreign branches of domestic
banks and domestic branches of foreign banks. Investment in foreign
securities presents certain risks, including those resulting from
fluctuations in currency exchange rates, revaluation of currencies, future
political and economic developments and the possible imposition of currency
exchange blockages or other foreign governmental laws or restrictions,
reduced availability of public information concerning issuers, and the fact
that foreign issuers are not generally subject to uniform accounting,
auditing and financial reporting standards or to other regulatory practices
and requirements comparable to those applicable to domestic issuers.
Moreover, securities of many foreign issuers may be less liquid and their
prices more volatile than those of comparable domestic issuers. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, confiscatory taxation and limitations on the use or removal of
funds or other assets of a Fund, including withholding of dividends. Foreign
securities may be subject to foreign government taxes that would reduce the
yield on such securities.
GNMA CERTIFICATES. The Dreyfus/Laurel Prime Money Market and
Dreyfus/Laurel Tax-Exempt Money Market Funds may invest in Government
National Mortgage Association ("GNMA") Certificates ("GNMA Certificates").
GNMA Certificates are mortgage-backed securities representing part ownership
of a pool of mortgage loans. These loans are made by mortgage bankers,
commercial banks, savings and loan associations, and other lenders and are
either insured by the Federal Housing Administration or guaranteed by the
Veterans Administration. A "pool" or group of such mortgages is assembled
and, after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, the timely payment of interest and principal
on each mortgage is guaranteed by the full faith and credit of the U.S.
Government. Although the mortgage loans in a pool underlying a GNMA
Certificate will have maturities of up to 30 years, the average life of a
GNMA Certificate will be substantially less because the mortgages will be
subject to normal principal amortization and also may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by changes in
mortgage interest rates. In periods of falling interest rates, the rate of
prepayment on higher interest mortgage rates tends to increase, thereby
shortening the actual average life of the GNMA Certificate. Conversely, when
interest rates are rising, the rate of prepayment tends to decrease, thereby
lengthening the average life of the GNMA Certificate. Reinvestment of payments
may occur at higher or lower rates than the original yield on the GNMA
Certificates. Due to the prepayment feature and the need to reinvest
prepayments of principal at current rates, GNMA Certificates with underlying
mortgages bearing higher interest rates can be less effective than typical
non-callable bonds of similar maturities at locking in yields during periods
of declining interest rates, although they may have comparable risks of
decline in value during periods of rising interest rates.
ILLIQUID SECURITIES. Each Fund will not knowingly invest more than
10% of the value of its net assets in illiquid securities, including time
deposits and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). A Fund may invest in commercial
obligations issued in reliance on the so-called "private placement" exemption
from
Page 14
registration afforded by Section 4(2) of the Securities Act of 1933, as
amended ("Section 4(2) paper"). A Fund may also purchase securities that are
not registered under the Securities Act of 1933, as amended, but which can be
sold to qualified institutional buyers in accordance with Rule 144A under
that Act ("Rule 144A securities"). Liquidity determinations with respect to
Section 4(2) paper and Rule 144A Securities will be made by the Board of
Directors as required. The Board will consider availability of reliable price
information and other relevant information in making such determinations.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Fund that agree that they are purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in the Section 4(2) paper,
thus providing liquidity. Rule 144A securities generally must be sold to
other qualified institutional buyers. If a particular investment in Section
4(2) paper or Rule 144A securities is not determined to be liquid, that
investment will be included within the percentage limitation on investment in
illiquid securities. The ability to sell Rule 144A securities to qualified
institutional buyers is a recent development and it is not possible to
predict how this market will mature. Investing in Rule 144A securities could
have the effect of increasing the level of fund illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these securities.
MORTGAGE PASS-THROUGH CERTIFICATES. The Dreyfus/Laurel Prime Money
Market and Dreyfus/Laurel Tax-Exempt Money Market Funds may invest in
Mortgage Pass-Through Certificates. Mortgage pass-through certificates are
issued by governmental, government-related and private organizations and are b
acked by pools of mortgage loans. These mortgage loans are made by lenders
such as savings and loan associations, mortgage bankers, commercial banks and
others to residential home buyers throughout the United States. The
securities are "pass-through" securities because they provide investors with
monthly payments of principal and interest which in effect are a
"pass-through" of the monthly payments made by the individual borrowers on
the underlying mortgage loans. The principal governmental issuer of such
securities is the GNMA, which is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. Government related
issuers include the Federal Home Loan Mortgage Corporation ("FHLMC") and the
Federal National Mortgage Association ("FNMA"), both government-sponsored
corporations owned entirely by private stockholders. Commercial banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers also create pass-through pools of
conventional residential mortgage loans. Such issuers may be the originators
of the underlying mortgage loans as well as the guarantors of the
mortgage-related securities. The market value of mortgage-related securities
depends on, among other things, the level of interest rates, the
certificates' coupon rates and the payment history of underlying mortgage
loans. For further information, see the SAI.
MUNICIPAL LEASES. The Dreyfus/Laurel Tax-Exempt Money Market Fund may
invest in municipal leases. Municipal leases frequently have special risks
not normally associated with general obligation or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide
for title to the leased asset to pass eventually to the government issuer)
have evolved as a means for governmental issuers to acquire property and
equipment without meeting the constitutional and statutory requirements for
the issuance of debt. The debt-issuance limitations of many state
constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-
appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money
is appropriated for such purpose by the appropriate leg-
Page 15
islative body on a
yearly or other periodic basis. To reduce these risks, the Dreyfus/Laurel
Tax-Exempt Money Market Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest
is backed by an unconditional irrevocable letter of credit or guarantee of a
bank.
The Dreyfus/Laurel Tax-Exempt Money Market Fund proposes to purchase
municipal lease obligations principally from banks, equipment vendors or
other parties that have entered into an agreement with the Dreyfus/Laurel
Tax-Exempt Money Market Fund providing that such party will remarket the
municipal lease obligations on certain conditions (described below) within
seven days after demand by the Dreyfus/Laurel Tax-Exempt Money Market Fund.
(Such agreements are referred to as "remarketing agreements" and the party
that agrees to remarket or repurchase a municipal lease obligation is
referred to as a "remarketing party.") The agreement will provide for a
remarketing price equal to the principal balance on the obligation as
determined pursuant to the terms of the remarketing agreement as of the
repurchase date (plus accrued interest). The Funds' investment manager, The
Dreyfus Corporation ("Dreyfus"), anticipates that, in most cases, the
remarketing agreement will also provide for the seller of the municipal lease
obligation or the remarketing party to service it for a servicing fee. The
conditions to the Dreyfus/Laurel Tax-Exempt Money Market Fund's right to
require the remarketing party to purchase or remarket the obligation are that
the Dreyfus/Laurel Tax-Exempt Money Market Fund must certify at the time of
remarketing that (1) payments of principal and interest under the municipal
lease obligation are current and the Dreyfus/Laurel Tax-Exempt Money Market
Fund has no knowledge of any default thereunder by the governmental issuer,
(2) such remarketing is necessary in the sole opinion of a designated officer
of the Dreyfus/Laurel Tax-Exempt Money Market Fund to meet the Fund's
liquidity needs, and (3) the governmental issuer has not notified the Dreyfus/
Laurel Tax-Exempt Money Market Fund of termination of the underlying lease.
The remarketing agreement described above requires the remarketing
party to purchase (or market to a third party) municipal lease obligations of
the Dreyfus/Laurel Tax-Exempt Money Market Fund under certain conditions to
provide liquidity if share redemptions of the Dreyfus/Laurel Tax-Exempt Money
Market Fund exceed purchases of Dreyfus/Laurel Tax-Exempt Money Market Fund
shares. The Dreyfus/Laurel Tax-Exempt Money Market Fund will only enter into
remarketing agreements with banks, equipment vendors or other responsible
parties (such as insurance companies, broker-dealers and other financial
institutions) that in Dreyfus' opinion are capable of meeting their
obligations to the Fund. Dreyfus will regularly monitor the ability of
remarketing parties to meet their obligation to the Dreyfus/Laurel Tax-Exempt
Money Market Fund. The Dreyfus/Laurel Tax-Exempt Money Market Fund will enter
into remarketing agreements covering at least 75% in the principal amount of
the municipal lease obligations in its Fund. The Dreyfus/Laurel Tax-Exempt
Money Market Fund will not enter into remarketing agreements with any one
remarketing party in excess of 5% of its total assets. Remarketing agreements
with broker-dealers may require an exemptive order under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Dreyfus/Laurel
Tax-Exempt Money Market Fund will not enter into such agreements with
broker-dealers prior to the issuance of such an order in interpretation of
the SEC that such an order is not required. There can be no assurance that
such an order or interpretation will be granted.
The "remarketing" feature of the agreement entitles the remarketing
party to attempt to resell the Dreyfus/Laurel Tax-Exempt Money Market Fund's
municipal lease obligation within seven days after demand from the Fund;
however, the remarketing party will be obligated to repurchase the municipal
lease obligation for its own account at the end of the seven-day period if
such obligation has not been resold. The remarketing agreement will often be
entered into with the party who has sold a municipal
Page 16
lease obligation to the
Dreyfus/Laurel Tax-Exempt Money Market Fund, but remarketing agreements may
also be entered into with a separate remarketing party of the same type that
meets the credit and other criteria listed above. Up to 25% of the
Dreyfus/Laurel Tax-Exempt Money Market Fund's municipal lease obligations may
not be covered by remarketing agreements. The Dreyfus/Laurel Tax-Exempt Money
Market Fund, however, will not invest in municipal lease obligations that are
not subject to remarketing agreements if, as a result of such investment,
more than 10% of its total assets would be invested in illiquid securities
such as (1) municipal lease obligations not subject to remarketing agreements
and not deemed by Dreyfus at the time of purchase to be at least of
comparable quality to rated municipal debt obligations, or (2) other illiquid
assets such as securities restricted as to resale under federal or state
securities laws. For purposes of the preceding sentence, a municipal lease
obligation that is backed by an irrevocable bank letter of credit or an
insurance policy, issued by a bank or issuer deemed by Dreyfus to be of high
quality and minimal credit risk, will not be deemed to be "illiquid" solely
because the underlying municipal lease obligation is unrated, if Dreyfus
determines that such municipal lease obligation is readily marketable because
it is backed by such letter of credit or insurance policy.
As used within this section, high quality means that the municipal
lease obligation meets all of the following criteria: (1) the underlying
equipment is for an essential governmental function; (2) the municipality has
a documented history of stable financial operations and timely payments of
principal and interest on its municipal debt or lease obligation; (3) the
lease/purchase agreement contains proper terms and conditions to protect
against non-appropriation, substitution of equipment and other more general
risks associated with the purchase of securities; (4) the equipment
underlying the lease was leased in a proper and legal manner; and (5) the
equipment underlying the lease was leased from a reputable equipment vendor.
A letter of credit or insurance policy would generally provide that the
issuer of the letter of credit or insurance policy would pay the outstanding
principal balance of the municipal lease obligations plus any accrued but
unpaid interest upon non-appropriation or default by the governmental lessee.
However, the terms of each letter of credit or insurance policy may vary
significantly and would affect the degree to which such protections increase
the liquidity of a particular municipal lease obligation.
OTHER INVESTMENT COMPANIES. Each Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the 1940 Act. As a shareholder of another investment company, a Fund
would bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would
be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by a
Fund and a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from a Fund at a specified price and date or upon
demand. This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause a Fund to suffer a loss
if the market value of such securities declines before they can be liquidated
on the open market. Repurchase agreements with a duration of more than seven
days are considered illiquid securities and are subject to the limit stated
above.
REVERSE REPURCHASE AGREEMENTS. The Dreyfus/Laurel Prime Money Market
and Dreyfus/Laurel Tax-Exempt Money Market Funds may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
fund securities is deemed by Dreyfus to be disadvantageous. Under a reverse
repurchase agreement, a Fund: (i) transfers possession of fund securities to
a bank or broker-dealer in return for cash in an amount equal to a percentage
of the securities' market value; and (ii)
Page 17
agrees to repurchase the securities
at a future date by repaying the cash with interest. Cash or liquid
high-grade debt securities held by the Fund equal in value to the repurchase
price including any accrued interest will be maintained in a segregated
account while a reverse repurchase agreement is in effect.
SECURITIES LENDING. To increase return on fund securities, each Fund
may lend its portfolio securities to broker-dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market
value of the securities loaned. There may be risks of delay in receiving
additional collateral or in recovering the securities loaned or even a loss
of rights to the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by Dreyfus to
be of good standing and when, in its judgment, the income to be earned from
the loan justifies the attendant risks.
STAND-BY COMMITMENTS. The Dreyfus/Laurel Tax-Exempt Money Market
Fund's investments may include "stand-by commitments," which are rights to
resell municipal securities at specified periods prior to their maturity
dates to the seller or to some third party at an agreed-upon price or yield.
Stand-by commitments may involve certain expenses and risks, including the
inability of the issuer of the commitment to pay for the securities at the
time the commitment is exercised, non-marketability of the commitment, and
differences between the maturity of the commitment.
U.S. GOVERNMENT SECURITIES. Each Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S. Government
or backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, GNMA, General Services Administration and Maritime
Administration. Investments may also be made in U.S. Government obligations
that do not carry the full faith and credit guarantee, such as those issued
by the FNMA, the FHLMC, or other instrumentalities.
VARIABLE AMOUNT MASTER DEMAND NOTES. The Dreyfus/Laurel Prime Money
Market Fund may invest in Variable Amount Master Demand Notes. Variable
amount master demand notes are unsecured obligations that are redeemable upon
demand and are typically unrated. These instruments are issued pursuant to
written agreements between their issuers and holders. The agreements permit
the holders to increase (subject to an agreed maximum) and the holders and
issuers to decrease the principal amount of the notes, and specify that the
rate of interest payable on the principal fluctuates according to an
agreed-upon formula. If an issuer of a variable amount master demand note
were to default on its payment obligation, a Fund might be unable to dispose
of the note because of the absence of a secondary market and might, for this
or other reasons, suffer a loss to the extent of the default. A Fund will
only invest in variable amount master demand notes issued only by entities
that Dreyfus considers creditworthy.
VARIABLE RATE OBLIGATIONS. The Dreyfus/Laurel Tax-Exempt Money Market
Fund may invest in variable rate obligations whose interest rates are
adjusted either at predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest rate is tied. The
adjustments minimize changes in the market value of the obligation and,
accordingly, enhance the ability of the Dreyfus/Laurel Tax-Exempt Money
Market Fund to maintain a stable NAV. The Dreyfus/Laurel Tax-Exempt Money
Market Fund may also purchase participation interests in variable rate
securities such as industrial development bonds backed by letters of credit
or insured or guaranteed by financial institutions, such as banks, or
insurance companies, whose credit quality ratings are judged by Dreyfus to be
comparable in quality to the two highest quality ratings of Moody's or
Standard & Poor's.
WHEN ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure
advantageous prices or yields, each Fund may purchase U.S. Government
securities on a when-issued basis or may purchase
Page 18
or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by a
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the market place, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transactions. Each Fund will
establish a segregated account consisting of cash, U.S. Government securities
or other high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds, Inc. may in the
future seek to achieve a Fund's investment objective by investing all of a
Fund's assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at least
30 days' prior notice of any such investment. Such investment would be made
only if the directors determine it to be in the best interest of the Fund and
its shareholders. In making that determination, the directors will consider,
among other things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the Funds believe
that the directors will not approve an arrangement that is likely to result
in higher costs, no assurance is given that costs will be materially reduced
if this option is implemented.
LIMITING INVESTMENT RISKS. Each Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of each Fund's outstanding Shares. The SAI describes all of a Fund's
fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of a Fund, unless otherwise specified, may be changed without
shareholder approval. If a Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of a Fund's Shares in certain states, a
Fund may make commitments more restrictive than the investment policies and
restrictions described in this Prospectus and the SAI. Should a Fund
determine that any such commitment is no longer in the best interests of the
Fund, it may consider terminating sales of its Shares in the states involved.
MANAGEMENT OF THE FUNDS
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Funds' investment manager. Dreyfus supervises
and assists in the overall management of the Funds' affairs under an
Investment Management Agreement with the Funds, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Funds. As the Funds' investment manager, Dreyfus manages the Funds by making
investment decisions based on the Funds' investment objective, policies and
restrictions.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a
Page 19
comprehensive range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank holding
companies in the United States based on total assets. Mellon's principal
wholly-owned subsidiaries are Mellon Bank, Mellon Bank (DE) National
Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit
Corporation and a number of companies known as Mellon Financial Services
Corporations. Through its subsidiaries, including Dreyfus, Mellon managed
approximately $193 billion in assets as of December 31, 1994, including $76
billion in mutual fund assets. As of December 31, 1994, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for approximately $654 billion in assets, including
approximately $74 billion in mutual fund assets.
Dreyfus pays all of the expenses of each Fund except brokerage fees,
taxes, interest, fee, and expenses of the non-interested Directors (including
counsel fees) and extraordinary expenses. Although Dreyfus does not pay for
the fees and expenses of the non-interested Directors (including counsel
fees), Dreyfus is contractually required to reduce its investment management
fee in an amount equal to each Fund's allocable share of such expenses. In
order to compensate Dreyfus for paying virtually all of a Fund's expenses,
each Fund's investment management fee is higher than the investment advisory
fees paid by most investment companies. Most if not all, such companies also
pay for additional non-investment advisory expenses that are not paid by such
companies' investment advisers. From time to time, Dreyfus may waive (either
voluntarily or pursuant to applicable state limitations) additional
investment management fees payable by a Fund. For the period from November 1,
1993 to April 3, 1994, the Prime Money Market Fund, the U.S. Treasury Money
Market Fund and the Tax-Exempt Money Market Fund paid its investment adviser,
Mellon Bank, 0.19%, 0.13%, and 0.32%, respectively (annualized) of its
average daily net assets in investment advisory fees (net of expenses
reimbursed), under the Fund's previous investment advisory contract (such
contract covered only the provision of investment advisory and certain
specified administrative services). For the period from April 4, 1994 through
the fiscal year ended October 31, 1994, each Fund paid Mellon Bank or the
Manager 0.50% (annualized) of its average daily net assets in investment
management fees, less fees and expenses of the non-interested Directors
(including counsel fees).
For the fiscal year ended October 31, 1994, total operating expenses
(excluding Rule 12b-1 fees) (net of expenses reimbursed) of the Prime Money
Market Fund were 0.51% (annualized) of the average daily net assets of each
class for both the Investor Class and Class R. For the fiscal year ended
October 31, 1994, total operating expenses (excluding Rule 12b-1 fees) (net
of expenses reimbursed) of the U.S. Treasury Money Market Fund were 0.50%
(annualized) of the average daily net assets of each class for both the
Investor Class and Class R. For the fiscal year ended October 31, 1994, total
operating expenses (excluding Rule 12b-1 fees) (net of expenses reimbursed)
of the Tax-Exempt Money Market Fund were 0.50% and 0.51% (annualized) of the
average daily net assets of each class for the Investor Class and Class R,
respectively. Without the reimbursement, operating expenses would have been
higher.
In addition, Investor shares may be subject to certain distribution
and service fees. See "Distribution Plan (Investor Shares only)."
Dreyfus may pay the Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Funds. The Distributor may use part or all of such payments
to pay Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Funds, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage
Page 20
firms. From time to time, to the extent consistent with its investment
objective, policies and restrictions, the Funds may invest in securities
of companies with which Mellon Bank has a lending relationship.
The Funds' distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR--Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Funds' custodian and fund accountant. The Funds'
Transfer and Dividend Disbursing Agent is The Shareholder Services Group,
Inc. (the "Transfer Agent"), a subsidiary of First Data Corporation, One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. is the Funds' sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Funds.
HOW TO BUY FUND SHARES
GENERAL-- Investor Shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into Selling
Agreements with the Distributor.
Class R Shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship. A
Retirement Plan is a certain qualified or non-qualified employee benefit plan
or other program, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships, non-pro
fit entities or state and local governments ("Retirement Plan"). Class R
Shares may be purchased for a Retirement Plan only by a custodian, trustee,
investment manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R Shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions. It is not recommended that the Dreyfus/Laurel Tax-Exempt Money
Market Fund be used as a vehicle for Keogh, IRA or other qualified plans.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Funds reserve the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, board members of a fund advised by
Dreyfus including members of the Company's board, or the spouse or minor
child of any of the foregoing, the minimum initial investment in $1,000. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Dreyfus/Laurel
Prime Money Market and U.S. Treasury Money Market Fund reserve the right to
offer their shares without regard to minimum purchase requirements to
employees participating in certain qualified or non-qualified employee
benefit plans or other programs where contributions or account information
can be transmitted in a manner and form acceptable to the Funds. The Funds
reserve the right to vary further the initial and subsequent investment
minimum requirements at any time.
Page 21
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
various limitations on the amount that may be contributed to Retirement
Plans. These limitations apply with respect to participants at the plan level
and, therefore, do not directly affect the amount that may be invested in a
Fund by a Retirement Plan. Participants and plan sponsors should consult
their tax advisers for details.
You may purchase shares of a Fund by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement
plan accounts, both initial and subsequent investments should be sent to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427. Neither initial nor subsequent investments should be made by
third party check. PURCHASE ORDERS MAY BE DELIVERED IN PERSON ONLY TO A
DREYFUS FINANCIAL CENTER. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL
BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR THE LOCATION OF THE NEAREST
DREYFUS FINANCIAL CENTER, PLEASE CALL ONE OF THE TELEPHONE NUMBERS LISTED
UNDER "GENERAL INFORMATION."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA # as shown below, for purchase of Fund shares in your
name:
DDA# 043427 Dreyfus/Laurel Prime Money Market/Investor shares;
DDA# 043435 Dreyfus/Laurel Prime Money Market/Class R shares;
DDA# 043516 Dreyfus/Laurel Tax-Exempt Money Market Fund/Investor
shares;
DDA# 043508 Dreyfus/Laurel Tax-Exempt Money Market Fund/Class R
shares;
DDA# 043567 Dreyfus/Laurel U.S.Treasury Money Market Fund/Investor
shares;
DDA# 043559 Dreyfus/Laurel U.S. Treasury Money Market Fund/Class R
shares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, you should call 1-800-645-6561 after completing your
wire payment in order to obtain your Fund account number. Please include your
Fund account number on the Funds' Account Application and promptly mail the
Account Application to the Fund, as no redemptions will be permitted until
the Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only on U.S. banks
.. A charge will be imposed if any check used for investment in your account
does not clear. The Funds make available to certain large institutions the
ability to issue purchase instructions through compatible computer
facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit & Trust Co. with instructions to credit
your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS:
"4790" Dreyfus/Laurel Prime Money Market Fund/Investor Shares;
"4480" Dreyfus/Laurel Prime Money Market Fund/Class R Shares;
Page 22
"4860" Dreyfus/Laurel Tax-Exempt Money Market Fund/Investor Shares;
"4850" Dreyfus/Laurel Tax-Exempt Money Market Fund/Class R Shares;
"4900" Dreyfus/Laurel U.S. Treasury Money Market Fund/Investor
Shares;
"4890" Dreyfus/Laurel U.S. Treasury Money Market Fund/Class R Shares.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in The Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Funds' Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Funds could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE ("NAV") The price of your shares is their NAV. NAV is
determined on each day that the New York Stock Exchange ("NYSE") is open (a
"business day"). Investments and requests to exchange or redeem shares
received by a Fund before 4 p.m., Eastern time, are effective on, and will
receive the price next determined on, that business day (except purchase
orders made through the Dreyfus TELETRANSFER Privilege, which are effective
one business day after your call). The NAV of each Fund is calculated two
times each business day, at 12 noon and 4 p.m., Eastern time. Investment,
exchange or redemption requests received after 4 p.m. Eastern time, for Money
Market Funds, are effective on, and receive the first Share price determined
on the next business day.
An investment portfolio's NAV refers to the worth of one share. The
NAV for Investor and Class R Shares of a Money Market Fund is calculated on
the basis of amortized cost, which involves initially valuing a portfolio
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. Each Money Market Fund
intends to maintain a constant NAV of $1.00 per share, although there is no
assurance that this can be done on a continuing basis.
The yield of most classes of shares of the Money Market Funds are
published weekly in leading financial publications and daily in many local
newspapers.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase shares of a Fund
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Funds'
Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an ACH member
may be so designated. The Funds may modify or terminate this Privilege at any
time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
Page 23
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, Shares of the
same class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. WITH
RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE
ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of Personal
Retirement Plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "No" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, or by a
separate Shareholder Services Form, also available by calling
1-800-645-6561. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if calling from overseas, 1-401-455-3306. See "How to Redeem Fund
Shares_Procedures." Upon an exchange, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividends and
distributions payment option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges of Investor Shares into funds
sold with a sales load. If you are exchanging Investor Shares into a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares
of the fund from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased with a sales
load, or (c) acquired through reinvestment of dividends or other
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Agent must notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the SAI. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders a nominal
fee in accordance with rules promulgated by the SEC. The Funds reserve the
right to reject any exchange request in whole
Page 24
or in part. The availability of
fund exchanges may be modified or terminated at any time upon notice to
shareholders. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax
exempt may result in, a taxable gain or loss. The exchange of shares of one
fund for shares of another is treated for Federal income tax purposes as a
sale of the shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize, or an exchange on behalf of a Retirement
Plan which is not tax exempt may result in, a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
a Fund, in shares of the same Class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO CLASS
R SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however a sales load may be charged with respect to exchanges of Investor
Shares into funds sold with a sales load. The right to exercise this
Privilege may be modified or canceled by the Funds or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Funds may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase shares of a
Fund (minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Shares of a Fund are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and Fund
Shares will be purchased, once a month, on either the first or fifteenth day,
or twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization by calling 1-800-645-6561 from the Distributor. You may cancel
your participation in this Privilege or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Funds may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by a Fund in Shares
of the same class of certain other funds in the Dreyfus Family of Funds of
which you are an investor. Shares of the other fund will be purchased at the
then-current NAV; however, a sales load may be charged with respect to
investments in shares of a fund sold
Page 25
with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. See
"Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you to
transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from a Fund to a designated bank account.
Only an account maintained at a domestic financial institution which is an
ACH member may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these Privileges is effective three business days
following receipt. These Privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Funds may modify or terminate these
Privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
shares of a Fund (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Funds may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase shares of a Fund
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Funds, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Funds
may modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus sponsored retirement
plans, may permit certain participants to establish an automatic withdrawal
plan from such Retirement Plans. Participants should consult their Retirement
Plan sponsor and tax adviser for details. Such a withdrawal plan is different
than the Automatic Withdrawal Plan. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. The Automatic
Withdrawal Plan may be ended at any time by the
Page 26
shareholder, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your Shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Funds will redeem the Shares at the
next determined NAV as described below. If you hold Fund shares of more than
one Class, any request for redemption must specify the Class of Shares being
redeemed. If you fail to specify the Class of Shares to be redeemed or if you
own fewer Shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further instructions
from you or your Agent.
The Funds impose no charges when shares are redeemed directly through
the Distributor. Agents or other institutions may charge their clients a
nominal fee for effecting redemptions of Fund Shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the Shares redeemed may be more or less than their
original cost, depending upon the Funds' then-current NAV.
The Funds ordinarily will make payment for all Shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUNDS WILL NOT
HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE AND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund Shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Funds reserve the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES--You may redeem Shares of a Fund by using the regular redemption
procedure through the Transfer Agent, the Check Redemption Privilege, the
Wire Redemption Privilege, the Telephone Redemption Privilege or, through the
Dreyfus TELETRANSFER Privilege. Other redemption procedures may
Page 27
be in effect
for clients of certain Agents and institutions. The Funds make available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities.
You may redeem shares of a Fund by telephone if you have checked the
appropriate box on the Funds' Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Funds will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Funds or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Funds nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund Shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus
retirement plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. REDEMPTION REQUESTS MAY BE
DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL CENTER. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. FOR
THE LOCATION OF THE NEAREST FINANCIAL CENTER, PLEASE CALL THE TELEPHONE NUMBER
LISTED UNDER "GENERAL INFORMATION." Redemption requests must be signed by
each shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program. For
more information with respect to signature-guarantees, please call one of the
telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- You may request on the Account
Application, Shareholder Services Form or by later written request that a
Fund provide Redemption Checks drawn on the Fund's account. Redemption Checks
may be made payable to the order of any person in the amount of $500 or more.
Redemption Checks should not be used to close your account. Redemption Checks
are free, but the Transfer Agent will impose a fee for stopping payment of a
Redemption Check upon your request or if the Transfer Agent cannot honor the
Redemption Check due to insufficient funds or other valid reason. You should
date your Redemption Checks with the current date when you write them. Please
do not postdate your Redemption Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the check, all
postdated Redemption Checks which are dated within six months of presentment
for payment, if they are otherwise in good order. Shares for which
certificates have been issued may not be redeemed by Redemption Check. Shares
held under Keogh Plans, IRAs or
Page 28
other retirement plans are not eligible for
this Privilege. This Privilege may be modified or terminated at any time by
the Funds or the Transfer Agent upon notice to shareholders.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Funds'
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of only up to $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 1-800-221-4060 or, if
calling from overseas, 1-401-455-3306. The Funds reserve the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Funds' SAIs set forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem shares of a Fund
(maximum $150,000 per day) by telephone if you checked the appropriate box on
the Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The redemption proceeds will be paid by check and mailed
to your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. The Funds
reserve the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. This Privilege may be modified or terminated at
any time by the Transfer Agent or the Funds. Shares held under Keogh Plans,
IRAs or other retirement plans, and shares for which certificates have been
issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem shares of a Fund
(minimum $500 per day) by telephone if you have checked the appropriate box
and supplied the necessary information on the Funds' Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between your Fund account and the bank account designated
in one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus TELETR
ANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Funds reserve the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Funds
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
Page 29
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)
The Investor Shares of each Fund are subject to a Distribution Plan
("Plan'') adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1'').
The Investor Shares of the Funds bear some of the cost of selling those
shares under the Plan. The Plan allows each Money Market Fund to spend
annually up to 0.25% of the average daily net assets attributable to Investor
Shares to compensate Dreyfus Service Corporation, an affiliate of Dreyfus,
for shareholder servicing activities and Premier for shareholder servicing
activities and for activities or expenses primarily intended to result in the
sale of Investor Shares of a Fund. The Plan allows Premier to make payments
from the Rule 12b-1 fees it collects from a Fund to compensate Agents that
have entered into Shareholder Servicing and Sales Support Agreements
("Agreements'') with Premier. Under the Agreements, the Agents are obligated
to provide distribution related services with regard to the Funds and/or
shareholder services to the Agent's clients that own Investor Shares of a
Fund.
The Funds and Premier may suspend or reduce payments under the Plan
at any time, and payments are subject to the continuation of a Fund's Plan
and the Agreements described above. From time to time, the Agents, Premier
and the Funds may agree to voluntarily reduce the maximum fees payable under
the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing a Fund's shares may receive different
compensation with respect to one Class of shares over another.
PERFORMANCE INFORMATION
From time to time, a Fund may advertise the yield and total return on
a class of Shares. The Dreyfus/Laurel Tax-Exempt Money Market Fund may
advertise tax-equivalent yields. TOTAL RETURN, YIELD AND THE TAX EQUIVALENT
YIELD FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. The "total return'' of a Class of shares of a
Fund may be calculated on an average annual total return basis or a
cumulative total return basis. Average annual total return refers to the
average annual compounded rates of return on a Class of shares over one-,
five-, and ten-year periods or the life of the Fund (as stated in the
advertisement) that would equate an initial amount invested at the beginning
of a stated period to the ending redeemable value of the investment, assuming
the reinvestment of all dividends and capital gains distributions. Cumulative
total return reflects the total percentage change in the value of the
investment over the measuring period, again assuming the reinvestment of all
dividends and capital gains distributions.
The "yield'' of a Class of shares in a Money Market Fund refers to
the income generated by an investment in such Class over a seven-day period
identified in the advertisement. This income is then "annualized.'' That is,
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield'' is calculated similarly, but, when
annualized, the income earned by an investment in a Class of shares in a
Money Market Fund is assumed to be reinvested. The "effective yield'' will be
slightly higher than the "yield'' because of the compounding effect of this
assumed reinvestment. The tax-equivalent yield of a the Dreyfus/Laurel
Tax-Exempt Money Market Fund shows the level of taxable yield needed to
produce an after-tax equivalent to such fund's tax-free yield. This is done
by increasing a Class's yield by the amount necessary to reflect the payment
of federal income tax (and state income tax, if applicable) at a stated tax
rate.
Total return and yield quotations will be computed separately for
each Class of a Fund's shares. Because of the difference in the fees and
expenses borne by Class R and Investor Shares of each Fund,
Page 30
the return and
yield on Class R Shares will generally be higher than the return and yield on
Investor Shares. Any fees charged by a Bank or Agent directly to its
customers' account in connection with investments in the Fund will not be
included in calculations of total return or yield. Each Fund's annual report
contains additional performance information and is available upon request
without charge from the Fund's distributor or your Bank or Agent.
A Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, and the Consumer Price Index. Performance rankings as
reported in CHANGING TIMES, BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL
STREET JOURNAL, IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO
LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND
WORLD REPORT, FORBES, FORTUNE, BARRON'S, FINANCIAL PLANNING, FINANCIAL
PLANNING ON WALL STREET, CERTIFIED FINANCIAL PLANNER TODAY, INVESTMENT
ADVISOR, KIPLINGER'S, SMART MONEY, and similar publications may also be used
in comparing the Fund's performance. Furthermore, a Fund may quote its
Investor and Class R Shares' total returns and yields in advertisements or in
shareholder reports. A Fund may also advertise non-standardized performance
information, such as total return for periods other than those required to be
shown or cumulative performance data. A Fund may advertise a quotation of
yield or other similar quotation demonstrating the income earned or
distributions made by the Fund.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
Each Fund declares daily and pays monthly (on the 20th day or next
business day if the 20th falls on a Saturday, Sunday or national holiday)
dividends from its net investment income, if any. Each Fund does not expect
to realize any long-term capital gains or losses, and does not anticipate
payment of any capital gain distribution.
Unless you choose to receive dividend and/or capital gain
distributions in cash, your distributions will be automatically reinvested in
additional shares of the distributing Fund at the NAV. You may change the
method of receiving distributions at any time by writing to the Funds. Checks
which are sent to shareholders who have requested distributions to be paid in
cash and which are subsequently returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in additional Fund shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically reinvested
in additional Fund shares in the shareholder's account.
Distributions paid by a Fund with respect to one Class of Shares may
be greater or less per share than those paid with respect to another Class of
Shares due to the different expenses of the different Classes. Shares
purchased on a day on which a Fund calculates its NAV will not begin to
accrue dividends until the following day. Except as provided below,
redemption orders effected on any particular day will receive all dividends
declared through the day of redemption. However, if immediately available
funds are received by the Transfer Agent prior to 12:00 noon, Eastern time,
you may receive the dividend declared on the day of purchase. You will not
receive the dividends declared on the day of redemption if the redemption
order is placed prior to 12:00 noon, Eastern time.
You may elect to have distributions on Shares held in IRAs and 403(b)
accounts paid in cash only if you are at least 59 1/2 years old or are
permanently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of taxable net investment income and net short-term capital gain)
and net capital gain
Page 31
(the excess of net long-term capital gain over net
short-term capital loss) that is distributed to its shareholders. In
addition, the Dreyfus/Laurel Tax-Exempt Money Market Fund intends to continue
to qualify to pay "exempt-interest'' dividends, which requires, among other
things, that at the close of each quarter of its taxable year at least 50% of
the value of its total assets must consist of municipal securities.
Dividends from a Fund's investment company taxable income are taxable
to you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Dreyfus/Laurel Tax-Exempt Money Market Fund that are
designated by it as "exempt-interest dividends'' generally may be excluded by
you from your gross income. Distributions by a Fund (including the
Dreyfus/Laurel Tax-Exempt Money Market Fund) of net capital gain, when
designated as such, are taxable to you as long-term capital gains, regardless
of the length of time you have owned your Shares. The Funds are not expected
to realize long-term capital gains.
Interest on indebtedness incurred or continued to purchase or carry
shares of the Dreyfus/Laurel Tax-Exempt Money Market Fund will not be
deductible for federal income tax purposes to the extent that Fund's
distributions consist of exempt-interest dividends. Although it has no
current intention to do so, the Dreyfus/Laurel Tax-Exempt Money Market Fund
may invest in "private activity bonds,'' the interest on which is treated as
a tax preference item for shareholders in determining their liability for the
alternative minimum tax. Proposals may be introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities. If such a proposal were enacted, the
availability of such securities for investment by the Dreyfus/Laurel
Tax-Exempt Money Market Fund and the value of its portfolio would be
affected. In such event, that Fund would reevaluate its investment objective
and policies.
Dividends and other distributions are taxable to you regardless of
whether they are received in cash or reinvested in additional Fund Shares,
even if the value of your Shares is below your cost. If you purchase Shares
shortly before a taxable distribution (i.e., any distribution other than an
exempt-interest dividend paid by the Dreyfus/Laurel Tax-Exempt Money Market
Fund), you must pay income taxes on the distribution, even though the value
of your investment (plus cash received, if any) remains the same. In
addition, the share price at the time you purchase Shares may include
unrealized gains in the securities held in the Fund. If these portfolio
securities are subsequently sold and the gains are realized, they will, to
the extent not offset by capital losses, be paid to you as a capital gain
distribution and will be taxable to you.
Dividends paid by the Funds to qualified retirement plans ordinarily,
will not be subject to taxation until the proceeds are distributed from the
retirement plans. The Fund will not report to the IRS dividends paid to such
plans. Generally, distributions from qualified retirement plans, except those
representing returns of non-deductible contributions thereto, will be taxable
as ordinary income and, if made prior to the time the participant reaches age
59 1/2, generally will be subject to an additional tax equal to 10% of the
taxable portion of the distribution. If the distribution from such a
retirement plan (other than certain governmental or church plans) for any
taxable year following the year in which the participant reaches age 70 1/2
is less than the "minimum required distribution'' for that taxable year, an
excise tax equal to 50% of the deficiency may be imposed by the IRS. The
administrator, trustee or custodian of such a retirement plan will be
responsible for reporting such distributions from such plans to the IRS.
Moreover, certain contributions to a qualified retirement plan in excess of
the amounts permitted by law may be subject to an excise tax.
In January of each year, the Funds will send you a Form 1099-DIV
notifying you of the status for federal income tax purposes of your
distributions for the preceding year. The Funds also will advise shareholders
of the percentage, if any, of the dividends paid by the Dreyfus/Laurel
Tax-Exempt Money
Page 32
Market Fund that are exempt from federal income tax and the
portion, if any, of those dividends that is a tax preference item for
purposes of the alternative minimum tax.
You must furnish the Funds with your taxpayer identification number
("TIN'') and state whether you are subject to withholding for prior
under-reporting, certified under penalties of perjury as prescribed by the
Code and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. Each Fund is required
to withhold a portion of all dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct TIN; withholding
from dividends and capital gain distributions also is required for such
shareholders who otherwise are subject to backup withholding.
Each Fund will be subject to a 4% nondeductible excise tax to the
extent it fails to distribute by the end of any calendar year substantially
all of its taxable ordinary income for that year and capital gain net income
for the one-year period ending on October 31 of that year, plus certain other
amounts. Each Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax
considerations generally affecting each Fund and its shareholders; see the
SAI for a further discussion. There may be other federal, state or local tax
considerations applicable to a particular investor; for example, the
Dreyfus/Laurel Tax-Exempt Money Market Fund's dividends may be wholly or
partly taxable under state and/or local laws. You therefore are urged to
consult your own tax adviser.
GENERAL INFORMATION
The Laurel Funds, Inc. was incorporated in Maryland on August 6, 1987
and changed its name to The Dreyfus/Laurel Funds, Inc. on October 17, 1994.
The Dreyfus/Laurel Funds, Inc. is registered with the SEC under the 1940 Act
as a diversified, open-end management investment company. The Dreyfus/Laurel
Funds, Inc. has an authorized capitalization of 25 billion Shares of $0.001
par value stock with equal voting rights. The Articles of Incorporation
permit the Directors to create an unlimited number of investment portfolios
(each a "fund''). Each of the Funds offered by this Prospectus currently
issues two Classes of Shares designated "Investor'' and "Class R'' Shares.
Each Share (regardless of Class) has one vote. All Shares of a Fund
(and classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or Class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or Classes, in which case only the shareholders of the
affected fund or class are entitled to vote, each as a separate class. At
your written request, the Funds will issue negotiable stock certificates.
At March 31, 1995, Mellon Bank Corporation, the investment manager's
parent, owned of record through its direct and indirect subsidiaries more
than 25% of The Dreyfus/Laurel Funds, Inc.'s outstanding voting shares, and
is deemed, under the 1940 Act, to be a controlling shareholder.
Only holders of Investor shares will be entitled to vote on matters
submitted to shareholders pertaining to the Distribution Plan relating to
that Class.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Funds to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office and
for any other proper purpose. Company shareholders may remove a Director by
the affirmative vote of a majority of the Company's voting shares. In
addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at
Page 33
any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Funds at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS'
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 34
Dreyfus/Laurel Prime Money Market Fund
Dreyfus/Laurel Tax-Exempt Money Market Fund
Dreyfus/Laurel U.S. Treasury Money Market Fund
PROSPECTUS
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
LMMKTp1041095
--------------------------------------------------------------------------
PROSPECTUS April 10, 1995
DREYFUS/LAUREL INSTITUTIONAL PRIME MONEY MARKET FUND
DREYFUS/LAUREL INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND
- ---------------------------------------------------------------------------
THIS PROSPECTUS DESCRIBES THE FOLLOWING FIVE INVESTMENT PORTFOLIOS
MANAGED BY THE DREYFUS CORPORATION ("DREYFUS"): THE DREYFUS/LAUREL
INSTITUTIONAL PRIME MONEY MARKET FUND, THE DREYFUS/LAUREL INSTITUTIONAL
GOVERNMENT MONEY MARKET FUND, THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND, THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY ONLY MONEY
MARKET FUND AND THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND (EACH A
"FUND," COLLECTIVELY, THE "INSTITUTIONAL FUNDS" OR "FUNDS"). THE INSTITUTIONAL
FUNDS ARE SEPARATE INVESTMENT PORTFOLIOS OF THE DREYFUS/LAUREL FUNDS, INC.
(FORMERLY THE LAUREL FUNDS, INC.), AN OPEN-END, DIVERSIFIED MANAGEMENT
INVESTMENT COMPANY THAT IS PART OF THE DREYFUS FAMILY OF FUNDS. THIS
PROSPECTUS DESCRIBES THREE CLASSES OF SHARES_CLASS I, CLASS II AND CLASS III
SHARES (COLLECTIVELY, THE "SHARES")_OF THE INSTITUTIONAL FUNDS.
THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND,
DREYFUS/LAUREL INSTITUTIONAL PRIME MONEY MARKET FUND, DREYFUS/LAUREL
INSTITUTIONAL GOVERNMENT MONEY MARKET FUND AND DREYFUS/LAUREL INSTITUTIONAL
U.S. TREASURY ONLY MONEY MARKET FUND (COLLECTIVELY, THE "MONEY MARKET FUNDS")
SEEK TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. INVESTMENTS IN
A MONEY MARKET FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT
AND THERE CAN BE NO ASSURANCE THAT ANY MONEY MARKET FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUNDS THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED APRIL 10, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY,
WRITE TO THE FUNDS AT 144 GLENNCURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH EACH FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUNDS' PROSPECTUS. THE FUNDS PAY MELLON BANK, N.A.
("MELLON BANK") OR ITS AFFILIATES TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUNDS, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUNDS ARE
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- ----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
EXPENSE SUMMARY................................. 4
FINANCIAL HIGHLIGHTS............................ 6
DESCRIPTION OF THE FUNDS........................ 12
MANAGEMENT OF THE FUNDS......................... 17
HOW TO BUY FUND SHARES.......................... 19
SHAREHOLDER SERVICES............................ 22
HOW TO REDEEM FUND SHARES....................... 25
THE SHAREHOLDER SERVICING PLANS................. 27
PERFORMANCE INFORMATION......................... 28
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES........ 29
GENERAL INFORMATION............................. 30
page 2
This Page Intentionally Left Blank
Page 3
EXPENSE SUMMARY
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear directly or
indirectly in connection with an investment in the Class I, Class II or Class
III Shares of the Dreyfus/Laurel Institutional Prime Money Market,
Dreyfus/Laurel Institutional Government Money Market, Dreyfus/Laurel
Institutional U.S. Treasury Money Market and Dreyfus/Laurel Institutional
U.S. Treasury Only Money Market Funds. (See "Management of the Funds.")
<TABLE>
CLASS I CLASS II CLASS III
SHARES SHARES SHARES
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................. none none none
Maximum Sales Load Imposed on Reinvestments............. none none none
Deferred Sales Load..................................... none none none
Redemption Fee.......................................... none none none
Exchange Fee............................................ none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee.......................................... 0.15% 0.15% 0.15%
Shareholder Servicing Fee*.............................. 0.15% 0.05% none
Other Expenses**........................................ 0.00% 0.00% 0.00%
------ ------ ------
Total Fund Operating Expenses........................... 0.30% 0.20% 0.15%
EXAMPLE:
You would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period: CLASS I CLASS II CLASS III
SHARES SHARES SHARES
1Year $3 $2 $ 2
3 Years $10 $6 $ 5
5 Years $17 $11 $ 8
10 Years $38 $26 $19
</TABLE>
- --------------------------
* See "The Shareholder Servicing Plans" for a description of the Funds'
shareholder servicing plans for Classes I and II.
**Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to a Fund's allocable portion of
such fees and expenses, which are estimated to be 0.02% of a Fund's net
assets (See "Management of the Funds.")
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.
The Funds understand that banks, brokers, dealers or other financial
institutions (including Mellon Bank and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Funds' Class
I, II or III Shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Selling Agreement ("Agreement") with Premier Mutual Fund
Services, Inc. ("Premier"). The Agreement requires each Agent to disclose to
its clients any compensation payable to such Agent by Premier and any other
compensation payable by the clients for various services provided in
connection with their accounts.
Long-term shareholders of Class I or II Shares could pay more in Shareholder
Servicing Fees than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. (the "NASD").
Page 4
EXPENSE SUMMARY
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear directly or
indirectly in connection with an investment in the Class I, Class II or Class
III Shares of the Dreyfus/Laurel Institutional Short-Term Bond Fund. (See
"Management of the Funds.")
<TABLE>
CLASS I CLASS II CLASS III
SHARES SHARES SHARES
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................. none none none
Maximum Sales Load Imposed on Reinvestments............. none none none
Deferred Sales Load..................................... none none none
Redemption Fee.......................................... none none none
Exchange Fee............................................ none none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee.......................................... 0.20% 0.20% 0.20%
Shareholder Servicing Fee*.............................. 0.15% 0.05% none
Other Expenses**........................................ 0.00% 0.00% 0.00%
------- ------- ------
Total Fund Operating Expenses........................... 0.35% 0.25% 0.20%
Example:
You would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period: CLASS I CLASS II CLASS III
SHARES SHARES SHARES
1Year $ 4 $ 3 $ 2
3 Years $11 $ 8 $ 6
5 Years N/A N/A N/A
10 Years N/A N/A N/A
</TABLE>
- --------------------
* See "The Shareholder Servicing Plans" for a description of the Funds'
shareholder servicing plans for Classes I and II.
**Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to a Fund's allocable portion of
such fees and expenses, which are estimated to be 0.02% of a Fund's net
assets (See "Management of the Funds.")
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.
The Fund understand that banks, brokers, dealers or other financial
institutions (including Mellon Bank and its affiliates) (collectively
"Agents") may charge fees to their clients who are owners of the Funds' Class
I, II or III Shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Selling Agreement ("Agreement") with Premier. The
Agreement requires each Agent to disclose to its clients any compensation paya
ble to such Agent by Premier and any other compensation payable by the
clients for various services provided in connection with their accounts.
Long-term shareholders of Class I or II Shares could pay more in Shareholder
Servicing Fees than the economic equivalent of the maximum front-end sales
charges applicable to mutual funds sold by members of the NASD.
Page 5
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
financial statements which have been audited by KPMG Peat Marwick LLP, the
independent auditors for the Fund for the indicated years or period ended
October 31, whose reports accompany such financial statements that appear in
the Fund's Annual Report and which are incorporated by reference in the SAI.
Financial information is not provided in connection with the Class II and
Class III Shares of the Dreyfus/Laurel Institutional Prime Money Market Fund
which were not offered as of fiscal year end October 31, 1994.
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL PRIME MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/94# 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88*
------------ --------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year.............. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+++ 0.0349 0.0300 0.0401 0.0641 0.0810 0.0897 0.0405
-------- ------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net
investment income.... (0.0349) (0.0300) (0.0401) (0.0641) (0.0810) (0.0897) (0.0405)
-------- ------- ------- ------- ------- ------- -------
Net asset value, end of year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-------- ------- ------- ------- ------- ------- -------
Total return++........... 3.67% 3.04% 4.09% 6.60% 8.41% 9.35% 4.12%
======== ======= ======== ======= ======= ======== ========
Ratios to average net assets/
supplemental data:
Net assets, end of year
(in 000's)........... $681,781 $824,080 $950,322 $943,636 $360,534 $97,366 $181,525
Ratio of operating expenses to
average net assets... 0.29% 0.27% 0.29% 0.30% 0.28% 0.30% 0.30% +
Ratio of net investment income
to average net assets 3.58% 2.99% 4.04% 6.22% 8.07% 8.74% 7.82% +
- ------------------------
* The Fund commenced operations on April 15, 1988.
+ Annualized.
Total return represents aggregate total return for the periods
indicated.
++ For the years ended October 31, 1993, 1992, 1991, 1989 and 1988, the
investment adviser reimbursed expenses of $0.00005, $0.0001, $0.0007,
$0.0022, $0.0044 and $0.0018 per share, respectively. For the period ended
October 31, 1988, the investment adviser waived a portion of its advisory fee
amounting to $0.0006 per share.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 6
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
financial statements which have been audited by KPMG Peat Marwick LLP, the
independent auditors for the Fund for the indicated years or period ended
October 31, whose reports accompany such financial statements that appear in
the Fund's Annual Report and which are incorporated by reference in the SAI.
Financial information is not provided in connection with the Class II and
Class III Shares of the Dreyfus/Laurel Institutional Government Money Market
Fund which were not offered as of fiscal year end October 31, 1994.
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/94# 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88 10/31/87*
-------- --------- --------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-------- ------- ------- ------- ------- ------- ------- -------
Income from
investment operations:
Net investment
income+++.......... 0.0356 0.0293 0.0385 0.0619 0.0796 0.0874 0.0692 0.0043
-------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net
investment income... (0.0356) (0.0293) (0.0385) (0.0619) (0.0796) (0.0874) (0.0692) (0.0043)
-------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year.. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-------- ------- ------- ------- ------- ------- ------- -------
Total return++........ 3.63% 2.97% 3.92% 6.36% 8.26% 9.10% 7.15% 0.43%
======== ======== ========= ======= ======== ======== ======== =======
Ratios to average net assets/
supplemental data:
Net assets, end of year
(in 000's)........ $470,007 $406,690 $391,364 $308,136 $84,283 $66,077 $147,430 $490,875
Ratio of operating expenses to
average net assets.... 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% +
Ratio of net investment income
to average net assets 3.60% 2.93% 3.82% 6.00% 8.03% 8.63% 6.70% 6.53% +
- ---------------------------
* The Fund commenced operations on October 8, 1987.
+ Annualized.
++ Total return represents aggregate total return for the periods
indicated.
+++ For the years ended October 31, 1993, 1992, 1991, 1990 and 1989, 1988
and 1987, the investment adviser reimbursed expenses of $0.0001, $0.0004,
$0.0014, $0.0035, $0.0037 and $0.0016 and $0.0001 per share, respectively.
For the period ended October 31, 1987, the investment adviser waived its
advisory fee amounting to $0.0001 per share.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 7
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
financial statements which have been audited by KPMG Peat Marwick LLP, the
independent auditors for the Fund for the indicated years or period ended
October 31, whose reports accompany such financial statements that appear in
the Fund's Annual Report and which are incorporated by reference in the SAI.
Financial information is not provided in connection with the Class II and
Class III Shares of the Dreyfus/Laurel Institutional U.S. Treasury Money
Market Fund which were not offered as of fiscal year end October 31, 1994.
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/94# 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year.................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income+++..... 0.0351** 0.0287 0.0381 0.0620 0.0793 0.0761
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net
investment income.......... (0.0351) (0.0287) (0.0381) (0.0620) (0.0793) (0.0761)
------- ------- ------- ------- ------- -------
Net asset value, end of year... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Total return++.................. 3.55% 2.91% 3.88% 6.39% 8.23% 7.88%
======= ======== ========= ======= ======== ========
Ratios to average net assets/
supplemental data:
Net assets, end of year
(in 000's)................. $586,778 $500,653 $666,378 $452,333 $270,664 $80,135
Ratio of operating expenses to
average net assets......... 0.30%*** 0.30% 0.30% 0.30% 0.30% 0.30% +
Ratio of net investment income
to average net assets...... 3.55% 2.87% 3.81% 6.04% 8.08% 8.83% +
_______________________________________
* The Fund commenced operations on December 22, 1988.
** Net investment income before reimbursement of expenses by the
investment manager for the year ended October 31, 1994 was $0.0350 per share.
*** Annualized expense ratio before reimbursement of expenses by investment
manager for the year ended October 31, 1994 was 0.31%.
+ Annualized.
++ Total return represents aggregate total return for the periods
indicated.
+++ For the years ended October 31, 1993, 1992, 1991, 1990 and 1989 the
investment adviser reimbursed expenses of $0.0004, $0.0003, $0.0008, $0.0023
and $0.0028 per share, respectively. For the period ended October 31, 1989,
the investment adviser waived a portion of its advisory fee amounting to
$0.0005 per share.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 8
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
financial statements which have been audited by KPMG Peat Marwick LLP, the
independent auditors for the Fund for the indicated years or period ended
October 31, whose reports accompany such financial statements that appear in
the Fund's Annual Report and which are incorporated by reference in the SAI.
Financial information is not provided in connection with the Class I Shares
of the Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
which were not offered as of fiscal year end October 31, 1994.
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
FOR A CLASS II SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/94# 10/31/93 10/31/92*
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of year............... $1.0000 $1.0000 $1.0000
-------- -------- -------
Income from investment operations:
Net investment income+++..................... 0.0348** 0.0287 0.0251
-------- -------- -------
Less distributions:
Distributions from net investment income..... (0.0348) (0.0287) (0.0251)
-------- -------- -------
Net asset value, end of year..................... $1.0000 $1.0000 $1.0000
-------- -------- -------
Total return++................................... 3.53% 2.90% 2.54%
========= ======== =========
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's)........... $30,301 $64,922 $43,782
Ratio of operating expenses to average net assets...... 0.19%*** 0.20% 0.20% +
Ratio of net investment income to average net assets 3.47% 2.86% 3.22% +
_______________________________________
* The Fund commenced operations on January 22, 1992.
** Net investment income before reimbursement of expenses by the
investment manager for the year ended October 31, 1994 was $0.0331
per share.
*** Operating expense ratio before reimbursement of expenses by investment
manager for the year ended October 31, 1994 was 0.35%.
+ Annualized.
++ Total return represents aggregate total return for the periods
indicated.
+++ For the years ended October 31, 1993 and the period ended October 31,
1992 the investment adviser reimbursed a portion of expenses amounting to
$0.0031, $0.0060 per share, respectively.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 9
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
FOR A CLASS III SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*#
__________
<S> <C> <C>
Net asset value, beginning of period............. $1.0000
__________
Income from investment operations:
Net investment income........................ 0.0193
__________
Less distributions:
Distributions from net investment income..... (0.0193)
__________
Net asset value, end of period................... $1.0000
__________
Total return++................................... 1.97%
=========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......... $30,700
Ratio of operating expenses to average net assets..... 0.17% +
Ratio of net investment income to average net assets 3.50% +
_______________________________________
* The Fund commenced selling Class III shares on May 12, 1994.
+ Annualized.
++ Total return represents aggregate total return for the periods
indicated.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 10
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
financial statements which have been audited by KPMG Peat Marwick LLP, the
independent auditors for the Fund for the indicated period ended October 31,
whose reports accompany such financial statements that appear in the Fund's
Annual Report and which are incorporated by reference in the SAI. Financial
information is not provided in connection with the Class II and Class III
Shares of the Dreyfus/Laurel Institutional Short-Term Bond Fund which were
not offered as of fiscal year end October 31, 1994.
<TABLE>
DREYFUS/LAUREL
INSTITUTIONAL SHORT-TERM BOND FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*#
---------
<S> <C><C>
Net asset value, beginning of period............. $10.00
---------
Income from investment operations:
Net investment income........................ 0.40
Net realized and unrealized loss on investments (0.12)
---------
Total from investment operations................. 0.28
---------
Distributions:
Distributions from net investment income..... (0.40)
---------
Net asset value, end of period................... $9.88
---------
Total return..................................... 2.82%
=========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......... $5,099
Ratio of operating expenses to average net assets0.21%**
Ratio of net investment income to average net assets 4.07%**
Portfolio turnover rate.......................... 216%
_______________________________________
* The Fund commenced operations on November 5, 1993.
** Annualized.
+ Net investment income per share before reimbursement of expenses by
the investment manager for the period ended October 31, 1994 was $0.34 per
share.
++ Total return represents aggregate total return for the periods
indicated.
+++ Annualized expense ratio before reimbursement of expenses by the
investment adviser was 0.80% for the period ended October 31, 1994.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, Dreyfus serves as the Fund's
investment manager.
</TABLE>
Page 11
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVE AND POLICES
Described below are the investment objective and policies of each
Institutional Fund. There can be no assurance that a Fund will meet its
stated investment objective. See "Other Investment Polices and Risk Factors"
on page 13 for a detailed description of risks and other Fund investment
policies.
THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
seeks a high level of current income consistent with stability of principal
and conservative investment risk by investing in direct obligations of the
U.S.Treasury and repurchase agreements secured by such obligations. The
objective is not fundamental and the Fund also employs other non-fundamental
policies.Fundamental and non-fundamental policies, and restrictions on
amending those policies are included in the SAI.
The Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund
invests only in direct obligations of the U.S. Treasury, such as Treasury
bills, notes and bonds, with remaining maturities of 397 days or less, and in
repurchase agreements secured by direct obligations of the U.S. Treasury.
THE DREYFUS/LAUREL INSTITUTIONAL PRIME MONEY MARKET FUND seeks a high
level of current income consistent with stability of principal by investing
in high grade money market instruments. The objective is not fundamental and
the Fund also employs other non-fundamental policies. Fundamental and
non-fundamental policies, and restrictions on amending those policies are
included in the SAI.
The instruments in which the Dreyfus/Laurel Institutional Prime Money
Market Fund invests include: (1) U.S. Treasury bills, notes and bonds;
(2)other obligations issued or guaranteed as to interest and principal by the
U.S. Government, its agencies and instrumentalities; (3) instruments of
U.S.and foreign banks, including certificates of deposit, banker's
acceptances,and time deposits, and may include Eurodollar Certificates of
Deposit("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and Eurodollar
Time Deposits ("ETDs"); (4) commercial paper of U.S. and foreign companies;
(5)corporate obligations; (6) mortgage-related securities backed by
U.S.Government agencies or instrumentalities; (7) variable amount master
demand notes; and (8) repurchase agreements. The Dreyfus/Laurel Institutional
Prime Money Market Fund also may utilize reverse repurchase agreements. (See
"Other Investment Policies and Risk Factors.")
THE DREYFUS/LAUREL INSTITUTIONAL GOVERNMENT MONEY MARKET FUND seeks a
high level of current income consistent with stability of principal and
conservative investment risk by investing principally in high grade money
market instruments issued or guaranteed by the U.S. Government and its
agencies and instrumentalities. The objective is not fundamental and the Fund
also employs other non-fundamental policies. Fundamental and non-fundamental
policies, and restrictions on amending those policies are included in the
SAI.
During normal market conditions, the Fund will invest at least 65% of
its total assets in securities issued or guaranteed by the U.S. Government
and its agencies and instrumentalities. The Dreyfus/Laurel Institutional
Government Money Market Fund may invest in: (1) U.S. Treasury bills, notes
and bonds and other obligations issued or guaranteed as to principal and
interest by the U.S. Government and its agencies and instrumentalities; (2)
mortgage-related securities backed by U.S. Government agencies or
instrumentalities; and (3)repurchase agreements.
THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND seeks a
high level of current income consistent with stability of principal and
conservative investment risk by investing only in U.S. Treasury bills, notes,
and bonds. The objective is not fundamental and the Fund also employs other
non-fundamental policies. Fundamental and non-fundamental policies, and
restrictions on amending those policies are included in the SAI.
Page 12
THE MONEY MARKET FUNDS.
Each Money Market Fund expects to maintain, but does not guarantee, a
net asset value of $1.00 per Share by valuing its portfolio securities at
amortized cost. In order to use the amortized cost method, each Fund must
maintain a dollar-weighted average portfolio maturity of 90 days or less and
invest only in U.S. dollar-denominated securities with remaining maturities
of 397 days or less and which are determined to be of high quality with
minimal credit risk in accordance with procedures adopted by the board of
directors.In determining whether a security is of high quality with minimal
credit risk, Dreyfus must consider whether the security is rated by
nationally recognized statistical rating organizations ("NRSROs") in
accordance with requirements of these procedures (See the SAI for a
description of NRSROs). These procedures are reasonably designed to assure
that the prices determined by the amortized cost valuation will approximate
the current market value of each Fund's securities.
THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND seeks a high
level of current income. The Fund seeks to achieve its objective by investing
at least 65% of its total assets in corporate bonds, U.S. Treasury bills,
notes and bonds, other obligations issued or guaranteed as to interest and
principal by the U.S. Government, its agencies and instrumentalities, and
mortgage-related securities backed by U.S. Government agencies or
instrumentalities, all with remaining maturities of three years or less.
These securities must be rated at least A by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch
Investors Service, Inc. ("Fitch"),or if not so rated, be of comparable
quality to such rated securities, as determined by Dreyfus. During normal
market conditions, the Fund will have a total dollar-weighted average
maturity of more than one year but less than three years. The Fund's
objective is not fundamental and the Fund also employs other non-fundamental
policies. Fundamental and non-fundamental policies, and restrictions on
amending those policies are included in the SAI.
Other instruments in which the Fund may invest include: (1)
instruments of U.S. and foreign banks, including certificates of deposit,
banker's acceptances and time deposits, and may include ECDs Yankee Cds and
ETDs; (2) commercial paper of U.S. and foreign companies, rated A-1 at the
time of purchase by Standard & Poor's, Prime-1 by Moody's, F-1 by Fitch, Duff
1 by Duff & Phelps, Inc. or A1 by IBCA, Inc.; and (3) repurchase agreements.
See the SAI for a description of the above ratings.
The Fund may enter into reverse repurchase agreements but does not
intend to invest more than 5% of its total assets in reverse repurchase
agreements.The Fund may also enter into futures contracts and options thereon
for hedging purposes. The Fund may invest in securities issued by other
investment companies, consistent with the Fund's investment objective and
policies. For additional information concerning certain of the Fund
investment practices, see the SAI.
OTHER INVESTMENT POLICIES AND RISK FACTORS
PORTFOLIO TURNOVER. Although securities are purchased for the
Dreyfus/Laurel Institutional Short-Term Bond Fund on the basis of potential
for investment income and not for short-term trading profits, the portfolio
turnover rate of the Dreyfus/Laurel Institutional Short-Term Bond Fund has
exceeded 100% and may exceed 100% in the future. A portfolio turnover rate of
100% would occur, for example, if all the securities held by the
Dreyfus/Laurel Institutional Short-Term Bond Fund were replaced once in a
period of one year. If the Dreyfus/Laurel Institutional Short-Term Bond
Fund's portfolio turnover rate exceeds 100%, it may result in higher
brokerage costs and possible tax consequences for the Fund and its
shareholders. Nevertheless, security transactions for the Dreyfus/Laurel
Institutional Short-Term Bond Fund will be based only upon investment
considerations and will not be limited by any other considerations when
Dreyfus deems it appropriate to make changes in the Dreyfus/Laurel
Institutional Short-Term Bond Fund's assets.
BANK INSTRUMENTS. The Dreyfus/Laurel Institutional Short-Term
Bond,Dreyfus/Laurel Institutional Prime Money Market and Dreyfus/Laurel
Institutional Government Money Market Funds may purchase bank
instruments.Bank instruments consist mainly of certificates of deposit, time
deposits and bankers' acceptances.
Page 13
BORROWINGS. When a Fund borrows money, the net asset value of a share
may be subject to greater fluctuation until the borrowing is paid off. Each
Fund(except the Dreyfus/Laurel Institutional U.S. Treasury Only Money Market
Fund)may enter into reverse repurchase agreements. Reverse repurchase
agreements maybe considered to be borrowings. When a Fund invests in a
reverse repurchase agreement, it sells a Fund security to another party, such
as a bank or broker-dealer, in return for cash, and agrees to buy the security
back at a future date and price. Reverse repurchase agreements may be used
to provide cash to satisfy unusually heavy redemption requests without having
to sell portfolio securities, or for other temporary or emergency purposes.
COMMERCIAL INSTRUMENTS. Commercial instruments consist of short-term
U.S.dollar-denominated obligations issued by domestic corporations or issued
in the U.S. by foreign corporations and foreign commercial banks. Investments
by the Dreyfus/Laurel Institutional Short-Term Bond, Dreyfus/Laurel
Institutional Prime Money Market and Dreyfus/Laurel Institutional Government
Money Market Funds in commercial paper will consist of issues rated in a
manner consistent with such Funds' investment policies and objectives. In
addition, each aforementioned Fund may acquire unrated commercial paper and
corporate bonds that are determined by Dreyfus at the time of purchase to be
of comparable quality to rated instruments that may be acquired by such Fund.
FOREIGN SECURITIES. The Dreyfus/Laurel Institutional Short-Term
Bond,Dreyfus/Laurel Institutional Prime Money Market and Dreyfus/Laurel
Institutional Government Money Market Funds may purchase securities of
foreign issuers and may invest in obligations of foreign branches of domestic
banks and domestic branches of foreign banks. Investments in foreign
securities present certain risks, including those resulting from fluctuations
in currency exchange rates, revaluation of currencies, future political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of securities of comparable domestic issuers. In
addition, with respect to certain foreign countries, there is the possibility
of expropriation, confiscatory taxation and limitations on the use or removal
of funds or other assets of a Fund, including withholding of dividends.
Foreign securities may be subject to foreign government taxes that would
reduce the yield on such securities.
FUTURES OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Dreyfus/Laurel
Institutional Short-Term Bond Fund may attempt to reduce the overall level of
investment risk of particular securities and attempt to protect the Fund
against adverse market movements by investing in futures, options and other
derivative instruments. These include the purchase and writing of options on
securities (including index options) and options on foreign currencies and
investing in futures contracts for the purchase or sale of instruments based
on financial indices, including interest rate indices or indices of U.S. or
foreign government, equity or fixed income securities ("futures
contracts"),options on futures contracts, forward contracts and swaps and
swap-related products such as equity swap contracts, interest rate swaps,
currency swaps,caps, collars and floors. The use of futures, options, forward
contracts and swaps exposes the Dreyfus/Laurel Institutional Short-Term Bond
Fund to additional investment risks and transaction costs. If Dreyfus
incorrectly analyzes market conditions or does not employ the appropriate
strategy with respect to these instruments, the Dreyfus/Laurel Institutional
Short-Term Bond Fund could be left in a less favorable position. Additional
risks inherent in the use of futures, options, forward contracts and swaps
include: imperfect correlation between the price of futures, options and
forward contracts and movements in the prices of the securities or currencies
being hedged; the possible absence of a liquid secondary market for any
particular instrument at any time; and the possible need to defer closing out
certain hedged positions to avoid adverse tax consequences. The
Dreyfus/Laurel
Page 14
Institutional Short-Term Bond Fund may not purchase put and
call options which are traded on a national stock exchange in an amount
exceeding 5% of its net assets. Further information on the use of futures,
options and other derivative instruments,and the associated risks is
contained in the SAI.
ILLIQUID SECURITIES. Each of the Money Market Funds will not
knowingly invest more than 10%, and the Dreyfus/Laurel Institutional
Short-Term Bond Fund will not knowingly invest more than 15%, of the value of
its net assets in illiquid securities, including time deposits and repurchase
agreements having maturities longer than seven days. Securities that have
readily available market quotations are not deemed illiquid for purposes of
this limitation (irrespective of any legal or contractual restrictions on
resale). A Fund may invest in commercial obligations issued in reliance on
the so-called "private placement" exemption from registration afforded by
Section4(2) of the Securities Act of 1933, as amended ("Section 4(2) paper").
A Fund may also purchase securities that are not registered under the
Securities Act of 1933,as amended, but which can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Liquidity determinations with respect to Section 4(2) paper and
Rule 144A securities will be made by the Board of Directors as required. The
Board will consider availability of reliable price information and other
relevant information in making such determinations. Section 4(2) paper is
restricted as to disposition under the federal securities laws, and generally
is sold to institutional investors such as a Fund that agrees that they are
purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors like a
Fund through or with the assistance of the issuer or investment dealers who
make a market in the Section 4(2) paper, thus providing liquidity. Rule 144A
securities generally must be sold to other qualified institutional buyers. If
a particular investment in Section 4(2) paper or Rule 144A Securities is not
determined to be liquid, that investment will be included within the
percentage limitation on investment in illiquid securities. The ability to
sell Rule 144A securities to qualified institutional buyers is a recent
development and it is not possible to predict how this market will mature.
Investing in Rule 144A securities could have the effect of increasing the
level of fund illiquidity to the extent that qualified institutional buyers
become, for a time,uninterested in purchasing these securities.
MORTGAGE PASS-THROUGH CERTIFICATES. The Dreyfus/Laurel Institutional
Short-Term Bond Fund may invest in mortgage pass-through
certificates.Mortgage pass-through certificates are issued by
governmental,government-related and private organizations and are backed by
pools of mortgage loans. These mortgage loans are made by lenders such as
savings and loan associations, mortgage bankers, commercial banks and others
to residential home buyers throughout the United States. The securities are
"pass-through" securities because they provide investors with monthly
payments of principal and interest which in effect are a "pass-through" of
the monthly payments made by the individual borrowers on the underlying
mortgage loans.The principal governmental issuer of such securities is the
Government National Mortgage Association ("GNMA"), which is a wholly-owned
U.S.government corporation within the Department of Housing and Urban
Development.Government related issuers include the Federal Home Loan Mortgage
Corporation("FHLMC") and the Federal National Mortgage Association ("FNMA"),
both government-sponsored corporations owned entirely by private
stockholders.Commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers also create pass-through pools of conventional residential mortgage
loans. Such issuers may be the originators of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. The market
value of mortgage-related securities depends on, among other things, the
level of interest rates, the certificates' coupon rates and the payment
history of underlying mortgage loans. For further information, see the SAI.
OTHER INVESTMENT COMPANIES. Each Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with its respective investment objective and
Page 15
policies and permissible under the 1940 Act. As a shareholder of another
investment company, a Fund would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses, including advisory
fees. These expenses would be in addition to the advisory and other expenses
that the Fund bears directly in connection with its own operations.
REPURCHASE AGREEMENTS. Each Fund (except the Dreyfus/Laurel
Institutional U.S. Treasury Only Money Market Fund) may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by a
Fund and a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from such Fund at a specified price and date or upon
demand.This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
limit stated above.
REVERSE REPURCHASE AGREEMENTS. The Dreyfus/Laurel Institutional Prime
Money Market and Dreyfus/Laurel Institutional Short-Term Bond Funds may enter
into reverse repurchase agreements to meet redemption requests where the
liquidation of Fund securities is deemed by Dreyfus to be disadvantageous.
Under a reverse repurchase agreement, a Fund: (i) transfers possession of Fund
securities to a bank or broker-dealer in return for cash in an amount equal
to a percentage of the securities' market value; and (ii) agrees to
repurchase the securities at a future date by repaying the cash with
interest. Cash or liquid high-grade debt securities held by the Fund equal in
value to the repurchase price including any accrued interest will be
maintained in a segregated account while a reverse repurchase agreement is in
effect.
SECURITIES LENDING. To increase return on Fund securities, each Fund
may lend its portfolio securities to broker-dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market
value of the securities loaned. There may be risks of delay in receiving
additional collateral or in recovering the securities loaned or even a loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by Dreyfus to
be of good standing and when, in its judgment, the income to be earned from
the loan justifies the attendant risks.
U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. Government
obligations consistent with such Fund's investment objective and policies.
U.S. Government obligations consist of marketable securities and instruments
issued or guaranteed by the U.S. Government or any of its agencies,authorities
or instrumentalities. Direct obligations are issued by the U.S.Treasury and
include all U.S. Treasury instruments (i.e., bills, notes and bonds).
Obligations of U.S. Government agencies, authorities and instrumentalities
are issued by government-sponsored agencies and enterprises acting under
authority of Congress. Although obligations of federal agencies,authorities
and instrumentalities are not debts of the U.S. Treasury, in some cases
payment of interest and principal on such obligations is guaranteed by the
U.S. Government, e.g., GNMA certificates; in other cases payment of interest
and principal are not guaranteed, e.g., obligations of the Federal Home Loan
Bank System and the Federal Farm Credit Bank. No assurances can be given that
the U.S. Government would provide financial support to government-sponsored
instrumentalities if it is not obligated to do so by law.
VARIABLE AMOUNT MASTER DEMAND NOTES. The Dreyfus/Laurel Institutional
Short-Term Bond, Dreyfus/Laurel Institutional Prime Money Market and
Dreyfus/Laurel Institutional Government Money Market Funds may invest
invariable amount master demand notes. Variable amount master demand notes
are unsecured obligations that are redeemable upon demand and are typically
unrated. These instruments are issued pursuant to written agreements between
their issuers and holders. The agreements permit the holders to
increase(subject to an agreed maximum) and the holders and issuers to
Page 16
decrease the principal amount of the notes, and specify that the rate of
interest payable on the principal fluctuates according to an agreed-upon
formula. If an issuer of a variable amount master demand note were to default
on its payment obligation, a Fund might be unable to dispose of the note
because of the absence of a secondary market and might, for this or other
reasons, suffer a loss to the extent of the default. Each Fund will invest in
variable amount master demand notes issued by entities that Dreyfus considers
creditworthy.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT SECURITIES. Each
Fund may purchase when-issued, delayed delivery and forward commitment
securities. The purchase of new issues of securities on a "when-issued,"
"delayed delivery" or "forward commitment" basis occurs when the payment and
delivery for securities takes place at a future date. Because actual payment
for and delivery of such securities generally take place 15 to 45 days after
the purchase date, purchasers of such securities bear the risk that interest
rates on debt securities at the time of delivery may be higher or lower than
those contracted for on the security purchased.
LIMITING INVESTMENT RISKS. Each Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of a Fund's outstanding shares. The SAI describes each of the Funds'
fundamental and non-fundamental investment restrictions.
The investment objective, policies, restrictions, practices and
procedures of each Fund, unless otherwise specified, may be changed without
shareholder approval. If a Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether such Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of a Fund's shares in certain states, the
Fund may make commitments more restrictive than the investment policies and
restrictions described in this Prospectus and the SAI. Should a Fund
determine that any such commitment is no longer in the best interests of the
Fund, it may consider terminating sales of its Shares in the states involved.
MASTER/FEEDER OPTION. The Dreyfus/Laurel Funds, Inc. may in the
future seek to achieve a Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to such Fund. Shareholders of each Fund will be given at
least 30 days' prior notice of any such investment. Such investment would be
made only if the Directors determine it to be in the best interest of a Fund
and its shareholders. In making that determination, the Directors will
consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. Although
the Funds believe that the Directors will not approve an arrangement that is
likely to result in higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.
Management of the Funds
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of March 31, 1995, Dreyfus managed or administered
approximately $72 billion in assets for more than 1.9 million investor
accounts nationwide.
Dreyfus serves as the Funds' investment manager. Dreyfus supervises
and assists in the overall management of the Funds' affairs under an
Investment Management Agreement with the Funds, subject to the overall
authority of the Company's Board of Directors in accordance with Maryland
law. Pursuant to the Investment Management Agreement, Dreyfus provides, or
arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services
Page 17
to the Funds. As the Funds' investment manager, Dreyfus manages the Funds by
making investment decisions based on the Fund's investment objectives,
policies and restrictions.
Laurie Carroll has managed the Dreyfus/Laurel Institutional
Short-Term Bond Fund since inception in November 1993. Ms. Carroll is a
portfolio manager at Dreyfus and has been employed by Dreyfus since October
17, 1994. Ms.Carroll has been employed by Mellon Bank since 1986 and is a
Senior Vice President at Mellon Bank.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the United States
based on total assets. Mellon's principal wholly-owned subsidiaries are
Mellon Bank, Mellon Bank (DE) National Association, Mellon Bank (MD), The
Boston Company, Inc., AFCO Credit Corporation and a number of companies known
as Mellon Financial Services Corporations. Through its subsidiaries,
including Dreyfus, Mellon managed approximately $193 billion in assets as of
December 31, 1994, including $70 billion in mutual fund assets. As of
December 31, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $654 billion in assets, including approximately $74 billion in
mutual fund assets.
Under the Investment Management Agreement, each Fund pays a fee
computed daily, and paid monthly, at the annual rate of 0.15% of each Money
Market Fund's and 0.20% of the Dreyfus/Laurel Institutional Short-Term Bond
Fund's average daily net assets less certain expenses described below.
Dreyfus pays all of the expenses of each Fund except brokerage fees, taxes,
interest, fees and expenses of the non-interested Directors (including
counsel fees), Rule 12b-1 fees (if applicable) and extraordinary expenses.
Although Dreyfus does not pay for the fees and expenses of the non-interested
Directors (including counsel fees), Dreyfus is contractually required to
reduce its investment management fee in an amount equal to each Fund's
allocable share of such expenses. In order to compensate Dreyfus for paying
virtually all of the Fund's expenses, the Fund's investment management fee is
higher than the investment advisory fees paid by most investment companies.
Most if not all, such companies also pay for additional non-investment
advisory expenses that are not paid by such companies' investment advisers.
From time to time, Dreyfus may waive (either voluntarily or pursuant to
applicable state limitations) additional investment management fees payable
by the Fund. For the period from November 1, 1993 to April 3,1994, the
Institutional Prime Money Market Fund, the Institutional Government Money
Market Fund, the Institutional U.S. Treasury Money Market Fund, the
Institutional U.S. Treasury Only Money Market Fund, and the Institutional
Short-Term Bond Fund paid its investment adviser, Mellon Bank, 0.20%,
0.20%,0.19%, 0.00%, and 0.00%, respectively (annualized) of its average daily
net assets in investment advisory fees (net of expenses reimbursed), under
the Fund's previous investment advisory contract (such contract covered only
the provision of investment advisory and certain specified administrative
services). For the period from April 4, 1994 through the fiscal year ended
October 31, 1994, the Institutional Prime Money Market Fund, the
Institutional Government Money Market Fund, the Institutional U.S. Treasury
Money Market Fund, the Institutional U.S. Treasury Only Money Market Fund,
and the Institutional Short-Term Bond Fund paid Mellon Bank or Dreyfus 0.15%,0
..15%, 0.15%, 0.15% and 0.20%, respectively (annualized) of its average daily
net assets in investment management fees, less fees and expenses of the
non-interested Directors (including counsel fees). Without the
reimbursements,operating expenses would have been higher.
For the fiscal year ended October 31, 1994, total operating
expenses(excluding Rule 12b-1 fees) (net of expenses reimbursed) of Class I
of the Institutional Prime Money Market Fund, the Institutional Government
Money Market Fund, and Institutional U.S. Treasury Money Market Fund were
Page 18
0.14%, 0.15%, and 0.15%, respectively (annualized) of the average daily net
assets of each Fund. For the fiscal year ended October 31, 1994, total
operating expenses (excluding Rule 12b-1 fees) (net of expenses reimbursed) of
the Institutional U.S. Treasury Only Money Market Fund were 0.14% and
0.17%(annualized) of the average daily net assets of each class for Class II
and Class III, respectively. For the fiscal year ended October 31, 1994,
total operating expenses of Class I (excluding Rule 12b-1 fees) (net of
expenses reimbursed) of the Institutional Short-Term Bond Fund were 0.11%
(annualized)of the Fund's average daily net assets.
Dreyfus may pay the Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Distributor may use part or all of such payments to
pay Agents in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Funds, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with their investment objectives, polic
ies and restrictions, the Funds may invest in securities of companies with
which Mellon Bank has a lending relationship.
The Funds' distributor is Premier (the "Distributor"). The
Distributor is located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR_Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian and fund accountant. The Fund's
Transfer and Dividend Disbursing Agent is The Shareholder Services Group,
Inc. (the "Transfer Agent"), a subsidiary of First Data Corporation, One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. is the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
You can purchase shares of a Fund without a sales charge directly
from the Distributor; you may be charged a nominal fee if you effect
transactions in shares of a Fund through a securities dealer, bank or other
financial institution. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Funds reserve
the right to reject any purchase order.
Except as noted below, the minimum initial investment to establish a
new account in each Institutional Fund is:(i) $100,000 for Class I shares,
(ii) $10 Million for Class II Shares, and (iii) $25 million for Class
III Shares.
You may purchase shares of a Fund by check or wire. Checks should
be made payable to "The Dreyfus Family of Funds." Payments to open new
accounts which are mailed should be sent to The Dreyfus Family of Funds, P.O.
Box 9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor
subsequent investments should be made by third party check. Purchase orders
may be delivered in person only to a Dreyfus Financial Center. THESE ORDERS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Page 19
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit & Trust Co., together with the
applicable Class' DDA# as shown below, for purchase of Fund shares in your
name:
DDA#043974 Dreyfus/Laurel Institutional Prime Money Market Fund/Class
I shares;
DDA#043990 Dreyfus/Laurel Institutional Prime Money Market Fund/Class
II shares;
DDA#044067 Dreyfus/Laurel Institutional Prime Money Market Fund/Class
III shares;
DDA#043931 Dreyfus/Laurel Institutional Government Money Market
Fund/Class I shares;
DDA#043958 Dreyfus/Laurel Institutional Government Money Market
Fund/Class II shares;
DDA#043966 Dreyfus/Laurel Institutional Government Money Market
Fund/Class III shares;
DDA#044075 Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund/Class I shares;
DDA#044083 Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund/Class II shares;
DDA#044091 Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund/Class III shares;
DDA#044105 Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/Class Ishares;
DDA#043338 Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/Class IIshares;
DDA#043346 Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/Class IIIshares;
DDA#043753 Dreyfus/Laurel Institutional Short-Term Bond Fund/Class I
shares;
DDA#043761 Dreyfus/Laurel Institutional Short-Term Bond Fund/Class
IIshares;
DDA#043788 Dreyfus/Laurel Institutional Short-Term Bond Fund/Class
IIIshares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Funds' Account Application and promptly mail the Account
Application to the Fund, as no redemption will be permitted until the Account
Application is received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be made in U.S.
dollars and, to avoid fees and delays, should be drawn only on U.S. banks. A
charge will be imposed if any check used for investment in your account does
not clear. The Funds make available to certain large institutions the ability
to issue purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit & Trust Co. with instructions to credit
your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS:
"4640" for Dreyfus/Laurel Institutional Prime Money Market Fund/Class
I shares;
"4650" for Dreyfus/Laurel Institutional Prime Money Market Fund/Class
II shares;
"4660" for Dreyfus/Laurel Institutional Prime Money Market Fund/Class
III shares;
"4610" for Dreyfus/Laurel Institutional Government Money Market
Fund/Class I shares;
"4620" for Dreyfus/Laurel Institutional Government Money Market
Fund/Class II shares;
"4630" for Dreyfus/Laurel Institutional Government Money Market
Fund/Class III shares;
"4670" for Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund/Class I shares;
"4680" for Dreyfus/Laurel Institutional U.S Treasury Money Market
Fund/Class II shares;
"4690" for Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund/Class III shares;
"4700" for Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/ Class I shares;
"4710" for Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/Class II shares;
"4720" for Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund/Class III shares;
"4500" for Dreyfus/Laurel Institutional Short-Term Bond Fund/Class I
shares;
Page 20
"4510" for Dreyfus/Laurel Institutional Short-Term Bond Fund/Class II
shares;
"4520" for Dreyfus/Laurel Institutional Short-Term Bond Fund/Class
III shares.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Funds' Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service ("IRS").
NET ASSET VALUE ("NAV") _ The price of your Shares is their net asset value
("NAV"). NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"). Investments and requests to exchange or
redeem Shares received by the Dreyfus/Laurel Institutional Short-Term Bond
Fund before the close of business on the NYSE(usually 4 p.m., Eastern time)
are effective on, and will receive the share price determined, that day.
Investments and requests to exchange or redeem Shares received by the
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund by 12 noon,
Eastern time, the Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund by 1 p.m., Eastern time and the Dreyfus/Laurel Institutional Prime
Money Market Fund and the Dreyfus/Laurel Institutional Government Money
Market Fund by 3 p.m., Eastern time are effective on, and will receive the
Share price next determined, that day. The NAV of the Money Market Funds are
calculated as follows: 12 noon, Eastern time for the Dreyfus/Laurel
Institutional U.S. Treasury Only Money Market Fund, 1 p.m., Eastern time for
the Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund and 3 p.m.,
Eastern time for the Dreyfus/Laurel Institutional Prime Money Market Fund and
the Dreyfus/Laurel Institutional Government Money Market Fund. Redemption
requests received after: (i) the close of the NYSEfor the Dreyfus/Laurel
Institutional Short-Term Bond, or (ii) 12 noon, Eastern time for the
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund, 1 p.m.,
Eastern time for the Dreyfus/Laurel Institutional U.S. Treasury Money Market
Fund and 3 p.m., Eastern time for the Dreyfus/Laurel Institutional Prime
Money Market Fund and the Dreyfus/Laurel Institutional Government Money
Market Fund are effective on, and receive the first Share price determined
on, the next business day.
An investment portfolio's NAV refers to the worth of one share. The
NAV for the Class I, Class II and Class III shares of a Money Market Fund is
calculated on the basis of amortized cost, which involves initially valuing a
portfolio instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the instrument. Each
Money Market Fund intends to maintain a constant NAV of $1.00 per
share,although there is no assurance that this can be done on a continuing
basis.The NAV for Class I, Class II and Class III shares of the
Dreyfus/Laurel Institutional Short-Term Bond Fund is computed by adding, with
respect to each Class of shares, the value of all the Class' investments,
cash, and other assets, deducting liabilities and dividing the result by the
number of Shares of that class outstanding. The valuation of assets for
determining NAV for the Dreyfus/Laurel Institutional Short-Term Bond Fund
maybe summarized as follows:
The portfolio securities of the Dreyfus/Laurel Institutional
Short-Term Bond Fund, except as otherwise noted, listed or traded on a stock
exchange, are valued at the latest sale price. If no sale is reported, the
mean of the latest bid and asked prices is used. Securities traded
over-the-counter are priced at the mean of the latest bid and asked prices
but will be valued at the last sale price if required by regulations of the
Securities and Exchange Commission. When market quotations are not readily ava
ilable, securities and other assets are valued at fair value as determined in
good faith in accordance with procedures established by the Board of
Directors. Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors. Pursuant to a determination by The Dreyfus/Laurel
Funds, Inc.'s Board of Directors that such value represents fair value, debt
securities
Page 21
with maturities of 60 days or less held by the Dreyfus/Laurel
Institutional Short-Term Bond Funds are valued at amortized cost.
The NAV of certain classes of Shares of the Dreyfus/Laurel
Institutional Short-Term Bond Fund are published in leading newspapers daily.
The yield of certain classes of Shares of the Money Market Funds are
published weekly in leading financial publications and daily in many local
newspapers. The NAVs of the Dreyfus/Laurel Institutional Short-Term Bond
Fund's classes may also be obtained by calling The Dreyfus Family of Funds.
PROCEDURES FOR MULTIPLE ACCOUNTS _ Special procedures have been designed for
banks and other institutions that wish to open multiple accounts. The
institution may open a single master account by filing one application with
the Transfer Agent and may open individual sub-accounts at the same time or
at some later date. For further information, please refer to the SAI.
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase shares of a Fund (minimum
$500 and maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Funds' Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Funds may modify or terminate this Privilege at any time
or charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
Shareholder Services
The services and privileges described under this heading may not be
available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
Fund Exchanges
You may purchase, in exchange for shares of a Class, shares of the
same class of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use.
To request an exchange, you or your Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of Personal
Retirement Plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "No" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, or by a
separate Shareholder Services Form, also available by calling
1-800-645-6561. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if calling from overseas, 1-401-455-3306. See "How to Redeem Fund
Shares_Procedures." Upon an exchange, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Wire Redemption Privilege, Telephone
Page 22
Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividends and
distributions payment option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges into funds sold with a sales
load. If you are exchanging into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which reflect
a reduced sales load, if the shares of the fund from which you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or other distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange you must notify
the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your holdings through a check of
appropriate records. See "Shareholder Services" in the SAI. No fees currently
are charged shareholders directly in connection with exchanges, although the
Funds reserve the right, upon not less than 60 days' written notice, to
charge shareholders a nominal fee in accordance with rules promulgated by the
SEC. The Funds reserve the right to reject any exchange request in whole or
in part. The availability of fund exchanges may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current NAV; however a sales
load may be charged with respect to exchanges into funds sold with a sales
load. The right to exercise this Privilege may be modified or canceled by the
Funds or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The Funds may
charge a service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
Dreyfus-AUTOMATIC Asset Builder
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization by calling 1-800-645-6561 from the Distributor. You may cancel
your participation in this Privilege or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671 and the notification will be
effective three business days following receipt. The Funds may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Page 23
Dreyfus Dividend Options
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of certain other funds in the Dreyfus Family of
Funds of which you are an investor. Shares of the other fund will be
purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales
load. If you are investing in a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which reflect
a reduced sales load. See "Shareholder Services" in the SAI. Dreyfus Dividend
ACH permits you to transfer electronically on the payment date dividends or
dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these Privileges is effective three business days
following receipt. These Privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Funds may modify or terminate these
Privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
Dreyfus Government Direct Deposit Privilege
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with a fluctuating NAV, such as Dreyfus/Laurel Institutional Short-Term Bond
Fund, may be appropriate for you. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Funds may
terminate your participation upon 30 days' notice to you.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Funds
may modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. An applica-
Page 24
tion for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by the
shareholder, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
How to Redeem Fund Shares
GENERAL_You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Funds will redeem the shares at the
next determined NAV. If you hold Fund shares of more than one Class, any
request for redemption must specify the Class of shares being redeemed. If
you fail to specify the Class of shares to be redeemed or if you own fewer
shares of the Class than specified to be redeemed, the redemption request may
be delayed until the Transfer Agent receives further instructions from you or
your Agent.
The Funds impose no charges when shares are redeemed directly through
the Distributor. Agents or other institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the redemption
request. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUNDS WILL
REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER
PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME
ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Funds reserve the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $500 or less and remains so during the notice period.
PROCEDURES_You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, the Wire Redemption Privilege, the
Telephone Redemption Privilege or the Dreyfus TELETRANSFER Privilege. Other
redemption procedures may be in effect for clients of certain Agents and
institutions. The Funds make available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
Page 25
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Funds' Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Funds will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Funds or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Funds nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Dreyfus/Laurel Institutional Short-Term Bond
Fund's net asset value may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. REDEMPTION REQUESTS MAY
BE DELIVERED IN PERSON ONLY TO A DREYFUS FINANCIAL CENTER. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. FOR THE LOCATION OF THE NEAREST FINANCIAL CENTER, PLEASE CALL THE
TELEPHONE NUMBER LISTED UNDER "GENERAL INFORMATION." Redemption requests must
be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards
and procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion
Program. For more information with respect to signature-guarantees, please
call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Funds'
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of only up to $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 1-800-221-4060 or, if
calling from overseas, 1-401-455-3306. The Funds reserve the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at anytime by the Transfer Agent
or the Fund. The Funds' SAIs set forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
Page 26
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the
Funds' Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. The Funds
reserve the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. This Privilege may be modified or terminated at
any time by the Transfer Agent or the Fund. Shares held under Keogh Plans,
IRAs or other retirement plans, and shares for which certificates have been
issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem Fund shares (minimum
$500 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Funds' Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between your Fund account and the bank account designated in
one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus
TELETRANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Funds reserve the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Funds
may modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
THE SHAREHOLDER SERVICING PLANS
The Class I and Class II shares of each Fund are subject to a
shareholder servicing plan. Each Fund's shareholder servicing plans (each a
"Plan,"collectively the "Plans") permit the Fund to compensate certain banks,
brokers, dealers or other financial institutions (including Mellon Bank and
its affiliates) (collectively "Agents") that have entered into Selling
Agreements ("Agreements") with The Dreyfus/Laurel Funds, Inc. Payments under
each Fund's Plans are calculated daily and paid monthly at a rate or rates
set from time to time by a Fund, provided that the annual rate may not
exceed: (i)0.15% of the average daily net asset value of the Class I shares,
or (ii)0.05% of the average daily net asset value of the Class II shares.
The fees payable under a Plan are used primarily to compensate or
reimburse Agents for shareholder services provided, and related expenses
incurred by such Agents. The shareholder services provided by Agents may
include: (i) aggregating and processing purchase and redemption requests for
Class I or Class II shares from their customers and transmitting net purchase
and redemption orders to the distributor or Transfer Agent; (ii) providing
customers with a service that invests the assets of their accounts in Class I
or Class II shares pursuant to specific or pre-authorized instructions;
(iii)processing dividend and distribution payments from a Fund on behalf of
customers; (iv) providing information periodically to customers showing their
positions in Class I or Class II shares; (v) arranging for bank wires; and
(vi) providing general shareholder liaison services.
The Dreyfus/Laurel Funds, Inc. may suspend or reduce payments under a
Plan at any time, and payments are subject to the continuation of each Fund's
Plans and the Agreements described above. From time to time, the Agents and
The Dreyfus/Laurel Funds, Inc. may agree to voluntarily reduce the maximum
fees payable under a Plan. See the SAI for more details on the Plans.
Page 27
The Dreyfus/Laurel Funds, Inc. understands that Agents may charge
fees to their clients who are owners of a Fund's Class I or Class II Shares
for various services provided in connection with a client's account. These
fees would be in addition to any amounts received by an Agent under its
Agreement with The Dreyfus/Laurel Funds, Inc. The Agreement requires each
Agent to disclose to their clients any compensation payable to such Agent by
the Dreyfus/Laurel Funds, Inc. and any other compensation payable by the
client for various services provided in connection with their accounts.
Potential investors should read this Prospectus in light of the terms
governing their accounts with their Agents. An Agent entitled to receive
compensation for servicing a Fund's shares may receive different compensation
with respect to one class of shares over another.
PERFORMANCE INFORMATION
From time to time, an Institutional Fund may advertise the yield and
total return on a class of Shares. TOTAL RETURN AND YIELD FIGURES ARE BASED
ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
The "total return" of a class of shares of a Fund may be calculated on an
average annual total return basis or a cumulative total return basis. Average
annual total return refers to the average annual compounded rates of return
on a class of Shares over one-, five-, and ten-year periods or the life of
the Fund (as stated in the advertisement) that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value
of the investment, assuming the reinvestment of all dividends and capital
gains distributions. Cumulative total return reflects the total percentage
change in the value of the investment over the measuring period, again
assuming there investment of all dividends and capital gains distributions.
The "yield" of a class of shares in a Money Market Fund refers to the
income generated by an investment in such Class over a seven-day period
identified in the advertisement. This income is then "annualized." That is,
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated similarly, but, when
annualized, the income earned by an investment in a class of Shares in a
Money Market Fund is assumed to be reinvested. The"effective yield" will be
slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. With respect to the Dreyfus/Laurel Institutional
Short-Term Bond Fund, "yield" is calculated by dividing a class of shares'
annualized net investment income per Share during a recent 30-day (or one
month) period by the maximum public offering price per class of such Share on
the last day of that period. Since yields fluctuate,yield date cannot
necessarily be used to compare an investment in a class of Shares with bank
deposits, savings accounts, and similar investment alternatives which often
provide an agreed-upon or guaranteed fixed yield fora stated period of time.
Total return and yield quotations will be computed separately for
each Class of a Fund's shares. Because of the difference in the fees and
expenses borne by Class I, Class II and Class III shares of a Fund, the
return and yield on Class III shares will generally be higher than the return
and yield on Class II shares, and the return and yield on Class III and Class
II shares will generally be higher than the return and yield on Class I
shares. Any fees charged by an Agent directly to its customers' account in
connection with investments in a Fund will not be included in calculations of
total return or yield. The Dreyfus/Laurel Institutional Short-Term Bond
Fund's annual report contains additional performance information and is
available upon request without charge from Premier or your Agent.
A Fund may compare the performance of its Class I, Class II and Class
III shares with various industry standards of performance including Lipper
Analytical Services, Inc. ratings, and the Consumer Price Index. Performance
rankings as reported in CHANGING TIMES, BUSINESS WEEK, INSTITUTIONAL
INVESTOR,THE WALL STREET JOURNAL, IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL
FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND
VALUES,U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE,
Page 28
BARRON'S, FINANCIAL PLANNING,FINANCIAL PLANNING ON WALL STREET, CERTIFIED
FINANCIAL PLANNER TODAY,INVESTMENT ADVISOR, KIPLINGER'S, SMART MONEY, and
similar publications may also be used in comparing a Fund's performance.
Furthermore, a Fund may quote its shares' returns or yields in advertisements
or in shareholder reports. the Dreyfus/Laurel Institutional Short-Term Bond
Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown, or cumulative
performance data and may advertise a quotation of yield or other similar
quotations demonstrating the income earned or distributions made by the Fund.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
Each Fund declares daily and pays monthly (on the first business day
of the following month) dividends from its net investment income, if any, and
the Dreyfus/Laurel Institutional Short-Term Bond Fund distributes net
realized gains, if any, on an annual basis. The Money Market Funds do not
expect to realize any long-term capital gains or losses and do not anticipate
payment of any capital gain distribution. The Board of Directors may elect
not to distribute capital gains in whole or in part to take advantage of
capital loss carryovers. Shares begin accruing dividends on the day the
purchase order for the Shares is effected and continue to accrue dividends
through the day before such shares are redeemed if the instructions to
purchase or redeem Shares (and immediately available funds with respect to a
purchase order) are received by the Transfer Agent prior to: (i) noon,
Eastern time for the Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund; (ii) 1 p.m., Eastern time for the Dreyfus/Laurel Institutional
U.S. Treasury Money Market Fund; and (iii) 3p.m., Eastern time for the
Dreyfus/Laurel Institutional Prime Money Market Fund and the Dreyfus/Laurel
Institutional Government Money Market Fund. Dividends begin accruing on
Shares on the next business day with regard to purchase orders effected after
the relevant times set forth above. Shares purchased on a day on which the
Dreyfus/Laurel Institutional Short-Term Bond Fund calculates its NAV will not
begin to accrue dividends until the following day. Redemption orders of that
Fund effected on any particular day will receive all dividends declared
through the day of redemption.
Unless you choose to receive dividend and/or capital gain
distributions in cash, your distributions will be automatically reinvested in
additional Shares of the distributing Fund at the NAV. You may change the
method of receiving distributions at any time by writing to the Funds. Checks
which are sent to shareholders who have requested distributions to be paid in
cash and which are subsequently returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in additional Fund shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically reinvested
in additional Fund shares in the shareholder's account.
Distributions paid by a Fund with respect to one class of shares may
be greater or less per Share than those paid with respect to another class of
shares due to the different expenses of the different Classes.
You may elect to have distributions on shares held in IRAs and
403(b)accounts paid in cash only if you are at least 59 1/2 years old or are
permanently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Any dividend and/or capital gain distribution paid by the
Dreyfus/Laurel Institutional Short-Term Bond Fund will reduce the NAV of that
Fund's shares by the amount of the distribution. Shareholders are subject to
taxes with respect to any such distribution.
Each Fund intends to qualify, or to continue to qualify, for
treatment as a regulated investment company under the Code so that it will be
relieved of federal income tax on that part of its investment company taxable
income(consisting generally of net investment income and net short-term
capital gain) and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that is distributed to its shareholders.
Page 29
Dividends from a Fund's investment company taxable income are taxable
to you as ordinary income, to the extent of the Fund's earnings and
profits.Distributions by a Fund of net capital gain, when designated as such,
are taxable to you as long-term capital gains, regardless of the length of
time you have owned your shares. None of the dividends paid by any of the
Funds will be eligible for the dividends-received deduction allowed to
corporations.
Dividends and other distributions are taxable to you regardless of
whether they are received in cash or reinvested in additional Fund shares,
even if the value of your shares is below your cost. If you purchase shares
shortly before a taxable distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received,
if any) remains the same. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
Fund. If these portfolios securities are subsequently sold and the gains are
realized, they will, to the extent not offset by capital losses, be paid to
you as a capital gain distribution and will be taxable to you.
In January of each year, your Fund will send you a Form 1099-DIV
notifying you of the status for federal income tax purposes of your
distributions for the preceding year.
You must furnish your Fund with your taxpayer identification
number("TIN") and state whether you are subject to withholding for prior
under-reporting, certified under penalties of perjury as prescribed by the
Internal Revenue Code and the regulations thereunder. Unless previously
furnished, investments received without such a certification will be
returned.Each Fund is required to withhold a portion of all dividends,
capital gain distributions and redemption proceeds payable to any individuals
and certain on-corporate shareholders who do not provide the Fund with a
correct TIN;withholding from dividends and capital gain distributions also is
required for such shareholders who otherwise are subject to backup
withholding.
Each Fund will be subject to a 4% nondeductible excise tax to the
extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gains net income for the
one-year period ending October 31 of that year, plus certain other amounts.
Each Fund expects to make such distributions as are necessary to avoid the
imposition of this tax.
The foregoing is only a summary of some of the important tax
considerations generally affecting each Fund and its shareholders; see the
SAI for a further discussion. There may be other federal, state or local tax
considerations applicable to a particular investor. You therefore should
consult your own tax adviser.
GENERAL INFORMATION
The Laurel Funds, Inc. was incorporated in Maryland on August 6, 1987
and changed its name to The Dreyfus/Laurel Funds, Inc. on October 17, 1994.
The Dreyfus/Laurel Funds, Inc. is registered with the SEC under the 1940 Act
as a diversified, open-end management investment company. The Dreyfus/Laurel
Funds,Inc. has an authorized capitalization of 25 billion shares of $0.001
par value stock with equal voting rights. The Articles of Incorporation
permit the Directors to create an unlimited number of investment portfolios
(each a "Fund"). Each Fund offered by this Prospectus issues three classes of
shares_Class I, Class II and Class III shares.
The Dreyfus/Laurel Funds, Inc. shares have non-cumulative voting
rights,which means that the holders of more than 50% of the shares voting for
the election of Directors can elect 100% of the Directors if they choose to
do so.In such event, the holders of the remaining shares will not be able to
elect any Directors. Each share has one vote with respect to matters upon
which a Shareholder vote is required. All shares of a Fund (and any classes
thereof)vote together as a single Class, except as to any matter for which a
separate vote of any Fund or Class is required by the 1940 Act, and except as
to any matter which affects the interests of one or more particular funds or
classes,in which case only the shareholders of the affected Fund or Class are
entitled to vote, each as a separate Class. At your written request, The
Dreyfus/Laurel Funds, Inc. will issue negotiable stock certificates.
Page 30
As of March 31, 1995, Mellon Bank Corporation, the investment
manager's parent, owned of record through its direct and indirect
subsidiaries more than 25% of The Dreyfus/Laurel Funds Inc.'s outstanding
voting shares and is deemed, under the 1940 Act, to be a controlling
shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Funds to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office and
for any other proper purpose. Company shareholders may remove a Director by
the affirmative vote of a majority of the Company's voting shares. In
addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Funds at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS'
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 31
DREYFUS
Dreyfus/Laurel Institutional Prime Money Market Fund
Dreyfus/Laurel Institutional Government Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
Dreyfus/Laurel Institutional Short-Term Bond Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
LFISTp3041095
__________________________________________________________________________
DREYFUS BOND MARKET INDEX FUND
INVESTOR SHARES AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
April 10, 1995
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the Dreyfus Bond Market Index Fund (formerly the Laurel Bond Market
Index Fund) (the "Fund"), dated April 10, 1995, as it may be revised from
time to time. The Fund is a separate portfolio of The Dreyfus/Laurel
Funds, Inc. (formerly, The Laurel Funds, Inc.), an open-end, diversified
management investment company (the "Company"), known as a mutual fund. To
obtain a copy of the Fund's Prospectus, please write to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call one of
the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
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-10
Management Arrangements. . . . . . . . . . . . . . . . . . . B-16
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . B-17
Distribution Plan . . . . . . . . . . . . . . . . . . . . . B-17
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . B-18
Shareholder Services . . . . . . . . . . . . . . . . . . . . B-20
Determination of Net Asset Value . . . . . . . . . . . . . . B-23
Dividends, Other Distributions and Taxes . . . . . . . . . . B-24
Portfolio Transactions . . . . . . . . . . . . . . . . . . . B-27
Performance Information. . . . . . . . . . . . . . . . . . . B-29
Information About the Fund . . . . . . . . . . . . . . . . . B-31
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors. . . . . . . . . . B-31
Financial Statements . . . . . . . . . . . . . . . . . . . . B-31
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Portfolio Securities
Floating Rate Securities. A floating rate security is one whose terms
provide for the automatic adjustment of interest rates whenever a
specified interest rate changes. The interest on floating rate securities
is ordinarily tied to and is a percentage of the prime rate of a specified
bank or some similar objective standard such as the 90-day U.S. Treasury
bill rate and may change daily. Generally, changes in interest rates on
floating rate securities will reduce changes in the security's market
value from the original purchase price resulting in the potential for
capital appreciation or capital depreciation being less than for fixed
income obligations with a fixed interest rate.
ECDs, ETDs and Yankee CDs. The Fund may purchase Eurodollar
certificates of deposit ("ECDs"), which are U.S. dollar denominated
certificates of deposit issued by foreign branches of domestic banks,
Eurodollar time deposits ("ETDs"), which are U.S. dollar denominated
deposits in a foreign branch of a domestic bank or a foreign bank, and
Yankee-Dollar certificates of deposit ("Yankee CDs") which are
certificates of deposit issued by a domestic branch of a foreign bank
denominated in U.S. dollars and held in the United States. ECDs, ETDs,
and Yankee CDs are subject to somewhat different risks than domestic
obligations of domestic banks. These risks are discussed in the
Prospectus.
Government Obligations. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates,
maturities and times of issuance: (a) U.S. Treasury bills have a maturity
of one year or less, (b) U.S. Treasury notes have maturities of one to ten
years, and (c) U.S. Treasury bonds generally have maturities of greater
than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the
full faith and credit of the U.S. Treasury (such as Government National
Mortgage Association ("GNMA") participation certificates), (b) the right
of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, (c) discretionary authority of the U.S. Government
agency or instrumentality, or (d) the credit of the instrumentality.
(Examples of agencies and instrumentalities are: Federal Land Banks,
Federal Housing Administration, Farmers Home Administration, Export-Import
Bank of the United States, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks, General Services
Administration, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Inter-American Development Bank, Asian-
American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development and Federal National
Mortgage Association ("FNMA")). No assurance can be given that the U.S.
Government will provide financial support to such U.S. Government agencies
or instrumentalities described in (b), (c) and (d) in the future, other
than as set forth above, since it is not obligated to do so by law.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Directors. In a repurchase agreement, the Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually
agreed upon date and price. The Fund's resale price will be in excess of
the purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate on the underlying
security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of
these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for
more than one year. The Fund will always receive as collateral securities
whose market value including accrued interest is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of
a repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. The Fund seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the credit guidelines of
the Company's Board of Directors.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
portfolio securities is deemed by the Fund to be inconvenient or
disadvantageous. A reverse repurchase agreement is a transaction whereby
the Fund transfers possession of a portfolio security to a bank or
broker-dealer in return for a percentage of the portfolio security's
market value. The Fund retains record ownership of the security involved
including the right to receive interest and principal payments. At an
agreed upon future date, the Fund repurchases the security by paying an
agreed upon purchase price plus interest. Cash or liquid high-grade debt
obligations of the Fund equal in value to the repurchase price including
any accrued interest will be maintained in a segregated account while a
reverse repurchase agreement is in effect.
When-Issued Securities. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that
delivery and payment for the securities normally will take place
approximately 7 to 15 days after the date the buyer commits to purchase
them. The payment obligation and the interest rate that will be received
on securities purchased on a when-issued basis are each fixed at the time
the buyer enters into the commitment. 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 or dispose of the
commitment before the settlement date if it is deemed advisable as a
matter of investment strategy. Cash or marketable high-grade debt
securities equal to the amount of the above commitments will be segregated
on the Fund's records. For the purpose of determining the adequacy of
these securities the segregated securities will be valued at market. If
the market value of such securities declines, additional cash or
securities will be segregated on the Fund's records on a daily basis so
that the market value of the account will equal the amount of such
commitments by the Fund.
Securities purchased on a when-issued basis and the securities held
by the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates
- -- i.e., they will appreciate in value when interest rates decline and
decrease in value when interest rates rise. Therefore, if in order to
achieve higher interest income the Fund remains substantially fully
invested at the same time that it has purchased securities on a "when-
issued" basis, there will be a greater possibility of fluctuation in the
Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet
its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities and/or, although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors who agree that
they are purchasing the paper for an investment and not with a view to
public distribution. Any resale by the purchaser must be pursuant to
registration or exemption therefrom. Section 4(2) paper is normally resold
to other investors through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. Pursuant to guidelines established by the Company's Board of
Directors, Dreyfus may determine that Section 4(2) paper is liquid for the
purposes of complying with the Fund's investment restriction relating to
investments in illiquid securities.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Loans of Fund Securities. The Fund has authority to lend its
portfolio securities provided (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or cash
equivalents adjusted daily to make a market value at least equal to the
current market value of these securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time
exceed one-third of the total assets of the Fund. In addition, it is
anticipated that the Fund may share with the borrower some of the income
received on the collateral for the loan or that it will be paid a premium
for the loan. In determining whether to lend securities, the Fund
considers all relevant factors and circumstances including the
creditworthiness of the borrower.
Futures Contracts and Options. For the purpose of creating market
exposure for uncommitted cash balances, reducing transaction costs
associated with rebalancing the Fund, facilitating trading or seeking
higher investment returns when a futures contract is priced more
attractively than the underlying security or the index of the Fund, the
Fund may enter into futures contracts, options, and options on futures
contracts with respect to securities in which the Fund may invest and
indices comprised of such securities.
Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security or
securities index at a specified future time and at a specified price.
Where the underlying security is an index, no physical transfer of
securities takes place; rather, upon expiration of the contract, the
parties settle by exchanging cash in an amount equal to the difference
between the contract price and the closing value of the index at
expiration, net of variation margin previously paid. Futures contracts
that are standardized as to maturity date and underlying interest are
traded on national futures exchanges.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended
to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified
delivery date. Minimal initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the
contract is marked to market daily. If the futures contract price changes
to the extent that the margin on deposit does not satisfy margin
requirements, payment of additional "variation" margin will be required.
Conversely, change in the contract value may reduce the required margin,
resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as
long as the contract remains open. The Fund expects to earn interest
income on its margin deposits.
Options are of two basic types, either call or put options, and may
relate to a single security or a securities index or a futures contract. A
call option on a security permits the holder of the option to purchase the
underlying security at a specified price ("strike price") at any time
during the term of the option. Thus, in exchange for the premium paid to
the writer, the purchaser obtains the right to profit from any
appreciation in the value of the underlying security above the strike
price. A put option permits the holder to sell the underlying security to
the writer at the strike price at any time during the term of the
contract. Thus, in exchange for the premium paid to the writer, the
purchaser is relieved of the risk of a decline in the value of the
underlying security below the strike price. An option on a securities
index gives the holder the right to receive cash from the writer in an
amount equal to the difference between the strike price of the option and
the value of the underlying index multiplied by a factor established by
the exchange upon which the option is traded. An option on a futures
contract gives the holder, in return for the premium paid to the writer,
the right to assume a position in the underlying futures contract at a
specified price at any time during the term of the option.
Although futures and options contracts by their terms call for actual
delivery or acceptance of the underlying securities, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by taking
an opposite position ("buying" a contract which has previously been
"sold," or "selling" a contract previously purchased) in an identical
contract to terminate the position. An option purchased may be closed out
by selling the option. An option written is closed out by purchasing an
option identical to that written. Brokerage commissions are incurred when
futures and options contracts are bought and sold.
Restrictions on the Use of Futures Contracts and Options. The Fund
will not enter into futures contracts to the extent that its outstanding
obligations under these contracts would exceed 25% of the Fund's total
assets. To the extent that the Fund enters into futures contracts and
options on futures positions that are not for bona fide hedging purposes
(as defined by the Commodity Futures Trading Commission), the aggregate
initial margin and premiums on these positions (excluding the amount by
which options are "in-the-money") may not exceed 5% of the Fund's net
assets.
Transactions using options and futures contracts (other than options
that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities or other
options or futures contracts or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
All options purchased or written by the Fund must be listed on a
national securities or futures exchange or traded in the over-the-counter
("OTC") market. The Fund will not purchase or write OTC options if, as a
result of such transaction, the sum of (i) the market value of outstanding
OTC options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund,
and (iii) the market value of all other assets of the Fund that are
illiquid or are not otherwise readily marketable, would exceed 15% of the
net assets of the Fund, taken at market value. However, if an OTC option
is sold by the Fund to a primary U.S. Government securities dealer
recognized by the Federal Reserve Bank of New York and the Fund has the
unconditional contractual right to repurchase such OTC option from the
dealer at a predetermined price, then the Fund will treat as illiquid such
amount of the underlying securities as is equal to the repurchase price
less the amount by which the option is "in-the-money" (the difference
between current market value of the underlying security and the option's
strike price). The repurchase price with primary dealers is typically a
formula price which is generally based on a multiple of the premium
received for the option plus the amount by which the option is
"in-the-money."
The Fund may write only covered options. A call option is covered if
the Fund owns the underlying security or a call option on the same
security with a lower strike price. A put option is covered if the Fund
segregates cash and/or short-term debt securities in an amount necessary
to pay the strike price of the option or purchases a put option on the
same underlying security with a higher strike price.
The Fund will not purchase puts, calls, straddles, spreads or any
combination thereof, if as a result of such purchase the value of the
Fund's aggregate investment in such securities would exceed 5% of the
Fund's total assets.
Risk Factors in Futures and Options Transactions. There can be no
assurance that a liquid secondary market will exist for any particular
futures or option contract at any specific time. Thus, it may not be
possible to close a futures or option position. In the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments to maintain its required margin with respect to open futures or
written options positions. In such a situation, if the Fund has
insufficient cash, it may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, the Fund may be required to make or take delivery of the
securities underlying futures contracts that it holds and options
contracts that it has written.
The Fund will seek to minimize the risk that it will be unable to
close out a futures contract by entering into only those futures contracts
that are listed on national futures exchanges and for which there appears
to be a liquid secondary market. Likewise, the Fund will enter into only
those option contracts that are listed on a national securities exchange
or traded in the OTC market for which there appears to be a liquid
secondary market.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the
extremely high degree of leverage involved in futures pricing. As a
result, a relatively small price movement in a futures contract may result
in immediate and substantial loss (as well as gain) to the investor. For
example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of
the futures contract would result in a total loss of margin deposit,
before any deduction for the transaction costs, if the account were then
closed out. A 15% decrease would result in a loss equal to 150% if the
original margin deposit for the contract were closed out. Thus, a purchase
or sale of a futures contract may result in losses in excess of the amount
invested in the contract. Options transactions are subject to similar
risks. However, because the Fund will not engage in futures or options
transactions for speculative purposes, Dreyfus believes that the Fund's
risk of loss is less than the risk of loss associated with speculative
transactions. Moreover, in the foregoing example, the Fund would
presumably have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying security and sold it after the
decline.
Utilization of futures contracts and options transactions by the Fund
does involve the risk of imperfect or no correlation where the securities
underlying futures and options contracts are different from the portfolio
securities being hedged. It is also possible that the Fund could both lose
money on futures and options contracts and also experience a decline in
value of its portfolio securities. There is also the risk of loss by the
Fund of margin deposits in the event of bankruptcy of a broker with whom
the Fund has an open position in a futures contract or option thereon.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may
vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a
particular type of contract, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions.
Futures contract prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Futures and options contracts involve special tax considerations. See
"Dividends, Other Distributions and Taxes" for further information.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the value
of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government securities, and state or municipal
governments and their political subdivisions are not considered
members of any industry. In addition, this limitation does not apply
to investments in domestic banks, including U.S. branches of foreign
banks and foreign branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), except that (a) the
Fund may borrow money in an amount not exceeding one-third of the
Fund's total assets at the time of such borrowings, and (b) the Fund
may issue multiple classes of shares. The purchase or sale of futures
contracts and related options shall not be considered to involve the
borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities of
any one issuer (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10%
of the outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such
loans. For purposes of this limitation debt instruments and
repurchase agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that
engage in real estate business or invest or deal in real estate or
interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be
deemed an underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contracts and
other similar instruments.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short, and provided that transactions in futures
contracts are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts
shall not constitute purchasing securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any issuer if
the officers or Directors of the Fund, its advisers, or managers,
owning beneficially more than one half of one percent of the
securities of such issuer, together own beneficially more than 5% of
such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that
have been in operation for less than three years, if by reason
thereof, the value of the Fund's investment in securities would
exceed 5% of the Fund's total assets. For purposes of this
limitation, sponsors, general partners, guarantors and originators of
underlying assets may be treated as the issuer of a security.
6. The Fund will invest no more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with
maturities in excess of seven days and other securities which are not
readily marketable. For purposes of this limitation, illiquid
securities shall not include Section 4(2) paper and securities which
may be resold under Rule 144A under the Securities Act of 1933,
provided that the Board of Directors, or its delegate, determines
that such securities are liquid based upon the trading markets for
the specific security.
7. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets and except to the extent otherwise permitted by
the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested
in warrants, or (b) more than 2% of the value of the Fund's assets
would be invested in warrants that are not listed on the New York or
American Stock Exchange (for purposes of this limitation, warrants
acquired by the Fund in units or attached to securities will be
deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities would exceed 5% of its total
assets except that: (a) this limitation shall not apply to standby
commitments, and (b) this limitation shall not apply to the Fund's
transactions in futures contracts and related options.
As an operating policy, the Fund will not invest more than 25% of the
value of its total assets, at the time of such purchase in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S.
banks. The Company's Board of Directors may change this policy without
shareholder approval. Notice will be given to shareholders if this policy
is changed by the Board.
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDER
Mellon Bank Corporation, a Pennsylvania corporation registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended, owned of record, through its direct and indirect subsidiaries,
more than 25% of the issued and outstanding Investor and Class R shares of
the Fund, as of March 31, 1995, and is, as a consequence, deemed to be a
controlling shareholder of the Company as that term is defined under the
1940 Act. The address of Mellon Bank Corporation is: Mellon Bank
Corporation, Mutual Fund Department, 3 Mellon Bank Center, Pittsburgh, PA
15259.
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned 5% or more of the outstanding
Class R shares of the Fund at March 31, 1995: Mac & Co. 314-X00, Mellon
Bank, N.A., as Nominee for Trust Custodian, P.O. Box 320, Pittsburgh, PA
15230-0320, 6% record; Mac & Co. 833-6BP, Mellon Bank, N.A., as Nominee
for Trust Custodian, P.O. Box 320, Pittsburgh, PA 15230-0320, 7% record;
Mac & Co. 180-192 Mellon Bank, N.A., as Nominee for Trust Custodian, P.O.
Box 320 Pittsburgh, PA 15230-0320, 7% record; Mac & Co. 057-090 Mellon
Bank, N.A. P.O. Box 320 Pittsburgh, PA 15230-0320, 12% record; Mac & Co.
178-832, Mellon Bank, N.A. as Nominee for Trust Custodian, P.O. Box 320,
Pittsburgh, PA 15230-0320, 39% record.
The following shareholder owned 5% or more of the Fund's outstanding
Investor Shares at March 31, 1995: Investnet Corporation (a wholly-owned
subsidiary of Mellon Bank Corporation) 2 Mellon Bank Center, Pittsburgh,
PA 15259-0001, 25% record.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, and in providing services to the Fund as custodian and fund
accountant, as well as Dreyfus' investment advisory activities, may raise
issues under these provisions. Mellon Bank has been advised by counsel
that the activities contemplated under these arrangements are consistent
with its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities, the Board of Directors would seek an alternative provider(s)
of such services.
DIRECTORS AND OFFICERS
The Company has a Board composed of thirteen Directors which
supervises the Company's investment activities and reviews contractual
arrangements with companies that provide the Funds with services. The
following lists the Directors and officers and their positions with the
Company and their present and principal occupations during the past five
years. Each Director who is an "interested person" of the Company (as
defined in the 1940 Act is indicated by an asterisk (*). Each of the
Directors also serves as a Trustee of The Dreyfus/Laurel Funds Trust, The
Dreyfus/Laurel Investment Series and The Dreyfus/Laurel Tax-Free Municipal
Funds (collectively "The Dreyfus Family of Funds").
o + RUTH MARIE ADAMS. Director of the Company; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United Chapters
of Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution.
Age: 79 years old. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts
Business Development Corp.; Director, Boston Mutual Insurance
Company; Director and Vice Chairman of the Board, Home Owners Federal
Savings and Loan (prior to May 1990). Age: 76 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o * JOSEPH S. DiMARTINO. Director of the Company since February 1995.
Since January 1995, Mr. DiMartino has served as Chairman of the Board
for 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 1994, the Fund's
distributor. Mr. DiMartino is a director and former Treasurer of the
Muscular Dystrophy Association; a trustee of Bucknell University; a
director of Health Plan Services Corporation; and Chairman of the
Board of Directors of Noel Group, Inc. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
o + JAMES M. FITZGIBBONS. Director of the Company; President and
Director, Amoskeag Company; Chairman, Howes Leather Company, Inc.;
Director, Fiduciary Trust Company; Chairman, CEO and Director,
Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance Company;
Director, Barrett Resources, Inc. Age: 59 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o * J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith,
Shaw & McClay (law firm). Age: 65 years old. Address: 204 Woodcock
Drive, Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Director of the Company; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon Carbon
Corporation; Director, National Picture Frame Corporation; Chairman
of the Board and Director, Tetra Corporation 1991-1993; Director,
Medalist Corporation 1992-1993. Age: 71 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of the Company; Former Director, The
Boston Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. and Florida Hospitality Group;
Managing Partner, Himmel/MKDG, Franklin Federal Partners, Reston Town
Center Associates and Grill 23 & Bar. Age: 47 years old. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Director of the Company; Financial Consultant. Age:
76 years old. Address: 1817 Foxcroft Lane, Allison Park,
Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 46
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o + ROBERT D. MCBRIDE. Director of the Company; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Age: 66 years old. Address: 15
Waverly Lane, Grosse Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Director of the Company; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Age: 79 years old. Address: 5521
Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Age: 62 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Director of the Company; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development
Project Manager and Vice President, The Gunwyn Company. Age: 44
years old. Address: 25 Braddock Park, Boston, Massachusetts 02116-
5816.
# MARIE E. CONNOLLY. President and Treasurer of the Company, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Vice President of The Dreyfus/Laurel Funds, Inc. (March 1994 to
September 1994); President, Funds Distributor, Inc. (since 1992);
Treasurer, Funds Distributor, Inc. (July 1993 to April 1994); COO,
Funds Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior Vice
President and Director of Financial Administration, The Boston
Company Advisors, Inc. (December 1988 to May 1993). Address: One
Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, Premier Mutual Fund Services, Inc. (since
August 1994); Vice President, Funds Distributor, Inc. (since August
1994); Fundraising Manager, Swim Across America (October 1993 to
August 1994); General Manager, Spring Industries (August 1988 to
October 1993). Address: Premier Mutual Fund Services, Inc., 200 Park
Avenue New York, New York 10166.
# ERIC B. FISCHMAN. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994); Vice
President and Associate General Counsel, Premier Mutual Fund
Services, Inc. (Since August 1994); Vice President and Associate
General Counsel, Funds Distributor, Inc. (since August 1994); Staff
Attorney, Federal Reserve Board (September 1992 to June 1994); Summer
Associate, Venture Economics (May 1991 to September 1991); Summer
Associate, Suffolk County District Attorney (June 1990 to August
1990). Address: Premier Mutual Fund Services, Inc., 200 Park Avenue,
New York, New York 10166.
LESLIE M. GAYNOR. Assistant Treasurer of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
RICHARD W. HEALEY. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds Trust
and The Dreyfus/Laurel Funds Trust (since March 1994); Senior Vice
President, Funds Distributor, Inc. (since March 1993); Vice
President, The Boston Company Inc., (March 1993 to May 1993); Vice
President of Marketing, Calvert Group (1989 to March 1993). Address:
One Exchange Place, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Company; The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, General Counsel and Secretary, Funds
Distributor, Inc. (since April 1994); Senior Vice President, General
Counsel and Secretary, Premier Mutual Fund Services, Inc. (since
August 1994); Counsel, The Boston Company Advisors, Inc. (February
1992 to March 1994); Associate, Ropes & Gray (August 1990 to February
1992); Associate, Sidley & Austin (June 1989 to August 1990).
Address: One Exchange Place, Boston, Massachusetts 02109.
___________________________________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by Dreyfus.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the Fund's total shares outstanding as of
March 13, 1995.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from the Company for serving
as an officer or Director of the Company. In addition, no officer or
employee of Dreyfus (or of any parent or subsidiary thereof) serves as an
officer or Director of the Company. The Dreyfus/Laurel Funds pay each
Director/Trustee who is not an officer or employee of Premier or any of
its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Funds).
In addition, the Dreyfus/Laurel Funds pay each Trustee/Director $1,000 per
joint Dreyfus/Laurel Fund meeting attended, plus $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburses each
Director/Trustee for travel and out-of-pocket expenses. For the fiscal
year ended October 31, 1994 the fees for meetings and expenses totaled
$2,664 for the Fund.
For the fiscal year ended October 31, 1994, the aggregate amount of
fees and expenses received by each Director from the Company and all other
Funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension of Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
- -------------------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $19,685 None None $ 37,500
Francis P. Brennan* 52,809 None None 112,500
Joseph S. DiMartino** N/A N/A N/A N/A
James M. Fitzgibbons 17,685 None None 31,750
J. Tomlinson Fort 7,500 None None 7,500
Arthur L. Goeschel 26,185 None None 32,500
Kenneth A. Himmel 18,685 None None 35,750
Arch S. Jeffrey 27,185 None None 33,500
Steven J. Lockwood 18,685 None None 35,750
Robert D. McBride 27,185 None None 33,500
John L. Propst 27,185 None None 33,500
John J. Sciullo 27,185 None None 33,500
Roslyn M. Watson 19,685 None None 36,750
</TABLE>
# Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $10,876 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by The
Dreyfus/Laurel Fund Family to be Chairman of the Board.
** Joseph S. DiMartino was not a director of the Company as of October
31, 1994.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus serves as the investment manager for
the Fund pursuant to an Investment Management Agreement with the Company
dated April 4, 1994 ("Management Agreement"), transferred to Dreyfus as of
October 17, 1994. Pursuant to the Management Agreement, Dreyfus provides,
or arranges for one or more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency services to
the Fund. As investment manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies
and restrictions. The Management Agreement is subject to review and
approval at least annually by the Board of Directors.
The Fund is not managed according to traditional methods of "active"
investment management, which involve the buying and selling of securities
based upon economic, financial and market analysis and investment
judgment. Instead, the Fund utilizes a "passive" investment approach,
attempting to duplicate the investment performance of the S&P 500
Composite Stock Price Index through statistical procedures.
The Management Agreement will continue from year to year provided
that a majority of the Directors who are not interested persons of the
Company and either a majority of all Directors or a majority of the
shareholders of the Fund approve its continuance. The Company may
terminate the Management Agreement, without prior notice to Dreyfus, upon
the vote of a majority of the Board of Directors or upon the vote of a
majority of the Fund's outstanding voting securities. Dreyfus may
terminate the Management Agreement upon sixty (60) days' written notice to
the Company. The Management Agreement will terminate immediately and
automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman--Operations and
Administration; Paul H. Snyder, Vice President and Chief Financial
Officer; Daniel C. Maclean, Vice President and General Counsel; Barbara E.
Casey, Vice President--Retirement Services; Henry D. Gottmann, Vice
President--Retail; Elie M. Genadry, Vice President--Wholesale; Mark N.
Jacobs, Vice President--Fund Legal and Compliance and Secretary; Jeffrey
N. Nachman, Vice President-Mutual Fund Accounting; Diane M. Coffey, Vice-
President--Corporate Communications; Katherine C. Wickham, Vice President-
- -Human Resources; Maurice Bendrihem, Controller; and Mandell L. Berman,
Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M.
Smerling and David B. Truman, Directors.
For the period from November 30, 1993 (commencement of operations)
through October 31, 1994, the Fund had the following expenses:
Management fees (gross
of waiver) $19,521
Expense Reimbursement from
investment manager $57,622
Management fees waived --
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
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time,
on any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange ("NYSE") are open. Such purchases will be credited to
the shareholder's Fund account on the next bank business day. To qualify
to use the Dreyfus TeleTransfer Privilege, the initial payment for
purchase of shares must be drawn on, and redemption proceeds paid to, the
same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares--Dreyfus 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 in which the account is closed or during the following
calendar year, provided the information on the old Account Application is
still applicable.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan."
Investor shares are subject to fees for distribution and shareholder
services.
Distribution Plan--Investor Shares. The Securities and Exchange
Commission ("SEC") has adopted Rule 12b-1 under the 1940 Act ("Rule")
regulating the circumstances under which investment companies such as the
Company may, directly or indirectly, bear the expenses of distributing
their shares. The Rule defines distribution expenses to include
expenditures for "any activity which is primarily intended to result in
the sale of fund shares." The Rule, among other things, provides that an
investment company may bear such expenses only pursuant to a plan adopted
in accordance with the Rule. With respect to the Investor shares of the
Fund, the Company has adopted a Distribution Plan ("Plan"), and may enter
into Selling Agreements with Service Agents pursuant to its Plan.
Under the Plan, the Fund may spend annually up to 0.25% of its
average daily net assets attributable to Investor shares for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, the Fund's Investor shares.
The Plan provides that a report of the amounts expended under the
Plan, and the purposes for which such expenditures were incurred, must be
made to the Company's Directors for their review at least quarterly. In
addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
the Company (as defined in the 1940 Act) and who do not have any direct or
indirect financial interest in the operation of the Plan, cast in person
at a meeting called for the purpose of considering such amendments. The
Plan is subject to annual approval by the entire Board of Directors and by
the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Plan, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The
Plan is terminable, as to the Fund's Investor shares, at any time by vote
of a majority of the Directors who are not interested persons and have no
direct or indirect financial interest in the operation of the Plan or by
vote of the holders of a majority of the outstanding Investor shares of
the Fund.
For the period from April 18, 1994 (inception date of Investor
shares) to October 31, 1994, the Fund paid the Distributor $30 pursuant to
the Plan.
Frank Russell Investment Management Company served as the Fund's
Administrator prior to September 23, 1994 and was paid $876 in fees by the
Fund for the fiscal period ended October 31, 1994.
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 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. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. 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 a described below under "Stock Certificates; Signatures."
Stock 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 NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may
request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the ACH system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's
account at an ACH member bank ordinarily two business days after receipt
of the redemption request. See "Purchase of Fund Shares--Dreyfus
TeleTransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, 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 SEC. In the
case of requests for redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of
the existing shareholders. In this 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 incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE 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 SEC 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 SEC 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 or comparable Class of certain other funds
advised or administered by Dreyfus. Shares of the same Class of such
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 other 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.
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 the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among 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.
Dreyfus Auto-Exchange Privilege. The Dreyfus 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 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 the investor's 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
Dreyfus 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 Dreyfus 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 from the Distributor. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal. 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. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. 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.
Dreyfus Dividend Sweep. Dreyfus 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
certain other funds in 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
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and 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 on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $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."
Restricted securities, as well as securities or other assets for
which market quotations are not readily available, or are not valued by a
pricing service approved by the Board of Directors, are valued at fair
value as determined in good faith by the Board of Directors. The Board of
Directors will review the method of valuation on a current basis. In
making their good faith valuation of restricted securities, the Directors
generally will take the following factors into consideration: restricted
securities which are securities of the same class of securities for which
a public market exists usually will be valued at market value less the
same percentage discount at which purchased. This discount will be
revised periodically by the Board of Directors if the Directors believe
that it no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a
public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Directors.
New York Stock Exchange Closings. The holidays (as observed) on
which the NYSE is closed currently are: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify as a regulated investment company ("RIC"), the Fund
(1) must distribute to its shareholders each year at least 90% of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign
currency transactions), (2) must derive at least 90% of its annual gross
income from specified sources ("Income Requirement"), (3) must derive less
than 30% of its annual gross income from gain on the sale or disposition
of any of the following that are held for less than three months --
(i) securities, (ii) non-foreign-currency options and futures and
(iii) foreign currencies (or foreign currency options, futures and forward
contracts) that are not directly related to the Fund's principal business
of investing in securities (or options and futures with respect thereto)
("Short-Short Limitation") -- and (4) must meet certain asset
diversification and other requirements. Accordingly, the Fund may be
restricted in the selling of securities held for less than three months.
Any dividend or other 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 his investment. Such a dividend or other distribution
would be a return on investment in an economic sense, although taxable as
stated in the Fund's Prospectus. In addition, the Internal Revenue Code,
as amended (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 those shares, any loss incurred on the sale of those
shares will be treated as a long-term capital loss to the extent of the
capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on
a date in that month any of those months are deemed to have been paid by
the Fund and received by the shareholders on December 31 of that year if
the distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash
or reinvested in additional Fund shares, may be eligible for the
dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by the Fund from
U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax.
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom that
may be excluded by future regulations), and income from transactions in
options, futures and forward contracts derived by the Fund with respect to
its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of
investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value of
a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
extent the Fund does not so qualify, it may be forced to defer the closing
out of certain options, futures and forward contracts beyond the time when
it otherwise would be advantageous to do so, in order for the Fund to
qualify as a RIC.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain and loss. However, a portion of the gain
or loss from the disposition of foreign currencies and non-U.S. dollar
denominated securities (including debt instruments, certain financial
forward, futures and option contracts and certain preferred stock) may be
treated as ordinary income or loss under Section 988 of the Code. In
addition, all or a portion of any gain realized from the sale or other
disposition of certain market discount bonds will be treated as ordinary
income. Moreover, 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 futures and 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 (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by the Fund involving certain 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, override or modify Sections 1256
and 988. As such, all or a portion of any short-term 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. 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, then to the extent the "straddle" and conversion transactions 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" 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.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) or providing for deferred interest
or for payment of interest in the form of additional obligations (for
example, "pay-in-kind" or "PIK" securities) could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, the Fund could be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and to distribute such income in order to
maintain its qualification for treatment as a RIC. In such case, the Fund
may have to dispose of securities it might otherwise have continued to
hold in order to generate cash to satisfy these distribution requirements.
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 Fund. 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.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which its offices are maintained,
in which its agents or independent contractors are located, or in which it
is otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate) on the gross amount
of the distribution. Foreign shareholders also may be subject to U.S.
federal withholding tax on income resulting from any election by the Fund
to treat foreign taxes paid by it as paid by its shareholders (see
discussion above), but foreign shareholders will not be able to claim a
credit or deduction for the foreign taxes treated as having been paid by
them.
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain, as well as amounts
retained by the Fund that are designated as undistributed capital gains,
generally will not be subject to U.S. federal income tax unless the
foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable
year. However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for U.S. federal income
tax purposes on his worldwide income at the graduated rates applicable to
U.S. citizens, rather than the 30% U.S. federal withholding tax rate. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If income from
the Fund is effectively connected with a U.S. trade or business carried on
by a foreign shareholder, then all distributions to that shareholder and
any gains realized by that shareholder on the disposition of the Fund
shares will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. citizens and domestic corporations, as the case may be.
Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to U.S. federal estate tax on their U.S. situs property, such as
shares of the Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. The Company has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of The
Company are exempt from Pennsylvania personal property taxes.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that
a dealer (the securities firm or bank dealing with the Fund) makes a
market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a
spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection
with such transactions. Dreyfus uses its best efforts to obtain execution
of portfolio transactions at prices which are advantageous to the Fund and
at spreads and commission rates, if any, which are reasonable in relation
to the benefits received. Dreyfus also places transactions for other
accounts that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to
be purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 of the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or
the purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as
clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt
to develop comparable information through their own staffs.
The Company's Board of Directors periodically review Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and review the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the period November 30, 1993 (commencement of operations) to
October 31, 1994, the Fund paid brokerage commissions amounting to $0.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year. The
portfolio turnover rate for the Fund for the period November 30, 1993
(commencement of operations) to October 21, 1994 was 188%.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and other 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.
Total return is calculated by subtracting the amount of the Fund's
net asset value per share at the beginning of a stated period from the net
asset value per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.
Aggregate total return (expressed as a percentage) for Investor
shares of the Fund for the periods noted were:
Aggregate Total Return for the
Periods Ended October 31, 1994
Fund: 1 Year 5 Years 10 Years Inception
Bond Market Index Fund -- -- -- (0.46%)
(4/28/94)
Inception date appears in parentheses following the aggregate total return
since inception.
Aggregate total return (expressed as a percentage) for Class R shares
of the Fund for the period was:
Aggregate Total Return for the
Periods Ended October 31, 1994
Fund: 1 Year 5 Years 10 Years Inception
Bond Market Index Fund -- -- (3.68%)
(11/30/93)
Inception date appears in parentheses following the annual total return
since inception.
The Fund may also advertise yield from time to time. Yields are
computed by using standardized methods of calculation required by the SEC.
Yields are calculated by dividing the net investment income per share earn
during a 30-day (or one month) period by the maximum offering price per
share on the last day of the period, according to the following formula:
YIELD = 2 [(a-b +1)6 -1]
---
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of shares outstanding during
the period that were entitled to receive
dividends; and
d = the maximum offering price per share on the last
day of the period.
The 30-day yield for the Fund for the period ended October 31, 1994:
Bond Market Index Fund: (Class R) 6.99%
(Investor Shares) 6.72%
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Morgan Stanley European Index; (ii) the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average, or other appropriate
unmanaged domestic or foreign indices of performance of various types of
investments so that investors may compare the Fund's results with those of
indices widely regarded by investors as representative of the securities
markets in general; (iii) other groups of mutual funds tracked by Lipper
Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, or
tracked by other services, companies, publications, or persons who rank
mutual funds on overall performance or other criteria; (iv) the Consumer
Price Index (a measure of inflation) to assess the real rate of return
from an investment in the Fund; and (v) products managed by a universe of
money managers with similar country allocation and performance objectives.
Unmanaged indices may assume the reinvestment of dividends but generally
do not reflect deductions or administrative and management costs and
expenses.
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 have no preemptive or subscription rights and are
freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Fund's custodian. The Shareholder Services Group, Inc., a subsidiary of
First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-
9671, is the Fund's transfer and dividend disbursing agent. The
Shareholder Services Group, Inc. and Mellon Bank, as custodian, have no
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby - 9th Floor,
Washington, D.C. 20036, has passed upon the legality of the shares offered
by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick LLP was appointed by the Directors to serve as the
Fund's independent auditors for the year ending October 31, 1995,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1994,
including notes to the financial statements and supplementary information
and the Report of Independent Auditors, are included in the Annual Report
to shareholders. A copy of the Annual Report accompanies this Statement
of Additional Information. The financial statements for the Annual Report
are incorporated herein by reference.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Municipal and Debt Instruments Rating
Moody's Investors Service, Inc. (Moody's):
AAA -- Bonds which are rated AAA are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest payments are protected by
a large or 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 are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in AAA
Securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in AAA securities.
A -- Bonds rated A possess many favorable investment attributes and
are considered "upper medium grade obligations."
Those Bonds in the AA and A group which Moody's believes possess the
strongest investment attributes are designated by the symbols AA 1 and A
1.
Standard & Poor's Ratings Group ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
Plus (+) or Minus (-): The AA rating may be modified by the addition
of a plus or minus sign to show relative standing within the AA rating
category.
Commercial Paper Ratings
Moody's:
Commercial paper rated Prime by Moody's is based upon its evaluation
of many factors including: (1) management of the issuer; (2) the issuer's
industry or industries and the speculative-type risks which may be
inherent in certain areas; (3) the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-1,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
(5) well established access to a range of financial markets and assured
sources of alternative liquidity.
Prime-2 indicates a strong capacity for repayment of short-term
promissory obligations. This will normally 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 alternative liquidity is
maintained.
S&P
Commercial paper rated by S&P has the following characteristics:
liquidity ratios adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically,
the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management
are unquestioned. Relative strength or weakness of the above factors
determine whether the issuer's commercial paper is rated A-1, A-2, or A-3.
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 (+) sign 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.
Fitch Investors Service, Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current appraisal of
the degree of assurance of timely payment of such debt. An appraisal
results in the rating of an issuer's paper as F-1, F-2, F-3, or F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
F-2 -- Commercial paper issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than those issues
rated F- 1.
Duff and Phelps. Inc.:
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash
from operations, but also access to alternative sources of funds including
trade credit, bank lines, and the capital markets. An important
consideration is the level of an obligor's reliance on short-term funds on
an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings is
the refinement of the traditional '1' category. The majority of short-
term debt issuers carry the highest rating, yet quality differences exist
within that tier. As a consequence, Duff & Phelps has incorporated
gradations of 'l+' (one plus) and '1-' (one minus) to assist investors in
recognizing those differences.
Duff l+ -- Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1 -- Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1 -- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Good Grade
Duff 2 -- Good certainty of timely payment. Liquidity factors and
company fundamental are sound. Although ongoing funding needs may enlarge
total financing requirements, access capital markets is good. Risk
factors are small.
Satisfactory Grade
Duff 3 -- Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment expected.
Non-Investment Grade
Duff 4 -- Speculative investment characteristics. Liquidity is not
sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
Default
Duff 5 -- Issuer failed to meet scheduled principal and/or interest
payments.
IBCA, Inc.:
In addition to conducting a careful review of an institution's
reports and publish figures, IBCA's analysts regularly visit the companies
for discussions with senior management. These meetings are fundamental to
the preparation of individual reports and ratings. To keep abreast of any
changes that may affect assessments, analysts maintain contact throughout
the year with the management of the companies they cover.
IBCA's analysts speak the languages of the countries they cover,
which is essential to maximize the value of their meetings with management
and to properly analyze a company written materials. They also have a
thorough knowledge of the laws and accounting practices that govern the
operations and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning IBCA's
ratings. Before dispatch to subscribers, a draft of the report submitted
to each company to permit correction of any factual errors and to enable
clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently
for institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time the
company is informed of the ratings as a matter of courtesy, but not for
discussion.
Al+ -- Obligations supported by the highest capacity for timely
repayment.
Al -- Obligations supported by a very strong capacity for timely
repayment.
A2 -- Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
B1 -- Obligations supported by an adequate capacity for timely
repayment. Such capacity is more susceptible to adverse changes in
business, economic, or financial conditions than for obligations in higher
categories.
B2 -- Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial
conditions.
C1 -- Obligations for which there is an inadequate capacity to
ensure timely repayment.
D1 -- Obligations which have a high risk of default or which are
currently in default.
__________________________________________________________________________
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
INVESTOR AND CLASS R SHARES
PART B
STATEMENT OF ADDITIONAL INFORMATION
APRIL 10, 1995
__________________________________________________________________________
This Statement of Additional Information which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the Dreyfus International Equity Allocation Fund (the "Fund")(formerly,
Laurel International Equity Allocation Fund), dated April 10, 1995, as it
may be revised from time to time. The Fund is a separate portfolio of The
Dreyfus/Laurel Funds, Inc., an open-end, diversified management investment
company (the "Company"), known as a mutual fund. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment manager.
Premier Mutual Fund Services, Inc. ("Premier") is the distributor of
the Fund's shares.
TABLE OF CONTENTS
Page
Investment Information and Risk Factors. . . . . . . . . . . . . . . . . B-2
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . B-8
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . B-10
Management Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . B-16
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . B-18
Distribution Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . B-19
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . B-24
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . . . B-25
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . B-30
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . B-32
Information about the Fund . . . . . . . . . . . . . . . . . . . . . . . B-34
Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . B-34
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
INVESTMENT INFORMATION AND RISK FACTORS
Government Obligations. The Fund may invest in the following U.S.
Treasury obligations, which differ only in their interest rates,
maturities and times of issuance: (a) U.S. Treasury bills have a maturity
of one year or less, (b) U.S. Treasury notes have maturities of one to ten
years, and (c) U.S. Treasury bonds generally have maturities of greater
than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the
full faith and credit of the U.S. Treasury (such as Government National
Mortgage Association ("GNMA") participation certificates), (b) the right
of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, (c) discretionary authority of the U.S. Government
agency or instrumentality, or (d) the credit of the instrumentality.
(Examples of agencies and instrumentalities are: Federal Land Banks,
Federal Housing Administration, Farmers Home Administration, Export-Import
Bank of the United States, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks, General Services
Administration, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Inter-American Development Bank, Asian-
American Development Bank, Student Loan Marketing Association,
International Bank of Reconstruction and Development and Federal National
Mortgage Association ("FNMA")). No assurance can be given that the U.S.
Government will provide financial support to such U.S. Government agencies
or instrumentalities described in (b), (c) and (d) in the future, other
than set forth above, since it is not obligated to do so by law.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Directors. In a repurchase agreement, the Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually
agreed upon date and price. The Fund's resale price will be in excess of
the purchase price, reflecting an agreed upon interest rate. This
interest rate is effective for the period of time the Fund is invested in
the agreement and is not related to the coupon rate of the underlying
security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of
these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for
more than one year. The Fund will always receive as collateral securities
whose market value including accrued interest is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the
Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of a security which
is the subject of a repurchase agreement, realization upon the collateral
by the Fund may be delayed or limited. The Manager seeks to minimize the
risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligors under repurchase agreements, in
accordance with the credit guidelines of the Board of Directors. No more
than 5% of the Fund's net assets will be invested in repurchase agreements
at any one time.
When-Issued Securities. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that
delivery and payment for the securities normally will take place
approximately 7 to 15 days after the date the buyer commits to purchase
them. The payment obligation and the interest rate that will be received
on securities purchased on a when-issued basis are each fixed at the time
the buyer enters into the commitment. 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 or dispose of the
commitment before the settlement date if it is deemed advisable as matter
of investment strategy. Cash or marketable high grade debt securities
equal to the amount of the above commitments will be segregated on the
Fund's records. For the purpose of determining the adequacy of these
securities the segregated securities will be valued at market. If the
market value of such securities declines, additional cash or securities
will be segregated on the Fund's records on a daily basis so that the
market value of the account will equal the amount of such commitments by
the Fund.
Securities purchased on a when-issued basis and the securities held
by the Fund are subject to changes in market value based upon the public's
perception of changes in the level interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates -
- - i.e., they will appreciate in value when interest rates decline and
decrease in value when interest rates rise. Therefore, if in order to
achieve higher interest income the Fund remains substantially fully
invested at the same time that it has purchased securities on a "when
issued" basis, there will be a greater possibility of fluctuation in the
Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet
its obligation from then-available cash flow, the sale of segregated
securities, the sale of other securities, or and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Loans of Fund Securities. The Fund has authority to lend its
portfolio securities provided (1) the loan is secured continuously by
collateral consisting of U.S Government securities or cash or cash
equivalents adjusted daily to make a market value at least equal to the
current market value of these securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time
exceed one-third of the total assets of the Fund. In addition, it is
anticipated that the Fund may share with the borrower some of the income
received on the collateral for the loan or that it will be paid a premium
for the loan. In determining whether to lend securities, the Manager and
the sub-adviser consider all relevant factors and circumstances including
the creditworthiness of the borrower.
Futures Contracts and Options. For the purpose of creating market
exposure for uncommitted cash balances, reducing transaction costs
associated with rebalancing the Fund, facilitating trading or seeking
higher investment returns when a futures contract is priced more
attractively than the underlying security or index, the Fund may enter
into futures contracts, options, and options on futures contracts with
respect to securities in which the Fund may invest and indices comprised
of such securities.
Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security or
securities index at a specified future time and at a specified price.
Where the underlying security is an index, no physical transfer of
securities takes place; rather, upon expiration of the contract, the
parties settle by exchanging cash in an amount equal to the difference
between the contract price and the closing value of the index at
expiration, net of variation margin previously paid. Futures contracts
that are standardized as to maturity date and underlying interest are
traded on national futures exchanges.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of
the underlying security) if it is not terminated prior to the specified
delivery date. Minimal initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the
contract is marked to market daily. If the futures contract price changes
to the extent that the margin on deposit does not satisfy margin
requirements, payment of additional "variation" margin will be required.
Conversely, change in the contract value may reduce the required margin,
resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as
long as the contract remains open. The Fund expects to earn interest
income on its margin deposits.
Options are of two basic types, either call or put options, and may
relate to a single security, a securities index or a futures contract. A
call option on a security permits the holder of the option to purchase the
underlying security at a specified price ("strike price") at any time
during the term of the option. Thus, in exchange for the premium paid to
the writer, the purchaser obtains the right to profit from any
appreciation in the value of the underlying security above the strike
price. A put option permits the holder to sell the underlying security to
the writer at the strike price at any time during the term of the
contract. Thus, in exchange for the premium paid to the writer, the
purchaser is relieved of the risk of a decline in the value of the
underlying security below the strike price. An option on a securities
index gives the holder the right to receive cash from the writer in an
amount equal to the difference between the strike price of the option and
the value of the underlying index multiplied by a factor established by
the exchange upon which the option is traded. An option on a futures
contract gives the holder, in return for the premium paid to the writer,
the right to assume a position in the underlying futures contract a
specified price at any time during the term of the option.
Although futures and options contracts by their terms call for actual
delivery or acceptance of the underlying securities, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by
taking an opposite position ("buying" a contract which has previously been
"sold," or "selling" a contract previously purchased) in an identical
contract to terminate the position. An option purchased may be closed out
by selling the option. An option written is closed out by purchasing an
option identical to that written. Brokerage commissions are incurred when
future and options contracts are bought and sold.
Restrictions on the Use of Futures Contracts and Options. The Fund
will not enter into futures contracts to the extent that its outstanding
obligations under these contracts would exceed 25% of the Fund's total
assets. To the extent that the Fund enters into futures contracts and
options on futures positions that are not for bona fide hedging purposes
(as defined by the Commodity Futures Trading Commission), the aggregate
initial margin and premiums on these positions (excluding the amount by
which options are "in-the-money") may not exceed 5% of the Fund's net
assets.
Transactions using options and futures contracts (other than options
that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities or other
options or futures contracts or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
All options purchased or written by the Fund must be listed on a
national securities or futures exchange or traded in the over-the-counter
("OTC") market. The Fund will not purchase or write OTC options if, as a
result of such transaction, the sum of (i) the market value of outstanding
OTC options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund,
and (iii) the market value of other assets of the Fund that are illiquid
or are not otherwise readily marketable, would exceed 15% of the net
assets of the Fund, taken at market value. However, if an OTC option is
sold by the Fund to a primary U.S. Government securities dealer recognized
by the Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the
amount by which the option is "in-the-money" (the difference between
current market value of the underlying security and the option's strike
price). The repurchase price with primary dealers is typically a formula
price which is generally based on a multiple of the premium received for
the option plus the amount by which the option is "in-the-money."
The Fund may write only covered options. A call option is covered if
the Fund owns the underlying security or a call option on the same
security with a lower strike price. A put option is covered if the Fund
segregates cash and/or short-term debt securities in an amount necessary
to pay the strike price of the option or purchases a put option on the
same underlying security with a higher strike price.
The Fund will not purchase puts, calls, straddles, spreads or any
combination thereof, if as a result of such purchase the value of the
Fund's aggregate investment in such securities would exceed 5% of the
Fund's total assets.
Risk Factors in Futures and Options Transactions. There can be no
assurance that a liquid secondary market will exist for any particular
futures or option contract at any specific time. Thus, it may not be
possible to close a futures or option position. In the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments to maintain its required margin with respect to open futures or
written options positions. In such a situation, if the Fund has
insufficient cash, it may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, the Fund may be required to make or take delivery of the
securities underlying futures contracts that it holds and options
contracts that it has written.
The Fund will seek to minimize the risk that it will be unable to
close out a futures contract by entering into only those futures contracts
that are listed on a national futures exchange and for which there appears
to be a liquid secondary market. Likewise, the Fund will enter into only
those option contracts that are listed on a national securities exchange
or traded in the OTC market for which there appears to be a liquid
secondary market.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the
extremely high degree of leverage involved in futures pricing. As a
result, a relatively small price movement in a futures contract may result
in immediate and substantial loss (as well as gain) to the investor. For
example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of
the futures contract would result in a total loss of margin deposit,
before any deduction for the transaction costs, if the account were then
closed out. A 15% decrease would result in a loss equal to 150% if the
original margin deposit for the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of
the amount invested in the contract. Options transactions are subject to
similar risks. However, because the Fund will not engage in futures or
options transactions for speculative purposes, the Manager believes that
the Fund's risk of loss is less than the risk of loss associated with
speculative transactions. Moreover, in the foregoing example, the Fund
would presumably have sustained comparable losses if, instead of the
futures contract, it had invested in the underlying security and sold it
after the decline.
Utilization of futures contracts and options transactions by the Fund
does involve the risk of imperfect or no correlation where the securities
underlying futures and options contract are different from the portfolio
securities being hedged. It is also possible that the Fund could both
lose money on futures and options contracts and also experience a decline
in value of its portfolio securities. There is also the risk of loss by
the Fund of margin deposits in the event of bankruptcy of a broker with
whom the Fund has an open position in a futures contract or option
thereon.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may
vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a
particular type of contract, no trade may be made on that day at a price
beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions.
Futures contract prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading thereby
preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Futures and options contracts involve special tax considerations.
See "Dividends, Other Distributions and Taxes" for further information.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors who agree that
they are purchasing the paper for an investment and not with a view to
public distribution. Any resale by the purchase must be in an exempt
transaction. Section 4(2) paper is normally resold to other investors
through or with the assistance of the issuer or investment dealers who
make a market in Section 4(2) paper, thus providing liquidity. Pursuant
to guidelines established by the Company's Board of Directors, the Manager
or the sub-adviser may determine that Section 4(2) paper is liquid for the
purposes of complying with the Fund's investment restriction relating to
investments in illiquid securities.
INVESTMENT LIMITATIONS
The following limitations have been adopted by the Fund. The Fund
may not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the value
of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government securities, and state or municipal
governments and their political subdivisions are not considered
members of any industry. In addition, this limitation does not apply
to investments in domestic banks, including U.S. branches of foreign
banks and foreign branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") except that (a) the
Fund may borrow money in an amount not exceeding one-third of the
Fund's total assets at the time of such borrowings, and (b) the Fund
may issue multiple classes of shares. The purchase or sale of
futures contracts and related options shall not be considered to
involve the borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities of
any one issuer (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10%
of the outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than one-
third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments and repurchase
agreements shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that
engage in real estate business or invest or deal in real estate or
interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be
deemed an underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contracts and
other similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a
single, open-end management investment company with substantially the same
investment objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the
securities sold short, and provided that transactions in futures
contracts are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts
shall not constitute purchasing securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any issuer if
the officers, Directors of the Fund, its advisers, or managers,
owning beneficially more than one half of one percent of the
securities of such issuer, together own beneficially more than five
percent of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that
have been in operation for less than three years, if by reason
thereof, the value of the Fund's investment in securities would
exceed 5% of the Fund's total assets. For purposes of this
limitation, sponsors, general partners, guarantors and originators of
underlying assets may be treated as the issuer of a security.
6. The Fund will not invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with
maturities in excess of seven days and other securities which are not
readily marketable. For purposes of this limitation illiquid
securities shall not include Section 4(2) paper and securities which
may be resold under Rule 144A under the Securities Act of 1933,
provided that the Board of Directors, or its delegate, determines
that such securities are liquid based upon trading markets for the
specific security.
7. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets and except to be extent otherwise permitted by
the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested
in warrants, or (b) more than 2% of the value of the Fund's assets
would be invested in warrants that are not listed on the New York
Stock Exchange ("NYSE") or American Stock Exchange (for purposes of
this limitation, warrants acquired by the Fund in units or attached
to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total
assets except that: (a) this limitation shall not apply to standby
commitments, and (b) this limitation shall not apply to the Fund's
transactions in future contracts and related options.
11. The Fund will not invest more than 25% of the market value of the
Fund's total assets in securities issued or guaranteed by a single
Western European government or its agencies and instrumentalities.
As an operating policy, the Fund will not invest more the 25% of the value
of the Fund's total assets, at the time of such purchase, in domestic
banks, including U.S. branches of foreign banks and foreign branches of
U.S. banks. The Board of Directors may change this operating policy
without shareholder approval. Notice will be given to shareholders if
this policy is changed by the Board of Directors.
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDERS
Mellon Bank Corporation, a Pennsylvania corporation registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended, owned of record, through its direct and indirect subsidiaries,
more than 25% of the issued and outstanding voting shares of the Fund as
of March 31, 1995, and is, as a consequence, deemed to be a controlling
shareholder of the Fund as that term is defined under the 1940 Act. The
address of Mellon Bank Corporation is: Mellon Bank Corporation, Mutual
Funds Department, 3 Mellon Bank Center, Pittsburgh, PA 15259.
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned 5% or more of the outstanding
Class R shares of the Fund at March 31, 1995: Mac & Co. 019-556, Mellon
Bank, N.A., as Nominee for Trust Custodian, Mutual Funds, P.O. Box 320,
Pittsburgh, PA 15230-0320, 38% record; MBC Investments Corp.(a wholly-
owned subsidiary of Mellon Bank Corporation), 4500 New Linden Hill Road,
Wilmington, DE 19808, 32% record.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in the business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian and fund accountant, as well
as the Manager's investment advisory activities, may raise issues under
these provisions. Mellon Bank has been advised by counsel that its
activities contemplated under this arrangement are consistent with Mellon
Bank's statutory and regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations could prevent
Mellon Bank or the Manager from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities, the Directors would seek an alternative provider(s) of such
services.
DIRECTORS AND OFFICERS
The Company has a Board composed of thirteen Directors which
supervises the Company's investment activities and reviews contractual
arrangements with companies that provide the Fund with services. The
following lists the Directors and officers and their positions with the
Company and their present and principal occupations during the past five
years. Each Director who is an "interested person" of the Company, as
defined in the 1940 Act, is indicated by an asterisk. Each of the
Directors also serves as a Trustee of The Dreyfus/Laurel Funds Trust, The
Dreyfus/Laurel Investment Series and The Dreyfus/Laurel Tax-Free Municipal
Funds (collectively "The Dreyfus Family of Funds").
o + RUTH MARIE ADAMS. Director of the Company; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United Chapters
of Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution.
Age: 79 years old. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts
Business Development Corp.; Director, Boston Mutual Insurance
Company; Director and Vice Chairman of the Board, Home Owners Federal
Savings and Loan (prior to May 1990). Age: 76 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o * JOSEPH S. DiMARTINO. Director of the Company since February 1995.
Since January 1995, Mr. DiMartino has served as Chairman of the Board
for 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 Dreyfus and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 1994, the Fund's
distributor. Mr. DiMartino is a director and former Treasurer of the
Muscular Dystrophy Association; a trustee of Bucknell University; a
director of Health Plan Services Corporation; and Chairman of the
Board of Directors of Noel Group, Inc. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
o + JAMES M. FITZGIBBONS. Director of the Company; President and
Director, Amoskeag Company; Chairman, Howes Leather Company, Inc.;
Director, Fiduciary Trust Company; Chairman, CEO and Director,
Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance Company;
Director, Barrett Resources, Inc. Age: 59 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o * J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith,
Shaw & McClay (law firm). Age: 65 years old. Address: 204 Woodcock
Drive, Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Director of the Company; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon Carbon
Corporation; Director, National Picture Frame Corporation; Chairman
of the Board and Director, Tetra Corporation 1991-1993; Director,
Medalist Corporation 1992-1993; From 1988-1989 Director, Rexene
Corporation. Age: 71 years old. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of the Company; Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company; President
and Chief Executive Officer, Himmel & Co., Inc.; Vice Chairman,
Sutton Place Gourmet, Inc. and Florida Hospitality Group; Managing
Partner, Himmel/MKDG, Franklin Federal Partners, Reston Town Center
Associates and Grill 23 & Bar. Age: 47 years old. Address: Himmel
and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o + ARCH S. JEFFERY. Director of the Company; Financial Consultant. Age:
76 years old. Address: 1817 Foxcroft Lane, Allison Park,
Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 46
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o + ROBERT D. MCBRIDE. Director of the Company; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Age: 66 years old. Address: 15
Waverly Lane, Grosse Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Director of the Company; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Age: 79 years old. Address: 5521
Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Age: 62 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o + ROSLYN M. WATSON. Director of the Company; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development
Project Manager and Vice President, The Gunwyn Company. Age: 44
years old. Address: 25 Braddock Park, Boston, Massachusetts 02116-
5816.
# MARIE E. CONNOLLY. President and Treasurer of the Company;, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Vice President of The Dreyfus/Laurel Funds, Inc. (March 1994 to
September 1994); President, Funds Distributor, Inc. (since 1992);
Treasurer, Funds Distributor, Inc. (July 1993 to April 1994); COO,
Funds Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior Vice
President and Director of Financial Administration, The Boston
Company Advisors, Inc. (December 1988 to May 1993). Address: One
Exchange Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, Premier Mutual Fund Services, Inc. (since
August 1994); Vice President, Funds Distributor, Inc. (since August
1994); Fundraising Manager, Swim Across America (October 1993 to
August 1994); General Manager, Spring Industries (August 1988 to
October 1993). Address: Premier Mutual Fund Services, Inc., 200 Park
Avenue New York, New York 10166.
# ERIC B. FISCHMAN. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994); Vice
President and Associate General Counsel, Premier Mutual Fund
Services, Inc. (Since August 1994); Vice President and Associate
General Counsel, Funds Distributor, Inc. (since August 1994); Staff
Attorney, Federal Reserve Board (September 1992 to June 1994); Summer
Associate, Venture Economics (May 1991 to September 1991); Summer
Associate, Suffolk County District Attorney (June 1990 to August
1990). Address: Premier Mutual Fund Services, Inc., 200 Park Avenue,
New York, New York 10166.
LESLIE M. GAYNOR. Assistant Treasurer of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
RICHARD W. HEALEY. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Tax-Free Municipal Funds Trust
and The Dreyfus/Laurel Funds Trust (since March 1994); Senior Vice
President, Funds Distributor, Inc. (since March 1993); Vice
President, The Boston Company Inc., (March 1993 to May 1993); Vice
President of Marketing, Calvert Group (1989 to March 1993); Fidelity
Investments (prior to 1989). Address: One Exchange Place, Boston,
Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Company; The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, General Counsel and Secretary, Funds
Distributor, Inc. (since April 1994); Senior Vice President, General
Counsel and Secretary, Premier Mutual Fund Services, Inc. (since
August 1994); Counsel, The Boston Company Advisors, Inc. (February
1992 to March 1994); Associate, Ropes & Gray (August 1990 to February
1992); Associate, Sidley & Austin (June 1989 to August 1990).
Address: One Exchange Place, Boston, Massachusetts 02109.
___________________________________________________
* "Interested person" of The Dreyfus/Laurel Funds, Inc., as defined in
the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by The Dreyfus Corporation.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the total shares of the Fund outstanding as
of March 13, 1995.
No officer or employee of Premier (or of any parent or subsidiary
thereof) receives any compensation from the Company for serving as an
officer or Director of the Company. In addition, no officer or employee
of The Dreyfus Corporation (or of any parent or subsidiary thereof) serves
as an officer or Director of the Company. The Dreyfus/Laurel Funds pays
each Trustee/Director who is not an officer or employee of Premier or any
of its affiliates, $27,000 per annum (and an additional $75,000 for the
Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Funds).
In addition, the Dreyfus/Laurel Funds pay each Trustee/Director $ 1,000
per joint Dreyfus/Laurel Fund meeting attended, plus $750 per
Dreyfus/Laurel Fund Audit Committee meeting attended, and reimburses each
Trustee/Director for travel and out-of-pocket expenses. For the fiscal
year ended October 31, 1994 the fees for meetings and expenses totaled
$396 for the Fund.
For the fiscal year ended October 31, 1994, the aggregate amount of
fees and expenses received by each Director from the Company and all other
Funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension of Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
- -------------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $19,685 None None $ 37,500
Francis P. Brennan* 52,809 None None 112,500
Joseph S. DiMartino** N/A N/A N/A N/A
James M. Fitzgibbons 17,685 None None 31,750
J. Tomlinson Fort 7,500 None None 7,500
Arthur L. Goeschel 26,185 None None 32,500
Kenneth A. Himmel 18,685 None None 35,750
Arch S. Jeffrey 27,185 None None 33,500
Steven J. Lockwood 18,685 None None 35,750
Robert D. McBride 27,185 None None 33,500
John L. Propst 27,185 None None 33,500
John J. Sciullo 27,185 None None 33,500
Roslyn M. Watson 19,685 None None 36,750
</TABLE>
# Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $10,876 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by The
Dreyfus/Laurel Fund Family to be Chairman of the Board.
** Joseph S. DiMartino was not a director of the Company as of October
31, 1994.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. The Dreyfus Corporation ("Dreyfus") serves as
the investment manager (the "Manager") for the Fund pursuant to an
Investment Management Agreement with the Company dated April 4, 1994
("Management Agreement"), transferred to Dreyfus as of October 17, 1994.
Pursuant to the Management Agreement, Dreyfus provides, or arranges for
one or more third parties to provide investment advisory, administrative,
custody, fund accounting and transfer agency service to the Fund. As
Manager, Dreyfus manages the fund by making investment decisions based on
the Fund's investment objectives, policies and restrictions. The
Management Agreement is subject to review and approval at least annually
by the Board of Directors.
S.A.M. Finance, S.A. ("CCF SAM") 115 Avenue des Champs-Elysees,
Paris, France 75008, serves as an investment sub-adviser. CCF SAM serves
as adviser for the Fund pursuant to a Sub-Advisory Agreement among the
Company, CCF SAM and Mellon Bank dated August 31, 1993 (the "Sub-Advisory
Agreement"), transferred to the Manager effective as of October 17, 1994.
CCF SAM is a wholly-owned subsidiary of Credit Commercial de France
("CCF"), a French bank. Under the Management and Sub-Advisory Agreements,
CCF SAM directs the investments of substantially all of the Fund's assets
in accordance with its investment objectives, policies and limitations.
The Manager has overall responsibility for general management of the Fund,
and for compliance with applicable law and the Fund's investment
objectives, policies and limitations. The Manager also directs
investments of all assets not assigned to CCF SAM. For these services,
the Fund pays a fee to the Manager, and the Manager pays a portion thereof
to CCF SAM, at the rates stated in the Prospectus.
The Management and Sub-Advisory Agreements will continue from year to
year provided that a majority of the Directors who are not interested
persons of the Company and either a majority of all Directors or a
majority of the shareholders of the Fund approve the continuance. The
Company may terminate the Agreements, without prior notice to the Manager
or CCF SAM, upon the vote of a majority of the Board of Directors or upon
the vote of a majority of the outstanding voting securities of the Fund on
60 days' written notice to the Manager or CCF SAM. The Manager may
terminate the Management Agreement upon written notice to the Company; the
Manager or CCF SAM may terminate the Sub-Advisory Agreement upon 60 days'
notice to the other parties. The Management Agreement and the Sub-
Advisory Agreement each will terminate immediately and automatically upon
its assignment.
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; Robert E. Riley, President, Chief
Operating Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and director; Philip L. Toia, Vice Chairman--Operations and
Administration; Paul H. Snyder, Vice President and Chief Financial
Officer; Daniel C. Maclean, Vice President and General Counsel; Barbara E.
Casey, Vice President--Retirement Services; Henry D. Gottmann, Vice
President--Retail; Elie M. Genadry, Vice President--Wholesale; Mark N.
Jacobs, Vice President--Fund Legal and Compliance and Secretary; Jeffrey
N. Nachman, Vice President-Mutual Fund Accounting; Diane M. Coffey, Vice-
President--Corporate Communications; Katherine C. Wickham, Vice President-
- -Human Resources; Maurice Bendrihem, Controller; and Mandell L. Berman,
Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M.
Smerling and David B. Truman, Directors.
For the period from August 12, 1994 (commencement of operations)
through October 31, 1994, the Fund had the following expenses:
For the Fiscal Period Ended October 31,
1994
Management fees (gross of waiver) $29,370
Expense Reimbursement from
investment manager --
Management fees waived --
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
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time,
on any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange ("NYSE") are open. Such purchases will be credited to
the shareholder's Fund account on the next bank business day. To qualify
to use the Dreyfus TeleTransfer Privilege, the initial payment for
purchase of shares must be drawn on, and redemption proceeds paid to, the
same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares-- Dreyfus 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
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan."
Investor shares are subject to fees for distribution and shareholder
services.
Distribution Plan--Investor Shares. The Securities and Exchange
Commission ("SEC") has adopted Rule 12b-l under the 1940 Act ("Rule")
regulating the circumstances under which investment companies such as the
Company may, directly or indirectly, bear the expenses of distributing
their shares. The Rule defines distribution expenses to include
expenditures for "any activity which is primarily intended to result in
the sale of fund shares." The Rule, among other things, provides that an
investment company may bear such expenses only pursuant to a plan adopted
in accordance with the Rule. With respect to the Investor shares of the
Fund, the Company has adopted a Distribution Plan ("Plan"), and may enter
into Selling Agreements with Agents pursuant to the Plan.
Under the Plan, the Fund may spend annually up to 0.25% of the
average daily net assets attributable to Investor shares for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, the Fund's Investor shares.
The Plan provides that a report of the amounts expended under the
Plan, and the purposes for which such expenditures were incurred, must be
made to the Company's Directors for their review at least quarterly. In
addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
the Company or the Manager (as defined in the 1940 Act) and who do not
have any direct or indirect financial interest in the operation the Plan,
cast in person at a meeting called for the purpose of considering such
amendments. The Plan is subject to annual approval by the entire Board of
Directors and by the Directors who are neither interested persons nor have
any direct or indirect financial interest in the operation of the Plan, by
vote cast in person at a meeting called for the purpose of voting on the
Plan. The Plan is terminable, as to the Fund's Investor shares, at any
time by vote of a majority of the Directors who are not interested persons
and have no direct or indirect financial interest in the operation of the
Plan or by vote of the holders of a majority of the outstanding shares of
the such class of the Fund.
For the period from August 12, 1994 (inception date of the Investor
shares) to October 31, 1994, the Fund paid the Distributor $11 pursuant to
the Plan.
The Distributor; Sub-Administrator. Premier Mutual Fund Services,
Inc., One Exchange Place, Boston, Massachusetts 02109) ("Premier"), a
wholly-owned subsidiary of Institutional Administration Services, Inc.,
serves as the Fund's distributor pursuant to an agreement with the Manager
effective October 17, 1994. Premier also acts as distributor for other
funds in the Dreyfus Family of Funds and for certain other investment
companies. Premier also serves as Sub-Administrator ("Sub-Administrator")
to the Fund pursuant to a Sub-Administration Agreement effective October,
17, 1994.
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 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 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. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. 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
Stock 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 NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may
request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the ACH system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's
account at an ACH member bank ordinarily two business days after receipt
of the redemption request. See "Purchase of Fund Shares-- Dreyfus
TeleTransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, 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 SEC. In the
case of requests for redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of
the existing shareholders. In this 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 incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE 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 SEC 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 SEC 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 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 other 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.
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 the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among 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.
Dreyfus Auto-Exchange Privilege. The Dreyfus 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 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 the investor's 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
Dreyfus 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 Dreyfus 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 from the Distributor. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal. 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. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. 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.
Dreyfus Dividend Sweep. Dreyfus 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
certain other funds in 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
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and 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 on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $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."
The Fund's net asset value ("NAV") per share is calculated on each
business day. A business day is any day on which the NYSE is open for
business. The Fund determines NAV as of the close of business of the
regular session of NYSE (currently 4:00 p.m. Eastern time). The holidays
(as observed) on which the NYSE is closed currently are: New Years Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
Equity securities listed or traded on a stock exchange, are valued at
the latest sale price. If no sale is reported, the mean of the latest bid
and asked prices is used. Securities traded over-the-counter are priced
at the mean of the latest bid and asked prices but will be valued at the
last sale price if required by regulations of the SEC. When market
quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith in accordance procedures
established by the Board of Directors.
Bonds are valued through valuations obtained from a commercial
pricing service or the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established
by the Board of Directors. Pursuant to a determination by the Company's
Board of Directors that such value represents fair value, debt securities
with maturities of 60 days or less are valued at amortized cost.
For purposes of determining the Fund's NAV, all assets and
liabilities initially expressed in foreign currency values will be
converted into U.S. dollar values at the mean between the bid and offered
quotations of such currencies against U.S. dollars as last quoted by any
recognized dealer. If an event were to occur after the value of a
portfolio instrument was so established but before the NAV per share is
determined which is likely to materially change the NAV, then the
portfolio instrument would be valued using fair value considerations
established by the Company's Board of Directors.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith and pursuant to
procedures approved by the Company's Board of Directors. Because of the
need to obtain prices as of the close of trading on the exchanges on which
portfolio securities are most frequently traded, the calculation of NAV
may not take place contemporaneously with the determination of the prices
of the majority of the Fund's portfolio securities.
Equity securities which are traded on a Western European securities
exchange are valued at the last sale price on that exchange or, if there
is no recent last sale price available, at the last current bid quotation.
An equity security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary
market for such security by CCF SAM. All other equity securities not so
traded are valued at the last sale price prior to the time of valuation.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
General. To qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the
Fund -- which is treated as a separate corporation for federal tax
purposes-- must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (generally consisting
of net investment income, net short-term capital gain and net gains from
certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or
foreign currencies, or other income (including gains from options,
futures, or forward contracts) derived with respect to its business of
investing in securities or those currencies ("Income Requirement"); (2)
the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following,
that were held for less than three months - options or futures (other than
those on foreign currencies), or foreign currencies (or options, futures
or forward contacts thereon) that are not directly related to the Fund's
principal business of investing in securities (or options and futures with
respect thereto) ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs and other securities, with those
other securities limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the Fund's total assets and that does
not represent more than 10% of the issuer's outstanding voting securities;
and (4) at the close of each quarter of the Fund's taxable year, not more
than 25% of the value its total assets may be invested in securities
(other than U.S. government securities or securities of other RICs) of any
one issuer.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on
a date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to the shareholders for the
year in which that December 31 falls.
If Fund shares are sold at a loss after being held six months or
less, the loss will be treated as a long-term, instead of short-term,
capital loss to the extent of capital gain distributions on those shares.
Investors also should be aware that if shares are purchased shortly before
the record date for any dividend or other distribution, the shareholder
will pay full price for the shares and receive some portion of the price
back as a taxable distribution.
If the Fund retains net capital gain (the excess of net long-term
capital gain over net short-term capital loss) for reinvestment, although
it has no plans to do so, it may elect to treat such amounts as having
been distributed to its shareholders. As a result, the shareholders would
be subject to tax on the undistributed net capital gain, would be able to
claim their proportionate share of the federal income tax paid by the Fund
on that gain as a credit against their own federal income tax liabilities,
and would be entitled to an increase in their basis for their Fund shares.
Hedging Transactions. The Fund may employ hedging strategies, such as
writing (selling) and purchasing options and futures contracts and
entering into forward contracts. The use of these strategies involves
complex rules that will determine for income tax purposes the character
and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from foreign currencies (except certain
gains therefrom may be excluded by future regulations), and income from
transactions in options, futures and forward contracts derived by the Fund
with respect to its business of investing in securities or foreign
currencies, will qualify as permissible income under the Income
Requirement. However, income from the disposition of options and futures
contracts, other than those on foreign currencies, will be subject to the
Short-Short Limitation if they are held for less than three months.
Income from the disposition of foreign currencies, and options, futures
and forward contracts thereon, that are not directly related to the Fund's
principal business of investing in securities (or options and futures with
respect thereto) also will be subject to the Short-Short Limitation if
they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of
a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider, when it engages
in hedging strategies, whether it should seek to qualify for this
treatment. To the extent the Fund does not qualify therefor, it may be
forced to defer the closing out of certain options, futures and forward
contracts beyond the time when it otherwise would be advantageous to do
so, in order for the Fund to qualify as a RIC.
Certain futures contracts in which the Fund may invest are "section
1256 contracts." Section 1256 contracts held by the Fund at the end of
each taxable year are "marked-to-market" (that is, treated as sold for
their fair market value) for federal income tax purposes, with the result
that unrealized gains or losses are treated as though they were realized.
Sixty percent of any net gain or loss recognized on these deemed sales,
and 60% of any net realized gain or loss from any actual sales of section
1256 contracts, are treated as long-term capital gain or loss, and the
balance is treated as short-term capital gain or loss. Section 1256
contracts also may be marked-to-market for purposes of the 4% excise tax
described in the Prospectus ("Excise Tax").
Certain futures contracts entered into by the Fund may result in
"straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. In addition, losses realized by the Fund on straddle positions
may be deferred under the straddle rules. If the Fund makes certain
elections, the amount, character and timing of the recognition of gains
and losses from the affected straddle positions will be determined under
rules that vary according to the elections made.
Passive Foreign Investment Companies. The Fund may invest in the
stock of foreign corporations that are classified as "passive foreign
investment companies" ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least one-half of its assets constitute
investment-type assets or 75% or more of its gross income is passive
income. If the Fund holds stock of a PFIC, an "excess distribution"
received with respect to the stock and gain from the disposition of the
stock (collectively "PFIC income") will be treated as having been realized
ratably over the entire period during which the Fund held the stock. The
Fund itself will be subject to tax on the portion, if any, of the PFIC
income that is allocated to the part of that holding period in prior
taxable years (and an interest factor will be added to the tax, as if the
tax had actually been payable in those prior taxable years), even if the
Fund distributes the corresponding income to shareholders. All PFIC
income is taxable as ordinary income.
The Fund may elect alternative tax treatment with respect to any PFIC
stock that it holds. Under such an election, the Fund generally would be
required to include in its gross income each year its share of the PFIC's
earnings and capital gains for the year, regardless of whether any
distributions are received from the PFIC, and the special rules in the
preceding paragraph would not apply; the amount so included in the Fund's
income would have to be distributed to its shareholders to satisfy the
Distribution Requirement and to avoid imposition of the Excise Tax. In
most instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund,
would be entitled to elect to "mark-to-market" their stock in certain
PFICs. "Marking-to-market," in this context, means recognizing as gain for
each taxable year the excess, as of the end of that year, of the fair
market value of such a PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election
was in effect).
Foreign Currency Gains and Losses. Gains and losses attributable to
fluctuations in foreign currency exchange rates that occur between the
time the Fund accrues dividends, interest or other receivables, or
expenses or other liabilities, denominated in a foreign currency and the
time the Fund actually collects the receivables or pays the liabilities
generally are treated as ordinary income or ordinary loss. Similarly, on
the disposition of a debt security denominated in a foreign currency, or
of an option or forward contract on a foreign currency, gains or losses
attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security, option or contract and the date
of disposition also are treated as ordinary income or loss. These gains
or losses may increase or decrease the amount of the Fund's investment
company taxable income to be distributed to its shareholders.
Foreign Taxes. Dividends and interest received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors. If more than 50% of the value of the Fund's total assets at
the close of its taxable year consists of securities of foreign
corporations, it will be eligible to, and may, file an election
("Election") with the Internal Revenue Service that will enable its
shareholders, in effect, to receive the benefit of the foreign tax credit
with respect to any foreign or U.S. possessions' income taxes paid by it.
Pursuant to the Election, the Fund would treat those taxes as dividends
paid to its shareholders and each shareholder would be required to (1)
include in gross income, and treat as paid by him or her, his or her
proportionate share of those taxes, (2) treat his or her share of those
taxes and of any dividend paid by the Fund that represents income from
foreign or U.S. possession sources as his or her own income from those
sources and (3) either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his or her
federal income tax. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Generally, a credit for
foreign taxes may not exceed the shareholder's federal income tax
attributable to his total foreign source taxable income. The Fund will
report to its shareholders shortly after each taxable year their
respective shares of the income from sources within, and taxes paid to,
foreign countries and U.S. possessions if it makes the Election.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a non-
resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder") depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund. For example, the tax consequences to a foreign shareholder entitled
to claim the benefits of an applicable tax treaty may be different from
those described below. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If a
foreign shareholder's income from the Fund is not effectively connected
with a U.S. trade or business carried on by the foreign shareholder,
distributions of the Fund's investment company taxable income generally
will be subject to U.S. federal withholding tax of 30% (or lower treaty
rate) on the gross amount of the distribution. Foreign shareholders also
may be subject to U.S. federal withholding tax on deemed income resulting
from any Election made by the Fund regarding foreign taxes paid by it as
paid by its shareholders (see discussion above), but foreign shareholders
will not be able to claim a credit or deduction for the foreign taxes
treated as having been paid by them.
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain, as well as amounts
retained by the Fund that are designated as undistributed capital gains,
generally will not be subject to federal income tax unless the foreign
shareholder is a non-resident alien individual and is physically present
in the United States for more than 182 days during the taxable year.
However, this rule only applies in exceptional cases, because any
individual present in the United States for more than 182 days during the
taxable year generally is treated as a resident for federal income tax
purposes on his worldwide income at the graduated rates applicable to U.S.
citizens, rather than the 30% federal withholding tax rate. In the case
of certain foreign shareholders, the Fund may be required to withhold
federal income tax at a rate of 31% from capital gain distributions and
the gross proceeds from a redemption of Fund shares unless the shareholder
furnishes the Fund with a certificate regarding the shareholder's foreign
status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's income from the Fund is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that
shareholder on the disposition of Fund shares will be subject to federal
income tax at the graduated rates applicable to U.S. citizens or domestic
corporations, as the case may be. Foreign shareholders also may be
subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be
available.
State and Local Taxes. Depending on the Fund's activities in states
and localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to
be conducting business, the Fund may be subject to the tax laws of such
states or localities. Shareholders are advised to consult their tax
advisers concerning the application of state and local taxes.
Pennsylvania Personal Property Tax Exemption. The Company has
obtained a Certificate of Authority to do business as a foreign
corporation in Pennsylvania. In the opinion of counsel, shares of the
Fund are exempt from Pennsylvania personal property taxes.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by the Manager or CCF SAM. Debt securities purchased and sold by the
Fund are generally traded on a net basis (i.e., without commission)
through dealers acting for their own account and not as brokers, or
otherwise involve transactions directly with the issuer of the instrument.
This means that a dealer (the securities firm or bank dealing with the
Fund) makes a market for securities by offering to buy at one price and
sell at a slightly higher price. The difference between the prices is
known as a spread. Other portfolio transactions may be executed through
brokers acting as agent. The Fund will pay a spread or commissions in
connection with such transactions. The Manager or CCF SAM uses its best
efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Fund and at spreads and commission rates, if any,
which are reasonable in relation to the benefits received. The Manager or
CCF SAM also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, the Manager or CCF SAM each will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer; the broker-
dealer's execution services rendered on a continuing basis; and the
reasonableness of any spreads (or commissions, if any). Any spread,
commission, fee or other remuneration paid to an affiliated broker-dealer
is paid pursuant to Dreyfus/Laurel's procedures adopted in accordance with
Rule 17e-1 of the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which the Manager
or CCF SAM or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and
performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and
settlement).
The receipt of research services from broker-dealers may be useful to
the Manager or CCF SAM in rendering investment management services to the
Fund and/or its other clients; and, conversely, such information provided
by brokers or dealers who have executed transaction orders on behalf of
other clients of the Manager or CCF SAM may be useful to these
organizations in carrying out their obligations to the Fund. The receipt
of such research services does not reduce these organizations' normal
independent research activities; however, it enables these organizations
to avoid the addition expenses which might otherwise be incurred if these
organizations were to attempt to develop comparable information through
their own staffs.
The Company's Board of Directors periodically reviews the Manager's
and CCF SAM's performance of their responsibilities in connection with the
placement of portfolio transactions on behalf of the Fund and review the
prices paid by the Fund over representative periods of time to determine
if they are reasonable in relation to the benefits to the Fund.
Although the Manager and CCF SAM manage other accounts in addition to
the Fund, investment decisions for the Fund are made independently from
decisions made for these other accounts. It sometimes happens that the
same security is held by more than one of the accounts managed by the
Manager or CCF SAM. Simultaneous transactions may occur when several
accounts are managed by the same investment adviser, particularly when the
same investment instrument is suitable for the investment objective of
more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by the Manager or CCF
SAM to be equitable to each account. In some cases this system could have
a detrimental effect on the price or volume of the investment instrument
as far as the Fund is concerned. In other cases, however, the ability of
the Fund to participate in volume transactions will produce better
executions for the Fund. While the Directors will continue to review
simultaneous transactions, it is their present opinion that the
desirability of retaining the Manager or CCF SAM as investment advisers to
the Fund outweighs any disadvantages that may be said to exist from
exposure to simultaneous transactions.
For the fiscal period ended October 31, 1994 the Fund paid brokerage
commissions of $0.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year. The Fund
commenced operations August 12, 1994, and its portfolio turnover rate for
the period ended October 31, 1994 was 0%.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The Fund computes average annual total return by using a standardized
method required by the SEC. Average annual total return is computed by
finding the average annual compounded rates of return on hypothetical
initial investment of $1,000 over the periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
Where: P = $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a $1,000 payment made
at the beginning of the 1, 5 or 10 year periods at the
end of the year or period
The calculation assumes (1) the deduction of the maximum sales load
(and any other charges deducted, if any, from payment) and all recurring
fees that are charged to all shareholder accounts, and (2) the
reinvestment of all dividends and other distributions by the Fund at the
price stated in the Prospectus on the reinvestment dates during the
period.
Aggregate annual total return (expressed as a percentage) for
Investor shares of the Fund for the periods noted were:
Aggregate Total Return for the
Periods Ended October 31, 1994
Fund: 1 Year 5 Years 10 Years Inception
International Equity
Allocation Fund -- -- -- 0.60%
(8/12/94)
Inception date appears in parentheses following the aggregate total return
since inception.
Aggregate total return (expressed as a percentage) for Class R shares
of the Fund for the periods noted were:
Aggregate Total Return for the
Periods Ended October 31, 1994
Fund: 1 Year 5 Years 10 Years Inception
International Equity
Allocation Fund -- -- -- 0.60%
(8/12/94)
Inception date appears in parentheses following the aggregate total return
since inception.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Morgan Stanley European Australia Far East Index; (ii) the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500"), the Dow Jones
Industrial Average ("DJIA"), or other appropriate unmanaged domestic or
foreign indices of performance of various types of investments so that
investors may compare the Fund's results with those of indices widely
regarded by investors as representative of the securities markets in
general; (iii) other groups of mutual funds tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds
by overall performance, investment objectives and assets, or tracked by
other services, companies, publications, or persons who rank mutual funds
on overall performance or other criteria; (iv) the Consumer Price Index (a
measure of inflation) to assess the real rate of return from an investment
in the Fund; and (v) products managed by a universe of money managers with
similar country allocation and performance objectives. Unmanaged indices
may assume the reinvestment of dividends but generally do not reflect
deductions or administrative and management costs and expenses.
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 have no preemptive or subscription rights and are
freely transferable.
Each Fund will send annual and semi-annual financial statements to
all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is the
Fund's custodian and fund accountant. The Shareholder Services Group,
Inc., a subsidiary of First Data Corporation, P.O. Box 9692, Providence,
Rhode Island 09240-9830, is the Fund's transfer and dividend disbursing
agent. The Shareholder Services Group, Inc. and Mellon Bank, as
custodian, have no part in determining the investment policies of the Fund
or which securities are to be purchased or sold by the Fund.
Kirkpatrick & Lockhart, 1800 M Street, N.W., South Lobby - 9th Floor,
Washington, D.C. 20036, has passed upon the legality of the shares offered
by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick LLP was appointed by the Directors to serve as the
Fund's independent auditors for the year ending October 31, 1995,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1994,
including notes to the financial statements and supplementary information
and the Report of Independent Auditors, are included in the Annual Report
to shareholders. A copy of the Annual Report accompanies this Statement
of Additional Information. The financial statements from the Annual
Report are incorporated herein by reference.
DREYFUS/LAUREL SHORT-TERM GOVERNMENT SECURITIES FUND
INVESTOR AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
April 10, 1995
This Statement of Additional Information, which is not a Prospectus,
supplements and should be read in conjunction with the current Prospectus of
the Dreyfus/Laurel Short-Term Government Securities Fund (formerly the Laurel
Short-Term Government Securities Fund) (the "Fund"), dated April 10, 1995, as
it may be revised from time to time. The Fund is a separate portfolio of The
Dreyfus/Laurel Funds, Inc., an open-end, diversified management investment
company ("Dreyfus/Laurel"), known as a mutual fund. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. ("Premier") is the distributor of the
Fund's shares.
TABLE OF CONTENTS
Page
Investment Information and Risk Factors . . . . . . . . . . . . . . . . .B-2
Investment Limitations. . . . . . . . . . . . . . . . . . . . . . . . . .B-5
Controlling Shareholders. . . . . . . . . . . . . . . . . . . . . . . . .B-8
Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . .B-8
Investment Management and Other Services. . . . . . . . . . . . . . . . .B-12
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . .B-14
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . .B-14
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . .B-16
Federal Law Affecting Mellon Bank . . . . . . . . . . . . . . . . . . . .B-19
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .B-20
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-21
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . .B-22
Dividends, Other Distributions and Taxes. . . . . . . . . . . . . . . . .B-23
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . .B-26
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-26
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-27
INVESTMENT INFORMATION AND RISK FACTORS
Government Obligations. The Fund may invest in the following U.S.
Treasury obligations, which differ only in their interest rates, maturities
and times of issuance: (a) U.S. Treasury bills have a maturity of one year or
less, (b) U.S. Treasury notes have maturities of one to ten years, and (c)
U.S. Treasury bonds generally have maturities of greater than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury (such as Government National Mortgage
Association ("GNMA") participation certificates), (b) the right of the issuer
to borrow an amount limited to a specific line of credit from the U.S.
Treasury, (c) discretionary authority of the U.S. Government agency or
instrumentality, or (d) the credit of the instrumentality. (Examples of
agencies and instrumentalities are: Federal Land Banks, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Central Bank for Cooperatives, Federal Intermediate Credit Banks,
Federal Home Loan Banks, General Services Administration, Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory Board,
Inter-American Development Bank, Asian-American Development Bank, Student Loan
Marketing Association, International Bank for Reconstruction and Development
and Federal National Mortgage Association ("FNMA").) No assurance can be
given that the U.S. Government will provide financial support to such U.S.
Government agencies or instrumentalities described in (b), (c) and (d) in the
future, other than as set forth above, since it is not obligated to do so by
law.
Mortgage Pass-Through Certificates. Mortgage pass-through certificates
are issued by governmental, government-related and private organizations and
are backed by pools of mortgage loans. These mortgage loans are made by
lenders such as savings and loan institutions, mortgage bankers, commercial
banks and others to residential home buyers throughout the United States. The
securities are "pass-through" securities because they provide investors with
monthly payments of principal and interest which in effect are a
"pass-through" of the monthly payments made by the individual borrowers on the
underlying mortgages, net of any fees paid to the issuer or guarantor of the
pass-through certificates. The principal governmental issuer of such
securities is the GNMA, which is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development. Government-related
issuers include the Federal Home Loan Mortgage Corporation ("FHLMC") and the
FNMA, both government-sponsored corporations owned entirely by private
stockholders. Commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers also create pass-through pools of conventional residential mortgage
loans. Such issuers may be the originators of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities.
(1) GNMA Mortgage Pass-Through Certificates ("Ginnie Maes"). Ginnie
Maes represent an undivided interest in a pool of mortgages that are insured
by the Federal Housing Administration or the Farmers Home Administration or
guaranteed by the Veterans Administration. Ginnie Maes entitle the holder to
receive all payments (including prepayments) of principal and interest owed
by the individual mortgagors, net of fees paid to GNMA and to the issuer which
assembles the mortgage pool and passes through the monthly mortgage payments
to the certificate holders (typically, a mortgage banking firm), regardless
of whether the individual mortgagor actually makes the payment. Because
payments are made to certificate holders regardless of whether payments are
actually received on the underlying mortgages, Ginnie Maes are of the
"modified pass-through" mortgage certificate type. The GNMA is authorized to
guarantee the timely payment of principal and interest on the Ginnie Maes as
securities backed by an eligible pool of mortgages. The GNMA guarantee is
backed by the full faith and credit of the United States, and the GNMA has
unlimited authority to borrow funds from the U.S. Treasury to make payments
under the guarantee. The market for Ginnie Maes is highly liquid because of
the size of the market and the active participation in the secondary market
of securities dealers and a variety of investors.
(2) FHLMC Mortgage Participation Certificates ("Freddie Macs").
Freddie Macs represent interests in groups of specified first lien residential
conventional mortgages underwritten and owned by the FHLMC. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC guarantees either ultimate collection or timely payment of
all principal payments on the underlying mortgage loans. In cases where the
FHLMC has not guaranteed timely payment of principal, the FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable. Freddie Macs are not guaranteed by the United
States or by any of the Federal Home Loan Banks and do not constitute a debt
or obligation of the United States or of any Federal Home Loan Bank. The
secondary market for Freddie Macs is highly liquid because of the size of the
market and the active participation in the secondary market of the FHLMC,
securities dealers and a variety of investors.
(3) FNMA Guaranteed Mortgage Pass-Through Certificates ("Fannie Maes").
Fannie Maes represent an undivided interest in a pool of conventional mortgage
loans secured by first mortgages or deeds of trust, on one family, or two to
four family, residential properties. The FNMA is obligated to distribute
scheduled monthly installments of principal and interest on the mortgages in
the pool, whether or not received, plus full principal of any foreclosed or
otherwise liquidated mortgages. The obligation of the FNMA under its guaranty
is solely the obligation of the FNMA and is not backed by, nor entitled to,
the full faith and credit of the United States.
The market value of mortgage-related securities depends on, among other
things, the level of interest rates, the certificates' coupon rates and the
payment history of the mortgagors of the mortgages in the underlying
mortgages.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of Directors.
In a repurchase agreement, the Fund buys a security from a seller that has
agreed to repurchase the same security at a mutually agreed upon date and
price. The Fund's resale price will be in excess of the purchase price,
reflecting an agreed upon interest rate. This interest rate is effective for
the period of time the Fund is invested in the agreement and is not related
to the coupon rate on the underlying security. Repurchase agreements may also
be viewed as a fully collateralized loan of money by the Fund to the seller.
The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will the Fund invest in repurchase
agreements for more than one year. The Fund will always receive as collateral
securities whose market value including accrued interest is, and during the
entire term of the agreement remains, at least equal to 100% of the dollar
amount invested by the Fund in each agreement, and the Fund will make payment
for such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of a
repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. Dreyfus seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors under
repurchase agreements, in accordance with the credit guidelines of
Dreyfus/Laurel's Board of Directors.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
portfolio securities is deemed by Dreyfus to be inconvenient or
disadvantageous. A reverse repurchase agreement is a transaction whereby the
Fund transfers possession of a portfolio security to a bank or broker-dealer
in return for a percentage of the portfolio security's market value. The Fund
retains record ownership of the security involved including the right to
receive interest and principal payments. At an agreed upon future date, the
Fund repurchases the security by paying an agreed upon purchase price plus
interest. Cash or liquid high-grade debt obligations of the Fund equal in
value to the repurchase price including any accrued interest will be
maintained in a segregated account while a reverse repurchase agreement is in
effect.
When-Issued Securities. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that delivery
and payment for the securities normally will take place approximately 7 to 15
days after the date the buyer commits to purchase them. The payment obligation
and the interest rate that will be received on securities purchased on a
when-issued basis are each fixed at the time the buyer enters into the
commitment. 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 or dispose of the commitment before the settlement date if
it is deemed advisable as a matter of investment strategy. Cash or marketable
high-grade debt securities equal to the amount of the above commitments will
be segregated on the Fund's records. For the purpose of determining the
adequacy of these securities the segregated securities will be valued at
market. If the market value of such securities declines, additional cash or
securities will be segregated on the Fund's records on a daily basis so that
the market value of the account will equal the amount of such commitments by
the Fund.
Securities purchased on a when-issued basis and the securities held by
the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value of
such securities will fluctuate inversely to changes in interest rates -- i.e.,
they will appreciate in value when interest rates decline and decrease in
value when interest rates rise. Therefore, if in order to achieve higher
interest income the Fund remains substantially fully invested at the same time
that it has purchased securities on a "when-issued" basis, there will be a
greater possibility of fluctuation in the Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated securities,
the sale of other securities or, and although it would not normally expect to
do so, from the sale of the when-issued securities themselves (which may have
a market value greater or less than the Fund's payment obligation). The sale
of securities to meet such obligations carries with it a greater potential for
the realization of capital gains, which are subject to federal income taxes.
Loans of Fund Securities. The Fund has authority to lend its portfolio
securities provided (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or cash equivalents adjusted
daily to make a market value at least equal to the current market value of
these securities loaned; (2) the Fund may at any time call the loan and regain
the securities loaned; (3) the Fund will receive any interest or dividends
paid on the loaned securities; and (4) the aggregate market value of
securities loaned will not at any time exceed one-third of the total assets
of the Fund. In addition, it is anticipated that the Fund may share with the
borrower some of the income received on the collateral for the loan or that
it will be paid a premium for the loan. In determining whether to lend
securities, Dreyfus considers all relevant factors and circumstances including
the creditworthiness of the borrower.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the federal
securities laws and generally is sold to investors who agree that they are
purchasing the paper for an investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper is normally resold to other investors through or with the
assistance of the issuer or investment dealers who make a market in Section
4(2) paper, thus providing liquidity. Pursuant to guidelines established by
Dreyfus/Laurel's Board of Directors, Dreyfus may determine that Section 4(2)
paper is liquid for the purposes of complying with the Fund's investment
restriction relating to investments in illiquid securities.
INVESTMENT LIMITATIONS
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations or its investment
objective without the consent of: (a) 67% or more of the shares present at a
meeting of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less. The
Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be invested
in the securities of one or more issuers conducting their principal activities
in the same industry. (For purposes of this limitation, U.S. Government
securities, and state or municipal governments and their political subdivisions
are not considered members of any industry. ln addition, this limitation does
not apply to investments in domestic banks, including U.S. branches of foreign
banks and foreign branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") except that (a) the Fund may
borrow money in an amount not exceeding one-third of the Fund's total assets
at the time of such borrowings, and (b) the Fund may issue multiple classes
of shares. The purchase or sale of futures contracts and related options shall
not be considered to involve the borrowing of money or issuance of senior
securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than
5% of the Fund's total assets would be invested in the securities of that
issuer, or (b) the Fund would hold more than 10% of the outstanding voting
securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate,
including mortgage loans, or securities of companies that engage in real
estate business or invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contacts and other
similar instruments.
The Fund may:
Notwithstanding any other fundamental investment policy or limitation,
invest all of its investable assets in securities of a single open-end
management investment company with substantially the same investment
objectives, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory policy.
1. The Fund shall not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the securities
sold short, and provided that transactions in futures contracts are not deemed
to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Directors of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the security of such issuer,
together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have been
in operation for less than three years, if by reason thereof, the value of the
Fund's investment in such securities would exceed 5% of the Fund's total
assets. For purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as the issuer
of a security.
6. The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, time deposits with maturities in excess
of seven days and other securities which are not readily marketable. For
purposes of this limitation, illiquid securities shall not include Section
4(2) paper and securities which may be resold under Rule 144A under the
Securities Act of 1933, provided that the Board of Directors, or its delegate,
determines that such securities are liquid based upon the trading markets for
the specific security.
7. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets and except to the extent otherwise permitted by the 1940
Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York Stock Exchange
("NYSE") or American Stock Exchange (for purposes of this limitation, warrants
acquired by the Fund in units or attached to securities will be deemed to have
no value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate investment
in such classes of securities would exceed 5% of its total assets except that:
(a) this limitation shall not apply to standby commitments, and (b) this
limitation shall not apply to the Fund's transactions in futures contracts and
related options.
As an operating policy, the Fund will not invest more than 25% of the
value of the Fund's total assets, at the time of such purchase in domestic
banks, including U.S. branches of foreign banks and foreign branches of U.S.
banks. The Board of Directors may change this policy without shareholder
approval. Notice will be given to shareholders if this policy is changed by
the Board.
CONTROLLING SHAREHOLDERS
The Dreyfus/Laurel Funds. Inc.
Mellon Bank Corporation, a Pennsylvania corporation registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended, owned
of record, through its direct and indirect subsidiaries, more than 25% of the
issued and outstanding Class R shares of the Fund as of March 31, 1995, and
is, as a consequence, deemed to be a controlling shareholder of the Fund as
that term is defined under the 1940 Act. The address of Mellon Bank
Corporation is: Mellon Bank Corporation, Mutual Fund Department, 3 Mellon Bank
Center, Pittsburgh, PA 15259.
DIRECTORS AND OFFICERS
Dreyfus/Laurel has a Board composed of thirteen Directors which
supervises Dreyfus/Laurel's investment activities and reviews contractual
arrangements with companies that provide the Fund with services. The
following lists the Directors and officers and their positions with
Dreyfus/Laurel and their present and principal occupations during the past
five years. Each Director who is an "interested person" of Dreyfus/Laurel,
as defined in the 1940 Act, is indicated by an asterisk. Each of the
Directors also serves as a Trustee of The Dreyfus/Laurel Funds Trust, The
Dreyfus/Laurel Investment Series and The Dreyfus/Laurel Tax-Free Municipal
Funds (collectively, "The Dreyfus/Laurel Family of Funds").
o+RUTH MARIE ADAMS. Director of The Dreyfus/Laurel Funds, Inc.; Professor
of English and Vice President Emeritus, Dartmouth College; Senator,
United Chapters of Phi Beta Kappa; Trustee, Woods Hole Oceanographic
Institution. Age: 79 years old. Address: 1026 Kendal Lyme Road,
Hanover, New Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of The Dreyfus/Laurel Funds, Inc.; Director and Chairman,
Massachusetts Business Development Corp.; Director, Boston Mutual
Insurance Company; Director and Vice Chairman of the Board, Home
Owners Federal Savings and Loan (prior to May 1990). Age: 76 years
old. Address: Massachusetts Business Development Corp., One Liberty
Square, Boston, Massachusetts 02109.
o*JOSEPH S. DiMARTINO. Director of the Company since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. For more than five
years prior thereto, he was President and a director of the Manager
and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 1994, the Fund's distributor. In addition, for more than five
years prior to January 1995 and until August 1994, he was Chief
Operating Officer of Dreyfus and from August 1994 to December 31,
1994, he was a director of Mellon Bank Corporation. Mr. DiMartino is
a director and former Treasurer of the Muscular Dystrophy
Association; a trustee of Bucknell University; Chairman of the Board
of Directors of Noel Group, Inc. and a director of HealthPlan
Corporation. Age: 51 years old. Address: 200 Park Avenue, New
York, New York 10166.
o+JAMES M. FITZGIBBONS. Director of The Dreyfus/Laurel Funds, Inc.;
President and Director, Amoskeag Company; Chairman, Howes Leather
Company, Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance
Company; Director, Barrett Resources, Inc. Age: 59 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of The Dreyfus/Laurel Funds, Inc.; Partner,
Reed, Smith, Shaw & McClay (law firm). Age: 65 years old. Address:
204 Woodcock Drive, Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of The Dreyfus/Laurel Funds, Inc.;
Director, Chairman of the Board and Director, Rexene Corporation;
Director, Calgon Carbon Corporation; Director, National Picture Frame
Corporation; Chairman of the Board and Director, Tetra Corporation
1991-1993; Director, Medalist Corporation 1992-1993; From 1988-1989
Director, Rexene Corporation. Age: 71 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of The Dreyfus/Laurel Funds, Inc.; Director,
The Boston Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. and Florida Hospitality Group;
Managing Partner, Himmel/MKDG, Franklin Federal Partners, Reston Town
Center Associates and Grill 23 & Bar. Age: 47 years old. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o+ARCH S. JEFFERY. Director of The Dreyfus/Laurel Funds, Inc.; Financial
Consultant. Age: 76 years old. Address: 1817 Foxcroft Lane,
Allison Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of The Dreyfus/Laurel Funds, Inc.;
President and CEO, LDG Management Company Inc.; CEO, LDG Reinsurance
Underwriters, SRRF Management Inc. and Medical Reinsurance
Underwriters Inc. Age: 46 years old. Address: 401 Edgewater Place,
Wakefield, Massachusetts 01880.
o+ROBERT D. MCBRIDE. Director of The Dreyfus/Laurel Funds, Inc.; Director,
Chairman and CEO, McLouth Steel; Director, Salem Corporation. Age:
66 years old. Address: 15 Waverly Lane, Grosse Pointe Farms,
Michigan 48236.
o+JOHN L. PROPST. Director of The Dreyfus/Laurel Funds, Inc.; Of Counsel,
Reed, Smith, Shaw & McClay (law firm). Age: 79 years old. Address:
5521 Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o+JOHN J. SCIULLO. Director of The Dreyfus/Laurel Funds, Inc.; Dean
Emeritus and Professor of Law, Duquesne University Law School;
Director, Urban Redevelopment Authority of Pittsburgh. Age: 62
years old. Address: 321 Gross Street, Pittsburgh, Pennsylvania
15224.
o+ROSLYN M. WATSON. Director of The Dreyfus/Laurel Funds, Inc.; Principal,
Watson Ventures, Inc., prior to February, 1993; Real Estate
Development Project Manager and Vice President, The Gunwyn Company.
Age: 44 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
#MARIE E. CONNOLLY. President and Treasurer of The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Vice President of The Dreyfus/Laurel Funds, Inc.
(March 1994 to September 1994); President, Funds Distributor, Inc.
(since 1992); Treasurer, Funds Distributor, Inc. (July 1993 to April
1994); COO, Funds Distributor, Inc. (since April 1994); Director,
Funds Distributor, Inc. (since July 1992); President, COO and
Director, Premier Mutual Fund Services, Inc. (since April 1994);
Senior Vice President and Director of Financial Administration, The
Boston Company Advisors, Inc. (December 1988 to May 1993). Address:
One Exchange Place, Boston, Massachusetts 02109.
#FREDERICK C. DEY. Vice President of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, Premier Mutual Fund Services, Inc. (since
August 1994); Vice President, Funds Distributor, Inc. (since August
1994); Fundraising Manager, Swim Across America (October 1993 to
August 1994); General Manager, Spring Industries (August 1988 to
October 1993). Address: Premier Mutual Fund Services, Inc., 200 Park
Avenue New York, New York 10166.
#ERIC B. FISCHMAN. Vice President of The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Vice President and Associate General Counsel, Premier Mutual Fund
Services, Inc. (Since August 1994); Vice President and Associate
General Counsel, Funds Distributor, Inc. (since August 1994); Staff
Attorney, Federal Reserve Board (September 1992 to June 1994); Summer
Associate, Venture Economics (May 1991 to September 1991); Summer
Associate, Suffolk County District Attorney (June 1990 to August
1990). Address: Premier Mutual Fund Services, Inc., 200 Park Avenue,
New York, New York 10166.
LESLIE M. GAYNOR. Assistant Treasurer of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
RICHARD W. HEALEY. Vice President of The Dreyfus/Laurel Funds Inc., The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Tax-Free
Municipal Funds Trust and The Dreyfus/Laurel Funds Trust (since March
1994); Senior Vice President, Funds Distributor, Inc. (since March
1993); Vice President, The Boston Company Inc., (March 1993 to May
1993); Vice President of Marketing, Calvert Group (1989 to March
1993); Fidelity Investments (prior to 1989). Address: One Exchange
Place, Boston, Massachusetts 02109.
#JOHN E. PELLETIER. Vice President and Secretary of The Dreyfus/Laurel
Funds, Inc.; The Dreyfus/Laurel Investment Series, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior Vice
President, General Counsel and Secretary, Premier Mutual Fund
Services, Inc. (since August 1994); Counsel, The Boston Company
Advisors, Inc. (February 1992 to March 1994); Associate, Ropes & Gray
(August 1990 to February 1992); Associate, Sidley & Austin (June 1989
to August 1990). Address: One Exchange Place, Boston, Massachusetts
02109.
____________________________________
* "Interested person" of The Dreyfus/Laurel Funds, Inc., as defined in the
1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by The Dreyfus Corporation.
The officers and Directors of Dreyfus/Laurel as a group owned
beneficially less than 1% of the total shares of the Fund outstanding as of
March 13, 1995.
No officer or employee of Premier (or of any parent or subsidiary
thereof) receives any compensation from Dreyfus/Laurel for serving as an
officer or Director of Dreyfus/Laurel. In addition, no officer or employee
of The Dreyfus Corporation (or of any parent or subsidiary thereof) serves
as an officer or Director of Dreyfus/Laurel. The Dreyfus/Laurel Family of
Funds pays each Trustee/Director who is not an officer or employee of
Premier or any of its affiliates, $27,000 per annum (and an additional
$75,000 for the Chairman of the Board of Directors/Trustees of The
Dreyfus/Laurel Family of Funds). In addition, The Dreyfus/Laurel Family of
Funds pays each Trustee/Director $ 1,000 per joint Dreyfus/Laurel Family of
Funds meeting attended, plus $750 per joint Dreyfus/Laurel Family of Funds
Audit Committee meeting attended, and reimburses each Trustee/Director for
travel and out-of-pocket expenses. For the year ended October 31, 1994 the
fees for meetings and expenses totaled $25,897.
For the fiscal year ended October 31, 1994, the aggregate amount of
fees and expenses received by each Director from the Company and all other
Funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
- -------------------- ------------ ------------- ---------- -------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $19,685 None None $ 37,500
Francis P. Brennan* 52,809 None None 112,500
Joseph S. DiMartino** N/A N/A N/A N/A
James M. Fitzgibbons 17,685 None None 31,750
J. Tomlinson Fort 7,500 None None 7,500
Arthur L. Goeschel 26,185 None None 32,500
Kenneth A. Himmel 18,685 None None 35,750
Arch S. Jeffrey 27,185 None None 33,500
Steven J. Lockwood 18,685 None None 35,750
Robert D. McBride 27,185 None None 33,500
John L. Propst 27,185 None None 33,500
John J. Sciullo 27,185 None None 33,500
Roslyn M. Watson 19,685 None None 36,750
# Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $10,876 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by The Dreyfus/Laurel
Fund Family to be Chairman of the Board.
** Joseph S. DiMartino was not a director of the Company as of October 31, 1994.
</TABLE>
INVESTMENT MANAGEMENT AND OTHER SERVICES
Advisory Services. Dreyfus serves as the investment manager for the
Funds pursuant to an Investment Management Agreement with Dreyfus/Laurel
dated April 4, 1994 ("Management Agreement"), transferred from Mellon Bank,
N.A. (One Mellon Bank Center, Pittsburgh, PA 15258) ("Mellon Bank"), to
Dreyfus effective October 17, 1994. Dreyfus is a wholly-owned subsidiary
of Mellon Bank. Pursuant to the Investment Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide investment
advisory, administrative, custody, fund accounting and transfer agency
service to the Fund. As manager, Dreyfus manages the Fund by making
investment decisions based on the Fund's investment objective, policies and
restrictions. For these services, the Fund pays a fee to Dreyfus at the
rates stated in the Prospectus.
The Fund commenced operations on April 6, 1994. For the fiscal period
ended October 31, 1994, the Fund paid total management fees of $2,415.
Distribution Plan. The SEC has adopted Rule 12b-1 under the 1940 Act
(the "Rule") regulating the circumstances under which investment companies
such as Dreyfus/Laurel may, directly or indirectly, bear the expenses of
distributing their shares. The Rule defines distribution expenses to
include expenditures for "any activity which is primarily intended to
result in the sale of fund shares." The Rule, among other things, provides
that an investment company may bear such expenses only pursuant to a plan
adopted in accordance with the Rule. With respect to the Investor Class
shares of the Fund, Dreyfus/Laurel has adopted a Distribution Plan
("Plan"), and may enter into Selling Agreements with Service Agents
pursuant to the Plan.
Under the Plan, Investor Class shares of the Fund may spend annually
up to 0.25% of the average of its net asset values for costs and expenses
incurred in connection with the distribution of, and shareholder servicing
with respect to, the Fund's Investor Class shares.
The Plan provides that a report of the amounts expended under the
Plan, and the purposes for which such expenditures were incurred, must be
made to Dreyfus/Laurel Directors for their review at least quarterly. In
addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
Dreyfus/Laurel (as defined in the 1940 Act) and who do not have any direct
or indirect financial interest in the operation of the Plan, cast in person
at a meeting called for the purpose of considering such amendments. The
Plan is subject to annual approval by the entire Board of Directors and by
the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Plan, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The Plan
is terminable, as to a class of shares, at any time by vote of a majority
of the Directors who are not interested persons and have no direct or
indirect financial interest in the operation of the Plan or by vote of the
holders of a majority of the outstanding shares of such class of the Fund.
Custodian, Fund Accountant. Mellon Bank serves as Custodian and Fund
Accountant with respect to the Fund. Mellon Bank provides portfolio and
shareholder recordkeeping required for regulatory and financial reporting
purposes. Mellon Bank, as Custodian and Fund Accountant, has no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Prior to the effectiveness of the Management Agreement, for its
services as custodian and fund accountant Mellon Bank was paid an annual
fee of $30,000 per portfolio and, for all portfolios, an annual
administrative account maintenance fee of $ 10,000, an annual on-line fee
of $3,600, an asset-based fee of .02% of the first $500 million of
Dreyfus/Laurel's net assets and .01% of net assets over $500 million, plus
a specified transaction fee for each transaction.
Transfer and Dividend Disbursing Agent. The Shareholder Services
Group, Inc. ("TSSG"), a subsidiary of First Data Corporation, is the Fund's
transfer and dividend disbursing agent. TSSG has no part in determining
the investment policies of the Fund or which securities are to be purchased
or sold by the Fund.
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; Sub-Administrator. Premier Mutual Fund Services,
Inc., One Exchange Place, Boston, Massachusetts 02109, a wholly-owned
subsidiary of Institutional Administration Services, Inc., serves as the
Fund's distributor pursuant to an agreement with Dreyfus effective October
17, 1994. Premier also acts as distributor for other funds in The
Dreyfus/Laurel Family of Funds and for certain other investment companies.
Premier also serves as Sub-Administrator ("Sub-Administrator") to the Funds
pursuant to a Sub-Administration Agreement effective October, 17, 1994.
Dreyfus TeleTransfer Privilege--Investor Shares. Dreyfus TeleTransfer
purchase orders may be made between the hours of 8:00 a.m. and 4:00 p.m.,
New York time, on any business day that The Shareholder Services Group,
Inc., the Fund's transfer and dividend disbursing agent (the "Transfer
Agent"), and the New York Stock Exchange ("NYSE") are open. Such purchases
will be credited to the shareholder's Fund account on the next bank
business day. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the
Account Application or Shareholder Services Form on file. If the proceeds
of a particular redemption are to be wired to an account at any other bank,
the request must be in writing and signature-guaranteed. See "Redemption
of Fund Shares--Dreyfus TeleTransfer Privilege--Investor Shares."
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.
REDEMPTION OF 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 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 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. Redemption
proceeds, if wired, must be in the amount of $1,000 or more and will be
wired to the investor's account at the bank of record designated in the
investor's file at the Transfer Agent, if the investor's bank is a member
of the Federal Reserve System, or to a correspondent bank if the investor's
bank is not a member. 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 a described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing shares
of a Fund 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 NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification. For
more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege--Investor Shares. Investors should be
aware that if they have selected the Dreyfus TeleTransfer Privilege, any
request for a wire redemption will be effected as a Dreyfus TeleTransfer
transaction through the ACH system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Fund Shares--Dreyfus
TeleTransfer Privilege--Investor Shares."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, 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 SEC. In the
case of requests for redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In this 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 incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE 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 SEC 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 SEC by order may permit
to protect the Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. Shares of any Class of a Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such 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 other 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.
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 the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500 invested
among 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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Fund, shares
of the same Class of another fund in 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 the investor's 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 Dreyfus 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 Dreyfus 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 from the Distributor. The Funds reserve the right to reject any
exchange request in whole or in part. The Fund exchange service or Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal. 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. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. There is a
service charge of $.50 for each withdrawal check. Automatic Withdrawal may
be terminated at any time by the investor, the Funds or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from a Fund in shares of the same Class of certain
other funds in 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
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Funds make
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Funds
make 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 shares of a Fund 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 on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $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.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in the business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with the Fund, and in
providing services to the Fund as custodian and fund accountant, as well as
Dreyfus' investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that the activities
contemplated under these arrangements are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities the Directors would seek an alternative provider(s) of such
services.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with the Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. The Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to
the benefits received. Dreyfus also places transactions for other accounts
that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to
Dreyfus/Laurel's procedures adopted in accordance with Rule 17e-1 of the
1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Directors periodically review Dreyfus' performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the Fund and review the prices paid by the Fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment adviser, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment adviser to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
For the period ended October 31, 1994, the Fund paid no brokerage
commissions.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year. The Fund
commenced operations on April 6, 1994, and its portfolio turnover rate for
the period ended October 31, 1994 was 0%.
NET ASSET VALUE
The Fund's net asset value per share is calculated on each business
day. A business day is any day on which the NYSE is open for business. The
Fund determines net asset value as of the close of business of the regular
session of the NYSE (currently 4:00 p.m. Eastern time).
Securities listed or traded on a stock exchange are valued at the
latest sale price. If no sale is reported, the mean of the latest bid and
asked prices is used. Securities traded over-the-counter are priced at the
mean of the latest bid and asked prices but will be valued at the last sale
price if required by regulations of the SEC. When market quotations are
not readily available, securities and other assets are valued at fair value
as determined in good faith in accordance with procedures established by
the Board of Directors.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board
of Directors.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund computes average annual total return by using a standardized
method required by the SEC Average annual total return is computed by
finding the average annual compounded rates of return on a hypothetical
initial investment of $1,000 over the periods that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P(1+T)n = ERV
Where: P = $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value of a $1,000 payment made
at the beginning of the 1, 5 or 10 year periods
at the end of the year or period.
The calculation assumes (1) the deduction of the maximum sales load
(and any other charges deducted, if any, from payment) and all recurring
fees that are charged to all shareholder accounts, and (2) the reinvestment
of all dividends and other distributions by the Fund at the price stated in
the Prospectus on the reinvestment dates during the period.
Aggregate total return (expressed as a percentage) for Investor and
Class R shares of the Fund for the periods were:
Aggregate Total Return for the Periods Ended October 31, 1994
-------------------------------------------------------------
1 Year 5 Years 10 Years Inception
------ ------- -------- ---------
Short-Term Government Securities Fund
(Investor Class) - - - 1.84%
Short-Term Government Securities Fund
(Class R) - - - 2.04%
The Fund may also advertise yields from time to time. Yields are
computed by using standardized methods of calculation required by the SEC.
Yields are calculated by dividing the net investment income per share
earned during a 30-day (or one month) period by the maximum offering price
per share on the last day of the period, according to the following
formula:
YIELD = 2[(a-b+1)6-1]
-------------
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of
the period.
The 30-day yield for the Fund for the period ended October 31, 1994:
Short-Term Government Securities Fund:
(Investor Shares) 3.97%
(Class R) 3.71%
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Morgan Stanley European Index; (ii) the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500"), the Dow Jones Industrial Average ("DJIA"),
or other appropriate unmanaged domestic or foreign indices of performance
of various types of investments so that investors may compare the Fund's
results with those of indices widely regarded by investors as
representative of the securities markets in general; (iii) other groups of
mutual funds tracked by Lipper Analytical Services, a widely used
independent research Firm which ranks mutual funds by overall performance,
investment objectives and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or
other criteria; (iv) the Consumer Price Index (a measure of inflation) to
assess the real rate of return from an investment in the Fund; and (v)
products managed by a universe of money managers with similar country
allocation and performance objectives. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions or
administrative and management costs and expenses.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Other Distributions and Taxes."
The term "regulated investment company" does not imply the supervision
of management or investment practices or policies by a government agency.
General. To qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the
Fund -- which is treated as a separate corporation for federal tax
purposes-- must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gain and net gains from
certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, futures, or
forward contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were held
for less than three months - options or futures (other than those on
foreign currencies), or foreign currencies (or options, futures or forward
contacts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and futures with respect
thereto) ("Short-Short Limitation"); (3) at the close of each quarter of
the Fund's taxable year, at least 50% of the value of its total assets must
be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with those other securities
limited, in respect of any one issuer, to an amount that does not exceed 5%
of the value of the Fund's total assets and that does not represent more
than 10% of the issuer's outstanding voting securities; and (4) at the
close of each quarter of the Fund's taxable year, not more than 25% of the
value its total assets may be invested in securities (other than U.S.
government securities or securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to the shareholders for the
year in which that December 31 falls.
If Fund shares are sold at a loss after being held six months or less,
the loss will be treated as a long-term, instead of short-term, capital
loss to the extent of capital gain distributions on those shares.
Investors also should be aware that if shares are purchased shortly before
the record date for any dividend or other distribution, the shareholder
will pay full price for the shares and receive some portion of the price
back as a taxable distribution.
If the Fund retains net capital gain (the excess of net long-term
capital gain over net short-term capital loss) for reinvestment, although
it has no plans to do so, it may elect to treat such amounts as having been
distributed to its shareholders. As a result, the shareholders would be
subject to tax on the undistributed net capital gain, would be able to
claim their proportionate share of the federal income tax paid by the Fund
on that gain as a credit against their own federal income tax liabilities,
and would be entitled to an increase in their basis for their Fund shares.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a non-
resident alien individual, a foreign trust or estate, a foreign corporation
or a foreign partnership (a "foreign shareholder") depends on whether the
income from the Fund is "effectively connected" with a U.S. trade or
business carried on by the shareholder, as discussed generally below.
Special U.S. federal income tax rules that differ from those described
below may apply to certain foreign persons who invest in the Fund. For
example, the tax consequences to a foreign shareholder entitled to claim
the benefits of an applicable tax treaty may be different from those
described below. Foreign shareholders are advised to consult their own tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If a foreign
shareholder's income from the Fund is not effectively connected with a U.S.
trade or business carried on by the foreign shareholder, distributions of
the Fund's investment company taxable income generally will be subject to
U.S. federal withholding tax of 30% (or lower treaty rate) on the gross
amount of the distribution. Foreign shareholders also may be subject to
U.S. federal withholding tax on deemed income resulting from any election
made by the Fund regarding foreign taxes paid by it as paid by its
shareholders (see discussion above), but foreign shareholders will not be
able to claim a credit or deduction for the foreign taxes treated as having
been paid by them.
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain, as well as amounts
retained by the Fund that are designated as undistributed capital gains,
generally will not be subject to federal income tax unless the foreign
shareholder is a non-resident alien individual and is physically present in
the United States for more than 182 days during the taxable year. However,
this rule only applies in exceptional cases, because any individual present
in the United States for more than 182 days during the taxable year
generally is treated as a resident for federal income tax purposes on his
worldwide income at the graduated rates applicable to U.S. citizens, rather
than the 30% federal withholding tax rate. In the case of certain foreign
shareholders, the Fund may be required to withhold federal income tax at a
rate of 31% from capital gain distributions and the gross proceeds from a
redemption of Fund shares unless the shareholder furnishes the Fund with a
certificate regarding the shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's income from the Fund is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that
shareholder on the disposition of Fund shares will be subject to federal
income tax at the graduated rates applicable to U.S. citizens or domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to U.S. federal estate tax on their U.S. situs property, such as
shares of the Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, the Fund may be subject to the
tax laws of such states or localities. Shareholders are advised to consult
their tax advisers concerning the application of state and local taxes.
Pennsylvania Personal Property Tax Exemption. Dreyfus/Laurel has
obtained a Certificate of Authority to do business as a foreign corporation
in Pennsylvania. In the opinion of counsel, shares of the Fund are exempt
from Pennsylvania personal property taxes.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1994,
including notes to the financial statements and supplementary information
and the Report of Independent Auditors, are included in the Annual Report
to shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements from the Annual Report,
including the notes thereto and report of independent auditors, are
incorporated herein by reference.
OTHER INFORMATION
Auditor. KPMG Peat Marwick LLP was appointed by the Directors to serve
as the Fund's independent auditors for the year ending October 31, 1994,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of The Funds.
Legal Counsel. Kirkpatrick & Lockhart, 1800 M Street, N.W., South
Lobby - 9th Floor, Washington, D.C. 20036, has passed upon the legality of
the shares offered by the Prospectus and this Statement of Additional
Information.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Debt Instruments Ratings
Moody's Investors Service. Inc. (Moody's):
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or
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 are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa Securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment attributes and
are considered "upper medium grade obligations."
Those Bonds in the Aa and A group which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa 1 and A 1.
Standard & Poor's Ratings Group ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
Plus (+) or Minus (-): The AA rating may be modified by the addition
of a plus or minus sign to show relative standing within the AA rating
category.
Commercial Paper Ratings
Moody's:
Commercial paper rated Prime by Moody's is based upon its evaluation
of many factors, including: (1) management of the issuer; (2) the issuer's
industry or industries and the speculative-type risks which may be inherent
in certain areas; (3) the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term
debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the
issue; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-l,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-l repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions in
well established industries; (2) high rates of return on funds employed;
(3) conservative capitalization structures with moderate reliance on debt
and ample asset protection; (4) broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and (5) well
established access to a range of financial markets and assured sources of
alternative liquidity.
Prime-2 indicates a strong capacity for repayment of short-term
promissory obligations. This will normally 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 alternative liquidity is maintained.
S&P:
Commercial paper rated by S&P has the following characteristics:
liquidity ratios are adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's
industry is well established and the issuer has a strong position within
the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-l, A-2, or A-3.
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 (+) sign 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.
Fitch's Investors Service. Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current appraisal of
the degree of assurance of timely payment of such debt. An appraisal
results in the rating of an issuer's paper as F-l, F-2, F-3, or F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
F-2 -- Commercial paper issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than those issues
rated F-l.
Duff and Phelps, Inc.:
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers' acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is also
rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is
the level of an obligor's reliance on short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings is the
refinement of the traditional '1' category. The majority of short-term debt
issuers carry the highest rating, yet quality differences exist within that
tier. As a consequence, Duff & Phelps has incorporated gradations of '1+'
(one plus) and '1-' (one minus) to assist investors in recognizing those
differences.
Duff 1+ --Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1 --Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1- --High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Good Grade
Duff 2--Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
Satisfactory Grade
Duff 3--Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
Non-Investment Grade
Duff 4--Speculative investment characteristics. Liquidity is not
sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
Default
Duff 5--Issuer failed to meet scheduled principal and/or interest
payments.
IBCA, Inc.:
In addition to conducting a careful review of an institution's reports
and published figures, IBCA's analysts regularly visit the companies for
discussions with senior management. These meetings are fundamental to the
preparation of individual reports and ratings. To keep abreast of any
changes that may affect assessments, analysts maintain contact throughout
the year with the management of the companies they cover.
IBCA's analysts speak the languages of the countries they cover, which
is essential to maximize the value of their meetings with management and to
properly analyze a company's written materials. They also have a thorough
knowledge of the laws and accounting practices that govern the operations
and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning our
ratings. Before dispatch to subscribers, a draft of the report is submitted
to each company to permit correction of any factual errors and to enable
clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently for
institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time, the
company is informed of the ratings as a matter of courtesy, but not for
discussion.
A1+--Obligations supported by the highest capacity for timely
repayment.
A1--Obligations supported by a very strong capacity for timely
repayment.
A2--Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic or financial conditions.
B1--Obligations supported by an adequate capacity for timely
repayment. Such capacity is more susceptible to adverse changes in
business, economic, or financial conditions than for obligations in higher
categories.
B2--Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial
conditions.
C1--Obligations for which there is an inadequate capacity to ensure
timely repayment.
D1--Obligations which have a high risk of default or which are
currently in default.
THE DREYFUS/LAUREL FUNDS, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
April 10, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with each of the Fund's
current Prospectus, dated April 10, 1995, as it may be revised from time to
time. The Funds listed below are separate portfolios of The Dreyfus/Laurel
Funds, Inc., ("Dreyfus Laurel") an open-end, diversified management
investment company known as a mutual fund. Shares of the Funds are offered
without sales commissions. To obtain a copy of Fund's Prospectus, please
write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
Dreyfus/Laurel Prime Money Market Fund ("Prime Fund")
Dreyfus/Laurel U.S. Treasury Money Market Fund ("U.S. Treasury Fund")
Dreyfus/Laurel Tax-Exempt Money Market Fund ("Tax-Exempt Fund")
Dreyfus/Laurel Institutional Prime Money Market Fund ("Institutional
Prime Fund")
Dreyfus/Laurel Institutional Government Money Market Fund
("Institutional Government Fund")
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund
("Institutional U.S. Treasury Fund")
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
("Institutional Treasury Only Fund")
Dreyfus/Laurel Institutional Short-Term Bond Fund ("Institutional
Short-Term Bond Fund")
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Investment Information and Risk Factors. . . . . . . . . . . . . . . . . . .3
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Controlling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . .16
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Management Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .25
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . .25
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Federal Law Affecting Mellon Bank. . . . . . . . . . . . . . . . . . . . . .30
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Performance Calculations . . . . . . . . . . . . . . . . . . . . . . . . . .33
Dividends, Other Distributions and Taxes . . . . . . . . . . . . . . . . . .34
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Custodian, Fund Accountant (All Funds) and Transfer and
Dividend Disbursing Agent (All Funds). . . . . . . . . . . . . . . . . . . .39
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
GENERAL INFORMATION
Tax-Exempt Fund. The Tax-Exempt Fund may invest more than 25% of its
assets in industrial development bonds, in participation interests therein
issued by banks, and in municipal securities and other obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
When the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from those of the government
creating the issuing entity and a security is backed only by the assets or
revenues of the entity, the entity will be deemed to be the sole issuer of
the security. Similarly, in the case of an industrial development bond
backed only by the assets or revenues of the non-governmental user, the
non-governmental user will be deemed to be the sole issuer of the bond.
The Tax-Exempt Fund will invest in securities, including the
foregoing types of securities, only if the investments are of a type which
would satisfy the requirements of Rule 2a-7 promulgated under the
Investment Company Act of 1940 (the "1940 Act") and only to the extent
permitted by the Tax-Exempt Fund's investment limitations. Accordingly, if
the creating agency, authority, instrumentality or other political
subdivision or some other entity, such as an insurance company or other
corporate obligor, guarantees a security purchased by the Tax-Exempt Fund
or a bank issues a letter of credit in support of a security purchased by
the Tax-Exempt Fund, the Fund will not purchase any security which, as to
75% of the value of all securities held by the Fund, would result in the
value of all securities issued or guaranteed by a single guarantor or
issuer of letters of credit exceeding 10% of the total value of the Fund's
assets.
The achievement of the Tax-Exempt Fund's investment objectives is
dependent in part on the continuing ability of the issuers of municipal
securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Municipal securities
historically have not been subject to registration with the Securities and
Exchange Commission ("SEC"), although there have been proposals which would
require registration in the future.
Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors. In addition, the obligations of such issuers
may become subject to laws enacted in the future by Congress or state
legislatures, or referenda extending the time for payment of principal
and/or interest, or imposing other constraints upon enforcement of such
obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions,
the ability of any issuer to pay, when due, the principal of and interest
on its municipal securities may be materially affected.
INVESTMENT INFORMATION AND RISK FACTORS
Municipal Securities (Tax-Exempt Fund). The municipal securities in
which the Tax-Exempt Fund will invest are limited to those obligations
which at the time of purchase:
1. are backed by the full faith and credit of the United States; or
2. are municipal notes rated MIG-1/VMIG-1 or MIG-2/VMIG-2 by Moody's
Investors Service, Inc. ("Moody's") or SP-1 or SP-2 by Standard &
Poor's Ratings Group ("S&P"), or, if not rated, are of equivalent
investment quality as determined by Dreyfus under guidelines
approved by the Board of Directors or are obligations of an
issuer which has outstanding municipal bonds rated Aa or higher
by Moody's or Aa or higher by S&P; or
3. are municipal bonds rated Aa or higher by Moody's or AA or higher
by S&P or, if not rated, are of equivalent investment quality as
determined by The Dreyfus Corporation ("Dreyfus") under
guidelines approved by the Board of Directors or are obligations
of an issuer which has outstanding municipal notes rated
MIG-1/VMIG-1 or MIG-2/VMIG-2 by Moody's or SP-1 or SP-2 by S&P;
or
4. are other types of municipal securities, provided that such
obligations are rated Prime-2 or higher by Moody's or A-2 or
higher by S&P or determined by Dreyfus to be of comparable
quality pursuant to guidelines approved by the Board of Directors
(see the Appendix for a description of these ratings.)
The municipal securities in which the Tax-Exempt Fund may invest
include municipal notes, short-term municipal bonds and municipal leases.
Municipal notes are generally used to provide for the issuer's short-term
capital needs and generally have maturities of one year or less. Examples
include tax anticipation and revenue anticipation notes which generally are
issued in anticipation of various seasonal revenues, bond anticipation
notes, construction loan notes and tax exempt commercial paper. Short-term
municipal bonds may include "general obligation bonds," which are secured
by the issuer's pledge of its faith, credit and taxing power for payment of
principal and interest, "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise or other source and
"industrial revenue bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial
and commercial facilities. "Municipal leases," which may take the form of
a lease or an installment purchase or conditional sale contract, are issued
by state and local governments and authorities to acquire a wide variety of
equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets.
Variable Rate Obligations (Tax-Exempt Fund). The interest rates
payable on certain municipal securities, including municipal leases, in
which the Tax-Exempt Fund may invest, called "variable rate" obligations,
are not fixed and may fluctuate based upon changes in market rates. The
interest rate payable on a variable rate municipal security is adjusted
either at predesignated periodic intervals or whenever there is a change in
the market rate to which the security's interest rate is tied. Other
features may include the right whereby the Tax-Exempt Fund may demand
prepayment of the principal amount of the obligation prior to its stated
maturity and the right of the issuer to prepay the principal amount prior
to maturity. The main benefit of variable rate municipal securities is
that the interest rate adjustment minimizes changes in the market value of
the obligation. As a result, the purchase of variable rate municipal
securities enhances the ability of the Tax-Exempt Fund to maintain a stable
net asset value per share and to sell an obligation prior to maturity at a
price approximating the full principal amount of the obligation. The
payment of principal and interest by issuers of certain municipal
securities purchased by the Tax-Exempt Fund may be guaranteed by letters of
credit or other credit facilities offered by banks or other financial
institutions. Such guarantees will be considered in determining whether a
municipal security meets the Tax-Exempt Fund's investment quality
requirements.
Variable rate obligations purchased by the Tax-Exempt Fund may
include participation interests purchased by the Tax-Exempt Fund from
banks, insurance companies or other financial institutions and variable
rate obligations that are backed by irrevocable letters of credit or
guarantees of banks. The Tax-Exempt Fund can exercise the right, on not
more than thirty days' notice, to sell such an instrument back to the bank
from which it purchased the instrument and draw on the letter of credit for
all or any part of the principal amount of the Tax-Exempt Fund's
participation interest in the instrument, plus accrued interest, but will
do so only (i) as required to provide liquidity to the Tax-Exempt Fund,
(ii) to maintain a high quality investment portfolio, or (iii) upon a
default under the terms of the demand instrument. Banks and other
financial institutions retain portions of the interest paid on such
variable rate obligations as their fees for servicing such instruments and
the issuance of related letters of credit, guarantees and repurchase
commitments. With respect to 75% of the Tax-Exempt Fund's net assets, no
single bank will issue its letters of credit with respect to variable rate
obligations or participation interests therein covering more than 10% of
the total assets of the Fund. Dreyfus will monitor the pricing, quality
and liquidity of variable rate demand obligations and participation
interests therein held by the Tax-Exempt Fund on the basis of published
financial information, rating agency reports and other research services to
which the Tax-Exempt Fund may subscribe.
Stand-by Commitments (Tax-Exempt Fund). The Tax-Exempt Fund may
purchase municipal securities together with the right to resell them to the
seller at an agreed-upon price or yield within specified periods prior to
their maturity dates. The right to resell is commonly known as a "stand-by
commitment," and the aggregate price which the Tax-Exempt Fund pays for
securities with a stand-by commitment may be higher than the price which
otherwise would be paid. The primary purpose of this practice is to permit
the Tax-Exempt Fund to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Tax-Exempt Fund acquires
stand-by commitments solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. In connection with
stand-by commitments, the Tax-Exempt Fund will segregate on the Fund's
records cash or liquid high-grade debt obligations of the Fund in an amount
at least equal to the commitments. On delivery dates under the
commitments, the Tax-Exempt Fund will meet its obligations from maturing
securities, sales of securities held in a separate account or other
available sources of cash. Since the value of a stand-by commitment is
dependent on the ability of the stand-by commitment writer to meet its
obligation to repurchase, the Tax-Exempt Fund's policy is to enter into
stand-by commitment transactions only with municipal securities dealers
which are determined to present minimal credit risks as determined by
Dreyfus.
The acquisition of a stand-by commitment does not affect the
valuation or maturity of the underlying municipal securities which continue
to be valued in accordance with the amortized cost method. Stand-by
commitments acquired by the Tax-Exempt Fund are valued at zero in
determining net asset value. When the Tax-Exempt Fund pays directly or
indirectly for a stand-by commitment its cost is reflected as unrealized
depreciation for the period during which the commitment is held. Stand-by
commitments do not affect the average weighted maturity of the Fund's
portfolio of securities.
Floating Rate Securities (Prime, Tax-Exempt, and Institutional Short-
Term Bond Funds). A floating rate security is one whose terms provide for
the automatic adjustment of interest rate whenever a specified interest
rate changes. The interest on floating rate securities is ordinarily tied
to and is a percentage of the prime rate of a specified bank or some
similar objective standard such as the 90-day U.S. Treasury bill rate and
may change daily. Generally, changes in interest rates on floating rate
securities will reduce changes in the security's market value from the
original purchase price resulting in the potential for capital appreciation
or capital depreciation being less than for fixed income obligations with a
fixed interest rate.
ECDs, ETDs and Yankee CDs (Prime, Tax-Exempt, Institutional Prime and
Institutional Short-Term Bond Funds). These Funds may purchase Eurodollar
certificates of deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by foreign branches of domestic banks,
Eurodollar time deposits ("ETDs"), which are U.S. dollar denominated
deposits in a foreign branch of a domestic bank or a foreign bank, and
Yankee-Dollar certificates of deposit ("Yankee CDs") which are certificates
of deposit issued by a domestic branch of a foreign bank denominated in
U.S. dollars and held in the United States. ECDs, ETDs, and Yankee CDs are
subject to somewhat different risks than domestic obligations of domestic
banks. These risks are discussed in the Prospectus.
Government Obligations (All Funds). Each Fund may invest in a
variety of U.S. Treasury obligations, which differ only in their interest
rates, maturities and times of issuance: (a) U.S. Treasury bills have a
maturity of one year or less, (b) U.S. Treasury notes have maturities of
one to ten years, and (c) U.S. Treasury bonds generally have maturities of
greater than ten years.
In addition to U.S. Treasury obligations, the Prime, Tax-Exempt,
Institutional Prime, Institutional Government, and Institutional Short-Term
Bond Funds may invest in obligations issued or guaranteed by
U.S. Government agencies and instrumentalities which are supported by any
of the following: (a) the full faith and credit of the U.S. Treasury (such
as Government National Mortgage Association ("GNMA") participation
certificates), (b) the right of the issuer to borrow an amount limited to a
specific line of credit from the U.S. Treasury, (c) discretionary authority
of the U.S. Government agency or instrumentality, or (d) the credit of the
instrumentality. (Examples of agencies and instrumentalities are: Federal
Land Banks, Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Central Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Home Loan Banks, General
Services Administration, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Inter-American Development
Bank, Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development and Federal National
Mortgage Association ("FNMA")). No assurance can be given that the
U.S. Government will provide financial support to such U.S. Government
agencies or instrumentalities described in (b), (c) and (d) in the future,
other than as set forth above, since it is not obligated to do so by law.
Mortgage Pass-Through Certificates (Prime, Tax-Exempt, Institutional
Prime, Institutional Government, and Institutional Short-Term Bond Funds).
Mortgage pass-through certificates are issued by governmental, government-
related and private organizations which are backed by pools of mortgage
loans. These mortgage loans are made by lenders such as savings and loan
institutions, mortgage bankers, commercial banks and others to residential
home buyers throughout the United States. The securities are "pass-
through" securities because they provide investors with monthly payments of
principal and interest which in effect are a "pass-through" of the monthly
payments made by the individual borrowers on the underlying mortgages, net
of any fees paid to the issuer or guarantor of the pass-through
certificates. The principal governmental issuer of such securities is the
GNMA, which is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. Government-related issuers
include the Federal Home Loan Mortgage Corporation ("FHLMC") and the FNMA,
both government sponsored corporations owned entirely by private
stockholders. Commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers also create pass-through pools of conventional residential mortgage
loans. Such issuers may be the originators of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities.
(1) GNMA Mortgage Pass-Through Certificates ("Ginnie Maes").
Ginnie Maes represent an undivided interest in a pool of mortgages that are
insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. Ginnie Maes
entitle the holder to receive all payments (including prepayments) of
principal and interest owed by the individual mortgagors, net of fees paid
to GNMA and to the issuer which assembles the mortgage pool and passes
through the monthly mortgage payments to the certificate holders
(typically, a mortgage banking firm), regardless of whether the individual
mortgagor actually makes the payment. Because payments are made to
certificate holders regardless of whether payments are actually received on
the underlying mortgages, Ginnie Maes are of the "modified pass-through"
mortgage certificate type. The GNMA is authorized to guarantee the timely
payment of principal and interest on the Ginnie Maes as securities backed
by an eligible pool of mortgages. The GNMA guarantee is backed by the full
faith and credit of the United States, and the GNMA has unlimited authority
to borrow funds from the U.S. Treasury to make payments under the
guarantee. The market for Ginnie Maes is highly liquid because of the size
of the market and the active participation in the secondary market of
securities dealers and a variety of investors.
(2) FHLMC Mortgage Participation Certificates ("Freddie Macs").
Freddie Macs represent interests in groups of specified first lien
residential conventional mortgages underwritten and owned by the FHLMC.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection
or timely payment of all principal payments on the underlying mortgage
loans. In cases where the FHLMC has not guaranteed timely payment of
principal, the FHLMC may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
Freddie Macs are not guaranteed by the United States or by any of the
Federal Home Loan Banks and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. The secondary market for
Freddie Macs is highly liquid because of the size of the market and the
active participation in the secondary market of the FHLMC, securities
dealers and a variety of investors.
(3) FNMA Guaranteed Mortgage Pass-Through Certificates ("Fannie
Maes"). Fannie Maes represent an undivided interest in a pool of
conventional mortgage loans secured by first mortgages or deeds of trust,
on one family, or two to four family, residential properties. The FNMA is
obligated to distribute scheduled monthly installments of principal and
interest on the mortgages in the pool, whether or not received, plus full
principal of any foreclosed or otherwise liquidated mortgages. The
obligation of the FNMA under its guaranty is solely the obligation of the
FNMA and is not backed by, nor entitled to, the full faith and credit of
the United States.
The market value of mortgage-related securities depends on, among
other things, the level of interest rates, the certificates' coupon rates
and the payment history of the mortgagors of the mortgages in the
underlying mortgages.
Repurchase Agreements (All Funds except Institutional Treasury Only
Fund). The Funds may enter into repurchase agreements with U.S. Government
securities dealers recognized by the Federal Reserve Board, with member
banks of the Federal Reserve System, or with such other brokers or dealers
that meet the credit guidelines of the Board of Directors. In a repurchase
agreement, the Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. A
Fund's resale price will be in excess of the purchase price, reflecting an
agreed upon interest rate. This interest rate is effective for the period
of time the Fund is invested in the agreement and is not related to the
coupon rate on the underlying security. Repurchase agreements may also be
viewed as a fully collateralized loan of money by the Fund to the seller.
The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will a Fund invest in repurchase
agreements for more than one year. A Fund will always receive as
collateral securities whose market value including accrued interest is, and
during the entire term of the agreement remains, at least equal to 100% of
the dollar amount invested by the Fund in each agreement, and the Fund will
make payment for such securities only upon physical delivery or upon
evidence of book entry transfer to the account of the Custodian. If the
seller defaults, the Fund might incur a loss if the value of the collateral
securing the repurchase agreement declines and might incur disposition
costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of a
security which is the subject of a repurchase agreement, realization upon
the collateral by the Fund may be delayed or limited. Dreyfus seeks to
minimize the risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligors under repurchase agreements, in accordance
with the credit guidelines of Dreyfus/Laurel's Board of Directors.
Reverse Repurchase Agreements (Prime, Tax-Exempt, Institutional
Prime, and Institutional Short-Term Bond Funds). A Fund may enter into
reverse repurchase agreements to meet redemption requests where the
liquidation of portfolio securities is deemed by Dreyfus to be inconvenient
or disadvantageous. A reverse repurchase agreement is a transaction
whereby a Fund transfers possession of a portfolio security to a bank or
broker-dealer in return for a percentage of the portfolio security's market
value. The Fund retains record ownership of the security involved
including the right to receive interest and principal payments. At an
agreed upon future date, the Fund repurchases the security by paying an
agreed upon purchase price plus interest. Cash or liquid high-grade debt
obligations of the Fund equal in value to the repurchase price including
any accrued interest will be maintained in a segregated account while a
reverse repurchase agreement is in effect.
When-Issued Securities (All Funds). New issues of U.S. Treasury and
Government securities are often offered on a when-issued basis. This means
that delivery and payment for the securities normally will take place
approximately 7 to 15 days after the date the buyer commits to purchase
them. The payment obligation and the interest rate that will be received
on securities purchased on a when-issued basis are each fixed at the time
the buyer enters into the commitment. Each Fund will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities or dispose of the
commitment before the settlement date if it is deemed advisable as a matter
of investment strategy. Cash or marketable high grade debt securities
equal to the amount of the above commitments will be segregated on each
Fund's records. For the purpose of determining the adequacy of these
securities the segregated securities will be valued at market. If the
market value of such securities declines, additional cash or securities
will be segregated on the Fund's records on a daily basis so that the
market value of the account will equal the amount of such commitments by
the Fund.
Securities purchased on a when-issued basis and the securities held
by each Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates --
i.e., they will appreciate in value when interest rates decline and
decrease in value when interest rates rise. Therefore, if in order to
achieve higher interest income each Fund remains substantially fully
invested at the same time that it has purchased securities on a "when-
issued" basis, there will be a greater possibility of fluctuation in the
Fund's net asset value.
When payment for when-issued securities is due, each Fund will meet
its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Loans of Fund Securities (All Funds). Each Fund has authority to
lend its portfolio securities provided (1) the loan is secured continuously
by collateral consisting of U.S. Government securities or cash or cash
equivalents adjusted daily to make a market value at least equal to the
current market value of these securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated
that a Fund may share with the borrower some of the income received on the
collateral for the loan or that it will be paid a premium for the loan. In
determining whether to lend securities, Dreyfus considers all relevant
factors and circumstances including the creditworthiness of the borrower.
Futures Contracts and Options (Institutional Short-Term Bond Funds).
For the purpose of creating market exposure for uncommitted cash balances,
reducing transaction costs associated with rebalancing a Fund, facilitating
trading or seeking higher investment returns when a futures contract is
priced more attractively than the underlying security or each index of the
above-referenced Funds may enter into futures contracts, options, and
options on futures contracts with respect to securities in which the Funds
may invest and indices comprised of such securities.
Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security or
securities index at a specified future time and at a specified price.
Where the underlying security is an index, no physical transfer of
securities takes place; rather, upon expiration of the contract, the
parties settle by exchanging cash in an amount equal to the difference
between the contract price and the closing value of the index at
expiration, net of variation margin previously paid. Futures contracts
that are standardized as to maturity date and underlying interest are
traded on national futures exchanges.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended
to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified
delivery date. Minimal initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the
contract is marked to market daily. If the futures contract price changes
to the extent that the margin on deposit does not satisfy margin
requirements, payment of additional "variation" margin will be required.
Conversely, change in the contract value may reduce the required margin,
resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as
long as the contract remains open. The Fund expects to earn interest
income on its margin deposits.
Options are of two basic types, either call or put options, and may
relate to a single security or a securities index or a futures contract. A
call option on a security permits the holder of the option to purchase the
underlying security at a specified price ("strike price") at any time
during the term of the option. Thus, in exchange for the premium paid to
the writer, the purchaser obtains the right to profit from any appreciation
in the value of the underlying security above the strike price. A put
option permits the holder to sell the underlying security to the writer at
the strike price at any time during the term of the contract. Thus, in
exchange for the premium paid to the writer, the purchaser is relieved of
the risk of a decline in the value of the underlying security below the
strike price. An option on a securities index gives the holder the right
to receive cash from the writer in an amount equal to the difference
between the strike price of the option and the value of the underlying
index multiplied by a factor established by the exchange upon which the
option is traded. An option on a futures contract gives the holder, in
return for the premium paid to the writer, the right to assume a position
in the underlying futures contract at a specified price at any time during
the term of the option.
Although futures and options contracts by their terms call for actual
delivery or acceptance of the underlying securities, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by taking
an opposite position ("buying" a contract which has previously been "sold,"
or "selling" a contract previously purchased) in an identical contract to
terminate the position. An option purchased may be closed out by selling
the option. An option written is closed out by purchasing an option
identical to that written. Brokerage commissions are incurred when futures
and options contracts are bought and sold.
Restrictions on the Use of Futures Contracts and Options. The Fund
will not enter into futures contracts to the extent that its outstanding
obligations under these contracts would exceed 25% of the Fund's total
assets. To the extent that the Fund enters into futures contracts and
options on futures positions that are not for bona fide hedging purposes
(as defined by the Commodity Futures Trading Commission), the aggregate
initial margin and premiums on these positions (excluding the amount by
which options are "in-the-money") may not exceed 5% of the Fund's net
assets.
Transactions using options and futures contracts (other than options
that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities or other
options or futures contracts or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
All options purchased or written by a Fund must be listed on a
national securities or futures exchange or traded in the over-the-counter
("OTC") market. A Fund will not purchase or write OTC options if, as a
result of such transaction, the sum of (i) the market value of outstanding
OTC options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund, and
(iii) the market value of all other assets of the Fund that are illiquid or
are not otherwise readily marketable, would exceed 15% of the net assets of
the Fund, taken at market value. However, if an OTC option is sold by a
Fund to a primary U.S. Government securities dealer recognized by the
Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the
amount by which the option is "in-the-money" (the difference between
current market value of the underlying security and the option's strike
price). The repurchase price with primary dealers is typically a formula
price which is generally based on a multiple of the premium received for
the option plus the amount by which the option is "in-the-money."
Each Fund may write only covered options. A call option is covered
if the Fund owns the underlying security or a call option on the same
security with a lower strike price. A put option is covered if the Fund
segregates cash and/or short-term debt securities in an amount necessary to
pay the strike price of the option or purchases a put option on the same
underlying security with a higher strike price.
Each Fund will not purchase puts, calls, straddles, spreads or any
combination thereof, if as a result of such purchase the value of the
Fund's aggregate investment in such securities would exceed 5% of the
Fund's total assets.
Risk Factors in Futures and Options Transactions. There can be no
assurance that a liquid secondary market will exist for any particular
futures or option contract at any specific time. Thus, it may not be
possible to close a futures or option position. In the event of adverse
price movements, each Fund would continue to be required to make daily cash
payments to maintain its required margin with respect to open futures or
written options positions. In such a situation, if the Fund has
insufficient cash, it may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, a Fund may be required to make or take delivery of the securities
underlying futures contracts that it holds and options contracts that it
has written.
Each Fund will seek to minimize the risk that it will be unable to
close out a futures contract by entering into only those futures contracts
that are listed on national futures exchanges and for which there appears
to be a liquid secondary market. Likewise, each Fund will enter into only
those option contracts that are listed on a national securities exchange or
traded in the OTC market for which there appears to be a liquid secondary
market.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the
extremely high degree of leverage involved in futures pricing. As a
result, a relatively small price movement in a futures contract may result
in immediate and substantial loss (as well as gain) to the investor. For
example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of
the futures contract would result in a total loss of margin deposit, before
any deduction for the transaction costs, if the account were then closed
out. A 15% decrease would result in a loss equal to 150% if the original
margin deposit for the contract were closed out. Thus, a purchase or sale
of a futures contract may result in losses in excess of the amount invested
in the contract. Options transactions are subject to similar risks.
However, because each Fund will not engage in futures or options
transactions for speculative purposes, Dreyfus believes that a Fund's risk
of loss is less than the risk of loss associated with speculative
transactions. Moreover, in the foregoing example, the Fund would
presumably have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying security and sold it after the
decline.
Utilization of futures contracts and options transactions by each
Fund does involve the risk of imperfect or no correlation where the
securities underlying futures and options contracts are different from the
portfolio securities being hedged. It is also possible that a Fund could
lose money on both futures and options contracts and also experience a
decline in value of its portfolio securities. There is also the risk of
loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or option
thereon.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may
vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a
particular type of contract, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions.
Futures contract prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading thereby
preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Futures and options contracts involve special tax considerations.
See "Dividends, Other Distributions and Taxes" for further information.
Commercial Paper (Prime, Tax-Exempt, Institutional Prime, and
Institutional Short-Term Bond Funds). The Funds may invest in commercial
paper issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act of 1933
("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition
under the federal securities laws and generally is sold to investors who
agree that they are purchasing the paper for an investment and not with a
view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper is normally resold to other
investors through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) paper, thus providing liquidity.
Pursuant to guidelines established by Dreyfus/Laurel's Board of Directors,
Dreyfus may determine that Section 4(2) paper is liquid for the purposes of
complying with the Fund's investment restriction relating to investments in
illiquid securities.
INVESTMENT LIMITATIONS
The following limitations have been adopted by each Fund except that
the Institutional Treasury Only Fund has only adopted limitations 2, 4, 5,
6 and 7 noted below. A Fund may not change any of these fundamental
investment limitations or its investment objective without the consent of:
(a) 67% or more of the shares present at a meeting of shareholders duly
called if the holders of more than 50% of the outstanding shares of a Fund
are present or represented by proxy; or (b) more than 50% of the
outstanding shares of a Fund, whichever is less. Each Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of a Fund's total assets at the time of such purchase to be invested
in the securities of one or more issuers conducting their principal
activities in the same industry. (For purposes of this limitation, U.S.
Government securities, and state or municipal governments and their
political subdivisions are not considered members of any industry. In
addition, this limitation does not apply to investments in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S.
banks).
2. Borrow money or issue senior securities as defined in the 1940
Act except that (a) a Fund may borrow money in an amount not exceeding one-
third of the Fund's total assets at the time of such borrowings, and (b) a
Fund may issue multiple classes of shares. The purchase or sale of futures
contracts and related options shall not be considered to involve the
borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of a Fund's total assets securities
of any one issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of a Fund's total assets would be invested in the securities of
that issuer, or (b) a Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments and repurchase agreements
shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests
therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed
an underwriting.
7. Purchase or sell commodities except that each Fund may enter
into futures contracts and related options, forward currency contacts and other
similar instruments.
Each Fund may:
Notwithstanding any other fundamental investment policy or
limitation, invest all of its investable assets in securities of a single
open-end management investment company with substantially the same
investment objective, policies and limitations as the Fund.
The Funds above have adopted the following additional non-fundamental
restrictions, except that the Institutional Treasury Only Fund has only
adopted limitations 1, 2, 4, 8 and 9 noted below. These non-fundamental
restrictions may be changed without shareholder approval, in compliance
with applicable law and regulatory policy.
1. No Fund shall sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amounts to the securities
sold short, and provided that transactions in futures contracts are not
deemed to constitute selling short.
2. No Fund shall purchase securities on margin, except that a Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
3. No Fund shall purchase oil, gas or mineral leases (Funds, other
than the Institutional Short-Term Bond Fund, may not, however purchase and
sell the securities of companies engaged in the exploration, development,
production, refining, transporting, and marketing of oil, gas or minerals).
4. No Fund will purchase or retain the securities of any issuer if
the officers, Directors of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such
issuer, together own beneficially more than five percent of such
securities.
5. No Fund will purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof), including their predecessors, that have
been in operation for less than three years, if by reason thereof, the
value of such Fund's investment in securities would exceed 5% of such
Fund's total assets. For purposes of this limitation, sponsors, general
partners, guarantors and originators of underlying assets may be treated as
the issuer of a security.
6. The Institutional Short-Term Bond Fund will not invest more than
15% of the value of its net assets in illiquid securities, including
repurchase agreements with remaining maturities in excess of seven days,
time deposits with maturities in excess of seven days and other securities
which are not readily marketable. For purposes of this limitation,
illiquid securities shall not include Section 4(2) Paper and securities
which may be resold under Rule 144A under the Securities Act of 1933,
provided that the Board of Directors, or its delegate, determines that such
securities are liquid based upon the trading markets for the specific
security.
7. None of the Prime, U.S. Treasury, Tax-Exempt, Institutional
Prime, Institutional Government and Institutional U.S. Treasury Funds will
invest more than 10% of the value of its net assets in illiquid securities,
including repurchase agreements with remaining maturities in excess of
seven days, time deposits with maturities in excess of seven days and other
securities which are not readily marketable. For purposes of this
limitation, illiquid securities shall not include Section 4(2) Paper and
securities which may be resold under Rule 144A under the Securities Act of
1933, provided that the Board of Directors, or its delegate, determines
that such securities are liquid based upon the trading markets for the
specific security.
8. No Fund may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
9. No Fund shall purchase any security while borrowings representing
more than 5% of the Fund's total assets are outstanding.
10. No Fund will purchase warrants if at the time of such purchase:
(a) more than 5% of the value of such Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York or American Stock
Exchange (for purposes of this limitation, warrants acquired by a Fund in
units or attached to securities will be deemed to have no value).
11. No Fund will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total assets
except that: (a) this limitation shall not apply to standby commitment, and
(b) this limitation shall not apply to a Fund's transactions in futures
contracts and related options.
CONTROLLING SHAREHOLDERS
Mellon Bank Corporation, a Pennsylvania corporation registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended, owned of record, through its direct and indirect subsidiaries,
more than 25% of the issued and outstanding voting shares of Dreyfus/Laurel
as of March 31, 1995, and is, as a consequence, deemed to be a controlling
shareholder of Dreyfus/Laurel as that term is defined under the 1940 Act.
The address of Mellon Bank Corporation is: Mellon Bank Corporation, Mutual
Funds Department, 2 Mellon Bank Center, Pittsburgh, PA 15259.
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned 5% or more of the outstanding
voting shares of the Funds at March 31, 1995:
PRIME FUND (Class R Shares): InvestNet Corporation, a Mellon Bank Center,
Pittsburgh, PA 15259-0001, 40% record; Mac & Company, Mellon Bank, N.A.,
Trust and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, 39% record; Mac & Company, Mellon Bank, N.A., Trust and
Investment Department, 3 Mellon Bank Center, Pittsburgh, PA 15259-0001, 33%
record.
U.S. TREASURY FUND (Class R Shares): Mellon Bank, N.A. - Mellon PSFS, P.O.
Box 7899, Room 199-5264, Philadelphia, PA 19101-7899, 43% record; Mac &
Company, Mellon Bank, N.A., Trust and Investment Department, 3 Mellon Bank
Center, Pittsburgh, PA 15259-001, 14% record; Mellon Bank, N.A. - Western
Region, P.O. Box 7899, Room 199-5264, Philadelphia, PA 19101-7899, 13%
record; InvestNet Corporation, 2 Mellon Bank Center, Pittsburgh, PA 15259-
0001, 9% record; Mellon Bank, N.A. - Central Region, P.O. Box 7899, Room
199-5264, Philadelphia, PA 19101-7899, 7% record.
U.S. TREASURY FUND (Investor Shares): Boston Safe Deposit & Trust Co., One
Cabot Road, Wellington III, Medford, Massachusetts 02155, 8% record.
TAX-EXEMPT FUND (Class R Shares): Mac & Company, Mellon Bank, N.A., Trust
and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA 15259-0001,
28% record; Mellon Bank, N.A. #14 as Agent for Capital Markets Customers,
One Mellon Bank Center, Room 151-0440, Pittsburgh, PA 15258-0001, 14%
record; Mac & Company, Mellon Bank, N.A., Trust and Investment Department,
3 Mellon Bank Center, Pittsburgh, PA 15259-0001, 7% record; InvestNet
Corporation, 2 Mellon Bank Center, Pittsburgh, PA 15259-0001, 7% record.
INSTITUTIONAL PRIME FUND (Class I Shares): Mac & Co., Mellon Bank, N.A.,
Trust and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, 61% record; Mellon Bank, N.A., #14 as Agent for Capital Markets
Customers, One Mellon Bank Center, Room 151-0440, Pittsburgh, PA 15258-
0001, 20% record.
INSTITUTIONAL PRIME FUND (Class II Shares): Mellon Bank, N.A., #14 as
Agent for Capital Markets Customers, One Mellon Bank Center, Room 151-0440,
Pittsburgh, PA 15258-0001, 100% record.
INSTITUTIONAL GOVERNMENT FUND (Class I Shares): Mac & Co., Mellon Bank,
N.A., Trust and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, 30% record; Mac & Co., One Mellon Bank Center, Room 0525,
Pittsburgh, PA 15258-0001, 24% record; Mac & Co., One Mellon Bank Center,
Room 0525, Pittsburgh, PA 15258-0001, 22% record; Mac & Co., Mellon Bank,
N.A., Trust and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, 14% record.
INSTITUTIONAL TREASURY FUND (Class I Shares): Mac & Co., Mellon Bank,
N.A., Trust and Investment Department, 3 Mellon Bank Center, Pittsburgh, PA
15259-0001, 69% record; Mac & Co., Mellon Bank, N.A., Trust and Investment
Department, 3 Mellon Bank Center, Pittsburgh, PA 15259-0001, 15% record;
Mellon Bank, N.A., #14 as Agent for Capital Markets Customers, One Mellon
Bank Center, Room 151-0440, Pittsburgh, PA 15258-0001, 6% record.
INSTITUTIONAL TREASURY ONLY FUND (Class II Shares): Mac & Co., Mellon
Bank, N.A., Trust and Investment Department, 3 Mellon Bank Center,
Pittsburgh, PA 15259-0001, 53% record.
INSTITUTIONAL TREASURY ONLY FUND (Class III Shares): Mellon Bank, N.A.,
#14 as Agent for Capital Markets Customers, One Mellon Bank Center, Room
151-0440, Pittsburgh, PA 15258-0001, 100% record.
INSTITUTIONAL SHORT-TERM BOND FUND (Class I Shares): Mac & Co., 178-801,
Mellon Bank, N.A., Mutual Funds, P.O. Box 320, Pittsburgh, PA 15230, 66%
record; Mac & Co. 860-621, Mellon Bank, N.A., Mutual Funds, P.O. Box 320,
Pittsburgh, PA 15230, 30% record.
DIRECTORS AND OFFICERS
Dreyfus/Laurel has a Board composed of thirteen Directors which
supervises Dreyfus/Laurel's investment activities and reviews contractual
arrangements with companies that provide the Funds with services. The
following lists the Directors and officers and their positions with
Dreyfus/Laurel and their present and principal occupations during the past
five years. Each Director who is an "interested person" of Dreyfus/Laurel
(as defined in the Investment Company Act of 1940, as amended (the "Act"))
is indicated by an asterisk. Each of the Directors also serves as a
Trustee of The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Investment
Series and The Dreyfus/Laurel Tax-Free Municipal Funds (collectively "The
Dreyfus/Laurel Funds").
o+RUTH MARIE ADAMS. Director of Dreyfus/Laurel; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United Chapters
of Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution.
Age: 79 years old. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of Dreyfus/Laurel; Director and Chairman, Massachusetts
Business Development Corp.; Director, Boston Mutual Insurance
Company; Director and Vice Chairman of the Board, Home Owners Federal
Savings and Loan (prior to May 1990). Age: 76 years old. Address:
Massachusetts Business Development Corp., One Liberty Square, Boston,
Massachusetts 02109.
o*JOSEPH S. DiMARTINO. Director of Dreyfus/Laurel since February 1995.
Since January 1995, Mr. DiMartino has served as Chairman of the Board
for 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 1994, the Fund's
distributor. Mr. DiMartino is a director and former Treasurer of the
Muscular Dystrophy Association; a trustee of Bucknell University;
Chairman of the Board of Directors of the Noel Group, Inc.; and a
director of Health Plan Corporation. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Director of Dreyfus/Laurel; President and
Director, Amoskeag Company; Chairman, Howes Leather Company, Inc.;
Director, Fiduciary Trust Company; Chairman, CEO and Director,
Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance Company;
Director, Barrett Resources, Inc. Age: 59 years old. Address: 40
Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of Dreyfus/Laurel; Partner, Reed, Smith,
Shaw & McClay (law firm). Age: 65 years old. Address: 204
Woodcock Drive, Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of Dreyfus/Laurel; Director, Chairman of
the Board and Director, Rexene Corporation; Director, Calgon Carbon
Corporation; Director, National Picture Frame Corporation; Chairman
of the Board and Director, Tetra Corporation 1991-1993; Director,
Medalist Corporation 1992-1993; From 1988-1989 Director, Rexene
Corporation. Age: 71 years old. Address: Way Hallow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of Dreyfus/Laurel; Former Director, The
Boston Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc. and Florida Hospitality Group;
Managing Partner, Himmel/MKDG, Franklin Federal Partners, Reston Town
Center Associates and Grill 23 & Bar. Age: 47 years old. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o+ARCH S. JEFFERY. Director of Dreyfus/Laurel; Financial Consultant. Age:
76 years old. Address: 1817 Foxcroft Lane, Allison Park,
Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of Dreyfus/Laurel; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age: 46
years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o+ROBERT D. MCBRIDE. Director of Dreyfus/Laurel; Director, Chairman and
CEO, McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Age: 66 years old. Address: 15
Waverly Lane, Grosse Pointe Farms, Michigan 48236.
o+JOHN L. PROPST. Director of Dreyfus/Laurel; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Age: 79 years old. Address: 5521
Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o+JOHN J. SCIULLO. Director of Dreyfus/Laurel; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Age: 62 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224
o+ROSLYN M. WATSON. Director of Dreyfus/Laurel; Principal, Watson
Ventures, Inc., prior to February, 1993; Real Estate Development
Project Manager and Vice President, The Gunwyn Company. Age: 44
years old. Address: 25 Braddock Park, Boston, Massachusetts 02116-
5816.
#MARIE E. CONNOLLY. President and Treasurer of Dreyfus/Laurel, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Vice President of The Dreyfus/Laurel Funds, Inc. (March 1994 to
September 1994); President, Funds Distributor, Inc. (since
1992);Treasurer, Funds Distributor, Inc. (July 1993 to April 1994);
COO, Funds Distributor, Inc. (since April 1994); Director, Funds
Distributor, Inc. (since July 1992); President, COO and Director,
Premier Mutual Fund Services, Inc. (since April 1994); Senior Vice
President and Director of Financial Administration, The Boston
Company Advisors, Inc. (December 1988 to May 1993). Address: One
Exchange Place, Boston, Massachusetts 02109.
#FREDERICK C. DEY. Vice President of Dreyfus/Laurel, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, Premier Mutual Fund Services, Inc. (since
August 1994); Vice President, Funds Distributor, Inc. (since August
1994); Fund raising Manager, Swim Across America (October 1993 to
August 1994); General Manager, Spring Industries (August 1988 to
October 1993). Address: Premier Mutual Fund Services, Inc., 200 Park
Avenue New York, New York 10166.
#ERIC B. FISCHMAN. Vice President of Dreyfus/Laurel, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994); Vice
President and Associate General Counsel, Premier Mutual Fund
Services, Inc. (Since August 1994); Vice President and Associate
General Counsel, Funds Distributor, Inc. (since August 1994); Staff
Attorney, Federal Reserve Board (September 1992 to June 1994); Summer
Associate, Venture Economics (May 1991 to September 1991); Summer
Associate, Suffolk County District Attorney (June 1990 to August
1990). Address: Premier Mutual Fund Services, Inc., 200 Park Avenue,
New York, New York 10166.
LESLIE M. GAYNOR. Assistant Treasurer of Dreyfus/Laurel, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds Distributor,
Inc. (since July 1994); Vice President, The Boston Company, Inc.
(1989 to July 1994). Address: One Exchange Place, Boston,
Massachusetts 02109.
RICHARD W. HEALEY. Vice President of Dreyfus/Laurel, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since March 1994); Senior
Vice President, Funds Distributor, Inc. (since March 1993); Vice
President, The Boston Company Inc., (March 1993 to May 1993); Vice
President of Marketing, Calvert Group (1989 to March 1993); Fidelity
Investments (prior to 1989). Address: One Exchange Place, Boston,
Massachusetts 02109.
#JOHN E. PELLETIER. Vice President and Secretary of Dreyfus/Laurel, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds Trust and
The Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Senior Vice President, General Counsel and Secretary, Funds
Distributor, Inc. (since April 1994); Senior Vice President, General
Counsel and Secretary, Premier Mutual Fund Services, Inc. (since
August 1994); Counsel, The Boston Company Advisors, Inc. (February
1992 to March 1994); Associate, Ropes & Gray (August 1990 to February
1992); Associate, Sidley & Austin (June 1989 to August 1990).
Address: One Exchange Place, Boston, Massachusetts 02109.
_____________________________
* "Interested person" of Dreyfus/Laurel, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies
advised by Dreyfus.
The officers and Directors of Dreyfus/Laurel as a group owned
beneficially less than 1% of the total shares of each Fund outstanding as
of March 13, 1995.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from Dreyfus/Laurel for
serving as an officer or Director of the Dreyfus/Laurel. In addition, no
officer or employee of The Dreyfus Corporation (or of any parent or
subsidiary thereof) serves as an officer or Director of Dreyfus/Laurel.
The Dreyfus/Laurel Funds pay each Director/Trustee who is not an officer or
employee of Premier or any of its affiliate thereof) or of Dreyfus $27,000
per annum (and an additional $75,000 for the Chairman of the Board of
Directors/Trustees of the Dreyfus/Laurel Funds), $1,000 for each
Dreyfus/Laurel Funds meeting attended, plus $750 per joint Dreyfus/Laurel
Funds Audit Committee meeting attended, and reimburses each
Director/Trustee for travel and out-of-pocket expenses. For the fiscal
year ended October 31, 1994 the fees for meetings and expenses totaled
$25,897.
For the fiscal year ended October 31, 1994, the aggregate amount of
fees and expenses received by each Director from the Company and all other
Funds in The Dreyfus/Laurel Family of Funds for which such person is a
Board member were as follows:
<TABLE>
<CAPTION>
Total
Pension of Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
- -------------------- ------------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $19,685 None None $ 37,500
Francis P. Brennan* 52,809 None None 112,500
Joseph S. DiMartino** N/A N/A N/A N/A
James M. Fitzgibbons 17,685 None None 31,750
J. Tomlinson Fort 7,500 None None 7,500
Arthur L. Goeschel 26,185 None None 32,500
Kenneth A. Himmel 18,685 None None 35,750
Arch S. Jeffrey 27,185 None None 33,500
Steven J. Lockwood 18,685 None None 35,750
Robert D. McBride 27,185 None None 33,500
John L. Propst 27,185 None None 33,500
John J. Sciullo 27,185 None None 33,500
Roslyn M. Watson 19,685 None None 36,750
# Amount does not include reimbursed expenses for attending Board meetings, which amounted to $10,876 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by The Dreyfus/Laurel Fund Family to be Chairman of the Board.
** Joseph S. DiMartino was not a director of the Company as of October 31, 1994.
</TABLE>
MANAGEMENT ARRANGEMENTS
Management Agreement. The Dreyfus Corporation ("Dreyfus") (200 Park
Avenue, New York, New York 10166) serves as each Fund's investment manager.
As of March 31, 1995, Dreyfus managed or administered approximately $72
billion in assets for more than 1.9 million investor accounts nationwide.
Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A. (One Mellon Bank
Center, Pittsburgh, PA 15258) ("Mellon Bank"), each Fund's prior
investment manager. Pursuant to an Investment Management Agreement,
transferred from Mellon Bank to Dreyfus effective as of October 17, 1994,
Dreyfus provides, or arranges for one or more third parties to provide
investment advisory, administrative, custody, fund accounting and transfer
agency services to each Fund. As investment manager, Dreyfus manages each
Fund by making investment decisions based on each Fund's investment
objectives, policies and restrictions, and is paid a fee as described in
the Fund's Prospectus. Each Fund continues to be managed by the same
individual who was the portfolio manager of the Fund prior to the transfer
of the Investment Management Agreement.
The Investment Management Agreement will continue from year to year
provided that a majority of the Directors who are not interested persons of
the Funds or Dreyfus and either a majority of all Directors or a majority
of the shareholders of each Fund approve their continuance. Dreyfus/Laurel
may terminate the Investment Management Agreement, without prior notice to
Dreyfus, upon the vote of a majority of the Board of Directors or upon the
vote of a majority of the outstanding voting securities of each Fund.
Dreyfus may terminate the Investment Management Agreement upon 60 days'
written notice to Dreyfus/Laurel. The Management Agreement will terminate
immediately and automatically upon its assignment.
For the last three fiscal years, each Fund had the following expenses:
<TABLE>
<CAPTION>
For the Fiscal Years Ended October 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Prime Fund
Advisory fees (gross of waiver) $241,885 $481,181 $515,936
Expense reimbursement from Adviser 147,972 343,319 281,690
Advisory fees waived -- -- 75,619
U.S. Treasury Fund
Advisory fees (gross of waiver) $152,242 $333,417 $346,626
Expense reimbursement from Adviser 111,352 267,656 272,313
Advisory fees waived -- -- --
Tax-Exempt Fund
Advisory fees (gross of waiver) $563,317 $1,156,577 $1,089,996
Expense reimbursement from Adviser 206,817 468,941 524,628
Advisory fees waived -- -- --
Institutional Prime Fund
Advisory fees (gross of waiver) $719,248 $2,085,334 $1,854,273
Expense reimbursement from Adviser -- 55,366 115,869
Advisory fees waived -- -- --
Institutional Government Fund
Advisory fees (gross of waiver) $380,929 $ 837,576 $828,072
Expense reimbursement from Adviser -- 53,054 168,501
Advisory fees waived -- -- --
Institutional U.S. Treasury Fund
Advisory fees (gross of waiver) $404,422 $1,252,103 $1,094,290
Expense reimbursement from Adviser 21,564 25,387 165,341
Advisory fees waived -- -- --
Institutional Treasury Only Fund
Advisory fees (gross of waiver) $81,152 $ 117,491 $ 46,906
Expense reimbursement from Adviser 55,152 183,354 179,5973
Advisory fees waived -- -- --
Institutional Short-Term Bond Fund
Advisory fees (gross of waiver) $11,572 -- --
Expense reimbursement from Adviser 85,177 -- --
Advisory fees waived -- -- --
</TABLE>
Distribution and Shareholder Services Plan. The SEC has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as Dreyfus/Laurel may, directly or indirectly,
bear the expenses of distributing their shares. The Rule defines
distribution expenses to include expenditures for "any activity which is
primarily intended to result in the sale of fund shares." The Rule, among
other things, provides that an investment company may bear such expenses
only pursuant to a plan adopted in accordance with the Rule. With respect
to the Investor Class of Prime, U.S. Treasury and Tax-Exempt Funds,
Dreyfus/Laurel has adopted a Distribution Plan ("Plan"), and may enter into
Selling Agreements with Servicing Agents pursuant to its Plan. With
respect to the Class I and Class II Shares of the Institutional Prime,
Institutional Government, Institutional U.S. Treasury, Institutional
Treasury Only and Institutional Short-Term Bond Funds, Dreyfus/Laurel has
adopted a Shareholder Servicing Plan (the "Institutional Plan")
(collectively, the "Plans"), and may enter into Shareholder Servicing and
Sales Support Agreements with Selling and Servicing Agents.
Under the Plan, each of the Prime, U.S. Treasury and Tax-Exempt Funds,
may spend annually up to 0.25% of the average of its daily net assets
attributable to Investor shares for costs and expenses incurred in
connection with the sale of such shares.
The Institutional Plan permits each Institutional Fund to compensate
certain banks, brokers, dealers or other financial institutions (including
Dreyfus and its affiliates) (collectively "Agents") that have entered into
Shareholder Servicing Agreements ("Agreements") with Dreyfus/Laurel.
Payments under the Institutional Plan are calculated daily and paid monthly
at a rate or rates set from time to time by a Fund, provided that the
annual rate may not exceed: (i) 0.15% of the average daily net asset value
of the Class I Shares, or (ii) 0.05% of the average daily net asset value
of the Class II Shares.
The fees payable under the Institutional Plan are used primarily to
compensate or reimburse Agents for shareholder services provided, and
related expenses incurred by such Agents. The shareholder services
provided by Agents may include: (i) aggregating and processing purchase
and redemption requests for Class I or Class II Shares from their customers
and transmitting net purchase and redemption orders to the Distributor or
Transfer Agent; (ii) providing customers with a service that invests the
assets of their accounts in Class I or Class II Shares pursuant to specific
or pre-authorized instructions; (iii) processing dividend and distribution
payments from a Fund on behalf of customers; (iv) providing information
periodically to customers showing their positions in Class I or Class II
Shares; (v) arranging for bank wires; and (vi) providing general
shareholder liaison services.
The Plans provide that a report of the amounts expended under each
Plan, and the purposes for which such expenditures were incurred, must be
made to the Directors for their review at least quarterly. In addition,
each Plan provides that it may not be amended to increase materially the
costs which a Fund may bear for distribution pursuant to the Plan without
approval of a Fund's shareholders, and that other material amendments of
the Plan must be approved by the vote of a majority of the Directors and of
the Directors who are not interested persons of Dreyfus/Laurel and who do
not have any direct or indirect financial interest in the operation of the
Plan or in the related Shareholder Servicing and Sales Support Agreements,
cast in person at a meeting called for the purpose of considering such
amendments. Both Plans are subject to annual approval by all of the
Directors and by the Directors who are neither interested persons nor have
any direct or indirect financial interest in the operation of either Plan
or in the related Shareholder Servicing and Sales Support Agreements, by
vote cast in person at a meeting called for the purpose of voting on the
Plan. The Plans are terminable, as to a Fund's class of shares, at any
time by vote of a majority of the Directors who are not interested persons
and have no direct or indirect financial interest in the operation of the
Plan or in the related Shareholder Servicing and Sales Support Agreements
or by vote of the holders of a majority of the outstanding shares of such
class of a Fund.
Prior to September 23, 1994, Frank Russell Investment Management
Company acted as the Fund's Administrator and was paid the following
amounts in fees by the Funds:
<TABLE>
<CAPTION>
For Year Ended October 31
-------------------------
Fund 1994 1993 1992
- ---- ---- ---- ----
<S> <C> <C> <C>
Prime Fund $ 13,821 $ 28,296 $ 37,888
U.S. Treasury Fund 8,701 19,612 24,699
Tax-Exempt Fund 26,810 56,584 65,898
Institutional Prime Fund 102,688 303,285 339,576
Institutional Government Fund 54,384 122,940 148,258
Institutional U.S. Treasury Fund 57,738 182,602 198,281
Institutional Treasury Only Fund 7,882 17,440 8,109
Institutional Short-Term Bond Fund 1,649 N/A N/A
</TABLE>
The Distributor; Sub-Administrator. Premier, a wholly-owned
subsidiary of Institutional Administration Services, Inc., serves as the
Funds' distributor pursuant to an agreement which is renewable annually.
Premier also acts as distributor for the other funds in the Premier Family
of Funds, for funds in the Dreyfus Family of Funds and for certain other
investment companies. Premier also serves as sub-administrator to the
Funds pursuant to a Sub-Administration Agreement effective October 17,
1994.
PURCHASE OF FUND SHARES
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on
any business day that The Shareholder Services Group, Inc., the Funds'
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange ("NYSE") are open. Such purchases will be credited to
the shareholder's Fund account on the next bank business day. To qualify
to use the Dreyfus TeleTransfer Privilege, the initial payment for purchase
of shares must be drawn on, and redemption proceeds paid to, the same bank
and account as are designated on the Account Application or Shareholder
Services Form on file. If the proceeds of a particular redemption are to
be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See "Redemption of Fund Shares--Dreyfus
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.
REDEMPTION OF 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 Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, a 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 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. Redemption
proceeds, if wired, must be in the amount of $1,000 or more and will be
wired to the investor's account at the bank of record designated in the
investor's file at the Transfer Agent, if the investor's bank is a member
of the Federal Reserve System, or to a correspondent bank if the investor's
bank is not a member. 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 "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing shares
of a Fund 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 NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees must be
signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may request
additional documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular verification. For
more information with respect to signature-guarantees, please call one of
the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the ACH system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's
account at an ACH member bank ordinarily two business days after receipt of
the redemption request. See "Purchase of Fund Shares-- Dreyfus
TeleTransfer Privilege."
Redemption Commitment. Each Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, 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 SEC. In the
case of requests for redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of a Fund to the detriment of the
existing shareholders. In this 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 incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE is
closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Funds ordinarily utilize is restricted, or when
an emergency exists as determined by the SEC so that disposal of the Funds'
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit
to protect a Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. Shares of any Class of a Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such 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 other 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.
All Funds Except Tax-Exempt Fund. 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 the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500 invested
among 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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Fund, shares
of the same Class of another fund in 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 the investor's 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 Dreyfus 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 Dreyfus 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 from the Distributor. The Funds reserve the right to reject any
exchange request in whole or in part. The Fund exchange service or Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal. 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 a Fund's 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. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. There is a
service charge of $.50 for each withdrawal check. Automatic Withdrawal may
be terminated at any time by the investors, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from a Fund in shares of the same Class of certain
other funds in 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
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans-All Funds Except
Tax-Exempt Fund. The Funds make available to corporations a variety of
prototype pension and profit-sharing plans including a 401(k) Salary
Reduction Plan. In addition, the Funds make 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 shares of a Fund 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 on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $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.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank in informing its customers of, and performing,
investment and redemption services in connection with a Fund, and in
providing services to a Fund as custodian, and transfer agent, shareholder
servicing and dividend disbursing agent, as well as Mellon Bank's
investment advisory activities, may raise issues under these provisions.
Mellon Bank has been advised by its counsel that the activities
contemplated under these arrangements are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank from continuing to perform all or a part of the above services
for its customers and/or a Fund. If Mellon Bank were prohibited from
serving a Fund in any of its present capacities the Board of Directors
would seek an alternative provider(s) of such services.
PORTFOLIO TRANSACTIONS
All portfolio transactions of a Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by a Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with a Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. A Fund will
pay a spread or commissions in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to a Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of a Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to
Dreyfus/Laurel's procedures adopted in accordance with Rule 17e-1 of the
1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to a Fund and/or other accounts over which Dreyfus or its
affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus, in rendering investment management services to a Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to a Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Directors periodically review Dreyfus' performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of a Fund and review the prices paid by the Fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Funds,
investment decisions for each Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment adviser, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as a Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment advisers to the Funds outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
None of the Funds paid a stated brokerage commission.
NET ASSET VALUE
Each Fund's net asset value per share is calculated on each business
day. A business day is any day on which the New York Stock Exchange is
open for business. Prime, U.S. Treasury and Tax-Exempt Funds determine net
asset value twice daily, as of 12:00 p.m. and 4:00 p.m., Eastern time.
Institutional Prime, Institutional Government, Institutional U.S. Treasury
and Institutional Treasury Only Funds determine net asset value once daily,
as of 3:00 p.m., 1:00 p.m. and 12:00 p.m., Eastern time.
It is the policy of each Fund other than Institutional Short-Term Bond
Fund to use its best efforts to maintain a constant price per share of
$1.00. There can be no assurance that a $1.00 net asset value per share
will be maintained. These Funds' portfolio instruments are valued based on
the amortized cost valuation technique pursuant to Rule 2a-7 under the 1940
Act. This involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
even though the portfolio security may increase or decrease in market value
generally in response to changes in interest rates. While this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Fund would receive if it sold the instrument.
The use of amortized cost is permitted by Rule 2a-7 under the 1940
Act. Pursuant to the provisions of Rule 2a-7, the Directors have
established procedures reasonably designed to stabilize each Fund's price
per share, as computed for the purpose of sale and redemption, at $1.00.
These procedures include the determination by the Directors, at such times
as they deem appropriate, of the extent of deviation, if any, of each
Fund's current net asset value, using market values, from $1.00; periodic
review by the Directors of the amount of and the methods used to calculate
the deviation; maintenance of records of the determination; and review of
such deviations. The procedures employed to stabilize each Fund's price
per share require the Directors to promptly consider what action, if any,
should be taken by the Directors if such deviation exceeds 1/2 of one
percent. Such procedures also require the Directors to take appropriate
action to eliminate or reduce, to the extent reasonably practicable,
material dilution or other unfair effects resulting from any deviation. In
addition to such procedures, Rule 2a-7 requires each Fund to purchase
instruments having remaining maturities of 397 days or less, to maintain a
dollar-weighted average portfolio maturity of 90 days or less and to invest
only in securities determined by the Directors to be of high quality, as
defined in Rule 2a-7, with minimal credit risks.
In periods of declining interest rates, the indicated daily yield on
shares of a Fund computed by dividing the annualized daily income on the
Fund by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the indicated
daily yield on shares of a Fund computed the same way may tend to be lower
than a similar computation made by using a method of calculation based upon
market prices and estimates.
PERFORMANCE CALCULATIONS
Each Fund computes its current annualized and compound effective
yields using standardized methods required by the SEC. The annualized
yield for each Fund is computed by (a) determining the net change in the
value of a hypothetical account having a balance of one share at the
beginning of a seven calendar day period; (b) dividing the net change by
the value of the account at the beginning of the period to obtain the base
period return; and (c) annualizing the results (i.e., multiplying the base
period return by 365/7). The net change in the value of the account
reflects the value of additional shares purchased with dividends declared
on both the original share and such additional shares, but does not include
realized gains and losses or unrealized appreciation and depreciation.
Compound effective yields are computed by adding 1 to the base period
return (calculated as described above), raising that sum to a power equal
to 365/7 and subtracting 1.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because each Fund's yield fluctuates, its yield cannot be
compared with yields on savings accounts or other investment alternatives
that provide an agreed-to or guaranteed fixed yield for a stated period of
time. However, yield information may be useful to an investor considering
temporary investments in money market instruments. In comparing the yield
of one money market fund to another, consideration should be given to each
Fund's investment policies, including the types of investments made, length
of maturities of portfolio securities, the methods used by each fund to
compute the yield (methods may differ) and whether there are any special
account charges which may reduce effective yield.
The following are the current and effective yields for the Funds for
the seven-day period ended October 31, 1994:
<TABLE>
<CAPTION>
Current Yield Effective Yield
Investor Class R Investor Class R
------------------- ------------------
<S> <C> <C> <C> <C>
Prime Fund 4.30% 4.50% 4.40% 4.61%
U.S. Treasury Fund 4.12% 4.32% 4.20% 4.41%
Tax-Exempt Fund 2.72% 2.92% 2.76% 2.97%
</TABLE>
<TABLE>
<CAPTION>
Class I Class II Class III Class I Class II Class III
------- -------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Institutional Prime Fund 4.70% - - 4.81% - -
Institutional Government Fund 4.59% - - 4.70% - -
Institutional U.S. Treasury Fund 4.51% - - 4.61% - -
Institutional Treasury Only Fund - 4.50% 4.55% - 4.60% 4.66%
Institutional Short-Term Bond Fund 4.25% - - 4.55% - 4.66%
</TABLE>
The Tax-Exempt Fund may also, from time to time, utilize tax-
equivalent yields. The tax-equivalent yield is calculated by dividing that
portion of the Fund's yield (as calculated above) which is tax-exempt by
one minus a stated tax rate and adding the quotient to that portion of the
Fund's yield, if any (as calculated above) that is not tax-exempt. The
following are the current and effective tax-equivalent yields based on a
tax rate of 39.6% for the Tax-Exempt Fund for the seven day period ended
October 31, 1994:
Investor Class R
Current Tax-Equivalent Yield 4.50 4.83
Effective Tax-Equivalent Yield 4.57 4.92
The Tax-Exempt Fund may from time to time for illustrative purposes
only use tax-equivalency tables which compare tax-exempt yields to their
equivalent taxable yields for relevant federal income tax brackets. The
following is an example of such a table:
Tax Bracket 28% 31% 36% 39.6%
Tax-Exempt Yields Equivalent Taxable Yields
4.5% 6.25% 6.52% 7.03% 7.45%
5.0% 6.94% 7.25% 7.81% 8.28%
5.5% 7.64% 7.97% 8.59% 9.11%
6.0% 8.33% 8.70% 9.38% 9.93%
6.5% 9.03% 9.42% 10.16% 10.76%
A Fund may from time to time advertise non-standardized performance,
including average annual total return, computed as noted above.
For the fiscal year ending October 31, 1994, the average annual total
return for each Fund was as follows:
<TABLE>
<CAPTION>
Investor Class R Class I Class II Class III
-------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Prime Fund 2.14% 3.52% - - -
U.S. Treasury Fund 1.96% 3.37% - - -
Tax-Exempt Fund 1.23% 2.29% - - -
Institutional Prime Fund - - 3.67% - -
Institutional Government Fund - - 2.63% - -
Institutional U.S. Treasury Fund - - 3.55% - -
Institutional Treasury Only Fund - - - 3.53% 1.97%
Institutional Short Term Bond Fund - - 2.82% - -
</TABLE>
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
Federal Tax--General. In order to qualify for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended, ("Code") each Fund -- each of which is treated as a
separate corporation for federal tax purposes-- must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (generally consisting of taxable net investment income and
net short-term capital gain, or, in the case of the Tax-Exempt Fund, at
least 90% of the sum of that income plus its net interest income excludable
from gross income under section 103(a) of the Code -- and must meet several
additional requirements. For each Fund these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies or other income (including gains from options, futures, or
forward contracts) derived with respect to its business of investing in
securities or other currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities held for less than three months -- options,
futures, or forward contracts (other than those on foreign currencies), or
foreign currencies (or options, futures or forward contacts thereon) that
are not directly related to the Fund's principal business of investing in
securities (or options and futures with respect thereto) ("Short-Short
Limitation"); (3) at the close of each quarter of the Fund's taxable year,
at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. government securities, securities of other RICs and
other securities, with those other securities limited, in respect of any
one issuer, to an amount that does not exceed 5% of the value of the Fund's
total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (4) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) of any one issuer.
Dividends and other distributions declared by a Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the year
in which that December 31 falls.
If Fund shares are sold at a loss after being held six months or less
the loss will be treated as a long-term, instead of short-term, capital
loss to the extent of capital gain distributions on those shares.
Investors also should be aware that if shares are purchased shortly before
the record date for any distribution, the shareholder will pay full price
for the shares and receive some portion of the price back as a taxable
dividend or capital gain distribution.
If a Fund retains net capital gain (the excess of net long-term
capital gains over net short-term capital loss) for reinvestment, although
it has no plans to do so, the Fund may elect to treat such amounts as
having been distributed to its shareholders. As a result, the Fund's
shareholders would be subject to tax on the undistributed net capital gain,
would be able to claim their proportionate share of the federal income tax
paid by the Fund on that gain as a credit against their own federal income
tax liabilities, and would be entitled to an increase in their basis for
their Fund shares.
Hedging Transactions. Certain Funds may employ hedging strategies,
such as writing (selling) and purchasing options and futures contracts and
entering into forward contracts. The use of these strategies involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the gains and losses a Fund realizes in connection
therewith. Income from foreign currencies (except certain gains therefrom
may be excluded by future regulations) and income from transactions in
options, futures and forward contracts derived by a Fund with respect to
its business of investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement. However, income from
the disposition of options and futures contracts, other than those on
foreign currencies, will be subject to the Short-Short Limitation if they
are held for less than three months. Income from the disposition of
foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to a Fund's principal business of investing
in securities (or options and futures with respect thereto) also will be
subject to the Short-Short Limitation if they are held for less than three
months.
If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining whether
the Fund satisfies the Short-Short Limitation. Thus, only the net gain (if
any) from the designated hedge will be included in gross income for
purposes of that limitation. Each Fund will consider, when it engages in
hedging strategies, whether it should seek to qualify for this treatment.
To the extent a Fund does not qualify therefor, it may be forced to defer
the closing out of certain options, futures and forward contracts beyond
the time when it otherwise would be advantageous to do so, in order for the
Fund to continue to qualify as a RIC.
Certain futures contracts in which some Funds may invest are "section
1256 contracts." Section 1256 contracts held by a Fund at the end of each
taxable year are "marked-to-market" (that is, treated as sold for their
fair market value) for federal income tax purposes, with the result that
unrealized gains or losses are treated as though they were realized. Sixty
percent of any net gain or loss recognized on these deemed sales, and 60%
of any net realized gain or loss from any actual sales of section 1256
contracts, are treated as long-term capital gain or loss, and the balance
is treated as short-term capital gain or loss. These contracts also may be
marked-to-market for purposes of the 4% excise tax described in the
Prospectuses ("Excise Tax") and for other purposes.
Certain futures contracts entered into by a Fund may result in
"straddles" for federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by a Fund on straddle
positions. In addition, losses realized by the Fund on straddle positions
may be deferred under the straddle rules. If a Fund makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions will be determined under rules
that vary according to the elections made.
Tax-Exempt Fund. Dividends paid by the Tax-Exempt Fund will qualify
as "exempt-interest dividends," and thus will be excludable from gross
income by its shareholders, if that Fund satisfies the requirement that, at
the close of each quarter of its taxable year, at least 50% of the value of
its total assets consists of securities the interest on which is excludable
from gross income under section 103(a) of the Code; that Fund intends to
continue to satisfy this requirement. The aggregate dividends excludable
from the shareholders' treatment of dividends from that Fund under local
and state income tax laws may differ from the treatment thereof under the
Code.
If shares of the Tax-Exempt Fund are sold at a loss after being held
for six months or less, the loss will be disallowed to the extent of any
exempt-interest dividends received on those shares.
Tax-exempt interest attributable to certain private activity bonds
("PABs") (including, in the case of a RIC receiving interest on such bonds,
a proportionate part of the exempt-interest dividends paid by that RIC) is
an item of tax preference for purposes of the alternative minimum tax.
Exempt-interest dividends received by a corporate shareholder also may be
indirectly subject to that tax without regard to whether the Tax-Exempt
Fund's tax-exempt interest was attributable to those bonds.
Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by PABs or industrial
development bonds ("IDBs") should consult their tax advisers before
purchasing shares of the Tax-Exempt Fund because, for users of certain of
these facilities, the interest on those bonds is not exempt from federal
income tax. For these purposes, the term "substantial user" is defined
generally to include a "non-exempt person" who regularly uses in trade or
business a part of a facility financed from the proceeds of PABs or IDBs.
Up to 85% of social security and railroad retirement benefits may be
included in taxable income for recipients whose adjusted gross income
(including income from tax-exempt sources such as the Tax-Exempt Fund) plus
50% of their benefits exceeds certain base amounts. Exempt-interest
dividends paid by that Fund still are tax-exempt to the extent described in
the Fund's Prospectus; they are only included in the calculation of whether
a recipient's income exceeds the established amounts.
If the Tax-Exempt Fund invests in any instrument that generates
taxable income, under the circumstances described in the Prospectus,
distributions of the interest earned thereon will be taxable to that Fund's
shareholders as ordinary income to the extent of that Fund's earnings and
profits. Moreover, if the Tax-Exempt Fund realizes capital gain as a
result of market transactions, any distribution of that gain will be
taxable to its shareholders. There also may be collateral federal income
tax consequences regarding the receipt of exempt-interest dividends by
shareholders such as S corporations, financial institutions and property
and casualty insurance companies. A shareholder falling into any such
category should consult its tax adviser concerning its investment in shares
of the Tax-Exempt Fund.
State and Local Taxes. Depending upon the extent of a Fund's
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located, or in which it is
otherwise deemed to be conducting business, the Fund may be subject to the
tax laws of such states or localities. Shareholders are advised to consult
their tax advisers concerning the application of state and local taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a non-
resident alien individual, a foreign trust or estate, a foreign corporation
or a foreign partnership (a "foreign shareholder"), depends on whether the
income from a Fund is "effectively connected" with a U.S. trade or business
carried on by the shareholder, as discussed generally below. Special U.S.
federal income tax rules that differ from those described below may apply
to certain foreign persons who invest in a Fund. For example, the tax
consequences to a foreign shareholder entitled to claim the benefits of an
applicable tax treaty may be different from those described below. Foreign
shareholders are advised to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in a Fund.
Foreign Shareholders - Income Not Effectively Connected. If the
income from a Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of investment
company taxable income generally will be subject to a U.S. federal
withholding tax of 30% (or lower treaty rate) on the gross amount of the
distribution. Foreign shareholders also may be subject to U.S. federal
withholding tax on income resulting from any election by a Fund to treat
foreign taxes paid by it as paid by its shareholders (see discussion
above), but foreign shareholders will not be able to claim a credit or
deduction for the foreign taxes treated as having been paid by them.
Capital gains realized by foreign shareholders on the sale of Fund
shares and distributions to them of net capital gain, as well as amounts
retained by the Fund that are designated as undistributed capital gains,
generally will not be subject to U.S. federal income tax unless the foreign
shareholder is a non-resident alien individual and is physically present in
the United States for more than 182 days during the taxable year. However,
this rule only applies in exceptional cases, because any individual present
in the United States for more than 182 days during the taxable year
generally is treated as a resident for U.S. federal income tax purposes on
his worldwide income at the graduated rates applicable to U.S. citizens,
rather than the 30% U.S. federal withholding tax rate. In the case of
certain foreign shareholders, a Fund may be required to withhold U.S.
federal income tax at a rate of 31% of capital gain distributions and of
the gross proceeds from a redemption of Fund shares unless the shareholder
furnishes the Fund with a certificate regarding the shareholder's foreign
status.
Foreign Shareholders - Effectively Connected Income. If income from a
Fund is effectively connected with a U.S. trade or business carried on by a
foreign shareholder, then all distributions to that shareholder and any
gains realized by that shareholder on the disposition of the Fund shares
will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. citizens and domestic corporations, as the case may be.
Foreign shareholders also may be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to U.S. federal estate tax on their U.S. situs property, such as
shares of a Fund, that they own at the time of their death. Certain
credits against that tax and relief under applicable tax treaties may be
available.
Pennsylvania Personal Property Tax Exemption. Dreyfus/Laurel has
obtained a Certificate of Authority to do business as a foreign corporation
in Pennsylvania. In the opinion of counsel, shares of Dreyfus/Laurel are
exempt from Pennsylvania personal property taxes.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1994,
including notes to the financial statements and supplementary information
and the Report of Independent Auditors are included in the Annual Report to
shareholders. A copy of the Annual Report accompanies this Statement of
Additional Information. The financial statements from the Annual Report
are incorporated herein by reference.
CUSTODIAN, FUND ACCOUNTANT (ALL FUNDS) AND TRANSFER AND
DIVIDEND DISBURSING AGENT (ALL FUNDS)
Mellon Bank serves as custodian and fund accountant with respect to
each Fund. Mellon Bank provides portfolio and shareholder recordkeeping
required for regulatory and financial reporting purposes. Prior to the
effectiveness of the Investment Management Agreement for its services as
custodian and fund accountant, Mellon Bank was paid an annual fee of
$30,000 per portfolio, and, for all portfolios, an annual administrative
account maintenance fee of $10,000, an annual on-line fee of $3,600, an
asset-based fee of .02% of the first $500 million of Dreyfus/Laurel's net
assets and .01% of net assets over $500 million, plus a specified
transaction fee for each transaction.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, serves as transfer agent ("Transfer Agent") for each Fund's
shares. The Transfer Agent is located at One American Express Plaza,
Providence, Rhode Island 02903.
OTHER INFORMATION
Auditor. KPMG Peat Marwick was appointed by the Directors to serve as
the Funds' independent auditors for the year ending October 31, 1995,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with SEC
(3) review of the annual federal income tax return and the Pennsylvania
excise tax return filed on behalf of Dreyfus/Laurel.
Legal Counsel. Kirkpatrick & Lockhart, 1800 M Street, N.W., South
Lobby - 9th Floor, Washington, D.C. 20036, has passed upon the legality of
the shares offered by the Prospectus and this Statement of Additional
Information.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Municipal and Debt Instruments Ratings
Moody's Investors Service, Inc. (Moody's):
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or
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 are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa Securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment attributes and
are considered "upper medium grade obligations."
Those Bonds in the Aa and A group which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa 1 and A 1.
Standard & Poor's Ratings Group ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
Plus (+) or Minus (-): The AA rating may be modified by the addition
of a plus or minus sign to show relative standing within the AA rating
category.
Short Term Municipal Loans
Moody's:
MIG-1/VMIG-1 -- Securities rated MIG-1/VMIG-1 are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG-2/VMIG-2 -- Loans bearing the MIG-2/VMIG-2 designation are of
high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
S&P:
SP-1 -- Short-term municipal securities bearing the SP-1 designation
have very strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 -- Issues rated SP-2 have satisfactory capacity to pay principal
and interest.
Other Municipal Securities and Commercial Paper Ratings
Moody's:
Commercial paper rated Prime by Moody's is based upon its evaluation
of many factors, including: (l) management of the issuer; (2) the issuer's
industry or industries and the speculative-type risks which may be inherent
in certain areas; (3) the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term
debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the
issue; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-l,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds employed;
(3) conservative capitalization structures with moderate reliance on debt
and ample asset protection; (4) broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and (5) well
established access to a range of financial markets and assured sources of
alternative liquidity.
S&P:
Commercial paper rated by S&P has the following characteristics:
liquidity ratios are adequate to meet cash requirements. Long-term senior
debt is rated A or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-l, A-2, or A-3.
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 (+) sign designation.
Fitch Investors Service, Inc. ("Fitch"):
Commercial paper rated by Fitch reflects Fitch's current appraisal of
the degree of assurance of timely payment of such debt. An appraisal
results in the rating of an issuer's paper as F-1, F-2, F-3, or F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
Duff and Phelps, Inc.:
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers acceptances, irrevocable letters of credit, and
current maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is
the level of an obligor's reliance on short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term ratings is the
refinement of the traditional '1' category. The majority of short-term
debt issuers carry the highest rating, yet quality differences exist within
that tier. As a consequence, Duff & Phelps has incorporated gradations of
'1+' (one plus) and '1-' (one minus) to assist investors in recognizing
those differences.
Duff 1+--Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1- -- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Good Grade
Duff 2--Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
Satisfactory Grade
Duff 3--Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
Non-Investment Grade
Duff 4--Speculative investment characteristics. Liquidity is not
sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
Default
Duff 5--Issuer failed to meet scheduled principal and/or interest
payments.
IBCA, Inc.:
In addition to conducting a careful review of an institution's reports
and published figures, IBCA's analysts regularly visit the companies for
discussions with senior management. These meetings are fundamental to the
preparation of individual reports and ratings. To keep abreast of any
changes that may affect assessments, analysts maintain contact throughout
the year with the management of the companies they cover.
IBCA's analysts speak the languages of the countries they cover, which
is essential to maximize the value of their meetings with management and to
properly analyze a company's written materials. They also have a thorough
knowledge of the laws and accounting practices that govern the operations
and reporting of companies within the various countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, they are taken into account when assigning our
ratings. Before dispatch to subscribers, a draft of the report is
submitted to each company to permit correction of any factual errors and to
enable clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all
ratings and to ensure that individual ratings are assigned consistently for
institutions in all the countries covered. Following the Committee
meetings, ratings are issued directly to subscribers. At the same time,
the company is informed of the ratings as a matter of courtesy, but not for
discussion.
A1+--Obligations supported by the highest capacity for timely
repayment.
A1--Obligations supported by a very strong capacity for timely
repayment.
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital
needs and usually have maturities of one year or less. They include the
following:
1. Tax Anticipation Notes are issued to finance working capital
needs of municipalities. Generally, they are issued in anticipation of
various seasonal tax revenues, such as income, sales, use and business
taxes, and are payable from these specific future taxes.
2. Revenue Anticipation Notes are issued in expectation of receipt
of other types of revenues, such as Federal revenues available under the
Federal Revenue Sharing Programs.
3. Bond Anticipation Notes are issued to provide interim financing
until long-term financing can be arranged. In most cases, the long-term
bonds then provide the money for the repayment of the Notes.
4. Construction Loan Notes are sold to provide construction
financing. After successful completion and acceptance, many projects
receive permanent financing through the Federal Housing Administration
under the Federal National Mortgage Association ("Fannie Mae") or the
Government National Mortgage Association ("Ginnie Mae").
5. Tax-Exempt Commercial Paper is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of state and
local governments to finance seasonal working capital needs or as short-
term financing in anticipation of longer term financing.
Municipals Bonds, which meet longer term capital needs and generally
have maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and
sewer systems. The basic security behind General Obligation Bonds is the
issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can be levied for the
payment of debt service may be limited or unlimited as to the rate or
amount of special assessments.
2. Revenue Bonds generally are secured by the net revenues derived
from a particular facility, group of facilities, or, in some cases, the
proceeds of a special excise or other specific revenue source. Revenue
Bonds are issued to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways, bridges, and tunnels;
port and airport facilities; colleges and universities; and hospitals.
Many of these Bonds provide additional security in the form of a debt
service reserve fund to be used to make principal and interest payments.
Housing authorities have a wide range of security, including partially or
fully insured mortgages, rent subsidized and/or collateralized mortgages,
and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt service reserve
fund.
3. Industrial Development Bonds are considered municipal bonds if
the interest paid thereon is exempt from Federal income tax and are issued
by or on behalf of public authorities to raise money to finance various
privately operated facilities for business and manufacturing, housing,
health, sports, and pollution control. These Bonds are also used to
finance public facilities such as airports, mass transit systems, ports,
and parking. The payment of the principal and interest on such Bonds is
dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property
as security for such payment.
4. Other Municipal Obligations incurred for a variety of financing
purposes, including: Municipal Leases, which may take the form of a lease
or an installment purchase or conditional sale contract, are issued by
state and local governments and authorities to acquire a wide variety of
equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general
obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased
asset to pass eventually to the government issuer) have evolved as a means
for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt.
The debt-issuance limitations of many state constitutions and statutes are
deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease or
contract unless money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis. To reduce this risk,
the Tax-Exempt Money Fund will only purchase Municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest
is backed by an unconditional irrevocable letter of credit, or guarantee of
a bank or other entity acceptable to the Adviser.
THE DREYFUS/LAUREL FUNDS, INC.
PORTFOLIO OF INVESTMENTS
DREYFUS BOND MARKET INDEX FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
U.S. TREASURY
OBLIGATIONS - 74.9%
<C> <S> <C> <C> <C>
$100,000 U.S. Treasury Bonds 11.750% 02/15/01 $ 120,968
100,000 U.S. Treasury Bonds 10.750 05/15/03 118,485
150,000 U.S. Treasury Bonds 8.750 11/15/08 157,135
200,000 U.S. Treasury Bonds 7.250 05/15/16 183,048
100,000 U.S. Treasury Bonds 7.500 11/15/16 93,908
130,000 U.S. Treasury Bonds 8.750 05/15/20 138,969
150,000 U.S. Treasury Bonds 8.125 08/15/21 150,447
200,000 U.S. Treasury Bonds 7.125 02/15/23 179,324
100,000 U.S. Treasury Bonds 6.250 08/15/23 80,054
100,000 U.S. Treasury Notes 4.625 08/15/95 98,917
300,000 U.S. Treasury Notes 5.125 11/15/95 296,586
300,000 U.S. Treasury Notes 4.250 05/15/96 289,665
100,000 U.S. Treasury Notes 6.500 11/30/96 99,305
100,000 U.S. Treasury Notes 6.250 01/31/97 98,612
100,000 U.S. Treasury Notes 5.625 08/31/97 96,213
100,000 U.S. Treasury Notes 6.000 11/30/97 96,756
100,000 U.S. Treasury Notes 5.125 04/30/98 93,421
100,000 U.S. Treasury Notes 4.750 08/31/98 91,408
100,000 U.S. Treasury Notes 6.375 01/15/99 96,380
150,000 U.S. Treasury Notes 5.875 03/31/99 141,462
100,000 U.S. Treasury Notes 6.375 01/15/00 95,188
100,000 U.S. Treasury Notes 5.500 04/15/00 91,153
100,000 U.S. Treasury Notes 7.750 02/15/01 100,808
100,000 U.S. Treasury Notes 5.768 02/15/03 90,987
200,000 U.S. Treasury Notes 5.750 08/15/03 174,458
100,000 U.S. Treasury Notes 7.250 05/15/04 96,345
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $3,664,527) 3,370,002
CORPORATE BONDS AND NOTES - 19.9%
FINANCIAL SERVICES - 7.9%
20,000 American General, Inc. 6.625 06/01/97 19,600
50,000 Associate Corporation of North
America 7.500 05/15/99 49,062
50,000 AVCO Financial Services, Inc. 7.500 11/15/96 50,250
25,000 BankAmerica Corporation 7.750 07/15/02 24,031
50,000 Beneficial Corporation 9.125 02/15/98 52,188
25,000 Commercial Credit Group 6.700 08/01/99 23,937
40,000 Ford Motor Credit Company 8.000 06/15/02 39,150
50,000 International Lease Finance
Corporation 4.750 01/15/97 47,375
25,000 NationsBank Corporation 6.625 01/15/98 24,406
25,000 Norwest Financial, Inc. 5.500 04/15/98 23,375
353,374
UTILITIES - 4.9%
20,000 B.P. North America, Inc. 9.875 03/15/04 22,100
25,000 Consolidated Edison 6.250 04/01/98 23,938
50,000 Duke Power Company 7.500 04/01/99 49,313
25,000 General Electric Capital
Corporation 8.750 11/26/96 25,781
25,000 New Jersey Bell Telephone
Company 8.000 06/01/22 23,562
25,000 Public Service Electric & Gas
Company 8.750 07/01/99 25,688
50,000 Union Electric Company 5.500 03/01/97 48,000
218,382
RETAIL - 3.2%
100,000 Sears Roebuck & Company 8.550 08/01/96 102,000
50,000 Wal-Mart Stores, Inc. 5.500 03/01/98 46,875
148,875
BASIC INDUSTRIES - 2.1%
50,000 Aluminum Company of America 5.750 02/01/01 44,188
55,000 Gannett, Inc. 5.850 05/01/00 50,463
94,651
CONSUMER NON-DURABLES - 1.8%
25,000 Hershey Foods Corporation 8.800 02/15/21 25,469
25,000 PepsiCo, Inc. 7.625 12/18/98 24,875
30,000 Procter & Gamble Company 8.700 08/01/01 31,087
81,431
TOTAL CORPORATE BONDS AND NOTES
(Cost $958,746) 896,713
REPURCHASE AGREEMENT - 1.0%
(Cost $45,446)
45,446 Agreement with Barclays de Zoete Wedd,
dated 10/31/94 bearing 4.780% to be
repurchased at $45,452 on 11/01/94,
collateralized by $46,005 U.S. Treasury
Bills, 4.360% due 11/10/94 45,446
TOTAL INVESTMENTS (Cost $4,668,719*) 95.8% 4,312,161
OTHER ASSETS AND LIABILITIES (NET) 4.2 189,928
NET ASSETS 100.0% $4,502,089
<FN>
* Aggregate cost for Federal tax purposes.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DREYFUS BOND MARKET INDEX FUND OCTOBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $4,668,719) (Note 1)
See accompanying schedule $4,312,161
Interest receivable 92,985
Receivable for investment securities sold 52,188
Receivable from investment adviser (Note 2) 45,107
Receivable for Fund shares sold 1,976
TOTAL ASSETS 4,504,417
LIABILITIES
Investment management fee payable (Note 2) $ 1,625
Accrued Directors' fees and expenses (Note 2) 621
Dividends payable 81
Distribution fee payable (Note 3) 1
TOTAL LIABILITIES 2,328
NET ASSETS $4,502,089
NET ASSETS consist of:
Accumulated net realized loss on investments
sold $ (68,933)
Unrealized depreciation of investments (356,558)
Par value 492
Paid-in capital in excess of par value 4,927,088
TOTAL NET ASSETS $4,502,089
NET ASSET VALUE
INVESTOR SHARES
Net asset value, offering and redemption price per
share ($38,186 / 4,175 shares of capital stock
outstanding) $9.15
CLASS R SHARES
Net asset value, offering and redemption price per
share ($4,463,903 / 488,054 shares of capital stock
outstanding) $9.15
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF OPERATIONS
DREYFUS BOND MARKET INDEX FUND
FOR THE PERIOD ENDED OCTOBER 31, 1994*
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $ 313,147
EXPENSES
Transfer agent fees (Note 2) $ 18,762
Custodian fees (Note 2) 11,701
Registration and filing fees 11,340
Investment management fee (Note 2) 10,268
Investment advisory fee (Note 2) 9,253
State tax expense 5,693
Legal and audit fees 5,307
Amortization of organization costs (Note 6) 3,202
Directors' fees and expenses (Note 2) 2,664
Administration fee (Note 2) 876
Distribution fee (Note 3) 30
Other 1,701
Expenses reimbursed by investment adviser (Note 2) (57,622)
Total Expenses 23,175
NET INVESTMENT INCOME 289,972
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(Notes 1 and 4):
Net realized loss on investments sold during the period (68,933)
Net unrealized depreciation of investments during the period (356,558)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (425,491)
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(135,519)
<FN>
* The Fund commenced operations on November 30, 1993.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
DREYFUS BOND MARKET INDEX FUND
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*
<S> <C>
Net investment income $ 289,972
Net realized loss on investments sold (68,933)
Net unrealized depreciation of investments during
the period (356,558)
Net decrease in net assets resulting from operations (135,519)
Distributions to shareholders from net investment:
Investor Shares (622)
Class R Shares (289,350)
Net increase in net assets from Fund share transactions
(Note 5):
Investor Shares 39,119
Class R Shares 4,888,461
Net increase in net assets 4,502,089
NET ASSETS
Beginning of period --
End of period $4,502,089
<FN>
* The Fund commenced operations on November 30, 1993.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
FINANCIAL HIGHLIGHTS
DREYFUS BOND MARKET INDEX FUND
Reference is made to page 5 of the Fund's prospectus dated April 10, 1995.
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
FINANCIAL HIGHLIGHTS
DREYFUS BOND MARKET INDEX FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Reference is made to page 6 of the Fund's Prospectus dated April 10, 1995.
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds, Inc. (the
"Investment Company"), The Dreyfus/Laurel
Funds Trust, The Dreyfus/Laurel Tax-Free
Municipal Funds and The Dreyfus/Laurel
Investment Series are all registered open-end
management investment companies that are now
part of The Dreyfus Family of Funds. The
Investment Company is a series mutual fund
with 19 separate investment portfolios. This
report contains financial statements for the
Dreyfus Bond Market Index Fund (the "Fund").
The Investment Company was incorporated on
August 6, 1987 as a Maryland corporation and
is registered with the Securities and
Exchange Commission under the Investment
Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management
investment company. The Fund commenced
operations on November 30, 1993. The Fund
offers two classes of shares: Investor Shares
and Class R Shares (effective October 17,
1994, the Trust Shares were redesignated as
Class R Shares). Investor Shares are sold
primarily to retail investors and bear a
distribution fee. Class R Shares are sold
primarily to bank trust departments and other
financial service providers acting on behalf
of customers having a qualified trust or
investment account or relationship at such
institution, and bear no distribution fee.
Each class of shares has identical rights and
privileges, except with respect to the
distribution fee and voting rights on matters
affecting a single class. The following is a
summary of significant accounting policies
consistently followed by the Fund in the
preparation of its financial statements in
accordance with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
Investments in securities traded on a
national securities exchange are valued at
the last reported sales price or, in the
absence of a recorded sale, at the mean of
the closing bid and asked prices. Over-the-
counter securities are valued at the mean of
the latest bid and asked prices. When market
quotations are not readily available,
securities are valued at fair value as
determined in good faith by the Board of
Directors. Bonds are valued through
valuations obtained from a commercial pricing
service or at the most recent mean of the bid
and asked prices provided by investment
dealers in accordance with procedures
established by the Board of Directors.
Investments in U.S. Government securities
(other than short-term securities) are valued
at the most recent quoted bid price in the
over-the-counter market. Debt securities
with maturities of 60 days or less from the
valuation day are valued on the basis of
amortized cost.
(B) REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement
transactions. Under the terms of a typical
repurchase agreement, the Fund, through its
custodian, takes possession of an underlying
debt obligation subject to an obligation of
the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon
price and time, thereby determining the yield
during the Fund's holding period. This
arrangement results in a fixed rate of return
that is not subject to market fluctuations
during the Fund's holding period. The value
of the collateral is at least equal, at all
times, to the total amount of the repurchase
obligations, including interest. In the
event of counterparty default, the Fund has
the right to use the collateral to offset
losses incurred. There is potential loss to
the Fund in the event the Fund is delayed or
prevented from exercising its rights to
dispose of the collateral securities,
including the risk of a possible decline in
the value of the underlying securities during
the period while the Fund seeks to assert its
rights. The Fund's investment manager, acting
under the supervision of the Board of
Directors, reviews the value of the
collateral and the creditworthiness of those
banks and dealers with which the Fund enters
into repurchase agreements to evaluate
potential risks.
(C) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of
the trade date. Interest income is recorded
on the accrual basis. Realized gains and
losses from securities sold are recorded on
the identified cost basis. Investment income
and realized and unrealized gains and losses
are allocated based upon relative average
daily net assets of each class.
(D) EXPENSE ALLOCATION
Expenses of the Fund not directly
attributable to the operations of any class
of shares are prorated between the classes
based upon the relative average daily net
assets of each class. Distribution expense
is directly attributable to a particular
class of shares and is charged only to that
class' operations.
(E) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any,
are determined on a class level and are
declared daily and paid monthly.
Distributions from net realized capital
gains, if any, are determined on Fund level
and are declared and paid annually.
Additional distributions of net investment
income and capital gains for the Fund may be
made at the discretion of the Board of
Directors in order to avoid the 4%
nondeductible Federal excise tax. Income
distributions and capital gain distributions
on a Fund level are determined in accordance
with income tax regulations, which may differ
from generally accepted accounting
principles. These differences are primarily
due to differing treatments of income and
gains on various investment securities held
by the Fund, timing differences and differing
characterization of distributions made by the
Fund as a whole.
(F) FEDERAL INCOME TAXES
The Fund intends to qualify as a regulated
investment company by complying with the
requirements of the Internal Revenue Code
applicable to regulated investment companies
and by distributing substantially all of its
taxable income to its shareholders.
Therefore, no federal income tax provision is
required.
2. INVESTMENT MANAGEMENT FEE, DIRECTORS' FEES AND
OTHER RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the
Investment Company's investment management
agreement with Mellon Bank, N.A. ("Mellon
Bank"), a wholly-owned subsidiary of Mellon
Bank Corporation, was transferred to The
Dreyfus Corporation (the "Manager"), a wholly-
owned subsidiary of Mellon Bank. The Manager
provides, or arranges for one or more third
parties to provide, investment advisory,
administrative, custody, fund accounting and
transfer agency services to the Investment
Company. The Manager also directs the
investments of the Fund in accordance with its
investment objective, policies and
limitations. For these services, the Fund
pays the Manager a fee, calculated daily and
paid monthly, at the annual rate of 0.40% of
the value of the Fund's average daily net
assets. Out of its fee, the Manager pays all
of the expenses of the Fund except brokerage,
taxes, interest, Rule 12b-1 distribution fees
and expenses, fees and expenses of non-
interested Directors (including counsel fees)
and extraordinary expenses. In addition, the
Manager is required to reduce its fee in an amount
equal to the Fund's allocable portion of fees and
expenses of the non-interested Directors (including
counsel).
For the period from April 4, 1994 to October 16,
1994, Mellon Bank served as the Investment
Company's investment manager pursuant to the
investment management agreement described
above. Prior to April 4, 1994, the Investment
Company had individual contracts with Mellon
Bank to provide custody, accounting, and
transfer agency services to the Fund.
Effective April 4, 1994, custody, accounting,
and transfer agency services are covered by
the investment management agreement described
above.
Prior to April 4, 1994, the Investment
Company had an investment advisory agreement
under which the Fund paid Mellon Bank an
annual fee of 0.40% of the value of the Fund's
average daily net assets for investment
advisory services. For the period from
November 30, 1993 through April 3, 1994,
Mellon Bank, as investment adviser,
voluntarily agreed to reimburse expenses in
the amount of $57,622.
Prior to September 23, 1994, Frank Russell
Investment Management Company (the
"Administrator") served as the Fund's
administrator and provided, pursuant to an
administration agreement, various
administrative and corporate secretarial
services to the Fund. For the period from
April 4, 1994 to September 23, 1994, Mellon
Bank, as investment manager, paid the
Administrator's fee out of the management fee
described above. Prior to April 4, 1994, the
Investment Company paid the Administrator the
following fees for the services supplied by the
Administrator pursuant to the administration
agreement: (i) an annual fee of $500,000; (ii)
an annual asset-based fee, payable monthly on a
pro rata basis, based on the following
percentages of the aggregate average daily net
assets of the Investment Company: up to and
including $10 billion -- 0.01%, over $10
billion -- 0.005%; and (iii) all start-up costs
(including out-of-pocket, blue sky registration
and personnel costs) for new portfolios (prior
to and for 6 months following commencement of
operations).
Prior to April 4, 1994, the Investment Company
had a contract with Russell Fund Distributors,
Inc. to serve as distributor of its shares.
Effective April 4, 1994 through October 16,
1994, Funds Distributor, Inc. served as
distributor of the Investment Company's shares.
Effective as of October 17, 1994, Premier
Mutual Fund Services, Inc. ("Premier") serves
as the Investment Company's distributor.
Premier also serves as the Investment Company's
sub-administrator and, pursuant to a sub-
administration agreement with the Manager,
provides various administrative and corporate
secretarial services to the Investment Company.
No officer or employee of Premier (or of any
parent, subsidiary or affiliate thereof)
receives any compensation from The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel
Funds Trust, The Dreyfus/Laurel Tax-Free
Municipal Funds or The Dreyfus/Laurel
Investment Series (collectively, "The
Dreyfus/Laurel Funds") for serving as an
officer or Director/Trustee of The
Dreyfus/Laurel Funds. In addition, no officer
or employee of the Manager (or of any parent,
subsidiary or affiliate thereof) serves as an
officer or Director/Trustee of The
Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds
pay each Director/Trustee who is not an officer
or employee of Premier (or any parent,
subsidiary or affiliate thereof), $27,000 per
annum, $1,000 for each Board meeting attended
and $750 for each Audit Committee meeting
attended, and reimburse each Director/Trustee
for travel and out-of-pocket expenses. Prior
to April 4, 1994, the Investment Company paid
each Director $15,000 per annum plus
reimbursement for travel and out-of-pocket
expenses.
3. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940
Act relating to its Investor Shares. Under the
Plan, the Fund may pay annually up to 0.25% of
the value of the average daily net assets
attributable to its Investor Shares to
compensate Premier and Dreyfus Service
Corporation, an affiliate of the Manager, for
shareholder servicing activities and Premier
for activities primarily intended to result in
the sale of Investor Shares. Class R Shares
bear no distribution fee. Prior to April 4,
1994, the Fund had a distribution and
shareholder services plan under which the Fund
was authorized to spend annually up to 0.35% of
its average daily net assets on distribution
and shareholder servicing expenses.
Under its terms, the Plan shall remain in
effect from year to year, provided such
continuance is approved annually by a vote of a
majority of those Directors who are not
"interested persons" of the Investment Company
and who have no direct or indirect financial
interest in the operation of the Plan or in any
agreement related to the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases of securities excluding
short-term investments and U.S. government
securities, for the period ended October 31,
1994 was $963,949. There were no proceeds from
sales of securities excluding short-term
investments and U.S. government securities, for
the period ended October 31, 1994.
The cost of purchases and proceeds from sales
of long-term U.S. government securities, for
the period ended October 31, 1994, aggregated
$13,205,540 and $9,449,038, respectively.
At October 31, 1994, aggregate gross unrealized
depreciation for all securities in which there
was an excess of tax cost over value amounted
to $356,558. There was no gross unrealized
appreciation for any securities in which there
was an excess of value over tax cost.
5. SHARES OF CAPITAL STOCK
The Investment Company has authority to issue
25 billion shares of capital stock with a par
value of $.001.
The Fund has authority to issue two classes of
shares. The table below summarizes
transactions in Fund shares for the periods
indicated:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
INVESTOR SHARES:
Sold 4,136 $38,751
Issued as reinvestment
dividends and distributions 50 468
Redeemed (11) (100)
Net increase 4,175 $39,119
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
CLASS R SHARES:
Sold 1,448,406 $14,406,896
Issued as reinvestment of
dividends and distributions 27,373 261,497
Redeemed (987,725) (9,779,932)
Net increase 488,054 $ 4,888,461
<FN>
*The Fund commenced operations on November 30,
1993 and began selling Investor Shares on April
28, 1994. Those shares outstanding prior to
April 4, 1994 were designated as Trust Shares.
Effective as of October 17, 1994, the Fund's
Trust Shares were redesignated as Class R
Shares.
</TABLE>
6. ORGANIZATION COSTS
The Fund paid all costs in connection with the
Fund's organization including the fees and
expenses of registering and qualifying the
Fund's shares for distribution under Federal
and state securities regulations. Prior to
April 4, 1994, all such costs were being
amortized on the straight-line method over a
period of five years. On April 4, 1994, the
remaining unamortized organization costs were
reimbursed by Mellon Bank as the investment
adviser.
7. CAPITAL LOSS CARRYFORWARD
At October 31, 1994, the Fund had available for
federal income tax purposes unused capital loss
carryforward of $68,933 expiring in the year
2002.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statement of
assets and liabilities of the Dreyfus Bond
Market Index Fund of The Dreyfus/Laurel Funds,
Inc., including the portfolio of investments,
as of October 31, 1994, and the related
statements of operations, statement of changes
in net assets, and the financial highlights
for the period then ended. 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 audit.
We conducted our audit 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 October 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 audit
provides 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 the Dreyfus Bond Market
Index Fund of The Dreyfus/Laurel Funds, Inc.,
as of October 31, 1994, and the results of its
operations, changes in its net assets, and the
financial highlights for the period then
ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 9, 1994
THE DREYFUS/LAUREL FUNDS, INC.
PORTFOLIO OF INVESTMENTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
COMMON STOCKS - 99.4%
Japan - 24.5%
2,000 Advantest $ 70,175
7,000 Ajinomoto Company 96,079
4,000 Dai-Ichi Kango Bank 73,065
4,000 Fuji Bank Ltd. 88,751
7,000 Fuji Photo Film Ltd. 166,873
13,000 Furukawa Electric 89,752
1,000 Hirose Electronics 59,340
3,000 House Food Industrial Company 63,467
2,000 Industrial Bank of Japan 61,920
5,000 Kansai Electric Power 125,903
13,000 Komatsu Ltd. 123,426
45,000 Konica Corporation 349,226
22,000 Kubota Corporation 168,916
3,000 Marui Company 54,799
16,000 Mitsubishi Heavy Industries 130,279
10,000 Nomura Securities Company 209,494
7,000 Sakura Bank 96,078
2,000 Sega Enterprises 103,818
4,000 Shimachu Company 136,223
3,000 Sumitomo Bank Ltd. 56,347
6,000 Sumitomo Marine & Fire 54,303
3,000 Taisho Pharmaceutical Company 55,108
6,000 Tokai Bank 74,303
1,000 Tokyo Electric Power Company 29,309
5,000 Toto 78,431
20,000 Toyo Kanetsu 123,426
6,000 Toyota Motor Company 132,508
5,000 Yasuda Trust and Banking Company Ltd. 44,530
2,915,849
Germany - 21.9%
650 Agiv AG 227,119
450 Allianz Worldwide AG 690,282
50 Bilfinger & Berger Bau AG 28,226
50 Brau und Brunnen 12,461
100 Colonia Konzern AG 84,777
100 Continental AG 14,708
200 Dyckerhoff AG 91,093
100 Heidelberg Zement AG 83,646
100 Herlitz AG 21,477
200 Hochtief AG 122,610
900 Industrie-Werlke Karl Augsburg 201,669
100 Karstadt AG $41,291
350 Kaufhof AG 118,687
700 Linde AG 418,664
150 Munchener Ruckversicherungs 276,272
50 Sap AG 32,215
100 Schering AG 66,791
110 Wella AG 79,723
2,611,711
France - 16.3%
650 Accor 77,124
1,100 Alcatel Alsthom Cie Generale d'Electricite 100,825
2,500 AXA Company 115,885
1,500 Banque Nationale de Paris 74,250
800 Cie Bancaire SA 77,988
3,600 Cie De Suez 172,188
600 Compagnie de Saint Gobain 76,085
1,300 Compagnie Financiere de Suez 86,465
400 Credit Foncier de France 60,744
3,000 C.S.F.+ 81,387
400 Eiffage 67,968
400 L'Oreal Group 86,843
500 LVHM Moet Hennessey 80,590
800 Pechiney International + 60,977
900 Peugeot SA 134,751
800 Pinault-Printemps Redoute 144,325
3,900 Rhone-Poulenc SA 96,184
200 Sagem 99,311
1,800 Societe National Elf Aquitaine 133,003
400 Saint Louis - Bouchon 112,632
1,939,525
Great Britian - 13.1%
25,000 Allied Irish Banks 102,203
14,000 Barclays Bank 133,927
18,000 British Petroleum Company 128,335
21,000 British Telecommunications 134,957
24,000 BTR 120,289
20,000 Caradon 86,341
3,700 Glaxo Holdings 36,182
20,000 Grand Metropolitan 135,726
33,000 Hanson Trust Plc $124,385
22,000 Marks & Spencer 148,579
9,000 Reed International 110,674
20,000 Smithkline Beecham Group, Series A 133,600
16,000 Williams Holdings 90,528
6,000 Wolseley 76,137
1,561,863
Switzerland - 3.6%
200 Brown Boveri & Cie AG, Series A 171,800
100 Ciba - Geigy AG 59,046
200 CS Holdings 87,494
90 Nestle SA 84,195
50 Sandoz Group AG 26,097
428,632
Hong Kong - 2.7%
37,000 Cheung Kong (Holdings) 178,117
48,000 Hong Kong & China Gas 91,000
90,000 South China Morning Post Holdings 56,196
325,313
Malaysia - 2.7%
7,000 Malayan Banking Berhad 47,671
23,000 Resorts World Berhad 145,832
16,000 Telekom Malaysia Berhad 129,628
323,131
Netherlands - 2.5%
20,000 Elsevier NV 204,057
1,000 Internationale Nederlanden Groep NV 46,803
1,000 Oce-Van Der Grinten NV 44,430
295,290
Australia - 2.3%
9,000 Ampolex Limited 27,268
9,000 Amcor Limited 59,883
2,700 Broken Hill Properties 41,424
30,000 Pacific Dunlop Ltd. 91,117
17,000 Westpac Banking Corporation 57,188
276,880
Italy - 1.9%
20,000 Fiat SpA + $81,643
17,000 Mediobanca SpA 141,225
222,868
Spain - 1.8%
3,000 Empresa Nacional De Elec 137,633
6,000 Telefonica Nacional d'Espana 81,285
218,918
Belgium - 1.6%
600 Petrofina SA NPV 184,103
Denmark - 1.2%
4,000 Danisco 142,044
Singapore - 1.1%
14,000 Keppel Corporation 128,703
Norway - 0.8%
8,500 Aker AS 99,457
New Zealand - 0.5%
23,000 Fisher & Paykel 60,873
Finland - 0.5%
4,000 Pohjola Insurance Co., Series B 58,931
Austria - 0.4%
300 Oesterreichische Landerbank 46,656
TOTAL COMMON STOCKS (Cost $11,802,968) 11,840,747
TOTAL INVESTMENTS (Cost $11,802,968*) 99.4% 11,840,747
OTHER ASSETS AND LIABILITIES (NET) 0.6 74,010
NET ASSETS 100.0% $11,914,757
<FN>
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
AT OCTOBER 31, 1994, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
% OF NET VALUE
ASSETS (NOTE 1)
<S> <C> <C>
COMMON STOCKS:
Financial Services 23.9% $ 2,850,692
Capital Goods 14.2 1,696,465
Basic Industries 10.9 1,292,783
Consumer Services 7.7 913,539
Energy 7.1 842,508
Consumer Non-Durables 6.9 827,652
Consumer Durables 5.6 672,200
Manufacturing 5.4 646,812
Utilities 4.4 522,210
Healthcare 4.1 476,255
Technology 3.2 385,434
Telecommunications 3.0 360,226
Transportation 3.0 353,971
TOTAL COMMON STOCKS 99.4% 11,840,747
TOTAL INVESTMENTS 99.4 11,840,747
OTHER ASSETS AND LIABILITIES (Net) 0.6 74,010
NET ASSETS 100.0% $11,914,757
</TABLE>
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND OCTOBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $11,802,968) (Note 1)
See accompanying schedule $11,840,747
Cash and foreign currency (Cost $109,195) 109,546
Dividends receivable 23,308
Receivable from investment adviser (Note 2) 130
TOTAL ASSETS 11,973,731
LIABILITIES
Investment management fee payable (Note 2) $ 29,370
Payable for investment securities purchased 29,205
Accrued Directors' fees and expenses (Note 2) 396
Distribution fee payable (Note 3) 3
TOTAL LIABILITIES 58,974
NET ASSETS $11,914,757
NET ASSETS consist of:
Undistributed net investment income $ 27,084
Net unrealized appreciation of investments, foreign
currency transactions and net other assets 38,721
Par value 1,185
Paid-in capital in excess of par value $11,847,767
TOTAL NET ASSETS 11,914,757
NET ASSET VALUE
INVESTOR SHARES
Net asset value, offering and redemption price per
share ($70,750 / 7,035 shares of capital stock
outstanding) $ 10.06
CLASS R SHARES
Net asset value, offering and redemption price per
share ($11,844,007 / 1,177,712 shares of capital
stock outstanding) $ 10.06
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF OPERATIONS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR THE PERIOD ENDED OCTOBER 31, 1994*
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $4,994) $ 38,636
Interest 35,101
TOTAL INVESTMENT INCOME 73,737
EXPENSES:
Investment management fee (Note 2) $29,370
Directors' fees and expenses (Note 2) 396
Distribution fee (Note 3) 11
TOTAL EXPENSES 29,777
NET INVESTMENT INCOME 43,960
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 4):
Net realized gain/(loss) on:
Forward foreign exchange contracts 1,713
Foreign currencies (18,589)
Net realized loss on investments during the period (16,876)
Net change in unrealized appreciation/(depreciation) of:
Securities 37,779
Currencies and net other assets 942
Net unrealized appreciation of investments during
the period 38,721
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 21,845
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 65,805
<FN>
* The Fund commenced operations on August 12, 1994.
</TABLE>
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*
<S> <C>
Net investment income $ 43,960
Net realized loss on forward foreign exchange contracts and
currency transactions during the period (16,876)
Net unrealized appreciation on investments,
currencies and net other assets during the period 38,721
Net increase in net assets resulting from operations 65,805
Net increase in net assets from Fund share transactions
(Note 5)
Investor Shares 69,582
Class R Shares 11,779,370
Net increase in net assets 11,914,757
NET ASSETS:
Beginning of period -
End of period (including undistributed net investment
income of $27,084 at October 31, 1994) $11,914,757
<FN>
* The Fund commenced operations on August 12, 1994.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
Reference is made to page 5 of the Fund's Prospectus dated April 10, 1995.
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Reference is made to page 6 of the Fund's Prospectus dated April 10, 1995.
See Notes to Financial Statements.
THE DREYFUS/LAUREL FUNDS, INC.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds, Inc. (the "Investment Company"), The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal
Funds and The Dreyfus/Laurel Investment Series are all registered
open-end management investment companies that are now part of The
Dreyfus Family of Funds. The Investment Company is a series mutual
fund with 19 separate investment portfolios. This report contains
financial statements for the Dreyfus International Equity Allocation
Fund (the "Fund"). The Investment Company was incorporated on
August 6, 1987 as a Maryland corporation and is registered with the
Securities and Exchange Commission under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund commenced operations on
August 12, 1994. The Fund offers two classes of shares: Investor
Shares and Class R Shares (effective October 17, 1994, the Trust
Shares were redesignated as Class R Shares). Investor Shares are
sold primarily to retail investors and bear a distribution fee.
Class R Shares are sold primarily to bank trust departments and
other financial service providers acting on behalf of customers
having a qualified trust or investment account or relationship at
such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to
the distribution fee and voting rights on matters affecting a single
class. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements in accordance with generally accepted
accounting principles.
(A) PORTFOLIO VALUATION
Investments in securities traded on a national securities exchange
are valued at the last reported sales price or, in the absence of a
recorded sale, at the last current bid quotation. Over-the-counter
securities are valued on the basis of the last sale price. When
market quotations are not readily available, securities are valued
at fair value as determined in good faith by the Board of Directors.
Debt securities with maturities of 60 days or less from the
valuation day are valued on the basis of amortized cost. Foreign
securities are generally valued at the proceeding closing values of
such securities on their respective exchanges, except that when an
occurrence subsequent to the time a value was so established is
likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by
or under the direction of the Board of Directors or its delegates.
(B) FORWARD FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in forward foreign currency contracts. Forward
foreign currency contracts are valued at the forward rate and are
markedto-market daily. The change in market value is recorded by
the Fund as an unrealized gain or loss. When the contract is
closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's investment
securities, but it does establish a rate of exchange that can be
achieved in the future. Although forward foreign currency contracts
limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result
should the value of the currency increase. In addition, the Fund
could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts.
(C) FOREIGN CURRENCY
The books and records of the Fund are maintained in United States
(U.S.) dollars. Any foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period. Purchases and
sales of investment securities, income and expenses are translated
on the respective dates of such transactions. Unrealized gains and
losses which result from changes in foreign currency exchange rates
have been included in the unrealized appreciation/(depreciation) of
investments and net other assets. Net realized foreign currency
gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement
date on investment security transactions, foreign currency
transactions and the difference between the amounts of interest and
dividends recorded on the books and the amount actually received.
The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial purchase trade
date and subsequent sale trade date is included in realized gains
and losses on investment securities sold.
(D) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Realized gains and losses from
securities sold are recorded on the identified cost basis.
Investment income and realized and unrealized gains and losses are
allocated based upon relative average daily net assets of each
class.
(E) EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of
any class of shares are prorated between the classes based upon the
relative average daily net assets of each class. Distribution
expense is directly attributable to a particular class of shares and
is charged only to that class's operations.
(F) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are determined on a
class level and are declared and paid annually. Distributions from
net realized capital gains, if any, are determined on a Fund level
and are declared and paid annually. Additional distributions of net
investment income and capital gains for the Fund may be made at the
discretion of the Board of Directors in order to avoid the 4%
nondeductible federal excise tax. Income distributions and capital
gain distributions on a Fund level are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment
securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund as a whole.
Permanent differences incurred during the year ended October 31,
1994, resulted from different book and tax accounting for certain
investment securities.
(G) FEDERAL INCOME TAXES
The Fund intends to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code
applicable to regulated investment companies and by distributing
substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
2. INVESTMENT MANAGEMENT FEE, DIRECTORS' FEES AND OTHER
RELATED PARTY TRANSACTIONS
Effective as of October 17, 1994, the Investment Company's investment
management agreement with Mellon Bank, N.A.("Mellon Bank"), a wholly-
owned subsidiary of Mellon Bank Corporation, was transferred to The
Dreyfus Corporation (the "Manager"), a wholly-owned subsidiary of
Mellon Bank. The Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody,
fund accounting and transfer agency services to the Investment
Company. The Manager also directs the investments of the Fund in
accordance with its investment objective, policies and limitations.
For these services, the Fund pays the Manager a fee, calculated daily
and paid monthly, at the annual rate of 1.50% of the value of the
Fund's average daily net assets. Out of its fee, the Manager pays
all of the expenses of the Fund except brokerage, taxes, interest,
Rule 12b-1 distribution fees and expenses, fees and expenses of non-
interested Directors (including counsel fees) and extraordinary
expenses. In addition, the Manager is required to reduce its fee in
an amount equal to the Fund's allocable portion of fees and expenses
of the non-interested Directors (including counsel).
For the period from August 12, 1994 (commencement of operations) to
October 16, 1994, Mellon Bank served as the Fund's investment manager
pursuant to the investment management agreement described above.
S.A.M. Finance, S.A. ("Sub-Advisor"), a wholly-owned subsidiary of
Credit Commercial de France, serves as the Fund's Sub-Advisor
pursuant to a subadvisory agreement among the Fund, the Sub-Advisor
and the Manager. For its services, the Sub-Advisor is paid an annual
fee of 0.25% of the value of the Fund's average daily net assets and
is paid by the Manager out of its fee.
Prior to September 23, 1994, Frank Russell Investment Management
Company (the "Administrator") served as the Fund's administrator and
provided, pursuant to an administration agreement, various
administrative and corporate secretarial services to the Fund. For
the period from August 12, 1994 (commencement of operations) to
September 23, 1994, Mellon Bank, as investment manager, paid the
Administrator's fee out of the management fee described above.
For the period from August 12, 1994 (commencement of operations)
through October 16, 1994, Funds Distributor, Inc. served as
distributor of the Investment Company's shares. Effective as of
October 17, 1994, Premier Mutual Fund Services, Inc. ("Premier")
serves as the Investment Company's distributor. Premier also serves
as the Investment Company's sub-administrator and, pursuant to a
sub-administration agreement with the Manager, provides various
administrative and corporate secretarial services to the Investment
Company.
No officer or employee of Premier (or of any parent, subsidiary or
affiliate thereof) receives any compensation from The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-
Free Municipal Funds or The Dreyfus/Laurel Investment Series
(collectively, "The Dreyfus/Laurel Funds") for serving as an officer
or Director/Trustee of The Dreyfus/Laurel Funds. In addition, no
officer or employee of the Manager (or of any parent, subsidiary or
affiliate thereof) serves as an officer or Director/Trustee of The
Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds pay each
Director/Trustee who is not an officer or employee of Premier (or
any parent, subsidiary or affiliate thereof), $27,000 per annum,
$1,000 for each Board meeting attended and $750 for each Audit Committee
meeting attended, and reimburse each Director/Trustee for travel and
out-of-pocket expenses.
3. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act relating to its Investor Shares.
Under the Plan, the Fund may pay annually up to 0.25% of the value
of the average daily net assets attributable to its Investor Shares
to compensate Premier and Dreyfus Service Corporation, an affiliate
of the Manager, for shareholder servicing activities and Premier for
activities primarily intended to result in the sale of Investor
Shares. Class R Shares bear no distribution fee.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a
majority of those Directors who are not "interested persons" of the
Investment Company and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan.
4. SECURITIES TRANSACTIONS
The cost of purchases of securities, excluding short-term
investments and U.S. government securities, for the period ended
October 31, 1994 was $11,802,968. There were no proceeds from sales
of securities for the period ended October 31, 1994.
At October 31, 1994, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost
amounted to $274,767 and aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost over value
amounted to $236,988.
5. SHARES OF CAPITAL STOCK
The Investment Company has authority to issue 25 billion of capital
stock with a par value of $.001. The Fund has authority to issue
two classes of shares. The table below summarizes transactions in
Fund shares for the period indicated:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
INVESTOR SHARES:
Sold 7,045 $69,682
Redeemed (10) (100)
Net increase 7,035 $69,582
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
SHARES AMOUNT
<S> <C> <C>
CLASS R SHARES:
Sold 1,181,714 $11,819,150
Redeemed (4,002) (39,780)
Net increase 1,177,712 $11,779,370
<FN>
* The Fund commenced operations on August 12, 1994. Effective as of
October 17, 1994, the Fund's Trust Shares were redesignated as Class
R Shares.
</TABLE>
6. FOREIGN SECURITIES
The Fund purchases securities of foreign issuers. Investing in
securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with
investing in U.S. companies and the U.S. government. These risks
include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statement of assets and liabilities
of the Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc., including the portfolio of investments,
as of October 31, 1994, and the related statement of operations,
statement of changes in net assets, and the financial highlights for
the period from August 12, 1994 (commencement of operations) to
October 31, 1994. 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 audit.
We conducted our audit 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
October 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 audit
provides 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 the Dreyfus International Equity Allocation
Fund of The Dreyfus/Laurel Funds, Inc., as of October 31, 1994, and
the results of its operations, changes in its net assets, and the
financial highlights for the period referred to above, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 9, 1994
PORTFOLIO OF INVESTMENTS
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
DOMESTIC COMMERCIAL PAPER -- 51.9%
$ 5,000,000 Anheuser-Busch Companies, Inc.
4.850% due 11/01/94 $ 5,000,000
4,000,000 Bausch & Lomb Inc.
4.850% due 11/21/94 3,989,222
5,000,000 Bear Stearns Company, Inc.
5.440% due 01/19/95 4,940,311
4,000,000 Ciesco LP
4.850% due 12/05/94 3,981,678
5,000,000 Gannett Company, Inc.
4.850% due 11/28/94+ 4,981,812
5,000,000 Goldman Sachs Group, Inc.
5.320% due 03/13/95 4,902,467
5,000,000 Hewlett Packard Company
5.020% due 02/27/95 4,917,728
5,000,000 New Center Asset Series A-1
5.020% due 12/20/94 4,965,836
5,000,000 Norfolk Southern Corporation
4.830% due 11/18/94 4,988,596
4,000,000 Sara Lee Corporation
4.900% due 11/29/94 3,984,756
5,000,000 Schering Corporation
4.800% due 12/14/94 4,971,333
5,000,000 Student Loan Corporation
5.000% due 11/07/94 4,995,833
5,000,000 Toys R Us
4.870% due 11/29/94 4,981,061
5,000,000 Warner Lambert Company
4.880% due 12/19/94 4,967,467
---------------
TOTAL DOMESTIC COMMERCIAL PAPER
(Cost $66,568,100) 66,568,100
---------------
</TABLE>
See Notes to Financial Statements. 5
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
FOREIGN COMMERCIAL PAPER -- 15.5%
$ 5,000,000 CSR America, Inc.
5.100% due 01/27/95 $ 4,938,375
5,000,000 Kingdom of Sweden
4.600% due 11/03/94 4,998,722
5,000,000 Hanson Finance PLC
4.630% due 11/02/94 4,999,357
5,000,000 National Provincial Building Society
4.850% due 12/20/94 4,966,993
---------------
TOTAL FOREIGN COMMERCIAL PAPER
(Cost $19,903,447) 19,903,447
---------------
U.S. GOVERNMENT AGENCIES -- 11.6%
5,000,000 Federal National Mortgage Association
4.720% due 11/23/94 4,985,578
5,000,000 Federal National Mortgage Association
5.010% due 12/19/94 4,966,600
5,000,000 Student Loan Marketing Association
4.920% due 12/08/94 5,000,000
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $14,952,178) 14,952,178
---------------
EURO-CERTIFICATES OF DEPOSIT -- 7.8%
5,000,000 National Westminster Bank PLC
4.880% due 12/05/94 5,000,093
5,000,000 Royal Bank of Canada
4.890% due 11/30/94 5,000,802
---------------
TOTAL EURO-CERTIFICATES OF DEPOSIT
(Cost $10,000,895) 10,000,895
---------------
</TABLE>
6 See Notes to Financial Statements.
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 7.7%
$ 5,000,000 U.S. Treasury Bill
5.145%# due 05/04/95 $ 4,868,517
5,000,000 U.S. Treasury Strip
4.815%# due 11/15/94 4,990,990
---------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $9,859,507) 9,859,507
---------------
REPURCHASE AGREEMENT -- 5.5%
(Cost $7,056,916)
7,056,916 Agreement with Barclays de Zoete Wedd, dated
10/31/94 bearing 4.780% to be repurchased at
$7,057,853 on 11/01/94, collateralized by
$7,005,000 U.S. Treasury Note, 5.875% due
05/15/95 7,056,916
---------------
TOTAL INVESTMENTS
(Cost $128,341,043*) 100.0% 128,341,043
OTHER ASSETS AND LIABILITIES (NET) 0.0 23,907
----- --------------
NET ASSETS 100.0% $128,364,950
----- --------------
----- --------------
-----------------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
# Annualized yield to maturity (unaudited).
+ Commercial paper sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and may
be resold to dealers in that program or other "accredited investors." These securities
have been determined to be liquid under guidelines established by the Board of Directors.
</TABLE>
See Notes to Financial Statements. 7
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 76.3%
$ 10,000,000 U.S. Treasury Bills
4.516%# due 11/03/94 $ 9,997,556
5,000,000 U.S. Treasury Bills
4.418%# due 11/03/94 4,998,803
10,000,000 U.S. Treasury Bills
4.597%# due 11/10/94 9,988,812
2,000,000 U.S. Treasury Bills
4.051%# due 11/17/94 1,996,524
10,000,000 U.S. Treasury Bills
4.684%# due 11/17/94 9,979,756
10,000,000 U.S. Treasury Bills
4.560%# due 12/08/94 9,953,133
5,000,000 U.S. Treasury Bills
4.580%# due 12/15/94 4,972,011
5,000,000 U.S. Treasury Bills
4.683%# due 12/15/94 4,971,950
15,000,000 U.S. Treasury Bills
4.825%# due 12/15/94 14,913,467
5,000,000 U.S. Treasury Bills
4.600%# due 12/22/94 4,967,417
5,000,000 U.S. Treasury Bills
4.718%# due 12/22/94 4,967,488
10,000,000 U.S. Treasury Bills
4.890%# due 01/12/95 9,902,200
5,000,000 U.S. Treasury Bills
4.832%# due 01/19/95 4,948,650
10,000,000 U.S. Treasury Bills
4.952%# due 01/19/95 9,895,325
10,000,000 U.S. Treasury Bills
5.140%# due 01/19/95 9,890,058
5,000,000 U.S. Treasury Bills
4.907%# due 01/26/95 9,886,408
10,000,000 U.S. Treasury Bills
5.187%# due 01/26/95 9,879,361
10,000,000 U.S. Treasury Bills
5.018%# due 02/02/95 9,874,450
</TABLE>
8 See Notes to Financial Statements.
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
..............................................................................
<TABLE>
- --------------------------------------------------------------------------------
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND OCTOBER 31, 1994
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (continued)
$10,000,000 U.S. Treasury Bills
5.165%# due 02/02/95 $ 9,870,317
10,000,000 U.S. Treasury Bills
5.170%# due 02/16/95 9,851,389
5,000,000 U.S. Treasury Bills
5.155%# due 05/04/95 4,868,261
5,000,000 U.S. Treasury Strip
4.815%# due 11/15/94 4,990,990
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $175,564,326) 175,564,326
------------
REPURCHASE AGREEMENTS -- 23.9%
4,976,961 Agreement with Barclays de Zoete Wedd,
dated 10/31/94 bearing 4.780% to be
repurchased at $4,977,622 on 11/01/94,
collateralized by $4,941,000 U.S. Treasury
Note, 5.875% due 05/15/95 4,976,961
50,000,000 Agreement with Donaldson Lufkin & Jenrette,
dated 10/31/94 bearing 4.780% to be
repurchased at $50,006,639 on 11/01/94,
collateralized by $49,734,000 U.S. Treasury
Note, 7.000% due 04/15/99 and by $1,921,000
U.S. Treasury Note, 3.875% due 08/31/95 50,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $54,976,961) 54,976,961
------------
TOTAL INVESTMENTS
(Cost $230,541,287*) 100.2% 230,541,287
OTHER ASSETS AND LIABILITIES (NET) (0.2) (420,615)
----- ------------
NET ASSETS 100.0% $230,120,672
===== ============
- ------------------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
# Annualized yield to maturity (unaudited).
</TABLE>
See Notes to Financial Statements. 9
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES -- 100.8%
ALABAMA -- 0.4%
$ 900,000 Alabama, Heatherbrook Housing
Financial Authority
3.400% due 10/01/13++ $ 900,000
--------------
ALASKA -- 0.6%
1,250,000 Alaska, Sitka School Improvement Project
3.150% due 02/01/06++ 1,250,000
--------------
ARIZONA -- 2.9%
1,200,000 Arizona, Apache County, Industrial
Development Authority, (Tucson Electric)
3.500% due 12/15/18++ 1,200,000
1,300,000 Arizona, Chandler County,
Industrial Development Authority
3.250% due 12/15/08+++ 1,300,000
2,000,000 Arizona, City of Mesa, Municipal
Development Corporation
3.200% due 12/08/94 2,000,000
1,500,000 Arizona, Cochise County, Pollution Control
Corporation, (Arizona Electric Power
Company)
3.800% due 03/01/95++++ 1,500,000
--------------
6,000,000
--------------
ARKANSAS -- 0.1%
195,000 Arkansas Hospital Equipment Finance Authority
3.600% due 12/01/05++ 195,000
--------------
CALIFORNIA -- 5.6%
100,000 California, Los Angeles County,
Metropolitan Sales Tax
3.250% due 07/01/20++ 100,000
2,000,000 California, Orange County Tax and
Revenue Anticipation Notes
4.500% due 07/19/95 2,010,277
</TABLE>
10 See Notes to Financial Statements.
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
CALIFORNIA (CONTINUED)
$ 1,935,000 California, Rural Home Mortgage Finance
Authority, Single Family Mortgage Revenue
Bonds,
Series 1993
3.380% due 12/01/99++++ $ 1,935,000
3,000,000 California, Santa Clara County Tax and Revenue
Anticipation Notes
4.250% due 07/07/95 3,011,778
3,000,000 California, State Floating LIBOR Index Note
3.600% due 06/28/95 3,000,000
1,500,000 California, Statewide Communities Development
Corporation
3.550% due 08/01/19++ 1,500,000
--------------
11,557,055
--------------
COLORADO -- 2.5%
700,000 Colorado, Arapahoe County
3.290% due 05/15/13+++ 700,000
1,000,000 Colorado, Arapahoe County, Capital Improvement
3.900% due 02/28/95++++ 1,000,000
1,200,000 Colorado, City of Lakewood
3.350% due 12/15/99+++ 1,200,000
200,000 Colorado, Health Facilities Authority Revenue
3.400% due 05/15/20++ 200,000
2,000,000 Colorado, South Denver Metropolitan District
3.600% due 12/01/05++++ 2,000,000
--------------
5,100,000
--------------
CONNECTICUT -- 0.8%
1,560,000 Connecticut State Housing Finance Authority,
Series H-1
4.300% due 09/01/95++++# 1,560,000
--------------
</TABLE>
See Notes to Financial Statements. 11
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
DELAWARE -- 1.0%
$ 1,700,000 Delaware, Economic Development Authority
3.700% due 10/01/17+ $ 1,700,000
300,000 Delaware, New Castle County
3.800% due 12/01/00++ 300,000
--------------
2,000,000
--------------
DISTRICT OF COLUMBIA -- 3.0%
District of Columbia:
2,000,000 9.375% due 06/01/95 2,090,167
4,000,000 4.050% due 07/01/95 4,000,000
--------------
6,090,167
--------------
FLORIDA -- 5.1%
1,800,000 Florida, Hillsborough County, Port District
Authority
3.400% due 02/01/04++ 1,800,000
4,300,000 Florida, Housing Finance Agency
3.900% due 06/15/95++++ 4,300,000
1,000,000 Florida, Housing M/F Kings Colony, Series D
3.125% due 10/01/06++ 1,000,000
1,500,000 Florida, Putnam County, Development Authority
3.550% due 03/15/14++ 1,500,000
2,000,000 Florida, Putnam County, Pollution Control
Revenue, (Seminole Electric Corporation)
3.150% due 12/15/94++++ 2,000,000
--------------
10,600,000
--------------
GEORGIA -- 6.2%
1,900,000 Georgia, Cobb County, Development Authority
3.500% due 01/01/08++ 1,900,000
1,000,000 Georgia, Dekalb County, Housing Authority
3.500% due 06/01/04++ 1,000,000
1,900,000 Georgia, Fulton County, Development Authority
3.250% due 09/01/12+++ 1,900,000
</TABLE>
12 See Notes to Financial Statements.
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
GEORGIA (CONTINUED)
$ 2,000,000 Georgia, Glynn Brunswick Memorial Hospital
Authority, (Southeast Regional Medical
Center)
3.500% due 08/01/09++ $ 2,000,000
2,000,000 Georgia, Hart County, Industrial Building
3.550% due 05/01/09++ 2,000,000
4,000,000 Georgia, Municipal Electric Authority,
Project One
3.450% due 11/08/94 4,000,000
--------------
12,800,000
--------------
HAWAII -- 0.5%
1,000,000 Hawaii, Budget & Finance, (Kaiser Permanente)
3.650% due 03/01/95 1,000,000
--------------
ILLINOIS -- 16.1%
1,675,000 Illinois, Alsip Industrial Development
Revenue (Ardco Inc. Project)
3.600% due 07/01/13++ 1,675,000
400,000 Illinois, City of Burbank
3.250% due 09/15/24+++ 400,000
2,700,000 Illinois, City of Chicago, General Obligation
Bonds, Series A-2
4.150% due 07/18/95 2,700,000
1,000,000 Illinois, City of Chicago, Tender Notes
3.300% due 10/31/95++ 1,000,000
3,200,000 Illinois, City of Lockport
3.600% due 04/01/25++ 3,200,000
1,500,000 Illinois Development Columbia Graphics
3.600% due 06/01/04++ 1,500,000
Illinois Development Finance Authority:
1,300,000 3.700% due 05/01/10++ 1,300,000
1,700,000 3.600% due 02/01/19++ 1,700,000
1,000,000 3.600% due 04/01/24++ 1,000,000
1,100,000 3.500% due 12/01/28++ 1,100,000
</TABLE>
See Notes to Financial Statements. 13
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
ILLINOIS (CONTINUED)
$ 2,100,000 Illinois Development Finance Authority,
Industrial
Development Revenue, (Overton Gear & Tool)
3.600% due 10/01/08++ $ 2,100,000
1,700,000 Illinois Development Finance Authority,
Residential Rental Revenue
3.500% due 04/01/24++ 1,700,000
Illinois Educational Facilities Authority:
500,000 2.900% due 01/01/18++ 500,000
1,000,000 3.450% due 05/01/22++ 1,000,000
3,400,000 3.500% due 12/01/25++ 3,400,000
2,615,000 3.500% due 03/01/28++ 2,615,000
Illinois Health Facilities Authority Revenue:
(Franciscan Sisters Health)
3,800,000 3.000% due 11/01/05++ 3,800,000
500,000 3.700% due 01/01/18+ 500,000
700,000 (Dupage Health)
3.700% due 11/01/20+ 700,000
1,300,000 Illinois, New Lenox
3.600% due 07/01/15++ 1,300,000
--------------
33,190,000
--------------
INDIANA -- 5.9%
3,500,000 Indiana, Auburn Economic Development Authority
3.500% due 07/01/10+++ 3,500,000
2,600,000 Indiana, City of Gary
3.250% due 07/15/02+++ 2,600,000
400,000 Indiana, Fort Wayne Economic Development
Authority
3.700% due 07/01/09++ 400,000
1,700,000 Indiana, Fort Wayne Hospital Parkview
Memorial, Series B
3.550% due 01/01/16++ 1,700,000
400,000 Indiana Health Facilities Finance Authority
3.500% due 12/01/02++ 400,000
</TABLE>
14 See Notes to Financial Statements.
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
INDIANA (CONTINUED)
$ 300,000 Indiana Hospital Equipment Finance Authority,
Series A
3.500% due 12/01/15++ $ 300,000
2,300,000 Indiana, Logansport, Economic Development
Authority
3.750% due 10/01/03++ 2,300,000
900,000 Indiana Secondary Market, Series B
3.450% due 12/01/13++ 900,000
--------------
12,100,000
--------------
IOWA -- 1.2%
400,000 Iowa, Cedar Rapids Pollution Control Revenue
3.500% due 11/01/03++ 400,000
2,000,000 Iowa Municipalities Workers Compensation
Association
3.950% due 07/01/95++++ 2,000,000
--------------
2,400,000
--------------
KANSAS -- 0.8%
1,000,000 Kansas, City of Burlington, Pollution
Control Revenue
3.300% due 12/06/94 1,000,000
700,000 Kansas, City of Wamego
3.200% due 11/15/14+++ 700,000
--------------
1,700,000
--------------
KENTUCKY -- 3.6%
1,900,000 Kentucky, Mason County
3.550% due 10/15/14++ 1,900,000
1,500,000 Kentucky, Pendleton County
3.750% due 07/01/95 1,500,000
2,000,000 Kentucky, Pendleton County, Multicounty
Lease Revenue
3.050% due 11/02/94 2,000,000
</TABLE>
See Notes to Financial Statements. 15
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
KENTUCKY (CONTINUED)
$ 2,000,000 Kentucky, Pulaski County, Solid Waste
3.650% due 02/15/95++++ $ 2,000,000
--------------
7,400,000
--------------
LOUISIANA -- 0.6%
1,300,000 Louisiana, Public Facilities Authority
3.700% due 12/01/05++ 1,300,000
--------------
MARYLAND -- 0.1%
200,000 Maryland, Anne Arundel County
General Improvement
6.900% due 01/15/95 201,362
--------------
MICHIGAN -- 0.4%
500,000 Michigan, Meridian Economic Development
3.350% due 12/15/99+++ 500,000
300,000 Michigan State Housing Development Authority
3.400% due 10/01/07++ 300,000
--------------
800,000
--------------
MINNESOTA -- 2.5%
100,000 Minnesota, City of New Brighton, Industrial
Development Revenue
3.500% due 12/01/14++ 100,000
3,100,000 Minnesota, Saint Cloud Hospital Facilities
Authority
3.400% due 07/01/20++ 3,100,000
2,000,000 Minnesota, University Of Minnesota Regents
3.600% due 02/01/95++++ 2,000,000
--------------
5,200,000
--------------
MISSISSIPPI -- 0.1%
300,000 Mississippi, Jackson, Industrial Development
Revenue (McCarthy Project)
3.550% due 12/01/15++ 300,000
--------------
</TABLE>
16 See Notes to Financial Statements.
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
MISSOURI -- 1.2%
$ 2,570,000 Missouri, Saint Charles County, Industrial
Development Authority
3.150% due 10/01/07++ $ 2,570,000
--------------
MONTANA -- 0.0%
100,000 Montana, Butte, Silver Bow Pollution
Control Revenue
3.550% due 03/01/16++ 100,000
--------------
NORTH CAROLINA -- 0.4%
200,000 North Carolina, Bladen County
3.500% due 11/01/20++ 200,000
400,000 North Carolina, City of Winston-Salem
3.550% due 07/01/09++ 400,000
200,000 North Carolina, Craven County, Industrial
Finance Authority
3.850% due 05/01/11+ 200,000
--------------
800,000
--------------
NORTH DAKOTA -- 0.9%
1,000,000 North Dakota, Grand Forks Hospital Facilities
Revenue Bonds
3.700% due 12/01/16+ 1,000,000
950,000 North Dakota, Mercer County
3.550% due 08/15/14++ 950,000
--------------
1,950,000
--------------
OREGON -- 2.3%
1,300,000 Oregon, Portland, Forsyth Mont Pollution
Control Revenue
3.500% due 06/01/13++ 1,300,000
3,345,000 Oregon, Portland, Multifamily Revenue,
(University Park Apartments)
3.550% due 10/01/11++ 3,345,000
--------------
4,645,000
--------------
</TABLE>
See Notes to Financial Statements. 17
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
PENNSYLVANIA -- 13.9%
Pennsylvania, Allegheny County, Hospital
Development Authority:
$ 800,000 3.450% due 07/01/07+ $ 800,000
700,000 3.450% due 03/01/18+ 700,000
660,000 3.450% due 03/01/20+ 660,000
3,500,000 Pennsylvania, Allegheny County, Industrial
Development Authority
3.450% due 01/18/95 3,500,000
1,200,000 Pennsylvania, Chartiers Valley, Industrial
Development Authority
3.450% due 12/01/16+++ 1,200,000
1,700,000 Pennsylvania, Chester County, Industrial
Development Authority
3.200% due 10/15/99+++ 1,700,000
3,000,000 Pennsylvania, City of Philadelphia, General
Obligation Bonds
3.250% due 12/12/94 3,000,000
3,000,000 Pennsylvania, Clarion County, Industrial
Development Authority
3.500% due 12/01/12++ 3,000,000
1,000,000 Pennsylvania, Gettysburg Area, Industrial
Development Authority
3.650% due 03/01/04++ 1,000,000
5,000,000 Pennsylvania, Infrastructure Investment
Authority Revenue
3.500% due 02/01/95++++ 5,001,218
1,250,000 Pennsylvania, Moon Industrial Development
Authority
3.500% due 11/01/10++ 1,250,000
Pennsylvania, State Higher Educational
Assistance Agency:
2,900,000 3.600% due 01/01/18++ 2,900,000
1,500,000 3.450% due 07/01/18++ 1,500,000
</TABLE>
18 See Notes to Financial Statements.
...............................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
PENNSYLVANIA (CONTINUED)
$ 2,000,000 Pennsylvania, Washington County, Higher
Education Agency
3.500% due 11/01/05++ $ 2,000,000
500,000 Pennsylvania, Washington County, Industrial
Development Authority, (Wetterau Finance
Company)
3.500% due 11/01/14++ 500,000
--------------
28,711,218
--------------
SOUTH CAROLINA -- 1.1%
400,000 South Carolina, Lexington County
3.400% due 12/01/09++ 400,000
150,000 South Carolina, Richland County
3.700% due 10/01/08++ 150,000
1,000,000 South Carolina, Walhaila Revenue,
(Avondale Mills, Inc.)
3.500% due 12/01/00++ 1,000,000
800,000 South Carolina, York County
3.550% due 09/15/14++ 800,000
--------------
2,350,000
--------------
TENNESSEE -- 0.5%
1,000,000 Tennessee, Knox County, Industrial Revenue
3.550% due 11/01/05++ 1,000,000
--------------
TEXAS -- 11.1%
1,100,000 Texas, Dallas, Industrial Development
Corporation
3.500% due 10/01/25+++ 1,100,000
3,000,000 Texas, Harris County, Tax Anticipation Notes
4.000% due 02/28/95 3,003,760
2,780,000 Texas, Higher Education Authority
3.500% due 12/01/25++ 2,780,000
350,000 Texas, Hospital Equipment Financing Council
3.500% due 04/07/05++ 350,000
</TABLE>
See Notes to Financial Statements. 19
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
TEXAS (CONTINUED)
$ 2,395,000 Texas, Nueces County, Health Facility
Development Corporation
3.550% due 07/01/15++ $ 2,395,000
1,000,000 Texas, Public Building Authority, Building
Revenue
9.375% due 08/01/95++++ 1,053,568
4,050,000 Texas, Rockwell, Industrial Development
Corporation, (Columbia)
3.600% due 07/01/14++ 4,050,000
2,500,000 Texas, Small Business Industrial Development
Corporation
3.550% due 07/01/26++ 2,500,000
1,000,000 Texas, South Columbia Basin Irrigation
District
10.500% due 06/01/95 1,038,222
2,700,000 Texas, State General Obligation Bonds
3.500% due 02/09/95 2,700,000
2,000,000 Texas, Tyler, Health Facilities Development
Corporation
3.650% due 12/08/94 2,000,000
--------------
22,970,550
--------------
UTAH -- 0.5%
700,000 Utah, State Board Regents
3.150% due 11/01/00++ 700,000
300,000 Utah, State Board of Regents, Student Loans
3.250% due 11/01/13++ 300,000
--------------
1,000,000
--------------
</TABLE>
20 See Notes to Financial Statements.
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
VIRGINIA -- 3.2%
Virginia, State Housing Development Authority:
$ 1,000,000 2.900% due 11/04/94 $ 1,000,000
3,300,000 3.900% due 05/10/95++++ 3,300,000
2,200,000 4.200% due 05/11/95++++ 2,200,000
--------------
6,500,000
--------------
WASHINGTON -- 1.6%
800,000 Washington, Pierce County, Economic
Development
3.600% due 10/01/07++ 800,000
1,500,000 Student Loan Finance
3.550% due 01/01/04++ 1,500,000
1,000,000 Washington, Student Loan Financial Association
3.550% due 12/01/02++ 1,000,000
--------------
3,300,000
--------------
WEST VIRGINIA -- 1.5%
3,000,000 West Virginia, Public Energy Authority
3.400% due 11/07/94 3,000,000
--------------
WISCONSIN -- 2.0%
1,160,000 Wisconsin, City of Milwaukee
5.600% due 12/15/94 1,164,114
3,000,000 Wisconsin, Health & Education Facilities,
(Alexian Village Project)
3.300% due 12/12/94 3,000,000
--------------
4,164,114
--------------
</TABLE>
See Notes to Financial Statements. 21
................................................................................
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<C> <S> <C>
MUNICIPAL BONDS AND NOTES (continued)
WYOMING -- 0.6%
$ 1,300,000 Wyoming, Platte County, Pollution Control
Revenue
3.600% due 07/01/14+ $ 1,300,000
--------------
TOTAL INVESTMENTS
(Cost $208,004,466*) 100.8% 208,004,466
OTHER ASSETS AND LIABILITIES (NET) (0.8) (1,738,776)
----- --------------
NET ASSETS 100.0% $ 206,265,690
----- --------------
----- --------------
- ------------------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand notes are payable upon not more than one business day's
notice. The interest rate shown reflects the rate currently in effect.
++ Variable rate demand notes are payable upon not more than seven business days'
notice. The interest rate shown reflects the rate currently in effect.
+++ Variable rate demand notes are payable upon not more than thirty business days'
notice. The interest rate shown reflects the rate currently in effect.
++++ "Put" bonds and notes have demand features which mature within one year. The
interest rate shown reflects the rate currently in effect.
# When-issued security (Note 1).
</TABLE>
22 See Notes to Financial Statements.
................................................................................
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
................................................................................
<TABLE>
- --------------------------------------------------------------------------------
THE DREYFUS/LAUREL FUNDS, INC. OCTOBER 31, 1994
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
PRIME U.S. TREASURY TAX-EXEMPT
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost
$128,341,043, $230,541,287 and
$208,004,466, respectively) (Note 1)
See accompanying schedule
Securities $121,284,127 $175,564,326 $208,004,466
Repurchase Agreements 7,056,916 54,976,961 --
------------ ------------ ------------
TOTAL INVESTMENTS 128,341,043 230,541,287 208,004,466
Cash -- -- 953,911
Interest receivable 231,881 7,300 1,128,031
Receivable from investment adviser
(Note 2) 25,737 26,005 85,761
Receivable for Fund shares sold 82,412 1,961 249,957
------------ ------------ ------------
TOTAL ASSETS 128,681,073 230,576,553 210,422,126
------------ ------------ ------------
LIABILITIES
Due to custodian -- 570 --
Dividends payable 187,584 334,447 199,442
Payable for investment securities
purchased -- -- 3,760,000
Payable for Fund shares redeemed 57,707 -- 77,492
Investment management fee payable
(Note 2) 56,150 102,321 94,786
Accrued Directors' fees and expenses 14,584 18,506 24,684
Distribution fee payable (Note 3) 98 37 32
------------ ------------ ------------
TOTAL LIABILITIES 316,123 455,881 4,156,436
------------ ------------ ------------
NET ASSETS $128,364,950 $230,120,672 $206,265,690
============ ============ ============
NET ASSETS consist of:
Distributions in excess of net
investment income $ -- $ (46) $ (2,335)
Par value 128,365 230,120 206,267
Paid-in capital in excess of par value 128,236,585 229,890,598 206,061,758
------------ ------------ ------------
TOTAL NET ASSETS $128,364,950 $230,120,672 $206,265,690
============ ============ ============
</TABLE>
See Notes to Financial Statements. 23
................................................................................
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
...............................................................................
<TABLE>
- --------------------------------------------------------------------------------
THE DREYFUS/LAUREL FUNDS, INC. OCTOBER 31, 1994
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
PRIME U.S. TREASURY TAX-EXEMPT
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
NET ASSETS:
Investor Shares $ 3,611,442 $ 1,323,502 $ 1,160,708
============ ============ ============
Class R Shares $124,753,508 $228,797,170 $205,104,982
============ ============ ============
SHARES OUTSTANDING:
Investor Shares 3,611,442 1,323,500 1,160,717
============ ============ ============
Class R Shares 124,753,508 228,796,647 205,106,705
============ ============ ============
INVESTOR SHARES
Net asset value, offering and
redemption price per share of
capital stock outstanding $ 1.00 $ 1.00 $ 1.00
============ ============ ============
CLASS R SHARES
Net asset value, offering and
redemption price per share of
capital stock outstanding $ 1.00 $ 1.00 $ 1.00
============ ============ ============
</TABLE>
24 See Notes to Financial Statements.
................................................................................
<PAGE>
STATEMENT OF OPERATIONS
...............................................................................
<TABLE>
- --------------------------------------------------------------------------------
THE DREYFUS/LAUREL FUNDS, INC.
FOR THE YEAR ENDED OCTOBER 31, 1994
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
PRIME U.S. TREASURY TAX-EXEMPT
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $4,670,504 $4,918,478 $5,930,412
---------- ---------- ----------
EXPENSES:
Investment advisory fee (Note 2) 241,885 152,242 563,317
Administration fee (Note 2) 13,821 8,701 26,810
Investment management fee (Note 2) 333,700 427,595 576,681
Custodian fees (Note 2) 22,183 20,059 26,299
Transfer agency fees (Note 2) 74,252 43,441 24,767
Distribution fee (Note 3) 2,268 564 939
Legal and audit fees 8,008 7,310 11,044
Directors' fees and expenses
(Note 2) 17,196 21,107 27,321
Amortization of organization costs
(Note 5) -- 3,657 --
Other 26,417 24,895 20,719
Expenses reimbursed by investment
adviser (Note 2) (147,972) (111,352) (206,817)
---------- ---------- ----------
TOTAL EXPENSES 591,758 598,219 1,071,080
---------- ---------- ----------
NET INVESTMENT INCOME 4,078,746 4,320,259 4,859,332
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $4,078,746 $4,320,259 $4,859,332
========== ========== ==========
</TABLE>
See Notes to Financial Statements. 25
...............................................................................
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
...............................................................................
<TABLE>
- --------------------------------------------------------------------------------
THE DREYFUS/LAUREL FUNDS, INC.
FOR THE YEAR ENDED OCTOBER 31, 1994
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
PRIME U.S. TREASURY TAX-EXEMPT
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
Net investment income $ 4,078,746 $ 4,320,259 $ 4,859,332
------------ ------------ ------------
Net increase in net assets
resulting from operations 4,078,746 4,320,259 4,859,332
Distributions to shareholders from
net investment income:
Investor Shares (44,787) (10,949) (10,965)
Class R Shares (4,033,959) (4,308,785) (4,850,099)
Net increase in net assets from
Fund share transactions
(Note 4):
Investor Shares 3,611,442 1,323,500 1,160,717
Class R Shares 20,993,449 159,011,800 17,277,012
------------ ------------ ------------
Net increase in net assets 24,604,891 160,335,825 18,435,997
NET ASSETS:
Beginning of year 103,760,059 69,784,847 187,829,693
------------ ------------ ------------
End of year (including
distributions in excess of net
investment income of $0, $46 and
$2,335, respectively) $128,364,950 $230,120,672 $206,265,690
============ ============ ============
</TABLE>
26 See Notes to Financial Statements.
................................................................................
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
...............................................................................
<TABLE>
- --------------------------------------------------------------------------------
THE DREYFUS/LAUREL FUNDS, INC.
FOR THE YEAR ENDED OCTOBER 31, 1993
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
PRIME U.S. TREASURY TAX-EXEMPT
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
Net investment income $ 2,964,150 $ 1,829,078 $ 4,014,781
------------ ----------- ------------
Net increase in net assets
resulting from operations 2,964,150 1,829,078 4,014,781
Distributions to shareholders
from net investment income:
Trust Shares (2,964,150) (1,829,078) (4,014,781)
Net increase in net assets from
Fund share transactions
(Note 4):
Trust Shares 11,911,669 597,401 3,110,805
------------ ----------- ------------
Net increase in net assets 11,911,669 597,401 3,110,805
NET ASSETS:
Beginning of year 91,848,390 69,187,446 184,718,888
------------ ----------- ------------
End of year $103,760,059 $69,784,847 $187,829,693
============ =========== ============
</TABLE>
See Notes to Financial Statements. 27
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Please refer to page 5 of the Prospectus dated April 10, 1995.
<PAGE>
[This Page Intentionally Left Blank]
29
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 6 of the Prospectus dated April 10, 1995.
30 See Notes to Financial Statements.
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
..............................................................................
- --------------------------------------------------------------------------------
Please refer to page 6 of the Prospectus dated April 10, 1995.
See Notes to Financial Statements. 31
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Please refer to page 9 of the Prospectus dated April 10, 1995.
32 See Notes to Financial Statements
..............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 10 of the Prospectus dated April 10, 1995.
See Notes to Financial Statements 33
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
...............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Please refer to page 7 of the Prospectus dated April 10, 1995.
34 See Notes to Financial Statements
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 8 of the Prospectus dated April 10, 1995.
See Notes to Financial Statements. 35
...............................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND CONTINUED
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 8 of the Prospectus dated April 10, 1995.
36 See Notes to Financial Statements.
..............................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS
..............................................................................
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds, Inc. (the "Investment Company"), The Dreyfus/Laurel
Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds and The
Dreyfus/Laurel Investment Series are all registered open-end management
investment companies that are now part of The Dreyfus Family of Funds. The
Investment Company is a series mutual fund with 19 separate investment
portfolios. These financial statements report on the Dreyfus/Laurel Prime
Money Market Fund, the Dreyfus/Laurel U.S. Treasury Money Market Fund and the
Dreyfus/Laurel Tax-Exempt Money Market Fund (each a "Fund" and collectively
the "Funds"). The Investment Company was incorporated on August 6, 1987 as a
Maryland corporation and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management investment company. The
Dreyfus/Laurel Prime Money Market Fund, the Dreyfus/Laurel U.S. Treasury
Money Market Fund and the Dreyfus/Laurel Tax-Exempt Money Market Fund
commenced operations on November 18, 1987, February 4, 1991, and December 10,
1987, respectively. Each Fund offers two classes of shares: Investor Shares
and Class R Shares (effective October 17, 1994, each Fund's Trust Shares were
reclassified as Class R shares of that Fund). Investor Shares are sold
primarily to retail investors and bear a distribution fee. Class R Shares are
sold primarily to bank trust departments and other financial service
providers acting on behalf of customers having a qualified trust or
investment account or relationship at such institution, and bear no
distribution fee. Each class of shares has identical rights and privileges,
except with respect to distribution fees and voting rights on matters
affecting a single class. The following is a summary of significant
accounting policies consistently followed by each Fund in the preparation of
its financial statements.
(A) PORTFOLIO VALUATION
Short-term investments with maturities of 60 days or less from the valuation
day are valued on the basis of amortized cost. Amortized cost valuation
involves valuing an instrument at its cost initially and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the effect of fluctuating interest rates on the market value of the
instrument.
(B) REPURCHASE AGREEMENTS
Each Fund may engage in repurchase agreement transactions. Under the terms of
a typical repurchase agreement, a Fund, through its custodians takes
possession of an underlying debt obligation, subject to an obligation of the
seller to repurchase, and the Fund to resell the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding
period. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Fund's holding period. The value of
the collateral is at least equal at all times to the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to a Fund in the
37
...............................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
event the Fund is delayed or prevented from exercising its rights to dispose
of the collateral securities including the risk of a possible decline in the
value of the underlying securities during the period while the Fund seeks to
assert its rights. Each Fund's investment manager, acting under the
supervision of the Board of Directors, reviews the value of the collateral
and the creditworthiness of those banks and dealers with which a Fund enters
into repurchase agreements to evaluate potential risks.
(C) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Interest income is
recorded on the accrual basis. Securities purchased or sold on a when-issued
or delay-delivery basis may be settled a month or more after the trade date.
Realized gains and losses from securities transactions are recorded on the
identified cost basis. Investment income and realized and unrealized gains
and losses are allocated based upon relative daily net assets of each class.
(D) EXPENSE ALLOCATION
Expenses of a Fund not directly attributable to the operations of any class
of shares of the Fund are pro rated between its classes based upon the
relative average daily net assets of each class. Distribution expense is
directly attributable to a particular class of shares and is charged only to
that class' operations.
(E) DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, if any, of a Fund are determined on a
class level and are declared daily and paid monthly. Additional distributions
of net investment income and capital gains for each Fund may be made at the
discretion of the Board of Directors in order to avoid the 4% nondeductible
federal excise tax. Income distributions on a Fund level are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of income on various investment securities held by a
Fund, timing differences and differing characterization of distributions made
by a Fund as a whole.
(F) FEDERAL INCOME TAXES
Each Fund intends to qualify as a regulated investment company by complying
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and by distributing substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provision is
required.
2. INVESTMENT MANAGEMENT FEE, DIRECTORS' FEES AND OTHER PARTY TRANSACTIONS
Effective as of October 17, 1994, the Investment Company's investment
management agreement with Mellon Bank, N.A.("Mellon Bank"), a wholly-owned
subsidiary of Mellon Bank Corporation, was transferred to The Dreyfus
Corporation (the "Manager"), a wholly-owned subsidiary of Mellon Bank. The
Manager provides, or arranges for one or
38
..............................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
more third parties to provide, investment advisory, administrative, custody,
fund accounting and transfer agency services to the Investment Company. The
Manager also directs the investments of each Fund in accordance with its
investment objective, policies and limitations. For these services, each Fund
pays the Manager a fee, calculated daily and paid monthly, at the annual rate
of 0.50% of the value of that Fund's average daily net assets. Out of its
fee, the Manager pays all of the expenses of each Fund except brokerage,
taxes, interest, Rule 12b-1 distribution fees and expenses, fees and expenses
of non-interested Directors (including counsel fees) and extraordinary
expenses. In addition, the Manager is required to reduce its fee in an amount
equal to each Fund's allocable portion of fees and expenses of the
non-interested Directors (including counsel).
For the period from April 4, 1994 to October 16, 1994, Mellon Bank served as
the Investment Company's investment manager pursuant to the investment
management agreement described above. Prior to April 4, 1994, the Investment
Company had individual contracts with Mellon Bank to provide custody,
accounting, and transfer agency services to each Fund. Effective April 4,
1994, custody, accounting, and transfer agency services are covered by the
investment management agreement described above.
Prior to April 4, 1994, the Investment Company had an investment advisory
agreement under which each Fund paid Mellon Bank an annual fee of 0.50% of
the value of that Fund's average daily net assets for investment advisory
services. For the period from November 1, 1993 through April 3, 1994, Mellon
Bank, as investment adviser, voluntarily agreed to reimburse expenses in the
amount of $147,972 for the Dreyfus/Laurel Prime Money Market Fund, $111,352
for the Dreyfus/Laurel U.S. Treasury Money Market Fund and $206,817 for the
Dreyfus/Laurel Tax-Exempt Money Market Fund.
Prior to September 23, 1994, Frank Russell Investment Management Company (the
"Administrator") served as each Fund's administrator and provided, pursuant
to an administration agreement, various administrative and corporate
secretarial services to each Fund. For the period from April 4, 1994 to
September 23, 1994, Mellon Bank, as investment manager, paid the
Administrator's fee out of the management fee described above. Prior to April
4, 1994, the Investment Company paid the Administrator the following fees for
the services supplied by the Administrator pursuant to the administration
agreement: (i) an annual fee of $500,000; (ii) an annual asset-based fee,
payable monthly on a pro rata basis, based on the following percentages of
the aggregate average daily net assets of the Investment Company: up to and
including $10 billion -- 0.01%, over $10 billion -- 0.005%; and (iii) all
start-up costs (including out-of-pocket, blue sky registration and personnel
costs) for new portfolios (prior to and for 6 months following commencement
of operations).
Prior to April 4, 1994, the Investment Company had a contract with Russell
Fund Distributors, Inc. to serve as distributor of its shares. Effective
April 4, 1994 through October 16, 1994, Funds Distributor, Inc. served as
distributor of the Investment
39
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
Company's shares. Effective as of October 17, 1994, Premier Mutual Fund
Services, Inc. ("Premier") serves as the Investment Company's distributor.
Premier also serves as the Investment Company's sub-administrator and,
pursuant to a sub-administration agreement with the Manager, provides various
administrative and corporate secretarial services to the Investment Company.
No officer or employee of Premier (or of any parent, subsidiary or affiliate
thereof) receives any compensation from The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds or
The Dreyfus/Laurel Investment Series (collectively, "The Dreyfus/Laurel
Funds") for serving as an officer or Director/Trustee of The Dreyfus/Laurel
Funds. In addition, no officer or employee of the Manager (or of any parent,
subsidiary or affiliate thereof) serves as an officer or Director or Trustee
of The Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds pays each
Director/Trustee who is not an officer or employee of Premier (or any parent,
subsidiary or affiliate thereof), $27,000 per annum, $1,000 for each Board
meeting attended and $750 for each Audit Committee meeting attended, and
reimburse each Director or Trustee for travel and out-of-pocket expenses.
Prior to April 4, 1994, the Investment Company paid each Director $15,000 per
annum plus reimbursement for travel and out-of-pocket expenses.
3. DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act relating to its Investor Shares. Under the Plan, each Fund
may pay annually up to 0.25% of the value of the average daily net assets
attributable to its Investor Shares to compensate Premier and Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing
activities and Premier for activities primarily intended to result in the
sale of Investor Shares. Class R Shares bear no distribution fee. Prior to
April 4, 1994, each Fund had a distribution and shareholder services plan
under which each Fund was authorized to spend annually up to 0.35% of its
average daily net assets on distribution and shareholder servicing expenses.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of a majority of those
Directors who are not "interested persons" of the Investment Company and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
40
..............................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
4. SHARES OF CAPITAL STOCK
The Investment Company has authority to issue 25 billion shares of capital
stock with a par value of $.001. Each Fund has authority to issue two classes
of shares. The table below summarizes the transactions in Fund shares for the
year or period indicated. Because each Fund has sold shares, issued shares of
reinvestments of dividends, and redeemed shares only at a constant net asset
value of $1.00 per share, the number of shares represented by such sales,
reinvestments and redemptions is the same as the amounts shown below for such
transactions.
<TABLE>
- ------------------------------------------------------------------------------------
DREYFUS/LAUREL PRIME MONEY MARKET FUND
<CAPTION>
PERIOD ENDED
October 31, 1994*
- ------------------------------------------------------------------------------------
<S> <C>
INVESTOR SHARES:
Sold $6,781,761
Issued as reinvestment of dividends 31,002
Redeemed (3,201,321)
----------
Net increase $3,611,442
==========
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED
October 31, 1994* October 31, 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
CLASS R SHARES:
Sold $ 214,477,712 $ 232,407,797
Issued as reinvestment of dividends 2,593,570 2,111,620
Redeemed (196,077,833) (222,607,748)
--------------- --------------
Net increase $ 20,993,449 $ 11,911,669
=============== ==============
- ------------------------------------------------------------------------------------
</TABLE>
41
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
<TABLE>
- ------------------------------------------------------------------------------------
DREYFUS/LAUREL U.S. TREASURY MONEY MARKET FUND
<CAPTION>
PERIOD ENDED
October 31, 1994*
- ------------------------------------------------------------------------------------
<S> <C>
INVESTOR SHARES:
Sold $2,966,555
Issued as reinvestment of dividends 9,219
Redeemed (1,652,274)
----------
Net increase $1,323,500
==========
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
October 31, 1994* October 31, 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
CLASS R SHARES:
Sold $801,362,826 $155,014,611
Issued as reinvestment of dividends 2,669,895 854,856
Redeemed (645,020,921) (155,272,066)
------------ ------------
Net increase $159,011,800 $ 597,401
============ ============
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND
<CAPTION>
PERIOD ENDED
October 31, 1994*
- ------------------------------------------------------------------------------------
<S> <C>
INVESTOR SHARES:
Sold $1,304,565
Issued as reinvestment of dividends 9,953
Redeemed (153,801)
----------
Net increase $1,160,717
==========
- ------------------------------------------------------------------------------------
</TABLE>
42
................................................................................
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
..............................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL TAX-EXEMPT MONEY MARKET FUND CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
October 31, 1994* October 31, 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
CLASS R SHARES:
Sold $ 639,468,498 $548,669,523
Issued as reinvestment of dividends 1,778,576 1,498,241
Redeemed (623,970,062) (547,056,959)
-------------- ------------
Net increase $ 17,277,012 $ 3,110,805
============== ============
- ------------------------------------------------------------------------------------
<FN>
* Dreyfus/Laurel Prime Money Market Fund commenced selling Investor Shares on
April 6, 1994, Dreyfus/Laurel U.S. Treasury Money Market Fund commenced
selling Investor Shares on April 18, 1994, and Dreyfus/Laurel Tax-Exempt Money
Market Fund commenced selling Investor Shares on April 20, 1994. Those shares
outstanding prior to April 4, 1994, for the Dreyfus/Laurel Prime Money Market
Fund, Dreyfus/Laurel U.S. Treasury Money Market Fund, and Dreyfus/Laurel
Tax-Exempt Money Market Fund were designated as Trust Shares of the respective
Fund. Effective October 17, 1994, the Trust Shares of each Fund were
reclassified as Class R Shares of that Fund.
</TABLE>
5. ORGANIZATION COSTS
Each Fund paid all costs in connection with the Fund's organization including
the fees and expenses of registering and qualifying the Fund's shares for
distribution under Federal and state securities regulations. Prior to April
4, 1994, all such costs were being amortized on the straight-line method over
a period of five years. On April 4, 1994, the remaining unamortized
organization costs were reimbursed by Mellon Bank as the investment adviser.
6. SUBSEQUENT EVENT
On November 4, 1994, a reorganization took place pursuant to which
substantially all of the assets of the Cash Management, Government Money and
Tax-Free Money Funds were acquired by the Prime Money Market, U.S. Treasury
Money Market and Tax-Exempt Money Market Funds, respectively.
43
...............................................................................
<PAGE>
INDEPENDENT AUDITORS REPORT
..............................................................................
[LOGO KPMG]
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments of the Dreyfus/Laurel Prime Money
Market Fund, the Dreyfus/Laurel U.S. Treasury Money Market Fund and the
Dreyfus/Laurel Tax-Exempt Money Market Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1994, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the
periods indicated herein. These financial statements and financial highlights
are the responsibility of each 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 October 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 statements presentation. We believe that our audits
provides 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 the
Dreyfus/Laurel Prime Money Market Fund, the Dreyfus/Laurel U.S. Treasury
Money Market Fund and the Dreyfus/Laurel Tax-Exempt Money Market Fund of The
Dreyfus/Laurel Funds, Inc. as of October 31, 1994, the results of their
operations for the year then ended, the changes in their net assets for each
of the two years in the period then ended, and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 9, 1994
44
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
PRIME MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
COMMERCIAL PAPER -- 71.6%
<C> <S> <C> <C> <C>
DOMESTIC COMMERCIAL PAPER -- 49.2%
$15,000,000 Ameritech Corporation 4.600% 11/18/94 $ 14,967,417
8,000,000 Anheuser-Busch Cos., Inc. 4.850 11/01/94 8,000,000
5,000,000 Bankers Trust New York 5.060 11/14/94 4,990,864
10,625,000 Bausch & Lomb Inc. 4.850 11/21/94 10,596,372
10,000,000 Bear Stearns Company 5.440 01/19/95 9,880,622
10,000,000 Ciesco LP 4.850 12/05/94 9,954,195
15,000,000 Corporate Receivables Corporation 4.875 12/06/94 14,928,906
25,000,000 Dun & Bradstreet Corporation 4.870 12/13/94 24,857,958
15,000,000 Equitable Resources Inc. 4.920 11/03/94 14,995,900
18,800,000 Gannet Company Inc.** 4.850 11/28/94 18,731,615
14,000,000 GTE Hawaiian Telephone Company 5.050 11/18/94 13,966,614
25,000,000 Hewlett Packard Company 5.020 02/27/95 24,588,639
5,000,000 HJ Heinz Company 4.770 11/01/94 5,000,000
15,000,000 JP Morgan Company 4.800 11/16/94 14,970,000
5,500,000 Laclede Gas Company 5.000 11/09/94 5,493,889
15,782,000 McGraw Hill Inc. 4.820 12/06/94 15,708,044
20,000,000 New Center Asset 5.020 12/20/94 19,863,345
15,000,000 Pitney Bowes Credit Corporation 4.800 11/17/94 14,968,000
12,000,000 Pitney Bowes Credit Corporation 4.850 11/29/94 11,954,733
14,000,000 Schering Corporation 4.800 12/14/94 13,919,733
4,379,000 Southern California Gas Company 4.890 12/05/94 4,358,776
10,000,000 Toys "R" Us 4.870 11/29/94 9,962,122
25,000,000 United Technologies 5.060 11/22/94 24,926,209
24,000,000 US West Communications Inc. 5.450 01/17/95 23,720,233
------------
TOTAL DOMESTIC COMMERCIAL PAPER (Cost $335,304,186)
335,304,186
------------
FOREIGN COMMERCIAL PAPER -- 22.4%
11,750,000 Aegon 4.880 12/07/94 11,692,660
8,000,000 Aegon 4.950 11/14/94 7,985,700
10,000,000 CSR America Inc. 5.100 01/27/95 9,876,750
10,000,000 Kingdom of Sweden 4.600 11/01/94 10,000,000
20,000,000 National Provincial Building
Society 4.850 12/20/94 19,867,972
15,000,000 National Westminster Bank PLC 4.900 12/05/94 15,000,280
20,000,000 New South Wales Treasury
Corporation 5.100 11/29/94 19,920,667
10,000,000 Royal Bank of Canada 4.890 11/30/94 10,001,605
10,000,000 RTZ America Inc.** 5.470 01/25/95 9,870,847
8,835,000 Sandoz Corporation 4.850 12/01/94 8,799,292
20,000,000 Toshiba America Inc. 5.070 01/05/95 19,816,917
4,500,000 Toshiba America Inc. 5.140 02/10/95 4,435,108
5,400,000 Toshiba America Inc. 5.220 04/17/95 5,269,239
------------
TOTAL FOREIGN COMMERCIAL PAPER (Cost $152,537,037)
152,537,037
------------
</TABLE>
6 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
PRIME MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
U.S. GOVERNMENT AGENCIES -- 13.1%
<C> <S> <C> <C> <C>
$10,000,000 Federal Farm Credit Bank Agency
Discount Notes 4.750% 12/14/94 $ 9,943,264
10,000,000 Federal Home Loan Bank Agency
Discount Note 4.900 12/19/94 9,934,667
35,000,000 Federal National Mortgage
Association Discount Note 4.720 11/23/94 34,899,045
25,000,000 Federal National Mortgage
Association Discount Note 4.750 11/30/94 24,904,340
10,000,000 Federal National Mortgage
Association Discount Note 5.010 12/19/94 9,933,200
------------
TOTAL U.S. GOVERNMENT AGENCIES (Cost $89,614,516)
89,614,516
------------
VARIABLE RATE NOTES -- 5.1%
15,000,000 Ford Motor Credit Company 3.750 02/27/95 15,013,111
10,000,000 Pepsico Inc. 5.325 04/13/95 9,999,870
5,000,000 PNC Bank Pennsylvania 5.310 05/09/95 4,996,573
5,000,000 Student Loan Marketing Association 4.250 12/08/94 5,000,000
------------
TOTAL VARIABLE RATE NOTES (Cost $35,009,554) 35,009,554
------------
<CAPTION>
ANNUALIZED
YIELD
AT
DATE
OF
PURCHASE
<C> <S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 1.4% (Cost $9,655,000)
10,000,000 U.S. Treasury Bills 5.175 06/29/95 9,655,000
------------
REPURCHASE AGREEMENT -- 9.1% (Cost $62,000,655)
62,000,655 Agreement with Barclays de Zoete Wedd dated 10/31/94
bearing 4.780% to be repurchased at $62,008,887 on
11/01/94 collateralized by: $6,423,188, U.S.
Treasury Notes, 5.500% due on 04/15/00; $7,637,825,
U.S. Treasury Notes, 5.500% due 02/28/99;
$33,459,177, U.S. Treasury Notes, 11.250% due
05/15/95; $14,481,054, U.S. Treasury Notes, 7.625%
due 12/31/94 62,000,655
------------
TOTAL INVESTMENTS (Cost $684,120,948*) 100.3% $684,120,948
OTHER ASSETS AND LIABILITIES (NET) (0.3) (2,340,416)
------ ------------
NET ASSETS 100.0% $681,780,532
------ ------------
------ ------------
---------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
** COMMERCIAL PAPER SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER "ACCREDITED
INVESTORS." THESE SECURITIES HAVE BEEN DETERMINED TO BE LIQUID UNDER
GUIDELINES ESTABLISHED BY THE BOARD OF DIRECTORS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 7
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
GOVERNMENT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
ANNUALIZED
YIELD AT
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT PURCHASE DATE (NOTE 1)
U.S. GOVERNMENT AGENCIES -- 64.8%
<C> <S> <C> <C> <C>
$ 13,000,000 Federal Farm Credit Bank Discount
Note 4.750% 12/14/94 $ 12,926,243
15,000,000 Federal Farm Credit Bank Discount
Note 5.010 12/22/94 14,893,538
13,585,000 Federal Home Loan Bank Discount
Note 4.750 12/09/94 13,516,886
10,000,000 Federal Home Loan Bank Discount
Note 4.900 12/20/94 9,933,306
25,000,000 Federal Home Loan Bank Discount
Note 5.290 01/20/95 24,706,111
15,000,000 Federal Home Loan Bank Discount
Note 5.320 01/23/95 14,816,017
20,000,000 Federal Home Loan Mortgage Agency
Discount Note 4.530 11/03/94 19,994,967
15,000,000 Federal Home Loan Mortgage Agency
Discount Note 4.730 11/21/94 14,960,583
17,000,000 Federal Home Loan Mortgage Agency
Discount Note 4.730 11/25/94 16,946,393
15,000,000 Federal National Mortgage
Association Discount Note 4.740 11/10/94 14,982,225
29,820,000 Federal National Mortgage
Association Discount Note 4.720 11/17/94 29,757,444
7,735,000 Federal National Mortgage
Association Discount Note 4.870 11/21/94 7,714,073
15,190,000 Federal National Mortgage
Association Discount Note 4.660 11/29/94 15,134,945
20,000,000 Federal National Mortgage
Association Discount Note 4.720 11/29/94 19,926,578
25,000,000 Federal National Mortgage
Association Discount Note 4.750 11/30/94 24,904,340
10,000,000 Federal National Mortgage
Association Discount Note 4.750 12/13/94 9,944,583
10,000,000 Federal National Mortgage
Association Discount Note 4.700 12/16/94 9,941,250
10,000,000 Federal National Mortgage
Association Discount Note 4.750 12/16/94 9,940,625
10,000,000 Federal National Mortgage
Association Discount Note 5.010 12/19/94 9,933,200
10,000,000 Federal National Mortgage
Association Discount Note 4.900 02/22/95 9,846,195
------------
TOTAL U.S. GOVERNMENT AGENCIES (Cost $304,719,502)
304,719,502
------------
</TABLE>
8 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
GOVERNMENT MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
ANNUALIZED
YIELD AT
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT PURCHASE DATE (NOTE 1)
U.S. TREASURY OBLIGATIONS -- 8.4%
<C> <S> <C> <C> <C>
$ 15,000,000 U.S. Treasury Bills 4.770% 12/15/94 $ 14,915,758
10,000,000 U.S. Treasury Bills 5.425 05/04/95 9,737,033
5,000,000 U.S. Treasury Bills 5.180 06/29/95 4,827,333
10,000,000 U.S. Treasury Strip 4.815 11/15/94 9,981,980
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $39,462,104) 39,462,104
------------
REPURCHASE AGREEMENTS -- 27.2%
27,763,286 Agreement with Barclays de Zoete Wedd dated 10/31/94 bearing
4.780% to be repurchased at $27,766,972 on 11/01/94
collateralized by: $27,763,537, U.S. Treasury Bill, 5.180%
due 01/26/95 27,763,286
100,000,000 Agreement with Donaldson Lufkin & Jenrette Securities
Corporation dated 10/31/94 bearing 4.780% to be
repurchased at $100,013,278 on 11/01/94 collateralized by:
$49,106,999, U.S. Treasury Notes, 6.750% due 05/31/99;
$1,619,631, U.S. Treasury Notes, 3.875% due 08/31/95;
$49,274,147, U.S. Treasury Notes, 4.250% due 07/31/95 100,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $127,763,286) 127,763,286
------------
TOTAL INVESTMENTS
(Cost $471,944,892*) 100.4% 471,944,892
OTHER ASSETS AND LIABILITIES (NET) (0.4) (1,938,022)
------ ------------
NET ASSETS 100.0% $470,006,870
------ ------------
------ ------------
------------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 9
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
U.S. TREASURY MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
ANNUALIZED
YIELD AT
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT PURCHASE DATE (NOTE 1)
U.S. TREASURY OBLIGATIONS -- 71.8%
<C> <S> <C> <C> <C>
$ 40,000,000 U.S. Treasury Bills 4.310% 11/03/94 $ 39,990,422
5,000,000 U.S. Treasury Bills 4.400 11/03/94 4,998,778
10,000,000 U.S. Treasury Bills 4.340 11/10/94 9,989,150
10,000,000 U.S. Treasury Bills 3.910 11/17/94 9,982,622
25,000,000 U.S. Treasury Bills 4.470 11/17/94 24,950,334
25,000,000 U.S. Treasury Bills 4.560 12/08/94 24,882,834
15,000,000 U.S. Treasury Bills 4.580 12/15/94 14,916,033
15,000,000 U.S. Treasury Bills 4.720 12/15/94 14,913,467
20,000,000 U.S. Treasury Bills 4.847 12/15/94 19,887,678
25,000,000 U.S. Treasury Bills 4.600 12/22/94 24,837,084
10,000,000 U.S. Treasury Bills 4.080 01/12/95 9,918,400
25,000,000 U.S. Treasury Bills 4.890 01/12/95 24,755,500
25,000,000 U.S. Treasury Bills 4.680 01/19/95 24,743,250
35,000,000 U.S. Treasury Bills 5.010 01/19/95 34,615,204
20,000,000 U.S. Treasury Bills 4.755 01/26/95 19,772,816
35,000,000 U.S. Treasury Bills 5.050 01/26/95 34,577,764
25,000,000 U.S. Treasury Bills 5.020 02/02/95 24,675,792
25,000,000 U.S. Treasury Bills 5.000 02/16/95 24,628,472
10,000,000 U.S. Treasury Bills 4.820 03/09/95 9,828,622
20,000,000 U.S. Treasury Bills 5.436 05/04/95 19,473,045
5,000,000 U.S. Treasury Strip 4.776 11/15/94 4,990,990
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $421,328,257)
421,328,257
------------
REPURCHASE AGREEMENTS -- 28.5%
66,956,071 Agreement with Barclays de Zoete Wedd dated 10/31/94 bearing
4.780% to be repurchased at $66,964,961 on 11/01/94
collateralized by: $8,778,620, U.S. Treasury Notes, 5.750%
due 10/31/97; $7,527,027, U.S. Treasury Notes, 7.500% due
01/31/96; $20,366,209, U.S. Treasury Notes, 11.625% due
11/15/94; $4,800,742, U.S. Treasury Bonds, 8.875% due
08/15/17; $5,046,199, U.S. Treasury Bonds, 10.750% due
05/15/03; $20,398,136, U.S. Treasury Bill, 5.180% due
01/26/95 66,956,071
100,000,000 Agreement with Donaldson Lufkin & Jenrette Securities
Corporation dated 10/31/94 bearing 4.780% to be
repurchased at $100,013,278 on 11/01/94 collateralized by:
$47,419,072, U.S. Treasury Notes, 8.750% due 10/15/97;
$52,581,618, U.S. Treasury Notes, 5.500% due 4/30/96 100,000,000
------------
TOTAL REPURCHASE AGREEMENTS (Cost $166,956,071) 166,956,071
------------
TOTAL INVESTMENTS (Cost $588,284,328*) 100.3% 588,284,328
OTHER ASSETS AND LIABILITIES (0.3) (1,506,043)
------ ------------
NET ASSETS 100.0% $586,778,285
------ ------------
------ ------------
------------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
</TABLE>
10 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
U.S. TREASURY ONLY MONEY MARKET FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
ANNUALIZED
YIELD AT
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT PURCHASE DATE (NOTE 1)
U.S. TREASURY OBLIGATIONS -- 100.3%
<C> <S> <C> <C> <C>
$ 4,834,000 U.S. Treasury Bills 4.380% 11/03/94 $ 4,832,824
37,000 U.S. Treasury Bills 4.340 11/10/94 36,958
1,633,000 U.S. Treasury Bills 4.435 11/10/94 1,631,189
7,546,000 U.S. Treasury Bills 4.470 11/10/94 7,537,567
1,038,000 U.S. Treasury Bills 4.390 11/17/94 1,035,975
10,250,000 U.S. Treasury Bills 4.450 11/17/94 10,229,728
521,000 U.S. Treasury Bills 4.540 11/17/94 519,949
1,371,000 U.S. Treasury Bills 4.580 11/17/94 1,368,209
2,032,000 U.S. Treasury Bills 4.450 12/08/94 2,022,706
16,000 U.S. Treasury Bills 4.550 12/08/94 15,925
92,000 U.S. Treasury Bills 4.590 12/08/94 91,566
170,000 U.S. Treasury Bills 4.650 12/08/94 169,188
454,000 U.S. Treasury Bills 4.780 12/08/94 451,770
4,205,000 U.S. Treasury Bills 4.580 12/15/94 4,181,461
70,000 U.S. Treasury Bills 4.570 12/22/94 69,547
147,000 U.S. Treasury Bills 4.585 12/22/94 146,045
5,000,000 U.S. Treasury Bills 4.600 12/22/94 4,967,417
7,929,000 U.S. Treasury Bills 4.750 12/22/94 7,875,644
3,381,000 U.S. Treasury Bills 4.820 12/22/94 3,357,913
4,024,000 U.S. Treasury Bills 4.660 01/12/95 3,986,496
1,256,000 U.S. Treasury Bills 4.700 01/19/95 1,243,046
131,000 U.S. Treasury Bills 4.730 01/19/95 129,640
106,000 U.S. Treasury Bills 4.750 01/19/95 104,895
1,114,000 U.S. Treasury Bills 4.895 01/19/95 1,102,034
1,279,000 U.S. Treasury Bills 4.790 02/23/95 1,259,600
2,000,000 U.S. Treasury Bills 5.110 05/04/95 1,947,765
338,000 U.S. Treasury Bills 5.150 06/29/95 326,395
562,000 U.S. Treasury Bills 5.280 07/27/95 539,910
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $61,181,362) 61,181,362
------------
TOTAL INVESTMENTS
(Cost $61,181,362*) 100.3% 61,181,362
OTHER ASSETS AND LIABILITIES (NET) (0.3) (181,228)
------ ------------
NET ASSETS 100.0% $61,000,134
------ ------------
------ ------------
------------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 11
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
SHORT-TERM BOND FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
COMMERCIAL PAPER -- 35.3%
<C> <S> <C> <C> <C>
DOMESTIC COMMERCIAL PAPER -- 23.6%
$200,000 Golden Peanut Company 5.080% 12/09/94 $ 198,899
200,000 Goldman Sachs Group 4.980 11/16/94 199,557
200,000 Kimberly Clark Corporation 4.920 11/17/94 199,535
200,000 Pitney Bowes Credit Corporation 5.100 12/08/94 198,863
209,000 Sara Lee Corporation 5.070 12/01/94 208,087
200,000 US Bancorp 5.120 12/08/94 198,919
----------
TOTAL DOMESTIC COMMERCIAL PAPER (Cost $1,204,091) 1,203,860
----------
FOREIGN COMMERCIAL PAPER -- 11.7%
200,000 British Telecommunications PLC 4.980 11/29/94 199,198
200,000 Canadian Wheat Board 5.500 03/10/95 195,955
200,000 Grand Metropolitan Investment 4.820 11/21/94 199,417
----------
TOTAL FOREIGN COMMERCIAL PAPER
(Cost $594,748) 594,570
----------
CORPORATE BONDS AND NOTES -- 27.5%
Banking and Finance -- 15.1%
175,000 C.I.T. Group Holdings, Inc. 5.500 11/01/95 173,031
150,000 International Lease Finance
Corporation 6.625 06/01/96 149,063
155,000 John Deere Capital Corporation 5.000 01/15/95 154,613
210,000 NationsBank Corporation 5.375 12/01/95 207,638
90,000 Republic National Bank of New York 4.750 10/15/95 88,650
----------
772,995
----------
Machinery -- 4.0%
200,000 Ingersoll Rand Company 8.250 11/01/96 203,500
----------
Aerospace -- 4.6%
230,000 Martin Marietta Corporation 8.500 03/01/96 234,025
----------
Utilities -- 3.8%
195,000 General Electric Company 5.875 12/01/94 195,000
----------
TOTAL CORPORATE BONDS AND NOTES
(Cost $1,422,212) 1,405,520
----------
</TABLE>
12 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
PORTFOLIO of INVESTMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL
SHORT-TERM BOND FUND OCTOBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL COUPON MATURITY VALUE
AMOUNT RATE DATE (NOTE 1)
U.S. TREASURY OBLIGATIONS -- 9.7%
<C> <S> <C> <C> <C>
(Cost $492,345)
$500,000 U.S. Treasury Notes 5.500% 04/30/96 $ 492,275
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.8%
(Cost $298,773)
300,000 Federal National Mortgage
Association 4.910 12/01/94 298,732
----------
REPURCHASE AGREEMENT -- 17.5%
(Cost $891,912)
Agreement with Barclays de Zoete Wedd dated 10/31/94 bearing
4.780% to be repurchased at $892,030 on 11/01/94,
collateralized by: $892,697, U.S. Treasury Bill, 5.720%
due 11/10/94 891,912
891,912
----------
TOTAL INVESTMENTS
(Cost $4,904,081*) 95.8% 4,886,869
OTHER ASSETS AND LIABILITIES (NET) 4.2 212,585
------ ----------
NET ASSETS 100.0% $5,099,454
------ ----------
------ ----------
------------------------------------------------------------------------------------
<FN>
* AGGREGATE COST FOR FEDERAL TAX PURPOSES.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 13
................................................................................
<PAGE>
STATEMENT of ASSETS and LIABILITIES
................................................................................
- --------------------------------------------------------------------------------
OCTOBER 31, 1994
<TABLE>
<CAPTION>
DREYFUS/LAUREL
INSTITUTIONAL
PRIME
MONEY MARKET
FUND
<S> <C>
-------------------------------------------------------------------
ASSETS
Investments, at value (Cost $684,120,948,
$471,944,892, $588,284,328, $61,181,362 and
$4,904,081, respectively.)
(Note 1) See accompanying schedules
Securities $622,120,293
Repurchase agreements 62,000,655
---------------
Total Investments 684,120,948
Cash --
Interest receivable 644,567
Receivable from investment adviser (Note 2) 70,823
Receivable for investment securities sold --
Receivable for Fund shares sold 179,302
Other assets --
---------------
TOTAL ASSETS 685,015,640
---------------
---------------
LIABILITIES
Dividends payable 2,985,051
Payable for Fund shares redeemed 54,897
Investment management fee payable (Note 2) 91,634
Shareholder service fee payable (Note 3) 14,909
Accrued Directors' fees and expenses (Note 2) 88,617
---------------
TOTAL LIABILITIES 3,235,108
---------------
NET ASSETS $681,780,532
---------------
---------------
NET ASSETS consist of:
Distribution in excess of net investment income $ --
Accumulated net realized loss on investments sold --
Unrealized depreciation of investments --
Par value 681,781
Paid-in capital in excess of par value 681,098,751
---------------
TOTAL NET ASSETS $681,780,532
---------------
---------------
NET ASSETS:
Class I Shares $681,780,532
---------------
---------------
Class II Shares $ --
---------------
---------------
Class III Shares $ --
---------------
---------------
SHARES OUTSTANDING:
Class I Shares 681,780,532
---------------
---------------
Class II Shares --
---------------
---------------
Class III Shares --
---------------
---------------
CLASS I SHARES
Net assets value, offering and redemption price
per share $1.00
-------
-------
CLASS II SHARES
Net asset value, offering and redemption price per
share $--
-------
-------
CLASS III SHARES
Net asset value, offering and redemption price per
share $--
-------
-------
</TABLE>
14 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of ASSETS and LIABILITIES (continued)
................................................................................
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS/LAUREL DREYFUS/LAUREL DREYFUS/LAUREL
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL DREYFUS/LAUREL
GOVERNMENT U.S. TREASURY U.S. TREASURY ONLY INSTITUTIONAL
MONEY MARKET MONEY MARKET MONEY MARKET SHORT-TERM BOND
FUND FUND FUND FUND
<S> <C> <C> <C>
--------------------------------------------------------------------------
$344,181,606 $421,328,257 $ 61,181,362 $ 3,994,957
127,763,286 166,956,071 -- 891,912
--------------- --------------- ------------------- ----------------
471,944,892 588,284,328 61,181,362 4,886,869
-- -- 9 --
16,964 22,169 -- 32,716
23,667 30,735 -- 83,093
-- -- -- 103,304
-- 876,252 52,796 614
6,629 -- -- --
--------------- --------------- ------------------- ----------------
471,992,152 589,213,484 61,234,167 5,106,596
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
1,861,675 2,201,952 218,357 474
-- 90,000 -- 3,219
58,883 70,810 7,082 1,153
9,532 12,435 204 104
55,192 60,002 8,390 2,192
--------------- --------------- ------------------- ----------------
1,985,282 2,435,199 234,033 7,142
--------------- --------------- ------------------- ----------------
$470,006,870 $586,778,285 $ 61,000,134 $ 5,099,454
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
$ -- $ -- $ (1,827) $ --
-- -- -- (158,643)
-- -- -- (17,212)
470,007 586,778 61,001 516
469,536,863 586,191,507 60,940,960 5,274,793
--------------- --------------- ------------------- ----------------
$470,006,870 $586,778,285 $ 61,000,134 $ 5,099,454
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
$470,006,870 $586,778,285 $ -- $ 5,099,454
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
$ -- $ -- $ 30,300,775 $ --
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
$ -- $ -- $ 30,699,359 $ --
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
470,006,870 586,778,285 -- 516,299
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
-- -- 30,301,400 --
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
-- -- 30,700,000 --
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
$1.00 $1.00 $-- $9.88
------- ------- --------- --------
------- ------- --------- --------
$-- $-- $1.00 $--
------- ------- --------- --------
------- ------- --------- --------
$-- $-- $1.00 $--
------- ------- --------- --------
------- ------- --------- --------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 15
................................................................................
<PAGE>
STATEMENT of OPERATIONS
................................................................................
- --------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
DREYFUS/LAUREL
INSTITUTIONAL
PRIME
MONEY MARKET
FUND
<S> <C>
------------------------------------------------------------------
INVESTMENT INCOME
Interest $30,976,305
--------------
EXPENSES
Investment advisory fee (Note 2) 719,248
Administration fee (Note 2) 102,688
Investment management fee (Note 2) 572,835
Custodian fees (Note 2) 60,862
Transfer agent fees (Note 2) 24,766
Shareholder service fee (Note 3) 660,963
Legal and audit fees 31,847
Directors' fees and expenses (Note 2) 91,431
Registration and filing fees 10,139
Amortization of organization costs (Note 6) --
Other expenses 64,636
Expenses reimbursed by investment adviser (Note 2) --
--------------
TOTAL EXPENSES 2,339,415
--------------
NET INVESTMENT INCOME 28,636,890
--------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(Notes 1 and 4)
Net realized loss on investments during the year --
Net unrealized depreciation of investments
during the year --
--------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS --
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $28,636,890
--------------
--------------
------------------------------------------------------------------
<FN>
* THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND COMMENCED OPERATIONS ON
NOVEMBER 5, 1993.
</TABLE>
16 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of OPERATIONS (continued)
................................................................................
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS/LAUREL DREYFUS/LAUREL DREYFUS/LAUREL
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL DREYFUS/LAUREL
GOVERNMENT U.S. TREASURY U.S. TREASURY ONLY INSTITUTIONAL
MONEY MARKET MONEY MARKET MONEY MARKET SHORT-TERM BOND
FUND FUND FUND FUND*
<S> <C> <C> <C>
------------------------------------------------------------------------------
$ 18,066,349 $ 19,165,474 $ 2,434,871 $ 616,754
--------------- --------------- ------------------- ----------------
380,929 404,422 55,152 11,572
54,384 57,738 7,882 1,649
354,884 386,511 50,321 15,477
41,999 45,824 18,793 19,438
24,766 24,766 24,848 23,976
409,481 445,973 11,732 12,898
19,141 23,184 6,701 4,957
57,893 62,762 11,031 4,698
11,834 11,117 13,154 11,402
-- 7,744 3,699 5,907
31,844 50,103 3,147 3,298
-- (21,564 ) (81,512) (85,177)
--------------- --------------- ------------------- ----------------
1,387,155 1,498,580 124,948 30,095
--------------- --------------- ------------------- ----------------
16,679,194 17,666,894 2,309,923 586,659
--------------- --------------- ------------------- ----------------
-- -- -- (158,643)
-- -- -- (17,212)
--------------- --------------- ------------------- ----------------
-- -- -- (175,855)
--------------- --------------- ------------------- ----------------
$ 16,679,194 $ 17,666,894 $ 2,309,923 $ 410,804
--------------- --------------- ------------------- ----------------
--------------- --------------- ------------------- ----------------
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 17
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS
................................................................................
- --------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
DREYFUS/LAUREL
INSTITUTIONAL
PRIME
MONEY MARKET
FUND
<S> <C>
----------------------------------------------------------------
Net investment income $ 28,636,890
Net realized loss on securities during the year --
Net unrealized depreciation of investments during
the year --
--------------
Net increase in net assets resulting from
operations 28,636,890
Distributions to shareholders from net investment
income:
Class I Shares (28,636,890)
Class II Shares --
Class III Shares --
Net increase/(decrease) in net assets from Fund
share transactions (Note 5):
Class I Shares (142,299,818)
Class II Shares --
Class III Shares --
--------------
Net increase/(decrease) in net assets (142,299,818)
NET ASSETS:
Beginning of year 824,080,350
--------------
End of year (including distributions in excess of
net investment income of $1,827 at October 31,
1994 for the Dreyfus/Laurel Institutional U.S.
Treasury Only Money Market Fund) $681,780,532
--------------
--------------
----------------------------------------------------------------
<FN>
* THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND COMMENCED OPERATIONS ON
NOVEMBER 5, 1993.
</TABLE>
18 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS (continued)
................................................................................
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS/LAUREL DREYFUS/LAUREL DREYFUS/LAUREL
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL DREYFUS/LAUREL
GOVERNMENT U.S. TREASURY U.S. TREASURY ONLY INSTITUTIONAL
MONEY MARKET MONEY MARKET MONEY MARKET SHORT-TERM BOND
FUND FUND FUND FUND*
<S> <C> <C> <C>
-------------------------------------------------------------------------------
$ 16,679,194 $ 17,666,894 $ 2,309,923 $ 586,659
-- -- -- (158,643)
-- -- -- (17,212)
--------------- --------------- ------------------- ---------------
16,679,194 17,666,894 2,309,923 410,804
(16,679,194) (17,666,894) -- (586,659)
-- -- (1,777,705) --
-- -- (533,484) --
63,317,245 86,124,993 -- 5,275,309
-- -- (34,620,667) --
-- -- 30,700,000 --
--------------- --------------- ------------------- ---------------
63,317,245 86,124,993 (3,921,933) 5,099,454
406,689,625 500,653,292 64,922,067 --
--------------- --------------- ------------------- ---------------
$470,006,870 $586,778,285 $ 61,000,134 $5,099,454
--------------- --------------- ------------------- ---------------
--------------- --------------- ------------------- ---------------
-------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 19
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS
................................................................................
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1993
<TABLE>
<CAPTION>
DREYFUS/LAUREL
INSTITUTIONAL
PRIME
MONEY MARKET
FUND
<S> <C>
--------------------------------------------------------------------
Net investment income $ 31,164,917
--------------
Net increase in net assets resulting from
operations 31,164,917
Distributions to shareholders from net investment
income (31,164,917)
Net increase/(decrease) in net assets from Fund
transactions (Note 5):
Class I Shares (126,241,187)
Class II Shares --
--------------
Net increase/(decrease) in net assets (126,241,187)
NET ASSETS:
Beginning of year 950,321,537
--------------
End of year $ 824,080,350
--------------
--------------
</TABLE>
20 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
STATEMENT of CHANGES in NET ASSETS (continued)
................................................................................
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS/LAUREL DREYFUS/LAUREL DREYFUS/LAUREL
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
GOVERNMENT U.S. TREASURY U.S. TREASURY ONLY
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
<S> <C> <C>
----------------------------------------------------------
$ 12,276,030 $ 17,958,489 $ 1,679,864
-------------- --------------- -------------------
12,276,030 17,958,489 1,679,864
(12,276,030) (17,958,489) (1,679,864)
15,325,408 (165,724,915) --
-- -- 21,140,185
-------------- --------------- -------------------
15,325,408 (165,724,915) 21,140,185
391,364,217 666,378,207 43,781,882
-------------- --------------- -------------------
$406,689,625 $500,653,292 $64,922,067
-------------- --------------- -------------------
-------------- --------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. 21
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL PRIME MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 6 of the Prospectus dated April 10, 1995.
22 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
................................................................................
- --------------------------------------------------------------------------------
Please refer to page 6 of the Prospectus dated April 10, 1995.
SEE NOTES TO FINANCIAL STATEMENTS. 23
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 7 of the Prospectus dated April 10, 1995.
24 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
................................................................................
- --------------------------------------------------------------------------------
Please refer to page 7 of the Prospectus dated April 10, 1995.
SEE NOTES TO FINANCIAL STATEMENTS. 25
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 8 of the Prospectus dated April 10, 1995.
26 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
................................................................................
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS. 27
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
FOR A CLASS II SHARE OUTSTANDING THROUGHOUT EACH YEAR.
Please refer to page 9 of the Prospectus dated April 10, 1995.
28 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
FOR A CLASS III SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Please refer to page 10 of the Prospectus dated April 10, 1995.
SEE NOTES TO FINANCIAL STATEMENTS. 29
................................................................................
<PAGE>
FINANCIAL HIGHLIGHTS
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND
FOR A CLASS I SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Please refer to page 11 of the Prospectus dated April 10, 1995.
30 SEE NOTES TO FINANCIAL STATEMENTS.
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS
................................................................................
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Funds, Inc. (the "Investment Company"), The Dreyfus/Laurel
Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds and The
Dreyfus/Laurel Investment Series are all registered open-end management
investment companies that compose The Dreyfus Family of Funds. The Investment
Company is a series mutual fund with 19 separate investment portfolios. These
financial statements report on five funds: the Dreyfus/Laurel Institutional
Prime Money Market Fund, the Dreyfus/Laurel Institutional Government Money
Market Fund, the Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund,
the Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund and the
Dreyfus/Laurel Institutional Short-Term Bond Fund (the "Funds"). The
Investment Company was incorporated on August 6, 1987 as a Maryland
corporation and is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified open-end management investment company. The Dreyfus/Laurel
Institutional Prime Money Market Fund, the Dreyfus/Laurel Institutional
Government Money Market Fund, the Dreyfus/Laurel Institutional U.S. Treasury
Money Market Fund, the Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund and the Dreyfus/Laurel Institutional Short-Term Bond Fund
commenced operations on April 15, 1988, October 8, 1987, December 22, 1988,
January 22, 1992 and November 5, 1993, respectively. Each Fund offers three
classes of shares: Class I, Class II and Class III Shares. Each class of
shares has identical rights and privileges, except with respect to the
effective shareholder servicing fees borne by each class and voting rights on
matters affecting a single class. The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of
their financial statements.
(A) PORTFOLIO VALUATION
With respect to the Dreyfus/Laurel Institutional Short-Term Bond Fund
investments in securities traded on a national securities exchange are valued
at the last reported sales price or, in the absence of a recorded sale, at the
mean of the latest bid and asked prices. Over-the-counter securities are
valued at the mean of the latest bid and asked prices. When market quotations
are not readily available, securities are valued at fair value as determined
in good faith by the Board of Directors. Bonds are valued through valuations
obtained from a commercial pricing service or at the most recent mean of the
bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors. Investments in U.S.
government securities (other than short-term securities) are valued at the
most recent quoted bid price in the over-the-counter market. Short-term
investments with maturities of 60 days or less from the valuation day are
valued on the basis of amortized cost. Amortized cost valuation involves
valuing an instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the effect
of fluctuating interest rates on the market value of the instrument.
31
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
(B) REPURCHASE AGREEMENTS
Each Fund other than the Dreyfus/Laurel Institutional U.S. Treasury Only Money
Market Fund may engage in repurchase agreement transactions. Under the terms
of a typical repurchase agreement, a Fund, through its custodian, takes
possession of an underlying debt obligation, subject to an obligation of the
seller to repurchase, and the Fund to resell the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding
period. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Fund's holding period. The value of the
collateral is at least equal, at all times, to the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to a Fund in the event the Fund is delayed
or prevented from exercising its rights to dispose of the collateral
securities including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. Each Fund's investment manager, acting under the supervision of the
Board of Directors, reviews the value of the collateral and the
creditworthiness of those banks and dealers with which a Fund enters into
repurchase agreements to evaluate potential risks.
(C) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Interest income is
recorded on the accrual basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Investment income and
realized and unrealized gains and losses are allocated based upon relative
average daily net assets of each class of shares.
(D) EXPENSE ALLOCATION
Expenses of a Fund not directly attributable to the operations of any class of
shares of the Fund are pro rated between its classes based upon the relative
average daily net assets of each class. Shareholder servicing expense directly
attributable to a particular class of shares is charged only to that class's
operations.
(E) DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, if any, of a Fund are determined on a
class level and are declared daily and paid monthly. Distributions from net
realized capital gains, if any, are determined on a Fund level and are
declared and paid annually. Additional distributions of net investment income
and capital gains for the Funds may be made at the discretion of the Board of
Directors in order to avoid the 4% nondeductible Federal excise tax. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by a Fund, timing
differences and differing characterization of distributions made by a Fund as
a whole.
32
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
(F) FEDERAL INCOME TAXES
Each Fund intends to qualify as a regulated investment company by complying
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and by distributing substantially all of its taxable
income to its shareholders. Therefore, no federal income tax provision is
required.
2. INVESTMENT MANAGEMENT FEE, DIRECTORS' FEES
AND OTHER PARTY TRANSACTIONS
Effective as of October 17, 1994, the Investment Company's investment
management agreement with Mellon Bank, N.A. ("Mellon Bank"), a wholly owned
subsidiary of Mellon Bank Corporation, was transferred to The Dreyfus
Corporation (the "Manager"), a wholly owned subsidiary of Mellon Bank. The
Manager provides, or arranges for one or more third parties to provide,
investment advisory, administrative, custody, fund accounting and transfer
agency services to the Investment Company. The Manager also directs the
investments of each Fund in accordance with its investment objective, policies
and limitations. For these services, the Dreyfus/Laurel Institutional Prime
Money Market Fund, the Dreyfus/Laurel Institutional Government Money Market
Fund, the Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund, the
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund and the
Dreyfus/Laurel Institutional Short-Term Bond Fund each pay a fee to the
manager, calculated daily and paid monthly, at an annual rate of 0.15%, 0.15%,
0.15% 0.15%, and 0.20% of the value of the Fund's average daily net assets,
respectively. Out of its fee, the Manager pays all of the expenses of each
Fund except brokerage, taxes, interest, shareholder servicing fees and
expenses, fees and expenses of non-interested directors (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to
reduce its fee in an amount equal to the Fund's allocable portion of fees and
expenses of the non-interested directors (including counsel).
For the period from April 4, 1994 to October 16, 1994, Mellon Bank served as
the Investment Company's investment manager pursuant to the investment
management agreement described above. Prior to April 4, 1994, the Investment
Company had individual contracts with Mellon Bank to provide custody,
accounting, and transfer agency services to each Fund. Effective April 4,
1994, custody, accounting, and transfer agency services are covered by the
investment management agreement described above.
Prior to April 4, 1994, the Investment Company had an investment advisory
agreement under which the Fund paid Mellon Bank an annual fee of 0.20% of the
value of the Fund's average daily net assets for investment advisory services.
For the period from November 1, 1993 through April 3, 1994, Mellon Bank, as
investment adviser, voluntarily agreed to reimburse expenses of the
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund and the
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund in the
amounts of $21,564 and $81,512, as investment adviser, respectively. For the
33
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
period from November 5, 1993 through April 3, 1994 Mellon Bank voluntarily
agreed to reimburse expenses of the Dreyfus/Laurel Institutional Short-Term
Bond Fund in the amount of $85,177.
Prior to September 23, 1994, Frank Russell Investment Management Company (the
"Administrator") served as each Funds' administrator and provided, pursuant to
an administration agreement, various administrative and corporate secretarial
services to each Funds. For the period from April 4, 1994 to September 23,
1994, Mellon Bank, as investment manager, paid the Administrator's fee out of
the management fee described above. Prior to April 4, 1994, the Investment
Company paid the Administrator the following fees for the services supplied by
the Administrator pursuant to the administration agreement: (i) an annual fee
of $500,000; (ii) an annual asset-based fee, payable monthly on a pro rata
basis, based on the following percentages of the aggregate average daily net
assets of the Investment Company: up to and including $10 billion -- 0.01%,
over $10 billion -- 0.005%; and (iii) all start-up costs (including
out-of-pocket, blue sky registration and personnel costs) for new portfolios
(prior to and for 6 months following commencement of operations).
No officer or employee of Premier (or of any parent, subsidiary or affiliate
thereof) receives any compensation from The Dreyfus/Laurel Funds, Inc., The
Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Municipal Funds or The
Dreyfus/Laurel Investment Series (collectively, "The Dreyfus/Laurel Funds")
for serving as an officer or Director/Trustee of The Dreyfus/Laurel Funds. In
addition, no officer or employee of the Manager (or of any parent, subsidiary
or affiliate thereof) serves as an officer or Director/ Trustee of The
Dreyfus/Laurel Funds. The Dreyfus/Laurel Funds pay each Director/Trustee who
is not an officer or employee of Premier (or any parent, subsidiary or
affiliate thereof) $27,000 per annum, $1,000 for each Board meeting attended
and $750 for each Audit Committee meeting attended, and reimburses each
Director/Trustee for travel and out-of-pocket expenses. Prior to April 4,
1994, the Investment Company paid each Director $15,000 per annum plus
reimbursement for travel and out-of-pocket expenses.
Prior to April 4, 1994, the Investment Company had a contract with Russell
Fund Distributors, Inc. to serve as distributor of its shares. Effective April
4, 1994 through October 16, 1994, Funds Distributor, Inc. served as
distributor of the Investment Company's shares. Effective as of October 17,
1994, Premier Mutual Fund Services, Inc. ("Premier") serves as the Investment
Company's distributor. Premier also serves as the Investment Company's
sub-administrator and, pursuant to a sub-administration agreement with the
Manager, provides various administrative and corporate secretarial services to
the Investment Company.
3. SHAREHOLDER SERVICING PLAN
On April 4, 1994, each Fund adopted a Shareholder Servicing Plan (the "Plan").
Under the Plan, each Fund may pay up to 0.15% and 0.05%, of the value of the
average daily
34
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
net assets attributable to its Class I and Class II shares, respectively,
annually to compensate Premier, certain banks, brokers, dealers or other
financial institutions for shareholder services. Class III shares are not
subject to the Plan. Prior to April 4, 1994, each Fund had a distribution and
shareholder services plan under which the Fund was authorized to spend
annually up to 0.35% of its average daily net assets on distribution and
shareholder servicing expenses.
Under its terms, the shareholder servicing plan shall remain in effect from
year to year, provided such continuance is approved annually by a vote of a
majority of those Directors who are not "interested persons" of the Investment
Company and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan.
4. SECURITIES TRANSACTIONS
For the Dreyfus/Laurel Institutional Short-Term Bond Fund, the cost of
purchases and proceeds from sales of securities, excluding short-term
investments and U.S. government securities, for the period ended October 31,
1994 were $7,958,905 and $6,466,204, respectively.
For the Dreyfus/Laurel Institutional Short-Term Bond Fund, the cost of
purchases and proceeds from sales of long-term U.S. government securities for
the period ended October 31, 1994 were $5,782,611 and $4,282,813,
respectively.
At October 31, 1994, The Dreyfus/Laurel Institutional Short-Term Bond Fund had
aggregate gross unrealized depreciation for all securities in which there was
an excess of tax cost over value of $17,212. There was no aggregate gross
unrealized appreciation for all securities in which there was an excess of
value over tax cost.
5. SHARES OF CAPITAL STOCK
The Investment Company has authority to issue 25 billion shares of capital
stock with a par value of $.001. Each Fund has authority to issue three
classes of shares (Class I, Class II, Class III Shares). The table below
summarizes the transactions in Fund shares for the years or period indicated.
Because the Dreyfus/Laurel Institutional Prime Money Market Fund, the
Dreyfus/Laurel Institutional Government Money Market Fund, the Dreyfus/Laurel
Institutional U.S. Treasury Money Market Fund and the Dreyfus/Laurel
Institutional U.S. Treasury Only Money Market Fund have sold shares, issued
shares of reinvestments of dividends, and redeemed shares only at a constant
net asset value of $1.00 per share, the number of shares represented by such
sales, reinvestments, and redemptions is the same as the amounts shown below
for such transactions.
35
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
-------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994+ OCTOBER 31, 1993
<S> <C> <C>
--------------------------------------------------------------------------------
CLASS I SHARES:
SOLD $ 6,346,280,548 $ 7,059,606,006
ISSUED AS REINVESTMENT OF DIVIDENDS 9,455,788 12,603,078
REDEEMED (6,498,036,154) (7,198,450,271)
------------------- -----------------
NET DECREASE $ (142,299,818) $ (126,241,187)
------------------- -----------------
------------------- -----------------
--------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994+ OCTOBER 31, 1993
<S> <C> <C>
--------------------------------------------------------------------------------
CLASS I SHARES:
SOLD $ 2,621,818,115 $ 2,449,481,559
ISSUED AS REINVESTMENT OF DIVIDENDS 2,072,225 1,144,061
REDEEMED (2,560,573,095) (2,435,300,212)
------------------- -----------------
NET INCREASE $ 63,317,245 $ 15,325,408
------------------- -----------------
------------------- -----------------
--------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994+ OCTOBER 31, 1993
<S> <C> <C>
--------------------------------------------------------------------------------
CLASS I SHARES:
SOLD $ 3,029,275,330 $ 3,219,306,510
ISSUED AS REINVESTMENT OF DIVIDENDS 2,102,357 1,875,568
REDEEMED (2,945,252,694) (3,386,906,993)
------------------- -----------------
NET INCREASE/(DECREASE) $ 86,124,993 $ (165,724,915)
------------------- -----------------
------------------- -----------------
--------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994+ OCTOBER 31, 1993
<S> <C> <C>
--------------------------------------------------------------------------------
CLASS II SHARES:
SOLD $ 112,306,805 $ 121,609,303
ISSUED AS REINVESTMENT OF DIVIDENDS 525,692 722,547
REDEEMED (147,453,164) (101,191,665)
------------------- -----------------
NET INCREASE/(DECREASE) $ (34,620,667) $ 21,140,185
------------------- -----------------
------------------- -----------------
--------------------------------------------------------------------------------
</TABLE>
36
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
- --------------------------------------------------------------------------------
DREYFUS/LAUREL
INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994**
<S> <C> <C>
--------------------------------------------------------------------------------
CLASS III SHARES:
Sold $ 35,035,694
Issued as reinvestment of dividends 506,140
Redeemed (4,841,834)
-------------------
Net increase $ 30,700,000
-------------------
-------------------
--------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*+
SHARES AMOUNT
<S> <C> <C>
---------------------------------------------------------------------
CLASS I SHARES:
Sold 3,988,741 $ 39,701,901
Issued as reinvestment of dividends 58,421 580,265
Redeemed (3,530,863) (35,006,857)
------------ ------------
Net increase 516,299 $ 5,275,309
------------ ------------
------------ ------------
---------------------------------------------------------------------
<FN>
* THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND COMMENCED OPERATIONS ON
NOVEMBER 5, 1993.
** THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY ONLY MONEY MARKET FUND
COMMENCED SELLING CLASS III SHARES ON MAY 12, 1994.
+ ON APRIL 4, 1994, EXISTING SHARES OF THE DREYFUS/LAUREL INSTITUTIONAL PRIME
MONEY MARKET FUND, THE DREYFUS/LAUREL INSTITUTIONAL GOVERNMENT MONEY MARKET
FUND, THE DREYFUS/LAUREL INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND AND
THE DREYFUS/LAUREL INSTITUTIONAL SHORT-TERM BOND FUND WERE DESIGNATED CLASS I
SHARES. ON APRIL 4, 1994, EXISTING SHARES OF THE DREYFUS/LAUREL INSTITUTIONAL
U.S. TREASURY ONLY MONEY MARKET FUND WERE DESIGNATED CLASS II SHARES.
</TABLE>
6. ORGANIZATION COSTS
Each Fund paid all costs in connection with the Fund's organization including
the fees and expenses of registering and qualifying the Fund's shares for
distribution under Federal and state securities regulations. Prior to April 4,
1994, all such costs were being amortized on the straight-line method over a
period of five years. On April 4, 1994, the remaining unamortized organization
costs were reimbursed by Mellon Bank as the investment adviser.
37
................................................................................
<PAGE>
NOTES to FINANCIAL STATEMENTS (continued)
................................................................................
7. CAPITAL LOSS CARRYFORWARD
At October 31, 1994, the Dreyfus/Laurel Institutional Short-Term Bond
Portfolio had available for federal income tax purposes an unused capital loss
carryforward of $158,643, to offset future gains expiring in 2002.
38
................................................................................
<PAGE>
INDEPENDENT AUDITORS' REPORT
................................................................................
[LOGO]
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.
We have audited the accompanying statements of assets and liabilities of
the Dreyfus/Laurel Institutional Prime Money Market Fund, the Dreyfus/Laurel
Institutional Government Money Market Fund, the Dreyfus/Laurel Institutional
U.S. Treasury Money Market Fund, the Dreyfus/Laurel Institutional U.S.
Treasury Only Money Market Fund and the Dreyfus/Laurel Institutional
Short-Term Bond Fund of The Dreyfus/ Laurel Funds, Inc., including the
portfolios of investments, as of October 31, 1994, and the related statements
of operations for the period then ended and the statements of changes in net
assets and the financial highlights for each of the periods indicated herein.
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 October 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 the
Dreyfus/Laurel Institutional Prime Money Market Fund, the Dreyfus/Laurel
Institutional Government Money Market Fund, the Dreyfus/Laurel Institutional
U.S. Treasury Money Market Fund, the
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund and the
Dreyfus/Laurel Institutional Short-Term Bond Fund of The Dreyfus/Laurel Funds,
Inc. as of October 31, 1994, the results of their operations for the period
then ended and the changes in their net assets and the financial highlights
for each of the periods indicated herein, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 9, 1994
PART C
-------
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A.
Financial Highlights for each of the periods
indicated therein.
Included in Part B: The following are incorporated by
reference to the Registrant's Annual Reports to Shareholders for the period
ended October 31, 1994 filed on January 5, 1995:
- Reports of Independent Accountants.
- Portfolio of Investments.
- Statements of Assets and Liabilities.
- Statements of Operations.
- Statements of Changes in Net Assets.
- Notes to Financial Statements.
(b) Exhibits:
1(a) Articles of Incorporation. (Incorporated by
reference to Post-Effective Amendment No. 29
("Post-Effective Amendment No. 29") to the
Registrant's Registration Statement on Form N-1A
filed May 19, 1994 -- Registration No. 33-16338
("Registration Statement").
1(b) Articles Supplementary increasing number of
shares registered. Incorporated by reference to
Post-Effective Amendment No. 29.
1(c) Articles of Amendment. Incorporated by reference
to Post-Effective Amendment No. 31 Filed on
December 13, 1994.
1(d) Articles Supplementary designating classes.
Incorporated by reference to Post-Effective
Amendment No. 32 Filed on December 19, 1994.
2 Bylaws. Incorporated by reference to the
Registration Statement.
3 Not applicable.
4 Specimen security. To be filed by amendment.
5(a) Investment Sub-Advisory Agreement among Mellon
Bank, N.A., S.A.M. Finance S.A. and the
Registrant for the European Fund. Incorporated
by reference to Post-Effective Amendment No. 22
filed September 3, 1993.
5(b) Investment Management Agreement between Mellon
Bank, N.A. and the Registrant. Incorporated by
reference to Post-Effective Amendment No. 29.
5(c) Investment Sub-Advisory Agreement among Mellon
Bank, N.A., S.A.M. Finance S.A. and the
Registrant for the International Equity
Allocation Fund. Incorporated by reference to
Post-Effective Amendment No. 31 filed on December
13, 1994.
5(d) Assignment and Assumption Agreement among Mellon
Bank, N.A., The Dreyfus Corporation and the
Registrant (relating to Investment Management
Agreement). Incorporated by reference to Post-
Effective Amendment No. 31 filed on December 13,
1994.
5(e) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the European Fund). To be filed by
amendment.
5(f) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the International Equity Allocation
Fund). To be filed by amendment.
6 Distribution Agreement between Premier Mutual
Fund Services, Inc. and the Registrant.
Incorporated by reference to Post-Effective
Amendment No. 31 filed on December 13, 1994.
7 Not applicable.
8(a) Custody Agreement with Boston Safe Deposit and
Trust Company with respect to the European Fund.
Incorporated by reference to Post-Effective
Amendment No. 23 filed December 30, 1993.
8(b) Custody and Fund Accounting Agreement between the
Registrant and Mellon Bank, N.A. Incorporated by
reference to Post-Effective Amendment No. 29.
8(c) Supplement to Custody Agreement with Boston Safe
Deposit and Trust Company with respect to the
European Fund. Incorporated by reference to
Post-Effective Amendment No. 29.
9(a) Fund Accounting Services Agreement. Incorporated
by reference to the Registration Statement.
9(b) Fund Accounting Services Agreement with Boston
Safe Deposit and Trust Company with respect to
the European Fund. Incorporated by reference to
Post-Effective Amendment No. 23 filed December
30, 1993.
9(c) Supplement to Fund Accounting Services Agreement
with Boston Safe Deposit and Trust Company with
respect to the European Fund. Incorporated by
reference to Post-Effective Amendment No. 29.
10 Opinion of counsel is incorporated by reference
to the Registration Statement and to Post-
Effective Amendment No.32 filed on December 19,
1994. Consent of Counsel is filed herewith.
11 Consent of KPMG Peat Marwick LLP. Filed herewith.
12 Not applicable.
13 Letter of Investment Intent. Incorporated by
reference to the Registration Statement.
14 Not applicable.
15(a) Restated Distribution Plan (relating to Investor
Shares and Class A Shares). Incorporated by
reference to Post-Effective Amendment No. 31
filed on December 13, 1994.
15(b) Form of Distribution and Service Plans (relating
to Class B Shares and Class C Shares).
Incorporated by reference to Post-Effective
Amendment No. 32 Filed on December 19, 1994.
16 Schedule for Computation of Performance
Calculation. Incorporated by reference to Post-
Effective Amendment No. 26 filed March 1,
1994.
Other Exhibits
--------------
(a) Powers of Attorney of the Directors and Officers
dated April 5, 1995.
Item 25. Persons Controlled by or Under Common Control with
Registrant
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities
-------------------------------
Set forth below are the number of recordholders of
securities of the Registrant as of March 31, 1995:
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class
Investor
Class Class R Class I Class II Class III
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dreyfus Bond Market Index Fund 10 22 - - -
Dreyfus/Laurel International Equity Allocation Fund 19 70 - - -
Dreyfus/Laurel Prime Money Market Fund 17,725 1,322 - - -
Dreyfus/Laurel U.S. Treasury Money Market Fund 2,598 280 - - -
Dreyfus/Laurel Tax-Exempt Money Market Fund 1,308 677 - - -
Dreyfus/Laurel Institutional Prime Money Market Fund - - 195 1 -
Dreyfus/Laurel Institutional Government Money Market Fund - - 29 - -
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund - - 54 - -
Dreyfus/Laurel Institutional Short-Term Bond Fund - - 8 - -
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund - - 2 3 1
</TABLE>
Item 27.
Indemnification
Incorporated by reference to Registration Statement.
Item 28.
Business and Other Connections of Investment Adviser
----------------------------------------------------
Investment Adviser -- The Dreyfus Corporation
------------------
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the investment
adviser, manager and distributor for sponsored investment companies
registered under the Investment Company Act of 1940 and as an investment
adviser to institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various pension
plans, institutions and individuals.
Officers and Directors of Investment Adviser
---------------------------------------------
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
MANDELL L. BERMAN Real estate consultant and private investor
Director
29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and Chief
Director Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 9103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director
535 Madison Avenue
New York, New York 10022;
Director and member of the Executive Committee of
Avnet, Inc.**
Lawrence M. Greene Director:
Director Dreyfus America Fund
DAVID B. TRUMAN Educational consultant;
Director
Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the
Board and Chief Dreyfus Acquisition Corporation*;
Executive Officer
The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Dreyfus Management, Inc.*;
Dreyfus Service Corporation;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management, Inc.*;
Dreyfus Personal Management, Inc. *;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING None
Director
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Robert E. Riley Director:
President, Chief Dreyfus Service Corporation
Operating Officer
and Director
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of
the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
LAWRENCE S. KASH Chairman, President and Chief Executive Officer:
Vice Chairman,
Distribution The Boston Advisers, Inc.
and a Director 53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PAUL H. SNYDER Director:
Vice President and
Chief Financial Pennsylvania Economy League
Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute
Philadelphia Chapter
Philadelphia, Pennsylvania;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
BARBARA E. CASEY President:
Vice President,
Retirement Services Dreyfus Retirement Services;
Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate
Communications
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
Henry D. Gottman Executive Vice President
Vice President-Retal Dreyfus Service Corporation
Sales and Service Vice President:
Dreyfsu Precious Metals
ELIE M. GENADRY President:
Vice President,
Institutioanl Sales
Institutional Services Division of Dreyfus
Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*:
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation *:
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and
General Counsel Dreyfus Previous Metals, Inc.*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation *;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President,
Mutual Fund Accounting
PHILIP L. TOIA Chairman of the Board and Vice President;
Vice Chairman,
Operations and Dreyfus Thrift & Commerce****;
Administration
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
The Chase Manhattan Bank, N.A. and The Chase
Manhattan Capital Markets Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. Formerly, Assistant Commissioner:
WICKHAM Department of Parks and Recreation of the City of
Vice President, New York
Human Resources 830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller
Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President,
Fund Legal and The Dreyfus Consumer Credit Corporation*;
Compliance, and
Secretary Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
Name and Position
with Dreyfus Other Businesses
----------------- ----------------
The Truepenny Corporation*
___________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New
York, New York 10006.
**** The address of the business so indicated is Five Triad Center,
Salt Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80
Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller
Plaza, New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama
Islands.
Item 29. Principal Underwriter
---------------------
(a) Premier Mutual Fund Services, Inc. ("Premier") currently serves as
the exclusive distributor for The Dreyfus/Laurel Funds, Inc. Premier is
registered with the Securities and Exchange Commission as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.
Premier is a wholly-owned subsidiary of Institutional Administration
Services, Inc., the parent company of which is Boston Institutional Group,
Inc.
Premier also currently serves as the exclusive distributor or principal
underwriter for the following investment companies:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wilshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) General California Municipal Bond Fund, Inc.
76) General California Municipal Money Market Fund
77) General Government Securities Money Market Fund, Inc.
78) General Money Market Fund, Inc.
79) General Municipal Bond Fund, Inc.
80) General Municipal Money Market Fund, Inc.
81) General New York Municipal Bond Fund, Inc.
82) General New York Municipal Money Market Fund
83) Pacific American Fund
84) Peoples Index Fund, Inc.
85) Peoples S&P MidCap Index Fund, Inc.
86) Premier Insured Municipal Bond Fund
87) Premier California Municipal Bond Fund
88) Premier GNMA Fund
89) Premier Growth Fund, Inc.
90) Premier Municipal Bond Fund
91) Premier New York Municipal Bond Fund
92) Premier State Municipal Bond Fund
93) The Dreyfus/Laurel Funds Trust
94) The Dreyfus/Laurel Tax-Free Municipal Funds
95) The Dreyfus/Laurel Investment Series
(b) The names of the principal executive officers of Premier together
with their respective positions with Premier and their positions and
offices with the Registrant, are set forth below.
<TABLE>
<CAPTION>
Position and Position and
Name Office(s) with Office(s)
and Address Premier with Registrant
----------- ----------------- ----------------
<S> <C> <C>
Marie E. Connolly* Director, President & President & Treasurer
Chief Operating Officer
John E. Pelletier* Senior Vice President Vice President &
& General Counsel Secretary
Joseph F. Tower, III* Senior Vice President & Assistant Treasurer
Chief Financial Officer
John J. Pyburn** Vice President Assistant Treasurer
Jean M. O'Leary* Assistant Secretary N/A
Lynn H. Johnson+ Vice President None
Eric B. Fischman** Vice President & Vice President &
Associate General Assistant Secretary
Counsel
Frederic C. Dey** Senior Vice President Vice President &
Assistant Treasurer
Ruth D. Leibert** Assistant Vice President Assistant Secretary
Paul D. Furcinito** Assistant Vice President Assistant Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John W. Gomez+ Director None
William J. Nutt+ Director None
</TABLE>
*Address: Funds Distributor, Inc., Exchange Place, Boston, MA 02109.
**Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, New York,
NY 10166.
Item 30. Location of Accounts and Records
(1) The Dreyfus/Laurel Funds, Inc.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(2) Mellon Bank, N.A.
c/o The Boston Company Advisers, Inc.
4th Floor
One Exchange Place
Boston, MA 02109
(3) Mellon Bank, N.A.
c/o The Boston Company, Inc.
5th Floor
One Boston Place
Boston, MA 02108
(4) Mellon Bank,
The Park Square Building
31 St. James Avenue
Boston, MA 02116
(5) The Shareholder Services Group, Inc.
1 American Express Plaza
Providence, RI 02903
(6) Mellon Bank, N.A.
One Mellon Bank Center
39th Floor
Pittsburgh, PA 15258
(7) The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
------------
(a) Not Applicable.
(b) Registrant has elected to include its Management's discussion of
fund performance required under Form N-1A, Item 5A in its annual
report. Registrant therefore undertakes to provide annual reports
without charge to any recipient of a Prospectus who requests the
information.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, The Dreyfus/Laurel Funds, Inc. (formerly The Laurel Funds,
Inc.), certifies that it meets all of the requirements for effectiveness
of this Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Pittsburgh, the Commonwealth
of Pennsylvania on the 7th day of April, 1995.
THE DREYFUS/LAUREL FUNDS, INC.
/s/Marie E. Connolly*
____________________________
Marie E. Connolly*
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Marie E. Connolly*
__________________ President, Treasurer 4/7/95
Marie E. Connolly
Signature Title Date
-------- ----- -----
/s/Francis P. Brennan*
_______________________ Director,
Francis P. Brennan Chairman of the Board 4/7/95
/s/Ruth Marie Adams*
_____________________ Director 4/7/95
Ruth Marie Adams
/s/Joseph S. DiMartino*
_______________________ Director 4/7/95
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Director 4/7/95
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Director 4/7/95
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Director 4/7/95
Stephen J. Lockwood
/s/Roslyn M. Watson*
________________________ Director 4/7/95
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Director 4/7/95
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Director 4/7/95
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Director 4/7/95
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Director 4/7/95
Robert D. McBride
/s/John L. Propst*
________________________ Director 4/7/95
John L. Propst
/s/John J. Sciullo*
________________________ Director 4/7/95
John J. Sciullo
*By: /s/Eric B. Fischman
-------------------
Eric B. Fischman,
Attorney-in-Fact
Independent Auditors' Consent
To the Board of Directors and Shareholders of
The Dreyfus/Laurel Funds, Inc.:
We consent to the use of our reports dated December 9, 1994, included
herein and to the references to our firm under the headings "Financial
Highlights" and "Other Information" in the Prospectus and Statement of
Additional Information filed with the Securities and Exchange Commission
in this Post-Effective Amendment No. 35 to the Registration Statement
under the Securities Act of 1933 and in this Amendment No. 36 to the
Registration Statement under the Investment Company Act of 1940.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
April 6, 1995
POWER OF ATTORNEY
The undersigned, hereby constitute and appoint Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John E. Pelletier and each of them, with
full power to act without the other, his or her true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to
the Registration Statement for The Dreyfus/Laurel Funds, Inc. (including
post-effective amendments and amendments thereto), and to file the same,
with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to do and
perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/Ruth Marie Adams /s/Arch S. Jeffery
Ruth Marie Adams, Trustee Arch S. Jeffery, Trustee
/s/Joseph S. DiMartino /s/Stephen J. Lockwood
Joseph S. DiMartino, Trustee Stephen J. Lockwood, Trustee
/s/Francis P. Brennan /s/Robert D. McBride
Francis P. Brennan, Trustee Robert D. McBride, Trustee
/s/James M. Fitzgibbons /s/John L. Propst
James M. Fitzgibbons, Trustee John L. Propst, Trustee
/s/J. Tomlinson Fort /s/John J. Sciullo
J. Tomlinson Fort, Trustee John J. Sciullo, Trustee
/s/Arthur L. Goeschel /s/Roslyn M. Watson
Arthur L. Goeschel, Trustee Roslyn M. Watson, Trustee
/s/Kenneth A. Himmel
Kenneth A. Himmel, Trustee
Dated: April 5, 1995
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Frederick C. Dey,
Eric B. Fischman, Ruth D. Leibert and John E. Pelletier and each of them,
with full power to act without the other, her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for
her and in her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the Registration
Statement for The Dreyfus/Laurel Funds, Inc. (including post-effective
amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/Marie E. Connolly
Marie E. Connolly, President & Treasurer
Dated: April 5, 1995
