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PROSPECTUS
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THE DREYFUS
[Small box above fund name showing a lion's face]
FAMILY
OF FUNDS
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DREYFUS DISCIPLINED STOCK FUND
Investor and Class R Shares
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MARCH 1, 1995
PROSPECTUS BEGINS ON PAGE 1
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PROSPECTUS
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DREYFUS DISCIPLINED
STOCK FUND
Investor and Class R Shares
March 1, 1995
DREYFUS DISCIPLINED STOCK FUND seeks investment returns (including capital
appreciation and income) consistently superior to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") by investing in a broadly diversified
list of equity securities generated by the application of quantitative security
selection and risk control techniques.
...............................................................................
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 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.
..................................... 1 ........................................
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DREYFUS DISCIPLINED STOCK FUND
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THIS PROSPECTUS describes the Dreyfus Disciplined Stock Fund (the "Fund"),
a separate portfolio 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 two classes of
shares--Investor Shares and Class R Shares (collectively, the "Shares")--of the
Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should read
this Prospectus and retain it for future reference. Additional information about
the Fund is contained in a Statement of Additional Information (the "SAI"),
which has been filed with the Securities and Exchange Commission (the "SEC") and
is available upon request without charge by calling or writing to The Dreyfus
Family of Funds. The SAI bears the same date as this Prospectus and is
incorporated by reference in its entirety into this Prospectus.
In addition to the Fund, The Dreyfus Family of Funds also offers other
funds that provide investment opportunities for you in the equity, fixed income
and money markets. For more information about these additional investment
opportunities, call 1-800-548-2868.
................................................................................
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
........................................ 2 .....................................
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PROSPECTUS
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TABLE OF CONTENTS
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Page
Expense Summary................................................................5
Financial Highlights...........................................................6
Alternative Purchase Methods...................................................9
Investment Objective and Policies..............................................9
Other Investment Policies and Risk Factors....................................10
HOW TO DO BUSINESS WITH US
Special Shareholder Services..................................................15
Investor Line.................................................................16
How to Invest in The Fund.....................................................16
By Mail.....................................................................16
By Telephone................................................................17
By Wire.....................................................................17
By Automatic Monthly Investments............................................17
By Direct Deposit...........................................................17
By In-Kind Purchases........................................................18
When Share Price is Determined..............................................18
Additional Information About Investments....................................18
How to Exchange Your Investment From One Fund to Another......................19
By Telephone................................................................19
By Mail.....................................................................19
Additional Information About Exchanges......................................20
How to Redeem Shares..........................................................20
By Telephone................................................................21
By Mail.....................................................................21
By Automated Withdrawal Program.............................................21
Redemption Proceeds.........................................................22
Additional Information About Redemptions....................................23
How To Use The Dreyfus Family of Funds in a
Tax-Qualified Retirement Plan.................................................23
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan.............................................................23
........................................ 3 .....................................
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DREYFUS DISCIPLINED STOCK FUND
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TABLE OF CONTENTS (CONTINUED)
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OTHER INFORMATION Page
Share Price...................................................................24
Performance Advertising.......................................................24
Distributions.................................................................26
Taxes.........................................................................27
Other Services................................................................28
Further Information About The Fund............................................29
The Dreyfus/Laurel Funds, Inc...............................................29
Management..................................................................30
Distribution Plan (Investor Class Only).....................................32
................................................................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
...................................... 4 .......................................
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PROSPECTUS
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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 Fund.
(See "Management.")
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<TABLE>
<CAPTION>
Investor Class R
Shares Shares
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SHAREHOLDER TRANSACTION EXPENSES
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<S> <C> <C>
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
</TABLE>
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ESTIMATED ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
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<TABLE>
<S> <C> <C>
Management Fee 0.90% 0.90%
12b-1 Fee* 0.25% none
Other Expenses** 0.00% 0.00%
----- -----
Total Fund Operating Expenses 1.15% 0.90%
</TABLE>
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EXAMPLES
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<TABLE>
<S> <C> <C> <C>
You would pay the following on 1 year $ 12 $ 9
a $1,000 investment, assuming (1) a 3 years 37 29
5% annual return and (2) redemption 5 years N/A 50
at the end of each time period: 10 years N/A 111
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<FN>
* See "Distribution Plan (Investor Class Only)" for a description of the
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.")
</TABLE>
................................................................................
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 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. ("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
client 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.
....................................... 5 ......................................
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DREYFUS DISCIPLINED STOCK FUND
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FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Class R Share
outstanding throughout each fiscal period ended October 31, 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
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DREYFUS DISCIPLINED STOCK FUND
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FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
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<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/94*#
----------
<S> <C>
Operating performance:
Net asset value, beginning of period $ 17.86
-------
Income from investment operations:
Net investment income 0.16
Net realized and unrealized gain on investments 0.66
-------
Total from investment operations 0.82
-------
Less distributions:
Distributions from net investment income (0.14)
Net asset value, end of period $ 18.54
=======
Total return+ 4.62%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $19,580
Ratio of operating expenses to average net assets 1.15%**
Ratio of net investment income to average net assets 1.29%**
Portfolio turnover rate 106%
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<FN>
* The Fund commenced selling Investor Shares on April 6, 1994.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
served as the Fund's investment manager.
</TABLE>
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....................................... 6 ......................................
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PROSPECTUS
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Annual Report for the year ended October 31, 1994 have been audited by KPMG Peat
Marwick LLP, independent accountants, 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.
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DREYFUS DISCIPLINED STOCK FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
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<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
10/31/94*# 10/31/93 10/31/92
<S> <C> <C> <C>
Operating performance:
Net asset value, beginning of year $ 18.69 $ 17.21 $ 16.40
-------- ------- -------
Income from investment operations:
Net investment income 0.26++ 0.30 0.27
Net realized and unrealized gain
on investments 0.25 2.56 1.33
-------- ------- -------
Total from investment operations 0.51 2.86 1.60
-------- ------- -------
Less distributions:
Dividends from net investment income (0.26) (0.31) (0.27)
Distributions from net realized gains (0.40) (1.07) (0.52)
-------- ------- -------
Total distributions (0.66) (1.38) (0.79)
-------- ------- -------
Net asset value, end of year $ 18.54 $ 18.69 $ 17.21
======== ======= =======
Total return++ 2.82% 17.46% 10.06%
======== ======= =======
Ratios to average net assets/supplemental
data:
Net assets, end of year (in 000's) $239,069 $92,955 $43,742
Ratio of operating expenses to average
net assets+++ 0.90%+ 0.90% 0.90%
Ratio of net investment income to average
net assets 1.54% 1.82% 1.73%
Portfolio turnover rate 106% 64% 84%
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<FN>
* The Fund commenced operations on December 31, 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, Trust Shares were
redesignated Class R Shares.
** Annualized.
+ Annualized expense ratio before reimbursement of expenses by the investment adviser
was .96% for the year ended October 31, 1994.
++ Total return represents aggregate total return for the period indicated.
+++ For the years or period ended October 31, 1990, 1989, and 1988, the adviser waived a
portion of its advisory fee amounting to $.0322, $.1032, and $.0392 per share,
respectively. For the years or period ended October 31, 1993, 1992, 1991, 1990, 1989,
and 1988, the Manager reimbursed expenses of the Fund amounting to $.0627, $.0981,
$.1721, $.3329, $.7153 and $.6040 per share, respectively.
++ Net investment income per share before reimbursement of expenses by the investment
adviser was $0.25 for the year ended October 31, 1994.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's investment manager.
Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's investment
manager.
</TABLE>
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- --------------------------------------- 7 --------------------------------------
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DREYFUS DISCIPLINED STOCK FUND
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<TABLE>
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DREYFUS DISCIPLINED STOCK FUND (CONTINUED)
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
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<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 10/31/88*
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year $ 12.41 $ 13.73 $ 11.08 $ 10.00
------- -------- -------- -------
Income from investment operations:
Net investment income 0.27 0.23 0.33 0.11
Net realized and unrealized
gain/(loss) on investments 4.04 (0.60) 2.62 0.97
------- -------- -------- -------
Total from investment operations 4.31 (0.37) 2.95 1.08
------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.27) (0.28) (0.30) --
Distributions from net realized
gains (0.05) (0.67) -- --
------- -------- -------- -------
Total distributions (0.32) (0.95) (0.30) --
------- -------- -------- -------
Net asset value, end of year $ 16.40 $ 12.41 $ 13.73 $ 11.08
======= ======== ======== =======
Total return++ 35.27% (3.09)% 27.12% $ 10.80%
======= ======== ======== =======
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's) $25,931 $ 9,517 $ 2,614 $ 1,619
Ratio of operating expenses to
average net assets+++ 0.90% 0.82% 0.35% 0.35%**
Ratio of net investment income to
average net assets 1.92% 2.22% 2.85% 2.58%
Portfolio turnover rate 69% 76% 93% 42%
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<FN>
* The Fund commenced operations on December 31, 1987.
** Annualized.
+ Annualized expense ratio before reimbursement of expenses by the investment
adviser was .96% for the year ended October 31, 1994.
++ Total return represents aggregate total return for the period indicated.
+++ For the years or period ended October 31, 1990, 1989, and 1988, the adviser
waived a portion of its advisory fee amounting to $.0322, $.1032, and $.0392
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 $.0627, $.0981, $.1721, $.3329, $.7153 and $.6040
per share, respectively.
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....................................... 8 .............................................
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</TABLE>
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PROSPECTUS
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DREYFUS DISCIPLINED STOCK FUND
ALTERNATIVE PURCHASE METHODS
Investor Shares and Class R Shares are also offered through a servicing network
associated with The Dreyfus Corporation (the "Manager") pursuant to a separate
Prospectus. For more information and a Prospectus relating to shares offered
through that network, call 1-800-645-6561. Please read that Prospectus
carefully. Exchange and shareholder services vary depending upon the network
through which you purchase your Fund shares.
Holders of Class R Shares who have held their Shares since April 4, 1994,
may continue to purchase Class R Shares of the Fund whether or not they would
otherwise be eligible to do so.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks investment returns (including capital appreciation and income)
consistently superior to the S&P 500 by investing in a broadly diversified list
of equity securities generated by the application of quantitative security
selection and risk control techniques. There can be no assurance that the Fund
will meet its stated investment objective. See "OTHER INVESTMENT POLICIES AND
RISK FACTORS" on page 10 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.
Individual security selection is the foundation of the Fund's investment
approach. Consistency of returns which exceed the S&P 500 and stability of the
Fund's asset value relative to the S&P 500 are primary goals of the investment
process. Information from diverse sources is collected and used to construct
valuation models which are combined to form a comprehensive computerized
valuation ranking system identifying common stocks which appear to be over or
under valued. These models include measures of actual and estimated earnings
changes and relative value based on dividend discount calculations, price to
book, price to earnings and return on equity ratios. The computerized ranking
system incorporates information from the most recent time period available to
the system and categorizes individual securities within each industry according
to relative attractiveness. The Manager then applies fundamental analysis to
select the most attractive of the top-rated securities and those issues that
should be sold.
This investment process utilizes disciplined control of fund risk and a
process of rigorous security selection. Risk is managed by controlling potential
size, growth rate, financial condition and earnings variability. The structure
of the Fund is controlled so that characteristics such as economic sector,
industry exposure, growth, size, volatility and quality are maintained similar
to those of the S&P 500 at all times. Common stocks held in the Fund, most but
not all of which
....................................... 9 ......................................
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DREYFUS DISCIPLINED STOCK FUND
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pay dividends, typically include a broad range of investment characteristics.
The Fund is not an index fund and its investments are not limited to securities
of issuers in the S&P 500.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities. The Fund also invests in high quality money
market instruments to meet liquidity needs in amounts not generally expected to
exceed 20%. Beyond that, the Manager will not attempt to time movements in the
market by raising substantial amounts of short-term reserves for subsequent
reinvestment. (See "OTHER INVESTMENT POLICIES AND RISK FACTORS.")
The S&P 500 is composed of 500 common stocks, most of which are traded on
the New York Stock Exchange ("NYSE"), chosen to reflect the industries of the
U.S. economy. The inclusion of a stock in the S&P 500 does not imply that
Standard & Poor's Ratings Group ("Standard & Poor's") believes the stock to be
an attractive or appropriate investment, nor is Standard & Poor's affiliated
with The Dreyfus Family of Funds or the Fund. "S&P 500" is a trademark of
Standard & Poor's.
OTHER INVESTMENT POLICIES AND RISK FACTORS
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.
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 Investors Service,
Inc., F-1 by Fitch Investors Service, Inc., Duff 1 by Duff & Phelps, Inc., or A1
by IBCA, Inc.
GNMA CERTIFICATES. The Fund 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
...................................... 10 .....................................
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PROSPECTUS
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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 the 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
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
...................................... 11 ......................................
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DREYFUS DISCIPLINED STOCK FUND
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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 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. 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.
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
...................................... 12 .....................................
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PROSPECTUS
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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 Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of fund securities
is deemed by the Manager 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.
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 the Manager 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 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.
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
...................................... 13 .....................................
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DREYFUS DISCIPLINED STOCK FUND
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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 by entities that
the Manager considers creditworthy.
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
transactions. The Fund will establish a segregated accounting 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 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.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and 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
...................................... 14 .....................................
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PROSPECTUS
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income. (See "Distributions" and "Taxes.") Nevertheless, security transactions
for the Fund will be based only upon investment considerations and will not be
limited by any other considerations when the Manager deems it appropriate to
make changes in the Fund's assets.
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.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy way
to do business with the Fund. By electing these services on your application or
by completing the appropriate forms, you may authorize:
- Investment by phone.
- Automatic monthly investments.
- Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment manager
from any loss, claim or expense you may incur as a result of their acting on
such instruction. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These include personal
identification procedures, recording of telephone conversations and providing
written confirmation of each transaction. A failure on the part of the Fund to
employ such procedures may subject it to liability for any loss due to
unauthorized or fraudulent instructions.
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DREYFUS DISCIPLINED STOCK FUND
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INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours (9
a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions on
how to: (1) request a current prospectus or information booklets about The
Dreyfus Family of Funds' investment portfolios and services, (2) listen to net
asset values, yields and total return figures, and (3) talk with a customer
service representative during normal business hours. For more information about
direct access using a Touch-Tone phone, please contact The Dreyfus Family of
Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier 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. Premier also serves as the Fund's sub-administrator and, pursuant to
a Sub-Administration Agreement, provides various administrative and corporate
secretarial services to the Fund. Premier has established various procedures for
purchasing Class R and Investor Shares of the Fund. 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 THE FUND
DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR RELATIONSHIP. Investor
Shares are primarily sold to retail investors by banks, securities brokers or
dealers and other financial institutions (including Mellon Bank and its
affiliates) ("Agents") that have entered into a Selling Agreement with Premier.
Once an investor has established an account, additional purchases may, in
certain cases, be made directly through the Fund's transfer agent. 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 your transaction
requests to the Fund's transfer agent or to Premier. You may diversify your
investments by choosing a combination of investment portfolios offered by The
Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return
...................................... 16 .....................................
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PROSPECTUS
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remittance portion of the confirmation of your previous investment. If the
remittance portion is not available, indicate on your check or a separate piece
of paper your name, address, the Fund and class of Shares of such Fund that you
are buying and the account number. Orders to purchase Shares are effective on
the day the Fund receives your check or money order. (See "When Share Price is
Determined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by calling
1-800-548-2868 if you have elected the service authorizing the Fund to draw on
your bank account by check when you call with instructions. Investments made by
phone in any one account must be in an amount of at least $100 and are effective
two days after your call. (See "When Share Price is Determined.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds. To
do so:
(1) Instruct your bank to wire funds to MELLON BANK (ABA routing
number 0430-0026-1).
(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying
and account number (if you have one).
(C) Your name.
(D) Your city and state.
In order for a wire purchase to be effective on the same day it is received
both the trading instructions and the wire must be received before 4 p.m.,
Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the Fund to
draw on your bank account regularly by paper or electronic draft. Such
investments must be in amounts of not less than $100 in any one account. You
should inquire at your bank whether it will honor a preauthorized paper or
electronic draft. Contact the Fund if your bank requires additional
documentation. Call 1-800-548-2868 or write The Dreyfus Family of Funds at One
Exchange Place, Boston, Massachusetts 02109 for more information about the
Automatic Investment Program.
...................................... 17 .....................................
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DREYFUS DISCIPLINED STOCK FUND
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BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from other
sources (including government pension or social security payments). Note that it
may not be appropriate to Direct Deposit your entire paycheck into the Fund
because it has a fluctuating net asset value per share ("NAV"). Call
1-800-548-2868 or write The Dreyfus Family of Funds at One Exchange Place,
Boston, Massachusetts 02109 for more information or a Direct Deposit
authorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may at its discretion,
permit you to purchase Shares through an "in-kind" exchange of securities you
hold. Any securities exchanged must meet the investment objective, policies and
limitations of the Fund, must have a readily ascertainable market value, must be
liquid and must not be subject to restrictions on resale. The market value of
any securities exchanged, plus any cash, must be at least equal to $25,000.
Shares purchased in exchange for securities generally cannot be redeemed for
fifteen days following the exchange in order to allow time for the transfer to
settle.
The basis of the exchange will depend upon the relative NAV of the Shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest earned on
the securities following their delivery to the Fund and prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at One Exchange Place, Boston, Massachusetts 02109 for more
information about "in-kind" purchases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of
the NYSE on each day that the NYSE is open (a "business day"). Investments and
requests to exchange or redeem Shares received by the Fund 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 investments made by electronic
funds transfer which are effective two business days 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.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instructions
to the Fund, they may not be modified or canceled. The Fund reserves the right
to reject any application or
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PROSPECTUS
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investment. The Fund reserves the right to make exceptions to the minimum
initial investment and account minimum amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement plans,
and Uniform Transfers (Gifts) to Minors Act accounts, for which the minimum
initial investment is $500. The Fund may suspend the offering of Shares of any
class of the Fund and reserves the right to vary initial and subsequent
investment minimums. Subsequent investments to purchase additional Shares in the
Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a specified
minimum unless you have established an automatic monthly investment to purchase
additional Shares. The Fund reserves the right to change such minimum from time
to time. Any time the Shares of the Fund held in an account have a value of less
than $1,000 ($500 for Uniform Gifts/Transfers to Minors Acts accounts), unless
the deficiency amount is the result of a decrease in the NAV, a notification may
be sent advising you of the need either to make an investment to bring the value
of the Shares held in the account up to $1,000 ($500) or to establish an
automatic monthly investment to purchase additional Shares. If the investment is
not made or the automatic monthly investment is not established within 60 days
from the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address of
record.
The automatic redemption of Shares will not apply to IRAs, custodial
accounts under Section 403(b) of the Internal Revenue Code of 1986, as amended
(the "Code") ("403(b) accounts") and other types of tax-deferred retirement plan
accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain other
funds advised by the Manager and that were previously advised by Mellon Bank. As
noted below, exchanges from any one fund account may be limited in any one
calendar year. In addition, the Shares being exchanged and the Shares of the
fund being acquired must have a current value of at least $100 and otherwise
meet the minimum investment requirement of the fund being acquired. Call the
Investor Line for additional information and a prospectus describing other
investment portfolios offered by The Dreyfus Family of Funds.
...................................... 19 .....................................
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DREYFUS DISCIPLINED STOCK FUND
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BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have
authorized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The request
should be signed by each person in whose name the Shares are registered. All
signatures should be exactly as the name appears in the registration; for
example, if an owner's name is registered as John Robert Jones, he should sign
that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new shares being purchased must have a current value of at
least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of any of the funds exchanged pursuant to an
Automatic Withdrawal Program, and to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is
irrevocable and may not be modified or canceled.
(6) An exchange is based on the next calculated NAV of each fund after
receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code.
(See "Taxes.")
(8) Exchange of Fund Shares is, for federal income tax purposes, a sale of
the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fiduciary,
agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given sixty days' notice prior to any material changes
in the exchange privilege.
...................................... 20 .....................................
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HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV. (Before
redeeming, please read "Additional Information About Redemptions.") Your
redemption proceeds may be delayed if you have owned your Shares less than 10
days. (See "Redemption Proceeds.") The Fund imposes no charges when Shares are
redeemed. Agents or other institutions may charge their clients a nominal fee
for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone request
may not be modified or canceled. (Before calling, read "Additional Information
About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the
following forms:
- A letter to The Dreyfus Family of Funds.
- An assignment form or stock power.
- An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence, Rhode
Island 02940-9830, the redemption request is irrevocable and may not be modified
or canceled. A letter of instruction should state the number of Shares or the
dollar amount to be redeemed. The letter must include your account number, and
for redemptions in an amount in excess of $25,000, a signature guarantee of each
owner. The redemption request must be signed by each person in whose name the
Shares are registered. For example, in the case of joint ownership, each owner
must sign. All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as John Robert
Jones, he should sign that way and not as John R. Jones. Signature guarantees
can be obtained from commercial banks, credit unions if authorized by state
laws, savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other industry
recognized program approved by the Securities Transfer Association. (Before
writing, see "Additional Information About Redemptions.")
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DREYFUS DISCIPLINED STOCK FUND
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BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough Shares
each month to provide you with a check for an amount which you specify (with a
minimum of $100). To set up an Automated Withdrawal Program, call the Fund at
1-800-548-2868 for instructions. Only shareholders with an account balance of
$10,000 or more may participate in this program. Shares will be redeemed on the
15th day or 30th day of each month or the next business day, and your check will
be mailed the next day. If your monthly checks exceed the dividends, interest
and capital appreciation on your Shares, the payments will deplete your
investment. Amounts paid to you by Automated Withdrawals are not a return on
your investment. They are derived from the redemption of Shares in your account,
and you must report on your income tax return any gains or losses that you
realize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be signed by
all owners, with their signatures guaranteed.
When you make your first investment you may request that Automated
Withdrawals be sent to an address other than the address of record. Thereafter,
a request to send Automated Withdrawals to an address other than the address of
record must be signed by all owners, with their signatures guaranteed.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of the
Automated Withdrawal Program, by notice to the Fund in writing or by telephone.
Termination or change will become effective within five days following receipt
of your instructions. Your Automated Withdrawal Program plan may begin any time
after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not later than
seven days afterwards. When a redemption occurs shortly after a recent purchase,
the Fund may hold the redemption proceeds beyond seven days but only until the
purchase check clears, which may take up to 10 days or more. No dividend is paid
on the redemption proceeds after the redemption and before the check is mailed.
If you anticipate redemptions soon after you purchase your Shares, you are
advised to wire funds to avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Proceeds from
the redemption of Fund
...................................... 22 .....................................
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Shares will normally be transmitted on the first business day, but not later
than the seventh day, following the date of redemption. Your bank usually will
receive wired funds the day they are transmitted. Electronically transferred
funds will ordinarily be received within two business days after transmission.
Once the funds are transmitted, the time of receipt and the availability of the
funds are not within the Fund's control. If your bank account changes, you must
send a new "voided" check preprinted with the bank registration with written
instructions signed by all owners (with their signatures guaranteed), including
tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption can
be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence
satisfactory to it of the authority of the individual signing the
request. Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as
specified by the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus Family of
Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and request the
appropriate forms for:
- IRAs.
- 403(b) accounts for employees of public school systems and non-profit
organizations.
- Profit-sharing plans and pension plans for corporations and other
employers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS' RETIREMENT
PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus Family of
Funds at P.O. Box 9692,
...................................... 23 .....................................
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DREYFUS DISCIPLINED STOCK FUND
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Providence, Rhode Island 02940-9830 for a request to transfer form. If you
direct The Dreyfus Family of Funds to transfer funds from an existing
non-retirement Dreyfus Family of Funds account into a retirement account, the
Shares in your non-retirement account will be redeemed. The redemption proceeds
will be invested in your Dreyfus Family of Funds IRA or other tax-qualified
retirement plan. The redemption is a taxable event resulting in a taxable gain
or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV for
Investor and Class R Shares of the 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 Fund
may be summarized as follows:
The portfolio securities of the 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 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 Dreyfus/Laurel Funds, Inc.'s Board of
Directors that such value represents fair value, the 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.
The NAV of most of The Dreyfus Family of Funds' investment portfolios
(other than money market funds) is published in leading newspapers daily. The
yield of each class of shares of most of The Dreyfus Family of Funds' money
market funds is published weekly in leading financial publications and in many
local newspapers. The NAV of the Fund may also be obtained by calling The
Dreyfus Family of Funds.
...................................... 24 .....................................
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PERFORMANCE ADVERTISING
From time to time, the 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 the 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 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.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and expenses
borne by Class R and Investor Shares of the Fund, 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. The Fund's annual report contains additional performance
information and is available upon request without charge from Premier or your
Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, Standard & Poor's 500 Composite Stock Price Index, 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 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 Investor and Class R
Shares' total returns and yields
...................................... 25 .....................................
- --------------------------------------------------------------------------------
<PAGE>
DREYFUS DISCIPLINED STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
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.
DISTRIBUTIONS
The Fund declares and pays dividends from its net investment income, if any,
four times yearly at the beginning of May, August, November and in mid-December
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 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 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
...................................... 26 .....................................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
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.
TAXES
The 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 (the
excess of net long-term capital gain over net short-term capital loss) that is
distributed to its shareholders.
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.
All or a portion of the dividends paid by the Fund 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 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,
...................................... 27 .....................................
- --------------------------------------------------------------------------------
<PAGE>
DREYFUS DISCIPLINED STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
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 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.
OTHER SERVICES
At least twice a year you will receive the financial statements of the Fund with
a summary of its investments and performance. The Fund will send you a
confirmation statement after every transaction (except with regard to the
reinvestment of dividends and other distributions) that affects your Fund
account. In addition, an account statement will be mailed to you quarterly or
- -------------------------------------- 28 --------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
monthly depending on the Fund's reporting schedule. You may also request a
statement of your account activity at any time. Carefully review such
confirmation statements and account statements and notify the Fund immediately
if there is an error. From time to time, to reduce expenses, only one copy of
the Fund's shareholder reports (such as the Fund's annual report) may be mailed
to your household. Please call The Dreyfus Family of Funds if you need
additional copies.
No later than January 31 of each year, the Fund will send you the following
reports, which you may use in completing your Federal income tax return:
<TABLE>
<S> <C>
Form 1099-DIV Reports taxable distributions (and returns of
capital, if any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the
preceding year.
Form 1099-R Reports distributions from IRAs and 403(b) accounts
during the preceding year.
</TABLE>
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS, INC.
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"). The Fund 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 Fund will issue negotiable stock certificates.
- -------------------------------------- 29 --------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DREYFUS DISCIPLINED STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
At January 31, 1995, Mellon Bank Corporation, the 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.
MANAGEMENT.
THE BOARD OF DIRECTORS. The business affairs of The Dreyfus/Laurel Funds,
Inc. are managed under the direction of its Directors. The SAI contains the
names and general background information concerning the Directors and officers
of The Dreyfus/Laurel Funds, Inc.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of January 31, 1995, the Manager managed or administered
approximately $70 billion in assets for more than 1.9 million investor accounts
nationwide. The Manager is a wholly-owned subsidiary of Mellon Bank, N.A. (One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the Fund's prior investment
manager. Pursuant to an Investment Management Agreement, transferred from Mellon
Bank to the Manager effective as of October 17, 1994, 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
Fund. As investment manager, the Manager manages the Fund by making investment
decisions based on the Fund's investment objective, policies and restrictions,
and is paid a fee.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of .90% of the Fund's average daily
net assets less certain expenses. The Manager pays all of the expenses of the
Fund except brokerage fees, taxes, interest, fees and expenses of the
non-interested Directors (including counsel fees) and extraordinary expenses.
Although the Manager does not pay for the fees and expenses of the non-
interested Directors (including counsel fees), the Manager 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 the Manager 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, the Manager 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
Fund paid its investment adviser, Mellon Bank, 0.74% (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,
- -------------------------------------- 30 --------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
1994 through the fiscal year ended October 31, 1994, the Fund paid Mellon Bank
or the Manager 0.90% (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 0.90% (annualized) of
the average daily net assets of each class for both the Investor Class and Class
R. Without the reimbursement operating expenses would have been higher.
The Manager is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with the
Manager or which have sold Shares of the Fund, if the Manager 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.
Mellon Bank is a subsidiary of Mellon Bank Corporation. At June 30, 1994,
Mellon Bank Corporation was the 24th largest bank holding company in the United
States. Through its bank subsidiaries, it operates 631 domestic retail banking
locations including 432 branch offices. Mellon Bank Corporation has 25 domestic
representative offices. There are international branches in Grand Cayman,
British West Indies, and London, England, and two international representative
offices in Tokyo, Japan and Hong Kong. Mellon Bank has a banking subsidiary,
Mellon Bank Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain
securities. The activities of Mellon Bank and the Manager may raise issues under
these provisions. However, Mellon Bank has been advised by its counsel that
these activities are consistent with these statutory and regulatory obligations.
For more information on the Glass-Steagall Act of 1933, see "Federal Law
Affecting Mellon Bank" in the SAI.
The Fund's portfolio manager is Bert Mullins. Mr. Mullins is a Vice
President and Senior Security Analyst for Mellon Bank and has been with Mellon
Bank since 1966. He is a portfolio manager at the Manager and has been employed
by the Manager since October 17, 1994.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant, maintaining possession of the
Fund's investment securities and providing certain accounting and related
services.
...................................... 31 .....................................
- --------------------------------------------------------------------------------
<PAGE>
DREYFUS DISCIPLINED STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, serves as transfer agent ("Transfer Agent") for the Fund's Shares.
The Transfer Agent is located at One American Express Plaza, Providence, Rhode
Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the Fund's
sponsor and distributor. Premier is a registered broker-dealer with principal
offices at One Exchange Place, Boston, Massachusetts 02109. The Fund has entered
into a distribution agreement with Premier which provides that Premier has the
exclusive right to distribute Shares of the Fund. Premier may pay service and/or
distribution fees to Agents that assist customers in purchasing and servicing of
Shares of the Fund. (See "Distribution Plan (Investor Class Only).")
DISTRIBUTION PLAN (INVESTOR CLASS ONLY).
Investor Shares 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 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 the Manager, 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 the Fund. The Plan allows
Premier 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
Premier. 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 Premier 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, Premier 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.
...................................... 32 .....................................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
...................................... 33 .....................................
- --------------------------------------------------------------------------------
<PAGE>
STOCK 2395
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
Dreyfus Disciplined
Midcap Stock Fund
Investor and Class R Shares
March 1, 1995
DREYFUS DISCIPLINED MIDCAP STOCK FUND seeks total investment returns
(including capital appreciation and income) which consistently outperform the
Standard & Poor's 400 Midcap Index ("S&P Midcap").
THIS PROSPECTUS describes the Dreyfus Disciplined Midcap Stock Fund (the
"Fund"), a separate portfolio 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 two classes of
shares--Investor Shares and Class R Shares (collectively, the "Shares")--of the
Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should read
this Prospectus and retain it for future reference. Additional information about
the Fund is contained in a Statement of
..........................................................................
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 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.
................................ 1 ................................
- --------------------------------------------------------------------------------
<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
Additional Information (the "SAI"), which has been filed with the Securities and
Exchange Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same date
as the Prospectus and is incorporated by reference in its entirety into this
Prospectus.
In addition to the Fund, The Dreyfus Family of Funds also offers other
funds that provide investment opportunities for you in the equity, fixed income
and money markets. For more information about these additional investment
opportunities, call 1-800-548-2868.
........................................................................
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
................................. 2 ...............................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
TABLE OF CONTENTS
Page
Expense Summary.............................................................. 5
Financial Highlights......................................................... 6
Alternative Purchase Methods................................................. 8
Investment Objective and Policies............................................ 8
Other Investment Policies and Risk Factors................................... 10
HOW TO DO BUSINESS WITH US
Special Shareholder Services................................................. 16
Investor Line................................................................ 16
How to Invest in The Fund.................................................... 16
By Mail.................................................................... 17
By Telephone............................................................... 17
By Wire.................................................................... 17
By Automatic Monthly Investments........................................... 18
By Direct Deposit.......................................................... 18
By In-Kind Purchases....................................................... 18
When Share Price is Determined............................................. 19
Additional Information About Investments................................... 19
How to Exchange Your Investment From One Fund to Another..................... 20
By Telephone............................................................... 20
By Mail.................................................................... 20
Additional Information About Exchanges..................................... 20
How to Redeem Shares......................................................... 21
By Telephone............................................................... 21
By Mail.................................................................... 22
By Automated Withdrawal Program............................................ 22
Redemption Proceeds........................................................ 23
Additional Information About Redemptions................................... 23
.............................. 3 ..................................
- --------------------------------------------------------------------------------
<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
TABLE OF CONTENTS(CONTINUED)
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan............................................................ 24
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan.......................................................... 24
OTHER INFORMATION
Share Price.................................................................. 25
Performance Advertising...................................................... 25
Distributions................................................................ 27
Taxes........................................................................ 28
Other Services............................................................... 29
Further Information About The Fund........................................... 30
The Dreyfus/Laurel Funds, Inc.............................................. 30
Management................................................................. 31
Distribution Plan (Investor Class Only).................................... 33
................................................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
............................... 4 .................................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
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 Fund.
(See "Management.")
=====================================================================================
<CAPTION>
Investor Class R
Shares Shares
- -------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
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 1.10% 1.10%
12b-1 Fee* 0.25% none
Other Expenses** 0.00% 0.00%
----- -----
Total Fund Operating Expenses 1.35% 1.10%
- -------------------------------------------------------------------------------------
EXAMPLES
You would pay the following on 1 year $ 14 $ 11
a $1,000 investment, assuming (1) a 3 years 43 35
5% annual return and (2) redemption 5 years N/A 61
at the end of each time period: 10 years N/A 134
=====================================================================================
<FN>
* See "Distribution Plan (Investor Class Only)" for a description of the
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".)
</TABLE>
................................................................
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 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. ("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
client 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.
................................ 5 ................................
- --------------------------------------------------------------------------------
<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
FINANCIAL HIGHLIGHTS
The table below is based upon a single Investor Share or Class R Share
outstanding throughout each fiscal period ended October 31, and should be read
in conjunction with the financial statements that appear in the Fund's Annual
report for the period ended October 31, 1994, which is incorporated by reference
in the SAI. The financial statements in the Fund's Annual Report have been
audited by KPMG Peat Marwick LLP, independent accountants, 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.
==================================================================================
DISCIPLINED MIDCAP STOCK FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
- ----------------------------------------------------------------------------------
<CAPTION>
PERIOD
ENDED
10/31/94*#
<S> <C> <C>
Net asset value, beginning of period $ 10.00
---------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized loss on investments (0.26)
---------
Total from investment operations (0.21)
Less distributions:
Distributions from net investment income (0.04)
Net asset value, end of period $ 9.75
=========
Total return++ (2.06)%
=========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 54
Ratio of operating expenses to average net assets 1.40%+
Ratio of net investment income to average net assets 0.73%+
Portfolio turnover rate 83%
- ----------------------------------------------------------------------------------
<FN>
* The Fund commenced selling Investor Shares on April 6, 1994.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994 Mellon Bank, N.A. served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager.
==================================================================================
</TABLE>
................................. 6 ...............................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
<TABLE>
===================================================================================
DISCIPLINED MIDCAP STOCK FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
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<CAPTION>
PERIOD
ENDED
10/31/94*#
<S> <C> <C>
Net asset value, beginning of period $ 10.00
---------
Income from investment operations:
Net investment income** 0.09
Net realized and unrealized loss on investments (0.27)
---------
Total from investment operations (0.18)
Less distributions:
Distributions from net investment income (0.06)
Net asset value, end of period $ 9.76
=========
Total return++ (1.77)%
=========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 18,169
Ratio of operating expenses to average net assets 1.16%+***
Ratio of net investment income to average net assets 0.98%+
Portfolio turnover rate 83%
<FN>
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* The Fund commenced operations on November 12, 1993. Any shares outstanding
prior to April 4, 1994 were designated as Trust Shares. 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.
** Net investment income before reimbursement of expenses by the investment
adviser for the period ended October 31, 1994 was $0.06.
*** Annualized expense ratio before voluntary reimbursement of expenses by the
investment adviser for the period ended October 31, 1994 was 1.53%.
# Prior to October 17, 1994 Mellon Bank, N.A. served as the Fund's investment
manager. Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manager.
===================================================================================
</TABLE>
................................ 7 ................................
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<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
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DREYFUS DISCIPLINED MIDCAP STOCK FUND
ALTERNATIVE PURCHASE METHODS
Investor Shares and Class R Shares are also offered through a servicing network
associated with The Dreyfus Corporation (the "Manager") pursuant to a separate
Prospectus. For more information and a Prospectus relating to shares offered
through that network, call 1-800-645-6561. Please read that Prospectus
carefully. Exchange and shareholder services vary depending upon the network
through which you purchase your Fund Shares.
Holders of Class R Shares who have held their Shares since April 4, 1994,
may continue to purchase Class R Shares of the Fund whether or not they would
otherwise be eligible to do so.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks total investment returns (including capital appreciation and
income) which consistently outperform the S&P MidCap. The objective is not
fundamental. There can be no assurance that the Fund will meet its stated
investment objective. See "OTHER INVESTMENT POLICIES AND RISK FACTORS" on page
10 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 Fund attempts to maintain a diversified holding in common stocks of
medium capitalization companies, firms with a market value between $200 million
and $5 billion. It is the view of the Manager that many medium-sized companies
are in fast-growing industries, offer superior earnings growth potential, and
are characterized by strong balance sheets and high returns on equity. However,
because the companies in this market are smaller, prices of their stocks tend to
be more volatile than prices of stocks of companies with large capitalizations.
The Fund may also hold investments in large and small capitalization companies,
including emerging and cyclical growth companies. Emerging and cyclical growth
companies are firms which, while they may not have a history of stable long-term
growth, are nonetheless expected to represent attractive investments.
Common stocks are selected for the Fund so that, in the aggregate, the
investment characteristics and risk profile of the Fund are similar to the S&P
MidCap. However, while it may maintain aggregate investment characteristics
similar to the S&P MidCap, the Fund seeks to invest in common stocks of
companies which in the aggregate will provide a higher total return than the S&P
MidCap. The Fund is not an index midcap stock fund and its investments are not
limited to securities of issuers included in the S&P MidCap.
................................ 8 ................................
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<PAGE>
PROSPECTUS
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The Manager utilizes computer techniques to track, and, if possible,
outperform the S&P MidCap. To construct the Fund, the Manager employs valuation
models designed to identify common stocks of companies that are undervalued and
should be purchased and retained by the Fund. Undervalued securities are
normally characterized by a relatively low price to earning ratio (using
normalized earnings), a low ratio of market price to book value, or underlying
asset values that the Manager feels are not fully reflected in the current
market price. Once undervalued common stocks are identified, the Manager's
experienced investment analysts construct a fund, using the valuation models,
that in the aggregate resembles the S&P MidCap, but is weighted toward the most
attractive stocks. The computerized ranking system incorporates information
about the relevant criteria as of the most recent period for which data are
available to the system. Once ranked, the securities are categorized by the
system under the headings "buy," "sell" or "hold." The Manager decides whether
to buy, sell, or hold the security based principally on the system's
categorization, subject to modification based on subsequently available or other
specific relevant information about the security.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in common stocks. The Fund may also invest in: (1) obligations issued
or guaranteed as to interest and principal by the U.S. Government, its agencies
and instrumentalities; (2) 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"); (3) corporate obligations
rated at least Baa by Moody's Investors Service, Inc. ("Moody's"), or BBB by
Standard & Poor's Ratings Group ("Standard & Poor's") rating services, or if
unrated, of comparable quality as determined by the Manager; (4) Eurodollar
bonds and notes; (5) securities of foreign companies evidenced by American
Depository Receipts ("ADRs"); (6) variable amount master demand notes; (7)
repurchase agreements; (8) when-issued transactions; and (9) commercial paper.
The Fund may also utilize securities lending and reverse repurchase agreements,
and may enter into option and futures contracts for hedging purposes, subject to
certain limitations. (See "OTHER INVESTMENT POLICIES AND RISK FACTORS.")
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 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 of, in
a prudent and orderly fashion, bonds whose ratings drop below these minimum
ratings.
................................ 9 ................................
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<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
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The S&P MidCap is composed of 400 domestic common stocks chosen by Standard
and Poor's for market size, liquidity and industry group representation. It is a
market-weighted index (stock price times shares outstanding), with each stock
affecting the S&P MidCap in proportion to its market value. The inclusion of a
stock in the S&P MidCap does not imply that Standard & Poor's believes the stock
to be an attractive or appropriate investment, nor is Standard & Poor's in any
way affiliated with the Fund. The S&P MidCap was created by Standard & Poor's to
capture the performance of the stocks that fall in the medium capitalization
range. The medium capitalization range of stocks was defined, at the original
time of screening, as between $200 million and $5 billion in market value. Any
middle-capitalization stocks already included in the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") were excluded from candidacy for the S&P
MidCap. After removal of the 500 stocks, the MidCap candidate population was
reduced to 1,200 stocks. Standard & Poor's then subjected this smaller
population to a variety of screens and eventually the sample size was reduced to
the final 400 stocks. S&P screened the candidate population using the following
criteria: level of trading activity, or liquidity; market value; industry group
representation; and the level of controlling interest. A limited percentage of
the S&P MidCap may include Canadian securities. No other foreign securities are
eligible for inclusion.
OTHER INVESTMENT POLICIES AND RISK FACTORS
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by foreign
companies. ADRs are traded in the United States on national securities exchanges
or in the over-the-counter market. (See "Foreign Securities.")
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.
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
Investors Service, Inc., Duff 1 by Duff & Phelps, Inc., or A1 by IBCA, Inc.
............................... 10 .................................
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<PAGE>
PROSPECTUS
-------------------------------------
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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. 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.")
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.
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 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 governments, 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.
............................... 11 .................................
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<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
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The use of futures, options, forward contracts and swaps exposes the Fund
to additional investment risks and transaction costs. If the Manager 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, 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 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. 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
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
............................... 12 .................................
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<PAGE>
PROSPECTUS
-------------------------------------
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level of fund illiquidity to the extent that qualified institutional buyers
become, for a time, uninterested in purchasing these securities.
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
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.
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 limit stated above.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of fund securities
is deemed by the Manager 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.
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 the Manager to be of good standing
and when, in its judgment, the income to be earned from the loan justifies the
attendant risks.
................................ 13 ................................
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<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
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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.
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 by entities that
the Manager considers creditworthy.
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
transactions. The Fund will establish a segregated accounting 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 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
............................... 14 .................................
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<PAGE>
PROSPECTUS
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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.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and 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. (See "Distributions" and
"Taxes.") Nevertheless, security transactions for the Fund will be based only
upon investment considerations and will not be limited by any other
considerations when the Manager deems it appropriate to make changes in the
Fund's assets.
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.
............................... 15 .................................
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<PAGE>
DISCIPLINED MIDCAP STOCK FUND
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- ------------------------------------------------------------
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy way
to do business with the Fund. By electing these services on your application or
by completing the appropriate forms, you may authorize:
- Investment by phone.
- Automatic monthly investments.
- Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment manager
from any loss, claim or expense you may incur as a result of their acting on
such instruction. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These include personal
identification procedures, recording of telephone conversations and providing
written confirmation of each transaction. A failure on the part of the Fund to
employ such procedures may subject it to liability for any loss due to
unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours (9
a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions on
how to: (1) request a current prospectus or information booklets about The
Dreyfus Family of Funds' investment portfolios and services, (2) listen to net
asset values, yields and total return figures, and (3) talk with a customer
service representative during normal business hours. For more information about
direct access using a Touch-Tone phone, please contact The Dreyfus Family of
Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier 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. Premier also serves as the Fund's sub-administrator and, pursuant to
a Sub-Administration Agreement, provides various administrative
............................... 16 .................................
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<PAGE>
PROSPECTUS
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and corporate secretarial services to the Fund. Premier has established various
procedures for purchasing Class R and Investor Shares of the Fund. 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 the Fund
distributed to them by virtue of such an account or relationship. Investor
Shares are primarily sold to retail investors by banks, securities brokers or
dealers and other financial institutions (including Mellon Bank and its
affiliates) ("Agents") that have entered into a Selling Agreement with Premier.
Once an investor has established an account, additional purchases may, in
certain cases, be made directly through the Fund's transfer agent. 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 your transaction
requests to the Fund's transfer agent or to Premier. You may diversify your
investments by choosing a combination of investment portfolios offered by The
Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and the
account number. Orders to purchase Shares are effective on the day the Fund
receives your check or money order. (See "When Share Price is Determined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by calling
1-800-548-2868 if you have elected the service authorizing the Fund to draw on
your bank account by check when you call with instructions. Investments made by
phone in any one account must be in an amount of at least $100 and are effective
two days after your call. (See "When Share Price is Determined.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds. To do so:
(1) Instruct your bank to wire funds to MELLON BANK (ABA routing number
0430-0026-1.)
............................... 17 .................................
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DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
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(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying
and account number (if you have one).
(C) Your name.
(D) Your city and state.
In order for a wire purchase to be effective on the same day it is received
both the trading instructions and the wire must be received before 4 p.m.,
Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the Fund to
draw on your bank account regularly by paper or electronic draft. Such
investments must be in amounts of not less than $100 in any one account. You
should inquire at your bank whether it will honor a preauthorized paper or
electronic draft. Contact the Fund if your bank requires additional
documentation. Call 1-800-548-2868 or write The Dreyfus Family of Funds, One
Exchange Place, Boston, Massachusetts 02109 for more information about the
Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of a Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from other
sources (including government pension or social security payments). Note that it
may not be appropriate to Direct Deposit your entire paycheck into the Fund
because it has a fluctuating net asset value per share ("NAV"). Call
1-800-548-2868 or write The Dreyfus Family of Funds, One Exchange Place, Boston,
Massachusetts 02109 for more information or a Direct Deposit authorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may at its discretion,
permit you to purchase Shares through an "in-kind" exchange of securities you
hold. Any securities exchanged must meet the investment objective, policies and
limitations of the Fund, must have a readily ascertainable market value, must be
liquid and must not be subject to restrictions on resale. The market value of
any securities exchanged, plus any cash, must be at least equal to $25,000.
Shares purchased in exchange for securities generally cannot be redeemed for
fifteen days following the exchange in order to allow time for the transfer to
settle.
............................... 18 .................................
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<PAGE>
PROSPECTUS
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The basis of the exchange will depend upon the relative NAV of the Shares
purchased and securities exchanged. Securities accepted by the Fund will be
valued in the same manner as the Fund values its assets. Any interest earned on
the securities following their delivery to the Fund and prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. Call 1-800-548-2868 or write The Dreyfus
Family of Funds, One Exchange Place, Boston, Massachusetts 02109 for more
information about "in-kind" purchases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of
the New York Stock Exchange ("NYSE") on each day that the NYSE is open (a
"business day"). Investments and requests to exchange or redeem Shares received
by the Fund 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 investments made by electronic funds transfer which are effective two
business days 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.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instructions
to the Fund, they may not be modified or canceled. The Fund reserves the right
to reject any application or investment. The Fund reserves the right to make
exceptions to the minimum initial investment and account minimum amount from
time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement plans,
and Uniform Transfers (Gifts) to Minors Act accounts, for which the minimum
initial investment is $500. The Fund may suspend the offering of Shares of any
class of the Fund and reserves the right to vary initial and subsequent
investment minimums. Subsequent investments to purchase additional Shares in the
Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a specified
minimum unless you have established an automatic monthly investment to purchase
additional Shares. The Fund reserves the right to change such minimum from time
to time. Any time the Shares of the Fund held in an account have a value of less
than $1,000 ($500 for Uniform Gifts/Transfers to Minors Acts accounts), unless
the deficiency amount is the result of a decrease in the NAV per Share, a
notification may be sent advising you of the need to either make an investment
to bring the value
............................... 19 .................................
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DISCIPLINED MIDCAP STOCK FUND
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of the Shares held in the account up to $1,000 ($500) or to establish an
automatic monthly investment to purchase additional Shares. If the investment is
not made or the automatic monthly investment is not established within 60 days
from the date of notification, the Shares held in the account will be redeemed
and the proceeds from the redemption will be sent by check to your address of
record.
The automatic redemption of Shares will not apply to IRAs, custodial
accounts under Section 403(b) of the Internal Revenue Code of 1986, as amended
(the "Code") ("403(b) accounts") and other types of tax-deferred retirement plan
accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain other
funds advised by the Manager and that were previously advised by Mellon Bank. As
noted below, exchanges from any one fund account may be limited in any one
calendar year. In addition, the shares being exchanged and the shares of the
fund being acquired must have a current value of at least $100 and otherwise
meet the minimum investment requirement of the fund being acquired. Call the
Investor Line for additional information and a prospectus describing other
investment portfolios offered by The Dreyfus Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have
authorized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The request
should be signed by each person in whose name the Shares are registered. All
signatures should be exactly as the name appears in the registration; for
example, if an owner's name is registered as John Robert Jones, he should sign
that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new Shares being purchased must have a current value of at
least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of Shares of any of the
............................... 20 .................................
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PROSPECTUS
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funds exchanged pursuant to an Automatic Withdrawal Program, and to
Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is
irrevocable and may not be modified or canceled.
(6) An exchange is based on the next calculated NAV of each fund after
receipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code.
(See "Taxes.")
(8) Exchange of Fund Shares is, for Federal income tax purposes, a sale of
the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fiduciary,
agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given sixty days' notice prior to any material changes
in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV. (Before
redeeming, please read "Additional Information About Redemptions.") Your
redemption proceeds may be delayed if you have owned your Shares less than 10
days. (See "Redemption Proceeds.") The Fund imposes no charges when shares are
redeemed. Agents or other institutions may charge their clients a nominal fee
for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone request
may not be modified or canceled. (Before calling, read "Additional Information
About Redemptions" and "When Share Price is Determined.")
............................... 21 .................................
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DISCIPLINED MIDCAP STOCK FUND
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BY MAIL.
Your written instructions to redeem Shares may be in any one of the
following forms:
- A letter to The Dreyfus Family of Funds.
- An assignment form or stock power.
- An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds, P.O. Box 9692, Providence,
Rhode Island 02940-9830, the redemption request is irrevocable and may not be
modified or canceled. A letter of instruction should state the number of Shares
or the dollar amount to be redeemed. The letter must include your account
number, and for redemptions in an amount in excess of $25,000, a signature
guarantee of each owner. The redemption request must be signed by each person in
whose name the Shares are registered; for example, in the case of joint
ownership, each owner must sign. All signatures should be exactly as the name
appears in the registration. If the owner's name appears in the registration as
John Robert Jones, he should sign that way and not as John R. Jones. Signature
guarantees can be obtained from commercial banks, credit unions if authorized by
state laws, savings and loans institutions, trust companies, members of a
recognized stock exchange, or from other eligible guarantors who are members of
the Securities Transfer Agents Medallion Program ("STAMP") or any other industry
recognized program approved by the Securities Transfer Association. (Before
writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough Shares
each month to provide you with a check for an amount which you specify (with a
minimum of $100). To set up an Automated Withdrawal Program, call the Fund at
1-800-548-2868 for instructions. Only shareholders with an account balance of
$10,000 or more may participate in this program. Shares will be redeemed on the
15th day or 30th day of each month or the next business day, and your check will
be mailed the next day. If your monthly checks exceed the dividends, interest
and capital appreciation on your Shares, the payments will deplete your
investment. Amounts paid to you by Automated Withdrawals are not a return on
your investment. They are derived from the redemption of Shares in your account,
and you must report on your income tax return any gains or losses that you
realize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be signed by
all owners, with their signatures guaranteed.
............................... 22 .................................
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22
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PROSPECTUS
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When you make your first investment you may request that Automated
Withdrawals be sent to an address other than the address of record. Thereafter,
a request to send Automated Withdrawals to an address other than the address of
record must be signed by all owners, with their signatures guaranteed.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of the
Automated Withdrawal Program, by notice to the Fund in writing or by telephone.
Termination or change will become effective within five days following receipt
of your instructions. Your Automated Withdrawal Program plan may begin any time
after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not later than
seven days afterwards. When a redemption occurs shortly after a recent purchase,
the Fund may hold the redemption proceeds beyond seven days but only until the
purchase check clears, which may take up to 10 days or more. No dividend is paid
on the redemption proceeds after the redemption and before the check is mailed.
If you anticipate redemptions soon after you purchase your Shares, you are
advised to wire funds to avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Proceeds from
the redemption of Fund Shares will normally be transmitted on the first business
day, but not later than the seventh day, following the date of redemption. Your
bank usually will receive wired funds the day they are transmitted.
Electronically transferred funds will ordinarily be received within two business
days after transmission. Once the funds are transmitted, the time of receipt and
the availability of the funds are not within the Fund's control. If your bank
account changes, you must send a new "voided" check preprinted with the bank
registration with written instructions signed by all owners (with their
signatures guaranteed), including tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption can
be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
............................... 23 .................................
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23
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DISCIPLINED MIDCAP STOCK FUND
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(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence
satisfactory to it of the authority of the individual signing the
request. Please call or write the Fund for further information.
(5) A request to redeem Shares in an IRA or 403(b) account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as
specified by the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS IN
A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830 and request the
appropriate forms for:
- IRAs.
- 403(b) accounts for employees of public school systems and non-profit
organizations.
- Profit-sharing plans and pension plans for corporations and other
employers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY OF FUNDS' RETIREMENT
PLAN.
It is easy to transfer your tax-deferred plan to The Dreyfus Family of
Funds from another custodian. Call 1-800-548-2868 or write The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830 for a request to
transfer form. If you direct The Dreyfus Family of Funds to transfer funds from
an existing non-retirement Dreyfus Family of Funds account into a retirement
account, the Shares in your non-retirement account will be redeemed. The
redemption proceeds will be invested in your Dreyfus Family of Funds IRA or
other tax-qualified retirement plan. The redemption is a taxable event resulting
in a taxable gain or loss.
............................... 24 .................................
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OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV for
Investor and Class R Shares of the 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 Fund
may be summarized as follows:
The portfolio securities of the 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 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 Dreyfus/Laurel Funds, Inc.'s Board of
Directors that such value represents fair value, the 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.
The NAV of each class of shares of most of The Dreyfus Family of Funds'
investment portfolios (other than money market funds) is published in leading
newspapers daily. The yield of each class of shares of most of The Dreyfus
Family of Funds' money market funds is published weekly in leading financial
publications and in many local newspapers. The NAV of the Fund may also be
obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the 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 the Fund may be calculated on an average annual total return basis
or a cumulative total return basis. Average annual total return
............................... 25 .................................
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DISCIPLINED MIDCAP STOCK FUND
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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 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.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and expenses
borne by Class R and Investor Shares of the Fund, 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. The Fund's annual report contains additional performance
information and is available upon request without charge from Premier or your
Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, S&P Midcap, 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 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 Investor and Class R 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.
............................... 26 .................................
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DISTRIBUTIONS
The Fund declares and pays dividends from its net investment income, if any,
four times yearly at the beginning of May, August, November and in mid-December
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 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 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 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
.............................. 27 ..................................
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DISCIPLINED MIDCAP STOCK FUND
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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.
TAXES
The 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 (the
excess of net long-term capital gain over net short-term capital loss) that is
distributed to its shareholders.
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.
All or a portion of the dividends paid by the Fund 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 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
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"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.
OTHER SERVICES
At least twice a year you will receive the financial statements of the Fund with
a summary of its investments and performance. The Fund will send you a
confirmation statement after every transaction (except with regard to the
reinvestment of dividends and other distributions) that affects your Fund
account. In addition, an account statement will be mailed to you quarterly or
monthly depending on the Fund's reporting schedule. You may also request a
statement of your account activity at any time. Carefully review such
confirmation statements and account statements and notify the Fund immediately
if there is an error. From time to time, to reduce expenses, only one copy of
the Fund's shareholder reports (such as the Fund's annual report)
............................... 29 .................................
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DISCIPLINED MIDCAP STOCK FUND
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may be mailed to your household. Please call The Dreyfus Family of Funds if you
need additional copies.
No later than January 31 of each year, the Fund will send you the following
reports, which you may use in completing your Federal income tax return:
<TABLE>
<S> <C>
Form 1099-DIV Reports taxable distributions (and returns of capital,
if any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the
preceding year.
Form 1099-R Reports distributions from IRAs and 403(b) accounts
during the preceding year.
</TABLE>
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS, INC.
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"). The Fund 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 Fund will issue negotiable stock certificates.
At January 31, 1995, Mellon Bank Corporation, the 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.
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MANAGEMENT.
THE BOARD OF DIRECTORS. The business affairs of The Dreyfus/Laurel Funds,
Inc. are managed under the direction of its Directors. The SAI contains the
names and general background information concerning the Directors and officers
of The Dreyfus/Laurel Funds, Inc.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of January 31, 1995, the Manager managed or administered
approximately $70 billion in assets for more than 1.9 million investor accounts
nationwide. The Manager is a wholly-owned subsidiary of Mellon Bank, N.A. (One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258), the Fund's prior investment
manager. Pursuant to an Investment Management Agreement, transferred from Mellon
Bank to the Manager effective as of October 17, 1994, 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
Fund. As investment manager, the Manager manages the Fund by making investment
decisions based on the Fund's investment objective, policies and restrictions,
and is paid a fee.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of 1.10% of the Fund's average daily
net assets less certain expenses. The Manager pays all of the expenses of the
Fund except brokerage fees, taxes, interest, fees and expenses of the
non-interested Directors (including counsel fees) and extraordinary expenses.
Although the Manager does not pay for the fees and expenses of the non-
interested Directors (including counsel fees), the Manager 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 the Manager 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, the Manager may waive (either voluntarily or
pursuant to applicable state limitations) additional investment management fees
payable by the Fund. For the period from November 12, 1993 (commencement of
operations) to April 3, 1994, the Fund paid its investment adviser, Mellon Bank,
0.04% (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 Fund paid Mellon Bank or the
Manager 1.10% (annualized) of its average daily net assets in investment
management fees, less fees and expenses of the non-interested Directors
(including counsel fees).
............................... 31 .................................
- --------------------------------------------------------------------------------
<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
For the fiscal year ended October 31, 1994, total operating expenses
(excluding Rule 12b-1 fees) (net of expenses reimbursed) of the Fund were 1.15%
and 1.16% (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.
The Manager is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with the
Manager or which have sold Shares of the Fund, if the Manager 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.
Mellon Bank is a subsidiary of Mellon Bank Corporation. At June 30, 1994,
Mellon Bank Corporation was the 24th largest bank holding company in the United
States in terms of total assets. Through its bank subsidiaries, it operates 631
domestic retail banking locations including 432 branch offices. Mellon Bank
Corporation has 25 domestic representative offices. There are international
branches in Grand Cayman, British West Indies, and London, England, and two
international representative offices in Tokyo, Japan and Hong Kong. Mellon Bank
has a banking subsidiary, Mellon Bank Canada, in Toronto. Mellon Bank is a
registered municipal securities dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain
securities. The activities of Mellon Bank and the Manager may raise issues under
these provisions. However, Mellon Bank has been advised by its counsel that
these activities are consistent with these statutory and regulatory obligations.
For more information on the Glass-Steagall Act of 1933, see "Federal Law
Affecting Mellon Bank" in the SAI.
The Fund's portfolio manager is John O'Toole. Mr. O'Toole is a Portfolio
Manager for Mellon Bank and is also responsible for the research and development
of Mellon Equity Associates' asset allocation. Mr. O'Toole is a Portfolio
Manager at the Manager and has been employed by the Manager since October 17,
1994. Mr. O'Toole joined Mellon Bank as a junior portfolio manager in 1979.
OTHER SERVICE PROVIDERS. Under a Custody and Fund Accounting Agreement,
Mellon Bank acts as custodian and fund accountant, maintaining possession of the
Fund's investment securities and providing certain accounting and related
services.
............................... 32 .................................
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
-------------------------------------
- --------------------------------------------------------------------------------
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence, Rhode
Island 02903.
Shares of the Fund are sold on a continuous basis by Premier, as the Fund's
sponsor and distributor. Premier is a registered broker-dealer with principal
offices at One Exchange Place, Boston, Massachusetts 02109. The Fund has entered
into a distribution agreement with Premier which provides that Premier has the
exclusive right to distribute Shares of the Fund. Premier may pay service and/or
distribution fees to Agents that assist customers in purchasing and servicing of
Shares of the Fund. (See "Distribution Plan (Investor Class Only)".
DISTRIBUTION PLAN (INVESTOR CLASS ONLY).
Investor Shares are subject to a Distributor Plan ("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 the Manager, 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 the Fund. The Plan allows
Premier 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
Premier. 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 Premier 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, Premier 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.
............................... 33 .................................
- --------------------------------------------------------------------------------
<PAGE>
DISCIPLINED MIDCAP STOCK FUND
-------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
............................... 34 .................................
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
PROSPECTUS March 1, 1995
Dreyfus S&P 500 Stock Index Fund
- ----------------------------------------------------------------------------
DREYFUS S&P 500 STOCK INDEX FUND (the "Fund"), formerly called
the "Laurel S&P 500 Stock 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's investment
objective is to replicate the total return of the Standard & Poor's 500
Composite Stock Price Index primarily through investments in equity
securities.
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. 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 Investor 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."
Shares of the Fund are also available through a servicing network
associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate of Dreyfus.
Exchange and shareholder services vary depending upon the network through
which you purchase Fund shares. See "How to Buy Fund Shares."
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 March 1,
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
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............................ 7
MANAGEMENT OF THE FUND............................. 12
HOW TO BUY FUND SHARES............................. 13
SHAREHOLDER SERVICES............................... 16
HOW TO REDEEM FUND SHARES.......................... 19
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
<TABLE>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
_______________ ______________
<S> <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 Fees......................................... .40% .40%
12b-1 Fee1.............................................. .25% none
Other Expenses2......................................... .00% .00%
Total Fund Operating Expenses........................... .65% .40%
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:
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. 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 discl
ose 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 year, 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 year ended October 31, 1994 have been audited by KPMG Peat
Marwick LLP, independent accountants, 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 S&P 500 STOCK INDEX FUND
For an Investor Share outstanding throughout the period.
PERIOD
ENDED
10/31/94*#
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.78
-------
Income from investment operations:
Net investment income 0.17
Net realized and unrealized gain on investments 0.59
-------
Total from investment operations 0.76
Less Distributions:
Distributions from net investment income (0.13)
Net asset value, end of period $10.41
========
Total return ++ 7.86%
========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 381
Ratio of operating expenses to average net assets 0.65%**
Ratio of net investment income to average net 2.13%**
Portfolio turnover rate 13%
- -----------------------
* The Fund commenced selling Investor Shares on April 18, 1994.
++ Total return represents aggregate total return for the period
indicated.
** Annualized.
# Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager. Effective October 17, 1994, The
Dreyfus Corporation serves as the Fund's investment manager.
</TABLE>
Page 5
<TABLE>
DREYFUS S&P 500 STOCK INDEX FUND
For a Class R Share outstanding throughout the period.(1)
YEAR PERIOD
ENDED ENDED
10/31/94*+++ 10/31/93*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.23 $10.00
------ ------
Income from investment operations:
Net investment income 0.21# 0.01
Net realized and unrealized gain on investments 0.14 0.22
------ ------
Total from investment operations 0.35 0.23
------ ------
Less distributions:
Distributions from net investment income (0.16) -_
Distributions from net capital gains (0.00)+ -_
------ ------
Total distributions (0.16) -_
------ ------
Net asset value, end of period $ 10.42 $10.23
======== ======
Total return ++ 3.50% 2.30%
======== ========
Ratios/supplemental data:
Net assets, end of period (in 000's) $123,994 $24,004
Net of operating expenses to average net assets 0.40%*** 0.40%**##
Net of net investment income to average net assets 2.38% 1.32%**
Portfolio turnover rate 13% 22%###
- ------------------------------------------------------------------------------------------------------------------
* The Fund commenced operations on September 30, 1993. The Fund
commenced selling Investor Shares on April 18, 1994. Those shares
outstanding prior to April 4, 1994 were designated Trust shares.
Effective October 17, 1994 the Fund's Trust Shares were
redesignated Class R shares.
** Annualized.
# Net investment income per share before reimbursement of expenses by
the investment adviser for the year ended October 31, 1994 was $0.21.
*** Annualized expense ratio before voluntary reimbursement of
expenses by the investment adviser for the year ended October 31,
1994 was 0.45%.
+ Amount represents less than $0.01.
++ Total return represents aggregate total return for periods indicated.
+++ Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus
Corporation serves as the Fund's investment manager.
## For the period September 30, 1993 (commencement of operations) to
October 31, 1993, the investment adviser reimbursed
expenses of the Fund amounting to $0.0103 per share.
### Turnover calculations does not include in-kind purchases amounting
to $22,472,314.
</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 similar relationship at such institution.
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.
Distribution and shareholder servicing fees 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's investment objective is to replicate the total return
of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"
or the "Index") primarily through investments in equity securities.
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 investment
judgment. Instead, the Fund utilizes a "passive" investment approach,
attempting to duplicate the investment performance of the S&P 500 Index
through statistical procedures.
The S&P 500 Index is composed of 500 common stocks that are
selected by Standard & Poor's Corporation ("Standard & Poor's") to capture
best the price performance of a large cross-section of the U.S. publicly
traded stock market. The 500 securities, most of which trade on the New York
Stock Exchange ("NYSE"), represent approximately 75% of the market value of
all U.S. common stocks. Each stock in the S&P 500 Index is weighted by its
market capitalization. That is, each security is weighted by its total market
value relative to the total market value of all the securities in the Index.
Component stocks included in the S&P 500 Index are chosen with the aim of
achieving a distribution at the index level representative of the various
components of the U.S. economy and therefore do not represent the 500 largest
companies. Aggregate market value and trading activity are also considered in
the selection process.
As the Fund's assets increase, the Fund expects to invest in all
500 stocks in the S&P 500 Index in proportion to their weighting in the
Index, except that the Fund does not intend to invest in Mellon Bank
Corporation stock at this time. To the extent that the size of the Fund does
not permit it to invest in all 500 stocks in the Index, the Fund will
purchase a representative sample of stock from each industry sector included
in the Index in proportion to that industry's weighting in the Index.
To the extent that the Fund seeks to replicate the S&P 500 Index
using such sampling techniques, a close correlation between the Fund's
performance and the performance of the Index is anticipated in both rising
and falling markets. The Fund attempts to achieve a correlation between the
performance of its investments and that of the Index of at least 0.95, before
deduction of expenses. A correlation of 1.00 would represent perfect
correlation between Fund and Index performance. It is anticipated that the
correlation of the Fund's performance to that of the Index will increase as
the size of the Fund increases. The Fund's ability to achieve significant
correlation between Fund and Index performance may be affected by changes in
securities markets, changes in the composition of the Index and the timing of
purchases and redemptions of Fund shares. The Fund's investment manager,
Page 7
Dreyfus, monitors this correlation and reports periodically to the Board of
Directors. Should the Fund fail to achieve an appropriate level of
correlation, the Board will consider alternative arrangements.
Under normal circumstances, the Fund invests at least 95% of its
total assets in the common stocks included in the S&P 500 Index. To maintain
liquidity, the Fund may invest up to 5% of its assets in the following
instruments: U.S. Government securities, commercial paper, bank certificates
of deposit, bank demand and time deposits, repurchase agreements, reverse
repurchase agreements, when-issued transactions and variable amount master
demand notes. The Fund may also lend securities in an amount not to exceed 33
1/3% 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 decreasing the Fund's investment in common stocks to
protect against potential stock market declines.
ADDITIONAL INFORMATION ABOUT THE FUND. "Standard & Poor's
Registration Mark, "S&PRegistration Mark," "S&P 500Registration Mark,"
"Standard & Poor's 500", and "500" are trademarks of McGraw-Hill, Inc. and
have been licensed for use by the Company. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the Fund.
Standard & Poor's makes no representation or warranty, express or implied,
to the owners of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Fund
particularly or the ability of the S&P 500 Index to track general stock
market performance. Standard & Poor's only relationship to the Company is
the licensing of certain trademarks and trade names of Standard & Poor's and
of the S&P 500 Index which is determined, composed and calculated by
Standard & Poor's without regard to the Company or the Fund.
Standard & Poor's has no obligation to take the needs of the Company or the
owners of the Fund into consideration in determining, composing or
calculating the S&P 500 Index. Standard & Poor's is not responsible for and
has not participated in the determination of the prices and amount of the
Fund or the timing of the issuance or sale of the Fund or in the
determination or calculation of the equation by which the Fund is to be
converted into cash. Standard & Poor's has no obligation or liability in
connection with the administration, marketing or trading of the Fund.
STANDARD & POOR'S DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND STANDARD &
POOR'S SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS
THEREIN. STANDARD & POOR'S MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE FUND, OWNERS OF THE FUND, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
STANDARD & POOR'S MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL STANDARD & POOR'S
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
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 secu-
Page 8
rities 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.
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.
WHEN-ISSUED SECURITIES AND DELAY 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 g
reater 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, 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
page 9
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 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 Investors Service, Inc., F-1 by Fitch Investors Service, Inc., Duff 1
by Duff & Phelps, Inc., or A1 by IBCA, Inc.
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
page 10
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, 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.
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 by entities that Dreyfus considers
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.
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 January 31, 1995, Dreyfus managed or
administered approximately $70 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 $201 billion in assets as of
September 30, 1994, including $76 billion in mutual fund assets. As of
September 30, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $659 billion in assets, including approximately $108 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 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 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 16, 1994, the Fund was advised by Mellon Bank under the Investment Man
agement Agreement. For the period from November 1, 1993 to April 3, 1994, the
Fund paid its investment adviser, Mellon Bank, 0.16% (annualized) of its
average daily net assets in investment advisory fees (net of expenses
reimbursed), under the Fund's previous investment advisory
Page 12
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 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
expense (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 Class and Class R. Without the reimbursement, 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 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, 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.
Page 13
Shares of the Fund are also available through a servicing network
associated with Mellon Bank, an affiliate of Dreyfus. For more information
about purchasing Fund shares through that network and a Prospectus, call
1-800-548-2868. Please read that Prospectus carefully. Exchange and
shareholder services, including the telephone purchase option, and minimum
and maximum dollar amounts associated with such services, may vary depending
upon the network through which you purchase Fund shares.
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, with respect
to Investor shares only, 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 The Bank of New York, together with the applicable
Class' DDA # as shown below, for purchase of Fund shares in your name:
DDA# 8900104236 Dreyfus S&P 500 Stock Index Fund/Investor shares;
DDA# 8900228008 Dreyfus S&P 500 Stock Index Fund/Class R shares.
Page 14
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 The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
Fund account number PRECEDED BY THE DIGITS "1111."
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 net asset
value ("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 attributab
le 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.
Page 15
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 price determined on, that day (except
investments made by electronic funds transfer, which are effective two
business days 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 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 net asset value per share of that Class.
DREYFUS TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES)_
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 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 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 Investor 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
Page 16
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, 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 net
asset value; 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 mod-
Page 17
ify 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 for 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 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 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
Page 18
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. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for this Privilege.
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 net asset value as described below. If you hold
Fund shares of more than one Class, any request for redemption must specify
the Class of shares being
Page 19
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 net asset
value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the 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, for Investor shares only,
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 the TELETRANSFER Privileg
e 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.
Page 20
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
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 any time by the Transfer
Agent or the Fund. The Fund's Statement of Additional Information 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 have 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_INVESTOR SHARES. 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
Page 21
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.
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 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 ordinarily declares and pays dividends from its net
investment income, if any, quarterly, and distributes net realized gains, if
any, on an annual basis, 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
Page 22
will receive lower per share dividends than Class R shares because of the
higher expenses borne by the Investor Class. 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
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 cor-
Page 23
rect 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 net asset
value (or maximum offering price in the case of Investor shares) per share at
the beginning of the period. Advertisements may include the percentage rate
of total return or may include the value of a hypothetical investment at the
end of the period which assumes the application of the percentage rate of
total return. Total return also may be calculated by using the net asset
value per share at the beginning of the period instead of the maximum
offering price per share at the beginning of the period for 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-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, Standard and Poor's 500 Composite Stock Price Index, 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 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. 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 January 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, pursuant to the Company's
By-Laws, 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 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.
Page 25
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
[This Page Intentionally Left Blank]
page 27
S&P 500
Stock Index Fund
Prospectus
(Lion Logo)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
313/713p2030195
- -----------------------------------------------------------------------------
PROSPECTUS MARCH 1, 1995
DREYFUS EQUITY INCOME FUND
- -----------------------------------------------------------------------------
DREYFUS EQUITY INCOME FUND (THE "FUND"), FORMERLY CALLED THE "LAUREL
EQUITY INCOME 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 AN ABOVE-AVERAGE LEVEL OF INCOME ALONG
WITH MODERATE LONG-TERM GROWTH OF INCOME AND PRINCIPAL BY INVESTING IN A
DIVERSIFIED LIST OF SECURITIES, RESULTING IN A PORTFOLIO WITH A MODERATE
LEVEL OF RISK.
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. 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 INVESTOR 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."
SHARES OF THE FUND ARE ALSO AVAILABLE THROUGH A SERVICING NETWORK
ASSOCIATED WITH MELLON BANK, N.A. ("MELLON BANK"), AN AFFILIATE OF DREYFUS.
EXCHANGE AND SHAREHOLDER SERVICES VARY DEPENDING UPON THE NETWORK THROUGH
WHICH YOU PURCHASE FUND SHARES. SEE "HOW TO BUY FUND SHARES."
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 MARCH 1, 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 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......................... 7
MANAGEMENT OF THE FUND.......................... 11
HOW TO BUY FUND SHARES.......................... 13
SHAREHOLDER SERVICES............................ 16
HOW TO REDEEM FUND SHARES....................... 19
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)........ 21
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES....... 22
PERFORMANCE INFORMATION......................... 23
GENERAL INFORMATION............................. 24
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
--------------- ---------------
<S> <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 Fees......................................... .90% .90%
12b-1 Fee1.............................................. .25% none
Other Expenses2......................................... .00% .00%
______ _____
Total Fund Operating Expenses........................... 1.15% .90%
</TABLE>
<TABLE>
<CAPTION>
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:
INVESTOR SHARES CLASS R SHARES
--------------- -------------
<S> <C> <C>
1 Year $12 $9
3 Years $37 $29
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 (as defined below) may charge their clients direct
fees for effecting transactions in Fund shares; such fees are not reflected
in the foregoing table. See "Management of the Fund," "How to Buy Fund
Shares" and "Distribution Plan."
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 client for various services provided in
connection with their accounts.
Page 4
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Class R
Share outstanding through each 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 year
ended October 31, 1994 have been audited by KPMGPeat Marwick LLP, independent
accountants 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.
DREYFUS EQUITY INCOME FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
10/31/94*#
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income 0.03
Net realized and unrealized loss on investments (0.08)
------
Total from investment operations (0.05)
Net asset value, end of period $9.95
======
Total return++ (0.50)%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 1
Ratio of operating expenses to average net assets 1.15%+
Ratio of net investment income to average net assets 2.65%+
Portfolio turnover rate 5%
- ----------------------------------------------------------------------------
* The Fund commenced selling Investor Shares on September 2, 1994.
+ Annualized.
++ Total return represents aggregate total return for the period
indicated.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus
Corporation serves as the Fund's investment manager.
</TABLE>
Page 5
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
DREYFUS EQUITY INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT THE PERIOD.
Period
Ended
10/31/94*#
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $10.00
-------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized loss on investments (0.10)
-------
Total from investment operations (0.05)
Net asset value, end of period $9.95
======
Total return++ (0.50)%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $5,005
Ratio of operating expenses to average net assets 0.90%+
Ratio of net investment income to average net assets 2.90%+
Portfolio turnover rate 5%
- ------------------------------------------------------------------------------------------------------------
* The Fund commenced selling Trust Shates on September 2, 1994. Effective
October 17,1994, 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,
N.A. served as the Fund's investment manager. Effective October 17,
1994, The Dreyfus Corporation serves 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 Service
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 a
Service Agent, such Bank or Service Agent may require you to place all Fund
purchase, exchange and redemption orders through them. All Banks and Service
Agents have agreed to transmit transaction requests to the Fund's transfer
agent or to the Fund's Distributor. Distribution 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 an above-average level of income along with moderate
long-term growth of income and principal by investing in a diversified list
of securities, resulting in a portfolio with a moderate level of risk. There
can be no assurance that the Fund will meet its investment objective.
MANAGEMENT POLICIES
GENERAL_The Fund will normally invest approximately 85% of its total
assets in dividend-paying stocks; the remainder may be invested in
convertible bonds, preferred stocks, fixed income securities and commercial
paper. The Fund may also invest in (1) repurchase agreements, (2) reverse
repurchase agreements, (3) stock index futures and options contracts, (4)
when-issued transactions and (5) American Depository Receipts ("ADRs"). The
Fund may invest in foreign securities, which may include investments in
developing countries. The Fund may also invest in fixed income obligations of
domestic and foreign issuers that are investment grade obligations. For a
description of fixed income ratings, please see the SAI.
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
Page 7
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 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 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
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by
foreign companies. ADRs are traded in the United States on national
securities exchanges or in the over-the-counter market.
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.
page 8
CONVERTIBLE SECURITIES. The Fund may purchase convertible securities,
which are fixed-income securities such as bonds that may be converted at a
stated price within a specified period of time into a specified number of
shares of common stock of the same or a different issuer. Convertible
securities are senior to common stock in a corporation's capital structure,
but usually are subordinated to non-convertible debt securities. While
providing a fixed-income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a
non-convertible debt security of similar quality), a convertible security
also affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation of the common stock into which it is
convertible. In general, the market value of a convertible security is the
higher of its "investment value" (i.e., its value as a fixed-income security)
or its "conversion value" (i.e., the value of the underlying shares of common
stock if the security is converted). As a fixed-income security, the market
value of a convertible security generally increases when interest rates
decline and generally decreases when interest rates rise. However, the price
of a convertible security also is influenced by the market value of the
security's underlying common stock. Thus, the price of a convertible security
generally increases as the market value of the underlying stock increases,
and generally decreases as the market value of the underlying stock declines.
Investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.
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 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.
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
Page 9
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 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."
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.
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
Page 10
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 income and capital appreciation 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.
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 January 31, 1995, Dreyfus managed or administered
approximately $70 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 Bert Mullins. Mr. Mullins is Vice President
and Senior Security Analyst for Mellon Bank. Mr. Mullins has managed the Fund
since its commencement of operations and has been employed by Dreyfus as a
portfolio manager since October 17, 1994. He has been with Mellon Bank since
1966.
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.
Page 11
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 $201 billion in assets as of
September 30, 1994, including $76 billion in mutual fund assets. As of
September 30, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
approximately $659 billion in assets, including approximately $108 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 0.90 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 September 2, 1994 (commencement of
operations) through the fiscal year ended October 31, 1994, the Fund paid
Mellon Bank or Dreyfus 0.90% (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) of the Fund were 0.90% (annualized) of the
average daily net assets of each class for both the Investor Class and Class
R.
In addition, Investor shares may be subject to certain distribution
fees. See "Distribution Plan (Investors 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 Exchange Place, Providence,
Page 12
Rhode Island 02903. Premier Mutual Fund Services, Inc. serves as the Fund's
sub-administrator and, pursuant to a Sub-Administration Agreement, 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.
Shares of the Fund are also available through a servicing network
associated with Mellon Bank, an affiliate of Dreyfus. For more information
about purchasing Fund shares through that network and a Prospectus, call
1-800-548-2868. Please read that Prospectus carefully. Exchange and
shareholder services, including telephone purchase options and minimum and
maximum dollar amounts associated with such services, may vary depending upon
the network through which you purchase Fund shares.
Stock certificates are issued only upon your written request. The
Fund reserves the right to reject any purchase order. No certificates are
issued for fractional shares.
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 $1,000. 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, with respect to
Investor shares only, through the Dreyfus TELETRANSFER Privilege described
below. Checks should be made payable to "The Dreyfus Family
Page 13
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. To purchase Investor shares in your
name, immediately available funds may be transmitted by wire to The Bank of
New York, DDA # 8900104333. For wire information with respect to Class R
shares, please call 1-800-548-2868. 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 The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
Fund account number PRECEDED BY THE DIGITS "1111."
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 infor-
Page 14
mation 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 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.
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
investments made by electronic funds transfer, which are effective two
business days 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 in many local newspapers. The NAV of any 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 (NOT APPLICABLE TO CLASS R SHARES) _
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 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 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 Investor shares by telephoning
1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
Page 15
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, 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
Page 16
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.
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 for 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 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 qualif
y 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.
Page 17
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. Shares held under Keogh Plans, IRAs or
other retirement plans are not eligible for this Privilege.
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.
Page 18
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 net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the 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 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, for Investor shares only, 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 or exchange 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 the
TELETRANSFER Privilege or telephone exchange privilege, which is granted
automatically unless you
Page 19
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 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 have checked the appropriate box on the
Fund's Account Application or have filed a
Page 20
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_INVESTOR SHARES. 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.
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 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 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.
Page 21
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays (on the first business day of the
following month) dividends four times yearly 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 at NAV; 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
591/2, generally will be subject to an additional tax equal to
Page 22
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.
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.
Advertisements of the Fund's performance will include the
Page 23
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 per
share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return.
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, Standard and Poor's 500 Composite Stock Price Index, Standard &
Poor's Midcap StockIndex, 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, 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
Securities and Exchange Commission 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 January 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.
Page 24
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, pursuant to the Company's By-Laws, 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 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 25
DREYFUS
Equity Income
Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
318/718p2030195
PROSPECTUS
Dreyfus European Fund
Investor and Class R Shares
March 1, 1995
DREYFUS EUROPEAN FUND'S objective is to outperform the Morgan Stanley Cap-
ital International Europe Index (the "Benchmark") in the medium to long
term by allocating the Fund's assets among Western European countries and
industry sectors represented in the Benchmark.
THIS PROSPECTUS describes the Dreyfus European Fund (the "Fund"), a sepa-
rate portfolio 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 two
classes of shares--Investor Shares and Class R Shares (collectively, the
"Shares")--of the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective purchaser should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional infor-
mation about the Fund is contained in a Statement of Additional Informa-
tion (the "SAI"), which has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request without charge by
calling or writing to The Dreyfus Family of Funds. The SAI bears the same
date as the Prospectus and is incorporated by reference in its entirety
into this Prospectus.
In addition to the Fund, The Dreyfus Family of Funds also offers other
funds that provide investment opportunities for you in the equity, fixed
income and money markets. For more information about these additional in-
vestment opportunities, call 1-800-548-2868.
The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DE-
POSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE POSSI-
BLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE SUM-
MARY" 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 SE-
CURITIES 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
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Expense Summary 5
Financial Highlights 7
Alternative Purchase Methods 10
Investment Objective and Policies 10
Other Investment Policies and Risk Factors 12
HOW TO DO BUSINESS WITH US
Special Shareholder Services 17
Investor Line 17
How to Invest in The Fund 17
By Mail 18
By Telephone 18
By Wire 18
By Automatic Monthly Investments 19
By Direct Deposit 19
By In-Kind Purchases 19
When Share Price is Determined 20
Additional Information About Investments 20
How to Exchange Your Investment From One Fund to Another 21
By Telephone 21
By Mail 21
Additional Information About Exchanges 21
How to Redeem Fund Shares 22
By Telephone 22
By Mail 22
By Automated Withdrawal Program 23
Redemption Proceeds 23
Additional Information About Redemptions 24
How To Use The Dreyfus Family of Funds in a Tax-Qualified
Retirement Plan 24
How to Transfer an Investment to a Dreyfus Family of Funds'
Retirement Plan 25
OTHER INFORMATION
Share Price 25
Performance Advertising 26
Distributions 27
Taxes 28
Other Services 29
Further Information About The Fund 30
The Dreyfus/Laurel Funds, Inc. 30
Management 30
Distribution Plan (Investor Class Only) 33
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REP-
RESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S SAI INCOR-
PORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBU-
TOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE.
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 indi-
rectly in connection with an investment in the Investor or Class R Shares
of the Fund (See "Management.")
<TABLE>
<CAPTION>
Investor Class R
Shares Shares
<S> <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 1.75% 1.75%
12b-1 Fee* 0.25% none
Other Expenses** 0.00% 0.00%
Total Fund Operating Expenses 2.00% 1.75%
EXAMPLES
You would pay the following on 1 year $20 $ 18
a $1,000 investment, assuming (1) a 3 years 63 54
5% annual return and (2) redemption 5 years N/A 94
at the end of each time period: 10 years N/A 204
<FN>
* See "Distribution Plan (Investor Class only)" for a description of
the 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 alloca-
ble portion of such fees and expenses, which are estimated to be
0.02% of the Fund's net assets (See "Management.")
</TABLE>
THE INFORMATION CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A REPRE-
SENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
The Fund understands that banks, brokers, dealers or other financial in-
stitutions (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 cli-
ent's account. These fees would be in addition to any amounts received by
an Agent under its Selling 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 client for various services provided in con-
nection 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.
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Investor Share or Class R Share
outstanding through each fiscal year or period ended October 31 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 year ended October 31, 1994 have been au-
dited by KPMG Peat Marwick LLP, independent accountants, whose report ap-
pears in the Fund's Annual Report. Further information about the Fund's
performance is contained in the Fund's Annual Report, which may be ob-
tained without charge.
DREYFUS EUROPEAN FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
Period
Ended
10/31/94*++
<S> <C> <C>
Net asset value, beginning of period $11.78
Income from investment operations:
Net investment income 0.05
Net realized and unrealized gain on investments 0.67
Total from investment operations 0.72
Less distributions:
Dividends from net investment income --
Total distributions --
Net asset value, end of period $ 12.50
Total return+ 6.11%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 48
Ratio of operating expenses to average net
assets 2.00%**
Ratio of net investment income to average net
assets 0.73%**
Portfolio turnover rate 46%
<FN>
* The Fund commenced selling Investor Shares on April 14, 1994. The Fund
has had the following investment advisers: CCF International Finance
Corporation (January 5, 1987 to October 31, 1993); Mellon Bank N.A.
(November 1, 1993 to October 16, 1994); and The Dreyfus Corporation
(October 17, 1994 to present).
** Annualized.
+ Total return represents aggregate total return for the period indi-
cated.
++ Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the
period since the use of the undistributed method does not accord with
results of operations.
</TABLE>
DREYFUS EUROPEAN FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
10/31/94*(1) 10/31/93+
<S> <C> <C>
Net asset value, beginning of year $ 12.70 $ 10.96
Income from investment operations:
Net investment income/(loss) 0.12++ 0.11
Net realized and unrealized gain/(loss) on
investments 0.63 1.73
Total from investment operations 0.75 1.84
Less distributions:
Distributions from net investment income (0.12) (0.10)
Distributions from net realized capital gains (0.83) --
Distributions from capital -- --
Total distributions (0.95) (0.10)
Net asset value, end of year $ 12.50 $ 12.70
Total return+++ 5.97% 16.88%
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $10,797 $10,481
Ratio of operating expenses to average net
assets 1.75%# 1.83%#
Ratio of net investment income to average net
assets 0.98% 0.59%#
Portfolio turnover rate 46% 12%
<FN>
* The Fund commenced operations on January 5, 1987. On April 14, 1994,
the Fund commenced selling Investor Shares. Those shares in existence
prior to April 4, 1994 were designated Trust Shares. On October 17,
1994, the Fund's Trust Shares were reclassified as Class R Shares. The
Fund has had the following investment advisers: CCF International Fi-
nance Corporation (January 5, 1987 to October 31, 1993); Mellon Bank
N.A. (November 1, 1993 to October 16, 1994); and The Dreyfus Corpora-
tion (October 17, 1994 to present).
** Annualized.
+ Audited by Tait, Weller & Baker, Certified Public Accountants.
++ Net investment income before expenses reimbursed by the investment ad-
viser was $0.09 for the year ended October 31, 1994.
+++ Total return represents aggregate total return for the periods indi-
cated.
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/92+ 10/31/91+ 10/31/90+ 10/31/89+ 10/31/88+ 10/31/87*+
<S> <C> <C> <C> <C> <C>
$11.12 $11.01 $ 9.30 $ 9.22 $ 8.93 $ 10.00
0.12 (0.02) 0.21 (0.13) (0.58) (0.01)
(0.10) 0.57 1.53 0.21 1.10 (1.06)
0.02 0.55 1.74 0.08 0.52 (1.07)
-- (0.08) (0.03) -- -- --
(0.18) (0.36) -- -- -- --
-- -- -- -- (0.23) --
(0.18) (0.44) (0.03) -- (0.23) --
$ 10.96 $ 11.12 $ 11.01 $ 9.30 $ 9.22 $ 8.93
0.16% 5.12% 18.73% 0.87% 5.73%(2) (10.70)%(2)
$15,648 $17,204 $14,643 $12,174 $1,116 $ 1,768
1.57%# 1.67% 1.52% 4.75%# 7.27%# 2.62%**#
0.92%# (0.16)% 1.96% (1.68)%# (4.67)%# (0.06)%**#
7% 5% 16% 69% 102% 99%
<FN>
# For the year ended October 31, 1994, the ratio of operating expenses
to average net assets before reimbursement of expenses by the invest-
ment adviser was 2.02%. For the years or period ended October 31,
1993, 1992, 1989, 1988 and 1987, the ratio of operating expenses and
the ratio of net investment income to average net assets on an annual-
ized basis before reimbursement of expenses by CCF International Fi-
nance Corp. and Capstone Asset Management Company were 2.41% and
0.01%; 1.82% and 0.67%; 5.42% and (3.00%); 7.27% and (4.67%); and
5.28% and (2.72%), respectively.
(1) Per share amounts have been calculated using the monthly average
share method, which more appropriately presents the per share data
for the period since the use of the undistributed method does not ac-
cord with results of operations.
(2) Unaudited.
</TABLE>
DREYFUS EUROPEAN FUND
THE FUND IS THE SUCCESSOR, THROUGH AN ACQUISITION OF ASSETS AND ASSUMPTION
OF LIABILITIES, TO THE CAPSTONE EUROPEAN FUND ("CAPSTONE EUROPEAN"), FOR-
MERLY A SERIES OF THE CAPSTONE INTERNATIONAL SERIES TRUST. PURSUANT TO THE
TRANSFER OF ASSETS AND LIABILITIES OF CAPSTONE EUROPEAN TO THE FUND WHICH
OCCURRED ON NOVEMBER 1, 1993, HOLDERS OF CAPSTONE EUROPEAN SHARES RECEIVED
A SHARE OF THE FUND FOR EACH CAPSTONE EUROPEAN SHARE HELD BY THEM. CAP-
STONE EUROPEAN HAD SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, AND SUB-
STANTIALLY THE SAME POLICIES AND RESTRICTIONS AS THE FUND AND WAS MANAGED
BY CCF INTERNATIONAL FINANCE CORP., A WHOLLY-OWNED SUBSIDIARY OF CREDIT
COMMERCIAL DE FRANCE ("CCF").
ALTERNATIVE PURCHASE METHODS
Investor Shares and Class R Shares are also offered through a servicing
network associated with The Dreyfus Corporation (the "Manager") pursuant
to a separate Prospectus. For more information and a Prospectus relating
to shares offered through that network, call 1-800-645-6561. Please read
that Prospectus carefully. Exchange and shareholder services vary depend-
ing upon the network through which you purchase your Fund shares.
Holders of Class R Shares who have held their shares since April 4, 1994,
may continue to purchase Class R Shares of the Fund whether or not they
would otherwise be eligible to do so.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's objective is to outperform the Morgan Stanley Capital Interna-
tional Europe Index (the "Benchmark") in the medium to long term by allo-
cating the Fund's assets among the Western European countries and industry
sectors represented in the Benchmark. There can be no assurance that the
Fund will meet its investment objective. See "OTHER INVESTMENT POLICIES
AND RISK FACTORS" on page 12 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 lim-
itations.
The Benchmark is a diversified, capitalization-weighted index of equity
securities of companies located in Austria, Belgium, Denmark, Finland,
France, Germany, Italy, The Netherlands, Norway, Spain, Sweden, Switzer-
land, and the United Kingdom. Stocks in the Benchmark are selected to rep-
resent 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 the Fund's sub-adviser, S.A.M. Finance,
S.A. ("CCF S.A.M.") in structuring the Fund has three basic components:
(1) country/industry sector allocation, (2) stock selection, and (3) fund
construction. These components employ a combination of quantitative re-
search using proprietary financial models and fundamental research from
specialists in London, Paris, Geneva and Milan.
Country/industry sector allocation is determined simultaneously by a
unique valuation model developed by CCF S.A.M. which puts stock market be-
havior in each country and sector into a macroeconomic and financial per-
spective. In its analysis and correlation process, the model gives consid-
eration to such factors as growth prospects, expected levels of inflation
and interest rates, competitive position, return on investment and raw ma-
terial costs. The end result of this country/industry sector allocation
process is an estimate of the potential excess return available from each
sector in each country. This enables a homogeneous analysis to be carried
out on a two-dimensional (i.e., country and sector) basis.
CCF S.A.M.'s stock selection process employs a security ranking system
based on quantitative analysis. Some 1,000 stocks are ranked into quin-
tiles depending on their exposure to thirteen different indicators (e.g.,
price/earnings ratio, price/book value ratio, yield, and volatility of
earnings) grouped in four basic categories: value, growth, financial
structure, and predictability. CCF S.A.M.'s buy/sell discipline is a
strictly-controlled function of this ranking process; only issues from the
first two quintiles are purchased, and those falling into the bottom two
quintiles are sold. The Fund will typically contain 75-85 issues from the
1,000 stock universe.
Using the output from its country/industry sector allocation and stock se-
lection processes, CCF S.A.M. employs the BARRA Equity Model for fund con-
struction. This model attempts to create an optimal fund and control fund
risk.
In no event will the Fund purchase securities which would cause more than
25% of the market value of the Fund's total assets to be invested in secu-
rities 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 Western Euro-
pean government or its agencies and instrumentalities.
Under normal circumstances, the Fund expects to be fully invested in secu-
rities of issuers of the Western European countries included in the Bench-
mark, 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 instru-
ments of the U.S. or foreign governments, their agencies and instrumental-
ities and repurchase agreements. The Fund may occasionally invest in for-
ward foreign currency exchange contracts, futures contracts and options on
foreign currencies, currency indices, futures contracts, and securities
indices to adjust its risk exposure relative to the Benchmark. See "OTHER
INVESTMENT POLICIES AND RISK FACTORS--Foreign Securities" for a discussion
on the risks associated with foreign securities. The Fund may also invest
in commercial paper and may lend fund securities. The Fund does not intend
to lend fund securities at this time. (See "OTHER INVESTMENT POLICIES AND
RISK FACTORS.") 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.
OTHER INVESTMENT POLICIES AND RISK FACTORS
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.
COMMERCIAL PAPER. The Fund may invest in commercial paper. These instru-
ments 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 addi-
tional 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.
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 con-
tracts 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 divi-
dends) 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 exchange 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 con-
vertible into, such currency.
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 pre-
sents certain risks, including those resulting from fluctuations in cur-
rency exchange rates, revaluation of currencies, future political and eco-
nomic developments and the possible imposition of currency exchange block-
ages 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 re-
quirements 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. The net asset
value of the Fund's Shares generally will fluctuate. In addition, with re-
spect to certain foreign countries, there is the possibility of expropria-
tion, 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.
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 the Fund against adverse market movements by in-
vesting in futures, options and other derivative instruments. These in-
clude the purchase and writing of options on securities (including index
options) and options on foreign currencies and investing in futures con-
tracts 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 fu-
tures 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 Fund
to additional investment risks and transaction costs. If the Manager 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, forward contracts and swaps include: imperfect correla-
tion between the price of futures, options and forward contracts and move-
ments in the prices of the securities or currencies being hedged; the pos-
sible absence of a liquid secondary market for any particular instrument
at any time; and the possible need to defer closing out certain hedged po-
sitions to avoid adverse tax consequences. The 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.
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
price which is expected to be lower than the spot price of the currency at
the time the option expires. Put options convey the right to sell the un-
derlying currency at a price which is anticipated to be higher than the
spot price of the currency at the time the option expires. Currency op-
tions 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 options contracts. Over-the-counter options differ from 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 liquid-
ity as exchange-traded options.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including time depos-
its 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 ob-
ligations issued in reliance on the so-called "private placement" exemp-
tion from registration afforded by Section 4(2) of the Securities Act of
1933, as amended ("Section 4(2) paper"). The Fund may also purchase secu-
rities that are not registered under the Securities Act of 1933, as
amended, but which can be sold to qualified institutional buyers in accor-
dance 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 con-
sider availability of reliable price information and other relevant infor-
mation 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 purchas-
ing 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 se-
curities 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 in-
stitutional buyers become, for a time, uninterested in purchasing these
securities.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued by
other investment companies to the extent that such investments are consis-
tent 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 com-
pany's expenses, including advisory fees. These expenses would be in addi-
tion 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 repur-
chase that security from a Fund at a specified price and date or upon de-
mand. 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.
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 the
Manager 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.
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 Adminis-
tration, Export-Import Bank of the United States, Small Business Adminis-
tration, Government National Mortgage Association, General Services Admin-
istration 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 Associa-
tion, the Federal Home Loan Mortgage Corporation, or other instrumentali-
ties.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To secure ad-
vantageous prices or yields, the Fund may purchase U.S. Government Securi-
ties 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 deliv-
ery 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. Gov-
ernment 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 the Fund's investment objective by investing all of the
Fund's assets in another investment company having the same investment ob-
jective 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.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation 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 portfo-
lio turnover involves correspondingly greater brokerage commissions and
other expenses which must be borne directly by the Fund and, thus, indi-
rectly 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. (See "Distributions" and "Taxes.") Nevertheless,
security transactions for the Fund will be based only upon investment con-
siderations and will not be limited by any other considerations when the
Manager or CCF S.A.M. deems it appropriate to make changes in the Fund's
assets.
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 fun-
damental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without share-
holder approval. If the Fund's investment objective, policies, restric-
tions, 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.
HOW TO DO BUSINESS WITH US
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services designed to provide an easy
way to do business with the Fund. By electing these services on your ap-
plication or by completing the appropriate forms, you may authorize:
* Investment by phone.
* Automatic monthly investments.
* Exchanges or redemptions by phone.
By electing the service which enables you to exchange and redeem by phone,
you agree to indemnify the Fund, its transfer agent and its investment
manager from any loss, claim or expense you may incur as a result of their
acting on such instruction. The Fund will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These in-
clude personal identification procedures, recording of telephone conversa-
tions and providing written confirmation of each transaction. A failure on
the part of the Fund to employ such procedures may subject it to liability
for any loss due to unauthorized or fraudulent instructions.
INVESTOR LINE
You may reach The Dreyfus Family of Funds by calling our Investor Line at
1-800-548-2868. If you call on a rotary phone during normal business hours
(9 a.m. to 5 p.m., Eastern time), you will reach a Dreyfus Family of Funds
operator. If you call on a Touch-Tone phone, you will receive instructions
on how to: (1) request a current prospectus or information booklets about
the Fund's investment portfolios and services, (2) listen to net asset
values, yields and total return figures, and (3) talk with a customer ser-
vice representative during normal business hours. For more information
about direct access using a Touch-Tone phone, please contact The Dreyfus
Family of Funds.
HOW TO INVEST IN THE FUND
Premier serves as the Fund's distributor. Premier is a wholly-owned sub-
sidiary of Institutional Administration Services, Inc., a provider of mu-
tual fund administration services, the parent company of which is Boston
Institutional Group, Inc. Premier also serves as the Fund's sub-
administrator and, pursuant to a Sub-Administration Agreement, provides
various administrative and corporate secretarial services to the Fund.
Premier has established various procedures for purchasing Class R and In-
vestor Shares of the Fund. 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 qual-
ified 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 banks, securities brokers or dealers
and other financial institutions (including Mellon Bank and its affili-
ates) ("Agents") that have entered into a Selling Agreement with Premier.
Once an investor has established an account, additional purchases may, in
certain cases, be made directly through the Fund's transfer agent. 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 re-
demption orders through them. All Banks and Agents have agreed to transmit
your transaction requests to the Fund's transfer agent or to Premier. You
may diversify your investments by choosing a combination of investment
portfolios offered by The Dreyfus Family of Funds.
You may invest in the following ways:
BY MAIL.
Send your application and check or money order to The Dreyfus Family of
Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. Checks must be
payable in U.S. dollars and drawn on U.S. banks. When making subsequent
investments, enclose your check with the return remittance portion of the
confirmation of your previous investment. If the remittance portion is not
available, indicate on your check or a separate piece of paper your name,
address, the Fund and class of Shares of the Fund that you are buying and
the account number. Orders to purchase Shares are effective on the day the
Fund receives your check or money order. (See "When Share Price is Deter-
mined.")
BY TELEPHONE.
Once your account is open, you may make investments by telephone by call-
ing 1-800-548-2868 if you have elected the service authorizing the Fund to
draw on your bank account by check when you call with instructions. In-
vestments made by phone in any one account must be in an amount of at
least $100 and are effective two days after your call. (See "When Share
Price is Determined.")
BY WIRE.
You may make your initial or subsequent investments in the Fund by wiring
funds. To do so:
(1) Instruct your bank to wire funds to MELLON BANK (ABA routing number
0430-0026-1.)
(2) Be sure to specify on the wire:
(A) The Dreyfus Funds.
(B) The Fund name and the class of Shares of the Fund you are buying and
account number (if you have one).
(C) Your name.
(D) Your city and state.
In order for a wire purchase to be effective on the same day it is re-
ceived both the trading instructions and the wire must be received before
4 p.m., Eastern time. (See "When Share Price is Determined.")
BY AUTOMATIC MONTHLY INVESTMENTS.
Once your account is open, you may make investments automatically by
electing the Automatic Investment Program, the service authorizing the
Fund to draw on your bank account regularly by paper or electronic draft.
Such investments must be in amounts of not less than $100 in any one ac-
count. You should inquire at your bank whether it will honor a preautho-
rized paper or electronic draft. Contact the Fund if your bank requires
additional documentation. Call 1-800-548-2868 or write The Dreyfus Family
of Funds at One Exchange Place, Boston, Massachusetts 02109 for more in-
formation about the Automatic Investment Program.
BY DIRECT DEPOSIT.
If your employer offers Direct Deposit, you may arrange to automatically
purchase Shares of the Fund (minimum $100) each pay period. Direct Deposit
investing may also be available to persons receiving regular payments from
other sources (including government pension or social security payments).
Note that it may not be appropriate to Direct Deposit your entire paycheck
into the Fund because it has a fluctuating net asset value ("NAV"). Call
1-800-548-2868 or write The Dreyfus Family of Funds at One Exchange Place,
Boston, Massachusetts 02109 for more information or a Direct Deposit au-
thorization form.
BY IN-KIND PURCHASES.
If the following conditions are satisfied, the Fund may at its discretion,
permit you to purchase Shares through an "in-kind" exchange of securities
you hold. Any securities exchanged must meet the investment objective,
policies and limitations of the Fund, must have a readily ascertainable
market value, must be liquid and must not be subject to restrictions on
resale. The market value of any securities exchanged, plus any cash, must
be at least equal to $25,000. Shares purchased in exchange for securities
generally cannot be redeemed for fifteen days following the exchange in
order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative net asset value of
the Shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securi-
ties become the property of the Fund, along with the securities. Call
1-800-548-2868 or write The Dreyfus Family of Funds at One Exchange Place,
Boston, Massachusetts 02109 for more information about "in-kind" pur-
chases.
WHEN SHARE PRICE IS DETERMINED.
The price of your Shares is their NAV. NAV is determined at the close of
the New York Stock Exchange ("NYSE") on each day that the NYSE is open (a
"business day"). Investments and requests to exchange or redeem Shares re-
ceived by the Fund before the close of business on the NYSE (usually 4
p.m., Eastern time) are effective on, and will receive the price deter-
mined on, that day (except investments made by electronic funds transfer
which are effective two business days after your call). Investment, ex-
change and redemption requests received after the close of the NYSE are
effective on, and receive the Share price determined on, the next business
day.
ADDITIONAL INFORMATION ABOUT INVESTMENTS.
Once you have mailed or otherwise transmitted your investments instruction
to the Fund, they may not be modified or canceled. The Fund reserves the
right to reject any application or investment. The Fund reserves the right
to make exceptions to the minimum initial investment and account minimum
amount from time to time.
The minimum initial investment to establish a new account in the Fund is
$1,000, except for Individual Retirement Accounts ("IRAs"), retirement
plans, and Uniform Transfers (Gifts) to Minors Act accounts, for which the
minimum initial investment is $500. The Fund may suspend the offering of
Shares of any class of the Fund and reserves the right to vary initial and
subsequent investment minimums. Subsequent investments to purchase addi-
tional Shares in the Fund must be in an amount of $100 or more.
The Fund intends, upon 60 days' prior notice, to involuntarily redeem
Shares in any account if the total value of the Shares is less than a
specified minimum unless you have established an automatic monthly invest-
ment to purchase additional Shares. The Fund reserves the right to change
such minimum from time to time. Any time the Shares of the Fund held in an
account have a value of less than $1,000 ($500 for Uniform Gifts/Transfers
to Minors Acts accounts), unless the deficiency amount is the result of a
decrease in NAV, a notification may be sent advising you of the need ei-
ther to make an investment to bring the value of the Shares held in the
account up to $1,000 ($500) or to establish an automatic monthly invest-
ment to purchase additional Shares. If the investment is not made or the
automatic monthly investment is not established within 60 days from the
date of notification, the Shares held in the account will be redeemed and
the proceeds from the redemption will be sent by check to your address of
record.
The automatic redemption of Shares will not apply to IRAs, custodial ac-
counts under Section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("403(b) accounts") and other types of tax-deferred
retirement plan accounts.
HOW TO EXCHANGE YOUR INVESTMENT
FROM ONE FUND TO ANOTHER
You may exchange your Fund Shares for shares of the same class of certain
other funds advised by the Manager and that were previously advised by
Mellon Bank. As noted below, exchanges from any one fund account may be
limited in any one calendar year. In addition, the Shares being exchanged
and the shares of the fund being acquired must have a current value of at
least $100 and otherwise meet the minimum investment requirement of the
fund being acquired. Call the Investor Line for additional information and
a prospectus describing other investment portfolios offered by The Dreyfus
Family of Funds.
BY TELEPHONE.
You may exchange your Shares by calling 1-800-548-2868 if you have autho-
rized the Fund to accept telephone instructions.
BY MAIL.
You may direct the Fund to exchange your Shares by writing to The Dreyfus
Family of Funds, P.O. Box 9692, Providence, Rhode Island 02940-9830. The
request should be signed by each person in whose name the Shares are reg-
istered. All signatures should be exactly as the name appears in the reg-
istration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
ADDITIONAL INFORMATION ABOUT EXCHANGES.
(1) In an exchange from one account to another account, the Shares being
sold and the new shares being purchased must have a current value of
at least $100.
(2) Exchanges from any one fund account may be limited in any one calendar
year. The Fund reserves the right to make exceptions to an exchange
limitation from time to time. An exchange limitation will not apply to
the exchange of shares of any of the funds exchanged pursuant to an
Automatic Withdrawal Program, and to Shares held in 403(b) accounts.
(3) The Shares being acquired must be qualified for sale in your state of
residence.
(4) If the Shares are represented by a negotiable stock certificate, the
certificate must be returned before the exchange can be effected.
(5) Once you have telephoned or mailed your exchange request, it is irre-
vocable and may not be modified or canceled.
(6) An exchange is based on the next calculated NAV of each fund after re-
ceipt of your exchange order.
(7) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Code
and regulations thereunder. (See "Taxes.")
(8) Exchange of Fund Shares is, for federal income tax purposes, a sale of
the Shares, on which you may realize a taxable gain or loss.
(9) If the request is made by a corporation, partnership, trust, fidu-
ciary, agent, estate, guardian, pension plan, profit sharing plan or
unincorporated association, the Fund may require evidence satisfactory
to it of the authority of the individual signing the request.
Shareholders will be given sixty days' notice prior to any material
changes in the exchange privilege.
HOW TO REDEEM SHARES
The Fund will redeem or "buy back" your Shares at any time at their NAV.
(Before redeeming, please read "Additional Information About Redemp-
tions.") Your redemption proceeds may be delayed if you have owned your
Shares less than 10 days. (See "Redemption Proceeds.") The Fund imposes no
charges when Shares are redeemed. Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund Shares.
BY TELEPHONE.
If you have authorized the Fund to accept telephone instructions, you may
redeem your Shares by calling 1-800-548-2868. Once made, your telephone
request may not be modified or canceled. (Before calling, read "Additional
Information About Redemptions" and "When Share Price is Determined.")
BY MAIL.
Your written instructions to redeem Shares may be in any one of the fol-
lowing forms:
* A letter to The Dreyfus Family of Funds.
* An assignment form or stock power.
* An endorsement on the back of your negotiable stock certificate, if you
have one.
Once mailed to The Dreyfus Family of Funds at P.O. Box 9692, Providence,
Rhode Island 02940- 9830, the redemption request is irrevocable and may
not be modified or canceled. A letter of instruction should state the num-
ber of Shares or the dollar amount to be redeemed. The letter must include
your account number, and for redemptions in an amount in excess of
$25,000, a signature guarantee of each owner. The redemption request must
be signed by each person in whose name the Shares are registered; for ex-
ample, in the case of joint ownership, each owner must sign. All signa-
tures should be exactly as the name appears in the registration. If the
owner's name appears in the registration as John Robert Jones, he should
sign that way and not as John R. Jones. Signature guarantees can be ob-
tained from commercial banks, credit unions if authorized by state laws,
savings and loans institutions, trust companies, members of a recognized
stock exchange, or from other eligible guarantors who are members of the
Securities Transfer Agents Medallion Program ("STAMP") or any other indus-
try recognized program approved by the Securities Transfer Association.
(Before writing, see "Additional Information About Redemptions.")
BY AUTOMATED WITHDRAWAL PROGRAM.
The Fund's Automated Withdrawal Program automatically redeems enough
Shares each month to provide you with a check for an amount which you
specify (with a minimum of $100). To set up an Automated Withdrawal Pro-
gram, call the Fund at 1-800-548-2868 for instructions. Only shareholders
with an account balance of $10,000 or more may participate in this pro-
gram. Shares will be redeemed on the 15th day or 30th day of each month or
the next business day, and your check will be mailed the next day. If your
monthly checks exceed the dividends, interest and capital appreciation on
your Shares, the payments will deplete your investment. Amounts paid to
you by Automated Withdrawals are not a return on your investment. They are
derived from the redemption of Shares in your account, and you must report
on your income tax return any gains or losses that you realize.
You may specify an Automated Withdrawal Program when you make your first
investment. If you would like to establish an Automated Withdrawal Program
thereafter, the request for the Automated Withdrawal Program must be
signed by all owners, with their signatures guaranteed.
When you make your first investment you may request that Automated With-
drawals be sent to an address other than the address of record. Thereaf-
ter, a request to send Automated Withdrawals to an address other than the
address of record must be signed by all owners, with their signatures
guaranteed.
The Fund may terminate the Automated Withdrawal Program at any time, upon
notice to you, and you likewise may terminate it or change the amount of
the Automated Withdrawal Program, by notice to the Fund in writing or by
telephone. Termination or change will become effective within five days
following receipt of your instructions. Your Automated Withdrawal Program
plan may begin any time after you have owned your Shares for 10 days.
REDEMPTION PROCEEDS.
Redemption proceeds may be sent to you:
BY MAIL. If your redemption check is mailed, it is usually mailed by the
second business day after receipt of your redemption request, but not
later than seven days afterwards. When a redemption occurs shortly after a
recent purchase, the Fund may hold the redemption proceeds beyond seven
days but only until the purchase check clears, which may take up to 10
days or more. No dividend is paid on the redemption proceeds after the re-
demption and before the check is mailed. If you anticipate redemptions
soon after you purchase your Shares, you are advised to wire funds to
avoid delay.
BY WIRE AND ELECTRONIC FUNDS TRANSFER. You may authorize the Fund to
transmit redemption proceeds by wire or electronic funds transfer. Pro-
ceeds from the redemption of Shares will normally be transmitted on the
first business day, but not later than the seventh day, following the date
of redemption. Your bank usually will receive wired funds the day they are
transmitted. Electronically transferred funds will ordinarily be received
within two business days after transmission. Once the funds are transmit-
ted, the time of receipt and the availability of the funds are not within
the Fund's control. If your bank account changes, you must send a new
"voided" check preprinted with the bank registration with written instruc-
tions signed by all owners (with their signatures guaranteed), including
tax identification number.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
(1) Redemptions specifying a certain date or price cannot be accepted and
will be returned.
(2) If the Shares being redeemed are represented by a negotiable stock
certificate, the certificate must be returned before the redemption
can be effected.
(3) All redemptions are made and the price is determined on the day when
all documentation is received in good order.
(4) If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent, estate, guardian, pension plan, profit sharing plan,
or unincorporated association, the Fund may require evidence satisfac-
tory to it of the authority of the individual signing the request.
Please call or write The Dreyfus Family of Funds for further informa-
tion.
(5) A request to redeem Shares in an IRA or 403(b) account must be accom-
panied by an IRS Form W4-P and a reason for withdrawal as specified by
the Internal Revenue Service.
HOW TO USE THE DREYFUS FAMILY OF FUNDS
IN A TAX-QUALIFIED RETIREMENT PLAN
The Dreyfus Family of Funds' investment portfolios are available for your
tax-deferred retirement plan. Call 1-800-548-2868 or write The Dreyfus
Family of Funds at P.O. Box 9692, Providence, Rhode Island 02940-9830 and
request the appropriate forms for:
* IRAs.
* 403(b) accounts for employees of public school systems and non-profit
organizations.
* Profit-sharing plans and pension plans for corporations and other em
ployers.
HOW TO TRANSFER AN INVESTMENT TO A DREYFUS FAMILY
OF FUNDS' RETIREMENT PLAN.
It is easy to transfer your tax-deferred plan to the Fund from another
custodian. Call 1-800-548- 2868 or write The Dreyfus Family of Funds at
P.O. Box 9692, Providence, Rhode Island 02940-9830 for a request to trans-
fer form. If you direct The Dreyfus Family of Funds to transfer funds from
an existing non-retirement Dreyfus Family of Funds account into a retire-
ment account, the Shares in your non- retirement account will be redeemed.
The redemption proceeds will be invested in your Dreyfus Family of Funds
IRA or other tax-qualified retirement plan. The redemption is a taxable
event resulting in a taxable gain or loss.
OTHER INFORMATION
SHARE PRICE
An investment portfolio's NAV refers to the worth of one Share. The NAV
for Investor and Class R Shares of the 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 Fund may be summarized as follows:
Equity securities which are traded on a Western European securities ex-
change 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 mar-
ket for such security by CCF S.A.M., sub-adviser to the Fund. Interna-
tional securities traded principally over-the-counter are valued on the
basis of the last sale price.
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 materi-
ally change the NAV, then the Fund instrument would be valued using fair
value considerations established by the Board of Directors. Because of the
need to obtain prices as of the close of trading on 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 securi-
ties.
Pursuant to a determination by The Dreyfus/Laurel Funds, Inc.'s Board of
Directors that such value represents fair value, the 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 fluctuat-
ing interest rates on the market value of the instrument.
The NAV of each class of shares of most of The Dreyfus Family of Funds'
investment portfolios (other than the money market funds) is published in
leading newspapers daily. The yield of each class of shares of most of The
Dreyfus Family of Funds' money market funds is published weekly in leading
financial publications and in many local newspapers. The NAV of the Fund
may also be obtained by calling The Dreyfus Family of Funds.
PERFORMANCE ADVERTISING
From time to time, the 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 the Fund may be calculated on an average
annual total return basis or a cumulative total return basis. Average an-
nual 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 redeem-
able 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 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) pe-
riod by the maximum public offering price per class of such Share on the
last day of that period. Since yields fluctuate, yield data cannot neces-
sarily be used to compare an investment in a class of Shares with bank de-
posits, savings accounts, and similar investment alternatives which often
provide an agreed-upon or guaranteed fixed yield for a stated period of
time.
Total return and yield quotations will be computed separately for each
class of the Fund's Shares. Because of the difference in the fees and ex-
penses borne by Class R and Investor Shares of the Fund, 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' accounts in connection with investments in the Fund will not be
included in calculations of total return or yield. The Fund's annual re-
port contains additional performance information and is available upon re-
quest without charge from Premier or your Bank or Agent.
The Fund may compare the performance of its Investor and Class R Shares
with various industry standards of performance including Lipper Analytical
Services, Inc. ratings, Morgan Stanley Capital International Europe Index,
CDA Technologies Indexes, the Consumer Price Index, and the Dow Jones In-
dustrial Average. Performance rankings as reported in Changing Times,
Business Week, Institutional Investor, The Wall Street Journal, IBC/Dono-
ghue'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 In-
vestor and Class R Shares' total returns and yields in advertisements or
in shareholder reports. The Fund may also advertise non-standardized per-
formance information, such as total return for periods other than those
required to be shown or cumulative performance data. The Fund may adver-
tise a quotation of yield or other similar quotation demonstrating the in-
come earned or distributions made by the Fund.
DISTRIBUTIONS
The Fund declares and pays dividends from its net investment income, if
any, annually and distributes net realized capital 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 dis-
tributions 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 de-
liverable or which remain uncashed for six months or more will be rein-
vested in additional Fund Shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically rein-
vested 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 the Fund calculates its NAV will not
begin to accrue dividends until the following day. Redemption orders ef-
fected on any particular day will receive all dividends declared through
the day of redemption.
You may elect to have distributions on Shares held in IRAs and 403(b) ac-
counts paid in cash only if you are at least 59 1/2 years old or are per-
manently 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 sub-
ject 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 undis-
tributed dividends and interest received, less the Fund's expenses. Be-
cause 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 addi-
tional Shares, the distribution has no effect on the value of your invest-
ment; 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.
TAXES
The Fund intends to continue to qualify for treatment as a regulated in-
vestment company under the Code so that it will be relieved of federal in-
come tax on that part of its investment company taxable income (consisting
generally of taxable net investment income, net short-term capital gain
and, net gains from certain foreign currency transactions) and net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) that is distributed to its shareholders.
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 re-
ceived, 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 re-
tirement 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 partici-
pant 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 distribu-
tion from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the partic-
ipant 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 re-
tirement plan will be responsible for reporting such distributions from
such plans to the IRS. Moreover, certain contributions to a qualified re-
tirement 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 re-
quired 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 consider-
ations generally affecting the Fund and its shareholders. See the SAI for
a further discussion. There may be other federal, state or local tax con-
siderations applicable to a particular investor. You therefore are urged
to consult your own tax adviser.
OTHER SERVICES
At least twice a year you will receive the financial statements of the
Fund with a summary of its investments and performance. The Fund will send
you a confirmation statement after every transaction (except with regard
to the reinvestment of dividends and other distributions) that affects
your Fund account. In addition, an account statement will be mailed to you
quarterly or monthly depending on the Fund's reporting schedule. You may
also request a statement of your account activity at any time. Carefully
review such confirmation statements and account statements and notify the
Fund immediately if there is an error. From time to time, to reduce ex-
penses, only one copy of the Fund's shareholder reports (such as the
Fund's annual report) may be mailed to your household. Please call The
Dreyfus Family of Funds if you need additional copies.
No later than January 31 of each year, the Fund will send you the follow-
ing reports, which you may use in completing your federal income tax re-
turn:
Form 1099-DIV Reports taxable distributions (and returns of capital, if
any) during the preceding year.
Form 1099-B Reports proceeds paid on redemptions during the preceding
year.
Form 1099-R Reports distributions from IRAs and 403(b) accounts during
the preceding year.
At such time as prescribed by law, the Fund will send you a Form 5498,
which reports contributions to your IRA for the previous calendar year. In
addition, the Fund may send you other relevant tax-related forms.
FURTHER INFORMATION ABOUT THE FUND
THE DREYFUS/LAUREL FUNDS, INC.
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 Dreyfu-
s/Laurel Funds, Inc. has an authorized capitalization of 25 billion Shares
of $0.001 par value stock with equal voting rights. The Articles of Incor-
poration 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.
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. At your written request, the Fund will issue negotiable stock cer-
tificates.
At January 31, 1995, Mellon Bank Corporation, the 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.
MANAGEMENT.
THE BOARD OF DIRECTORS. The business affairs of The Dreyfus/Laurel Funds,
Inc. are managed under the direction of its Directors. The SAI contains
the names and general background information concerning the Directors and
officers of The Dreyfus/Laurel Funds, Inc.
INVESTMENT MANAGER. The Manager is located at 200 Park Avenue, New York,
New York 10166. As of January 31, 1995, the Manager managed or adminis-
tered approximately $70 billion in assets for more than 1.9 million inves-
tor accounts nationwide. The Manager is a wholly-owned subsidiary of Mel-
lon Bank, N.A. (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258),
the Fund's prior investment manager. Pursuant to an Investment Management
Agreement, transferred from Mellon Bank to the Manager effective as of Oc-
tober 17, 1994, the Manager provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Fund. S.A.M. Finance, S.A.
("CCF S.A.M.") continues as the Fund's sub-adviser pursuant to the Sub-
Advisory Agreement. The Manager and CCF S.A.M. manage the Fund by making
investment decisions based on the Fund's investment objective, policies
and restrictions, and are paid a fee. The 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 Manager is authorized to allocate purchase and sale orders for portfo-
lio securities to certain financial institutions, including, in the case
of agency transactions, financial institutions which are affiliated with
the Manager or which have sold Shares of the Fund, if the Manager 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.
Under the Investment Management Agreement, the Fund pays a fee computed
daily, and paid monthly, at the annual rate of 1.75% of the Fund's average
daily net assets less certain expenses. The Manager pays all of the ex-
penses of the Fund except brokerage fees, taxes, interest, fees and ex-
penses of the non-interested Directors (including counsel fees) and ex-
traordinary expenses. Although the Manager does not pay for the fees and
expenses of the non-interested Directors (including counsel fees), the
Manager 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 the Manager for paying virtually all of the Fund's ex-
penses, 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,
the Manager 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 Fund paid its
investment adviser, Mellon Bank, 0.36% (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 adminis-
trative services). For the period from April 4, 1994 through the fiscal
year ended October 31, 1994, the Fund paid Mellon Bank or the Manager
1.75% (annualized) of its average daily net assets in investment manage-
ment fees, less fees and expenses of the non-interested Directors (includ-
ing counsel fees).
For the fiscal year ended October 31, 1994, total operating expenses (ex-
cluding Rule 12b-1 fees) (net of expenses reimbursed) of the Fund were
1.75% (annualized) of the average daily net assets of each class for both
the Investor Class and Class R. Without the reimbursement, expenses would
have been higher.
Mellon Bank is a subsidiary of Mellon Bank Corporation. At December 31,
1994, Mellon Bank Corporation was the 24th largest bank holding company in
the United States in terms of total assets. Through its bank subsidiaries,
it operates 631 domestic retail banking locations including 432 branch of-
fices. Mellon Bank Corporation has 25 domestic representative offices.
There are international branches in Grand Cayman, British West Indies, and
London, England, and two international representative offices in Tokyo,
Japan and Hong Kong. Mellon Bank has a banking subsidiary, Mellon Bank
Canada, in Toronto. Mellon Bank is a registered municipal securities
dealer.
The Glass-Steagall Act of 1933 prohibits a national bank from engaging in
the business of issuing, underwriting, selling or distributing certain se-
curities. The activities of Mellon Bank and the Manager may raise issues
under these provisions. However, Mellon Bank has been advised by its coun-
sel that these activities are consistent with these statutory and regula-
tory obligations. For more information on the Glass-Steagall Act of 1933,
see "Federal Law Affecting Mellon Bank" in the SAI.
SUB-ADVISOR. CCF S.A.M. (115 Avenue des Champs-Elysees, Paris, France
75008) provides investment advice and portfolio management services to the
Fund. A wholly-owned subsidiary of Credit Commercial de France ("CCF"),
the Sub-Advisor is a French corporation organized in 1989, and has been a
registered investment advisor since February, 1993. CCF was founded nearly
a century ago 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 di-
vided among 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 of assets worldwide.
Pursuant to the Sub-Advisory Agreement among The Dreyfus/Laurel Funds,
Inc., CCF S.A.M. and the Manager, CCF S.A.M. will receive an amount equal
to 0.60% of the Fund's average daily net assets. Payment of this fee to
CCF S.A.M. is the obligation of the Manager and not of the Fund.
For the fiscal year ended October 31, 1994, the Manager paid CCF S.A.M.
advisory fees of 0.60% of average daily net assets.
The Fund's portfolio manager is Catherine Adibi of CCF S.A.M. From 1988-
1989, Ms. Adibi was a journalist with Le Revenue Francais, an economics
and finance journal, attended Unviersite Paris XIII (France) (MBA Finance
program). Ms. Adibi has managed the Fund since 1989.
OTHER SERVICE PROVIDERS. Shares of the Fund are sold on a continuous
basis by Premier, as the Fund's sponsor and distributor. Premier is a reg-
istered broker-dealer with principal offices at One Exchange Place, Bos-
ton, Massachusetts 02109. The Fund has entered into a distribution agree-
ment with Premier which provides that Premier has the exclusive right to
distribute Shares of the Fund. Premier may pay service and/or distribution
fees to Agents that assist customers in purchasing and servicing of Shares
of the Fund. (See "Distribution Plan (Investor Class Only).")
The Shareholder Services Group, Inc., a subsidiary of First Data Corpora-
tion, serves as transfer agent ("Transfer Agent") for the Fund's shares.
The Transfer Agent is located at One American Express Plaza, Providence,
Rhode Island 02903.
Boston Safe Deposit and Trust Company (One Boston Place, Boston, MA 02109)
("Boston Safe") an indirect wholly-owned subsidiary of Mellon Bank Corpo-
ration, serves as the Fund's custodian and fund accountant. As Custodian,
Boston Safe maintains possession of the Fund's investment securities and
provides portfolio recordkeeping services. Boston Safe is authorized to
deposit securities in securities depositories or to use the services of
subcustodians. As fund accountant, Boston Safe maintains the daily ac-
counting records of the Fund, including NAV determinations, purchase and
sale records and securities pricing services.
DISTRIBUTION PLAN (INVESTOR CLASS ONLY).
Investor Shares are subject to a Distribution Plan ("Plan") adopted pursu-
ant 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 the Manager, for shareholder servic-
ing activities and Premier for shareholder servicing activities and for
activities or expenses primarily intended to result in the sale of Inves-
tor Shares of the Fund. The Plan allows Premier 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 Premier. Under the
Agreements, the Agents are obligated to provide distribution related ser-
vices with regard to the Fund and/or shareholder services to the Agent's
clients that own Investor Shares of the Fund.
The Fund and Premier 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, Premier 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 gov-
erning Agreements with their Agents. An Agent entitled to receive compen-
sation for selling and servicing the Fund's Shares may receive different
compensation with respect to one class of Shares over another.
FOR MORE INFORMATION
FUND INFORMATION AND PROSPECTUSES
Call 1-800-548-2868
Please read the prospectus before you invest or send money
TO INVEST, REDEEM AND EXCHANGE
Call 1-800-548-2868 (for overseas, call collect (401) 455-3476)
9:00 a.m. to 5:00 p.m., Eastern time
Monday through Friday
Or Write: The Dreyfus Family of Funds
P.O. Box 9692
Providence, Rhode Island 02940-9830
YIELD AND SHARE PRICE INFORMATION
1-800-548-2868
24 hours a day, 7 days a week
The Dreyfus Family of Funds
One Exchange Place
Boston, Massachusetts 02109
- ----------------------------------------------------------------------------
PREMIER BALANCED FUND
(Lion Logo)
PROSPECTUS MARCH 1, 1995
- ---------------------------------------------------------------------------
Premier Balanced Fund (the "Fund"), formerly called the
"Laurel Balanced 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 outperform a hybrid index, 60% of which is the Standard & Poor's
500 Composite Stock Price Index and 40% of which is the Lehman Brothers
Intermediate Bond Index, by investing in common stocks and bonds in
proportions consistent with their expected returns and risks as
determined by the Fund's investment manager.
By this Prospectus, the Fund is offering four Classes of
shares_Class A, Class B, Class C and Class R.
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 March 1,
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
1-800-554-4611. 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 THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS 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.
- --------------------------------------------------------------------------
(Continued from page 1)
Class A shares are subject to a sales charge imposed at the
time of purchase. (Class A shares of the Fund were formerly called
Investor Shares.) Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within six years of purchase.
Class C shares are subject to a 1% contingent deferred sales charge
imposed on redemptions made within the first year of purchase. 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. (Class R shares
of the Fund were formerly called Trust Shares.) Other differences between
the Classes include the services offered to and the expenses borne by
each Class and certain voting rights, as described herein. These
alternatives are offered so an investor may choose the method of
purchasing shares that is most beneficial given the amount of purchase,
the length of time the investor expects to hold the shares and other
circumstances.
You can purchase or redeem all Classes of shares, except
Class R shares, by telephone using the TELETRANSFER Privilege.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate
of Dreyfus. Exchange and shareholder services vary depending upon the
network through which you purchase Fund shares. See "How to Buy Fund
Shares."
Page 2
TABLE OF CONTENTS
Expense Summary.................................... 4
Financial Highlights............................... 5
Alternative Purchase Methods....................... 7
Description of the Fund............................ 8
Management of the Fund............................. 14
How to Buy Fund Shares............................. 16
Shareholder Services............................... 21
How to Redeem Fund Shares.......................... 24
Distribution Plans (Class A Plan and Class B and C Plan). 27
Dividends, Other Distributions and Taxes........... 28
Performance Information............................ 30
General Information................................ 31
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
CLASS A CLASS B CLASS C CLASS R
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............... 4.50% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)..... none 4.00% 1.00% none
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.......................... 1.00% 1.00% 1.00% 1.00%
12b-1 Fee1.............................. .25% 1.00% 1.00% none
Other Expenses2 ........................ .04% .00% .00% .04%
------ ------- ------- ------
Total Fund Operating Expenses........... 1.29% 2.00% 2.00% 1.04%
</TABLE>
<TABLE>
<CAPTION>
Example:
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) except where noted,
redemption at the end of each time period:
<S> <C> <C> <C> <C>
1 YEAR $ 58 $ 60/$20 3 $ 30/$20 3 $ 11
3 YEARS $ 84 $ 93/$63 3 $ 63 $ 33
5 YEARS $113 $128/$108 3 $108 $ 57
10 YEARS $194 $195 $233 $127
1 See "Distribution Plans (Class A Plan and Class B and C Plan)" for a
description of the Fund's Distribution Plan and Service
Plan for Class A, B and C shares.
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 net assets. (See "Management of the Fund.")
3 Assuming no redemption of shares.
</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 Class A, B or C 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 (as defined herein) 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 Plans (Class A Plan and
Class B and C Plan)."
The Company 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 Class A, B or C 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 Service
Agent by the Distributor and any other compensation payable by the client for
various services provided in connection with their accounts.
Page 4
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A Share or
Class R Share outstanding through the 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. Further information about the Fund's
performance is contained in the Fund's Annual Report which may be
obtained without charge.
PREMIER BALANCED FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD ENDED
10/31/94*#
------------
<S> <C>
Net asset value, beginning of period $9.73
------
Income from investment operations:
Net investment income 0.11++
Net realized and unrealized gain on investments 0.34
------
Total from investment operations 0.45
------
Less distributions:
Distributions from net investment income (0.10)
------
Net asset value, end of period $10.08
=======
Total return+ 4.68%
------
Ratios to average net assets/supplemental data:
Net assets, end of period (000's) $1,798
Ratio of operating expenses to average net assets 1.29%**
Ratio of net investment income to average net assets 1.98%**
Portfolio turnover rate 83%
- ------------------------------------------------------------------------------------------
* The Fund commenced selling Investor Shares on April 14, 1994. On October
17, 1994, the Investor Shares were redesignated as Class A Shares.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
++ The amount shown in this caption for each share outstanding throughout
the period may not accord with the change in the aggregate gains and
losses in the portfolio securities for the period because of the timing
of purchases and withdrawals of shares in relation to the fluctuating
market values of the portfolio.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
serves as the Fund's investment manager.
</TABLE>
Page 5
<TABLE>
<CAPTION>
PREMIER BALANCED FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR PERIOD
ENDED ENDED
10/31/94## 10/31/93*
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning or period $10.18 $10.00
------- -------
Income from investment operations:
Net investment income 0.20** 0.02
Net realized and unrealized gain / (loss) on investments (0.13) 0.16
------- -------
Total from investment operations 0.07 0.18
------- -------
Less distributions:
Distributions from net investment income (0.16) --
------- -------
Net asset value, end of period $10.09 $10.18
====== =======
Total return + .68% 1.80%
------- -------
Ratios to average net assets/supplemental data:
Net Assets, end of period (000's) $75,726 $28,904
Ratio of operating expenses to average net assets 1.04%*** 1.15%#++
Ratio of net investment income to average net assets 2.23% 1.96%++
Portfolio turnover rate 83% --
- -----------------------------------------------------------------------------------------------------------------
* The Fund commenced operations on September 15, 1993.
On April 14, 1994, the Fund commenced selling Investor Shares. Those
shares outstanding prior to April 14, 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 the
investment adviser for the year ended October 31, 1994 was $0.2031.
*** Annualized expense ratio before voluntary reimbursement of expenses by
the investment adviser for the year ended October 31, 1994 was 1.09%.
+ Total return represents aggregate total return for the period
indicated.
++ Annualized.
# For the period September 15, 1993 (commencement of operations) to
October 31, 1993, the adviser reimbursed expenses of the Fund
amounting to $0.0109.
## Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
serves as the Fund's investment manager.
</TABLE>
Page 6
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares; you
may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 4.50% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Fund Shares_Class A
shares." These shares are subject to an annual 12b-1 fee at the rate of
0.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan _ Class A shares."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Fund Shares _ Class B shares" and "How to
Redeem Fund Shares _ Contingent Deferred Sales Charge _ Class B shares."
These shares also are subject to an annual distribution fee at the rate
of 0.75 of 1% of the value of the average daily net assets of Class B. In
addition, Class B shares are subject to an annual service fee at the rate
of 0.25 of 1% of the value of the average daily net assets of Class B.
See "Distribution and Service Plans _ Class B and C." The distribution
fee paid by Class B will cause such Class to have a higher expense ratio
and to pay lower dividends than Class A. Approximately six years after
the date of purchase, Class B shares automatically will convert to Class
A shares, based on the relative net asset values for shares of each such
Class, and will no longer be subject to the distribution fee. (Such
conversion is subject to suspension by the Board of Directors if adverse
tax consequences might result.) Class B shares that have been acquired
through the reinvestment of dividends and other distributions will be
converted on a pro rata basis together with other Class B shares, in the
proportion that a shareholder's Class B shares converting to Class A
shares bears to the total Class B shares not acquired through the
reinvestment of dividends and other distributions.
Class C shares are subject to a 1% CDSC, which is assessed
only if you redeem Class C shares within one year of purchase. See "How
to Redeem Fund Shares _ Class C shares." These shares also are subject to
an annual distribution fee at the rate of 0.75 of 1% of the value of the
average daily net assets of Class C. Class C shares are also subject to
an annual service fee at the rate of 0.25 of 1% of the value of the
average daily net assets of Class C. See "Distribution and Service Plans
_ Class B and C." The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
Class R shares generally may not be purchased directly by
individuals, although eligible institutions may purchase Class R shares
for accounts maintained by individuals. Class R shares are sold at net
asset value per share 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. Class A, Class B
and Class C shares are primarily sold to retail investors by Agents that
have entered into Selling Agreements with the Distributor.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect
Page 7
of the CDSC period and any conversion rights of the Classes in the context
of your own investment time frame. For example, while Class C shares have
a shorter CDSC period than Class B shares, Class C shares do not have a
conversion feature and, therefore, are subject to an ongoing distribution
fee. Thus, Class B shares may be more attractive than Class C shares to
investors with longer term investment outlooks. Generally, Class A shares
may be more appropriate for investors who invest $1,000,000 or more in
Fund shares, but will not be appropriate for investors who invest less
than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to outperform a hybrid index, 60% of which is
the S&P 500 Composite Stock Price Index ("S&P 500") and 40% of which is
the Lehman Brothers Intermediate Bond Index ("Intermediate Index"), by
investing in common stocks and bonds in proportions consistent with their
expected returns and risks as determined by Dreyfus. There can be no
assurance that the Fund will meet its stated objective.
MANAGEMENT POLICIES
To outperform the hybrid index, Dreyfus first employs a
disciplined valuation methodology to the return and risks of common
stocks and bonds. Dreyfus considers various factors in determining the
relative attractiveness of investing in common stocks and bonds. The
attractiveness of an investment in common stocks is evaluated using a
dividend-discount valuation model designed to estimate the expected
return of a broad universe of stocks based upon earnings forecasts for
those companies. The expected bond return is the yield to maturity of the
Lehman Brothers Government Corporate Bond Index.
After developing the expected return and risks of each asset
class, Dreyfus utilizes computer models designed to identify imbalances
in the pricing of common stocks and bonds. Dreyfus then invests the
Fund's assets in common stocks and bonds in proportions intended to
exploit the perceived imbalances. Under normal circumstances, the Fund's
total assets are allocated approximately 60% to common stocks and 40% to
bonds. These percentages may vary by 20%, as deemed advisable by Dreyfus.
Allocation of assets among common stocks and bonds permits the Fund to
exhibit less risk than a fund consisting entirely of common stocks.
Common stocks are selected so that, in the aggregate, the
investment characteristics and risk profile of the equity portion of the
Fund are similar to the S&P 500. These characteristics include such
measures as dividend yield (before expenses), price-to-earnings ratio,
"beta" (relative volatility), return on equity, and market price-to-book
value ratio. However, while it may maintain aggregate investment
characteristics similar to the S&P 500, the Fund seeks to invest in
individual common stocks which together will provide a higher total
return than the S&P 500. The Fund will not be operated as an index fund,
and the Fund's equity portion will not be limited to stocks included in
the S&P 500. Individual security selection is the foundation upon which
Dreyfus seeks to implement the investment objective and policies of the
equity portion of the Fund. Dreyfus collects information from diverse
sources from which Dreyfus constructs and combines valuation models into
a computerized comprehensive valuation ranking system identifying common
stocks that are undervalued and should be purchased or retained by the
Fund. These models include measures of changes in earnings and relative
value based on present and historical price-to-earnings ratios, as well
as dividend discount calculations. Once the ranking of common stocks is
complete, Dreyfus' experienced investment analysts construct the right
component of the Fund to resemble in the aggregate the S&P 500 Index, but
weighted toward the most attractive stocks as determined by the valuation
models.
The bond portion of the Fund normally is invested in U.S.
dollar-denominated fixed income obligations of domestic and foreign
issuers. The Fund's dollar-weighted average maturity may not exceed ten
years. Investment selections are based on fundamental economic, market,
and
Page 8
other factors leading to valuation by sector, maturity, and quality.
The Fund invests in investment grade bonds rated at least Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings
Group ("Standard & Poor's) rating services, or if unrated, of comparable
quality as determined by Dreyfus. The Fund will, in a prudent and orderly
fashion, sell bonds whose ratings drop below these minimum ratings.
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. Furthermore, while bonds rated BBB by Standard & Poor's
exhibit adequate 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. Investment in foreign obligations may be affected by
governmental action in the issuer's country of domicile. Examples of such
governmental actions would be the imposition of currency controls,
interest limitations, seizure of assets, or the declaration of a
moratorium. In addition, evidences of ownership of the Fund's securities
may be held outside the United States and the Fund may be subject to the
risks associated with the holding of such property overseas.
To implement a particular allocation strategy or for
liquidity purposes, other instruments in which the Fund may also invest
are: (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) mortgage-related securities
backed by the U.S. Government, its agencies and instrumentalities; (4)
corporate obligations rated at least Baa by Moody's or BBB by Standard &
Poor's, or if unrated, of comparable quality as determined by Dreyfus;
(5) 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"); (6) foreign
securities evidenced by American Depository Receipts ("ADRs"); (7)
Eurodollar bonds and notes; (8) when-issued transactions (9) repurchase
agreements; and (10) commercial paper.
The Fund may utilize securities lending and reverse
repurchase agreements. It may also enter into option and futures
contracts for hedging purposes, subject to certain limitations.
The S&P 500 is composed of 500 common stocks which are chosen
by Standard & Poor's to best capture the price performance of a large
cross-section of the U.S. publicly traded stock market. The S&P 500 is
structured to approximate the general distribution of industries in the
U.S. economy. The inclusion of a stock in the S&P 500 does not imply that
Standard & Poor's believes the stock to be an attractive or appropriate
investment, nor is Standard & Poor's in any way affiliated with the Fund.
The 500 securities, most of which trade on the New York Stock Exchange,
represent approximately 75% of the market value of all U.S. common
stocks. Each stock in the S&P 500 is weighted by its market
capitalization. That is, each security is weighted by its total market
value relative to the total market values of all the securities in the
S&P 500. Component stocks included in the S&P 500 are chosen with the aim
of achieving a distribution at the index level representative of the
various components of the U.S. economy and therefore do not represent the
500 largest companies. Aggregate market value and trading activity are
also considered in the selection process. A limited percentage of the S&P
500 may include foreign securities.
The Intermediate Index is an index established by Lehman
Brothers, Inc. which includes fixed rate debt issues rated investment
grade or higher by Moody's, Standard & Poor's, or Fitch Investors
Service, Inc. ("Fitch"). All issues have at least one year to maturity
and an outstanding par value of at least $100 million for U.S. Government
issues and $50 million for all others. The Intermediate Index includes
bonds with maturities of up to ten years.
The Lehman Brothers Government/Corporate Bond Index is a
combination of the Lehman Brothers Corporate Bond, Government Bond, and
Yankee Bond Indices. The Corporate Bond Index includes public, fixed
rate, non-convertible investment grade domestic corporate debt. Issues
included in this index are rated at least Baa by Moody's or BBB by
Standard & Poor's or, in the case of bonds, unrated by Moody's or
Standard & Poor's, at least BBB by Fitch. Collateralized
Page 9
mortgage obligations are not included in the Corporate Bond Index. The
Yankee Bond Index includes U.S. dollar denominated, SEC registered,
public, non-convertible debt issued or guaranteed by foreign sovereign
governments, foreign municipalities, foreign governmental agencies, or
international agencies. The Government Bond Index is a combination of the
Treasury Bond Index and the Agency Bond Index. The Treasury Bond Index
includes public obligations of the U.S. treasury; flower bonds and
foreign-targeted bonds are excluded. The Agency Bond Index includes
publicly issued debt of agencies of the U.S. Government, quasi-federal
corporations, and corporate debt guaranteed by the U.S. Government.
Mortgage-backed securities are not included in the Agency Index.
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 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 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 Company's Board of Directors
determine it to be in the best interest of the Fund and its shareholders.
In making that determination, the Board of 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 Board of 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
gov-
Page 10
ernment, 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 a 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
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by
foreign companies. ADRs are traded in the United States on national
securities exchanges or in the over-the-counter market.
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, Inc., or A1 by IBCA, Inc.
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.
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 reg-
Page 11
istered 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 of Directors 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
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.
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
above.
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. 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.
EURODOLLAR BONDS AND NOTES. The Fund may invest in Eurodollar
bonds and notes. Eurodollar bonds and notes are obligations that 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.
FIXED-INCOME SECURITIES. The Fund may invest in fixed-income
securities. 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 a fund may tend to be lower. Also, when
interest rates are falling, the inflow of net new money to the Fund from
the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of the Fund's
portfolio, thereby reducing
Page 12
the yield of the Fund. In periods of rising interest rates, the
opposite can be true. The net asset value of a 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 be expected to decline. Conversely, when
interest rates decline, the value of a portfolio of fixed-income
securities can be expected to increase.
GNMA CERTIFICATES. The Fund may invest in Government National
Mortgage Association ("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 of 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.
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 deemed "pass-through" securities
because they provide investors with monthly payments of principal and
interest that, 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 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. 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.
Page 13
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 ("U.S. Government Securities"). In addition to direct obligations
of the U.S. Treasury, U.S. Government Securities 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, FHLMC or other instrumentalities.
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 by entities that Dreyfus considers creditworthy.
PORTFOLIO TURNOVER. While securities are purchased for the
Fund on the basis of potential for capital appreciation and 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 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.
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.
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 January 31, 1995, Dreyfus managed or
administered approximately $70 billion in assets for more than 1.9 million
investor accounts nationwide.
Page 14
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 objectives, policies and restrictions.
The fixed income portion of 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. The
equity portion of the Fund is managed by Ron Gala. Mr. Gala is Vice
President and Portfolio Manager for Mellon Bank and is a Portfolio
Manager for Mellon Equity Associates. Mr. Gala is also responsible for
Mellon Equity Associates' asset allocation. Mr. Gala has been employed by
Mellon Bank in various capacities since 1982. Ms. Carroll and Mr. Gala
have been employed by Dreyfus as portfolio managers 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 more than $201 billion in assets as of
September 30, 1994, including $76 billion in mutual fund assets. As of
September 30, 1994, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services,
for approximately $659 billion in assets, including approximately $108
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 1.00 of 1% of
the value 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 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. Prior to
October 17, 1994, the Fund was advised by Mellon Bank under the Investment
Management Agreement. Prior 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, 0.77% (annualized) of its
average daily net assets in investment advisory fees (net of expenses
reimbured), 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 Fund paid Mellon Bank
or Dreyfus 1.00% (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
Page 15
fees) (net of expenses reimbursed) of the Fund were 1.04% (annualized) of
the average daily net assets of each class for both Class A and Class R.
Without the reimbursement, operating expenses would have been higher.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans (Class A
Plan and Class B and C Plan)."
Dreyfus may pay the Fund's distributor for shareholder
services from Dreyfus's own assets, including past profits but not
including the management fee paid by the Fund. The Fund's distributor may
use part or all of such payments to pay 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, PA
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, P.O. Box
9671, Providence, Rhode Island 02940-9671. Premier Mutual Fund Services,
Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement, provides various administrative and
corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL - Class A shares, Class B shares and Class C shares
may be purchased only by clients of certain financial institutions (which
may include banks), securities dealers ("Selected Dealers") and Agents,
except that full-time or part-time employees or directors of Dreyfus or
any of its affiliates or subsidiaries, 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 may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Agent.
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. 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.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, an affiliate of Dreyfus. For more
information about purchasing Fund shares through the affiliate network,
call 1-800-548-2868. Please read the Prospectus carefully. Exchange and
shareholder services, including the telephone purchase options, and
minimum and maximum dollar amounts associated with such services, may
vary depending upon the network through which you purchase Fund shares.
Page 16
When purchasing Fund shares, you must specify which Class is
being purchased. 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.
Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees
which would be in addition to any amounts which might be received under
the Distribution and Service Plans. Each Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Agent in
this regard.
The minimum initial investment is $1,000. 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.
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
certain qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("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, with the
exception of Class R shares, through the TELETRANSFER Privilege described
below. Checks should be made payable to "Premier Balanced Fund". Payments
to open new accounts which are mailed should be sent to Premier Balanced
Fund, 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
Premier Balanced Fund, P.O. Box 105, Newark, New Jersey 07101-0105.
Neither initial nor subsequent investments should be made by third party
check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Class' DDA # as shown below, for purchase of
Fund shares in your name:
DDA# 8900104279 Premier Balanced Fund/Class A shares;
DDA# 8900227958 Premier Balanced Fund/Class B shares;
DDA# 8900227966 Premier Balanced Fund/Class C shares;
DDA# 8900104287 Premier Balanced 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 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
Page 17
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 The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "1111.
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 shares of each Class of the
Fund 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, 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 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.
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 investments made by electronic funds
transfer, which are effective two business days after your call).
Investment, exchange and
Page 18
redemption requests received after the close of the NYSE are effective on
and receive the share price determined on the next business day.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the
public offering price per share determined as of the close of trading on
the floor of the NYSE on that day. Otherwise, the orders will be based on
the next determined public offering price. It is the dealer's
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day.
The NAV of most shares of investment portfolios advised by
Dreyfus is published in leading newspapers daily. The NAV of any Premier
Fund may also be obtained by calling 1-800-645-6561.
CLASS A SHARES _ The public offering price of Class A shares
is the NAV per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
------------------------------------
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
---------------------- --------------- --------------- _____________
<S> <C> <C> <C>
Less than $50,000......... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000..... 3.00 3.10 2.75
$250,000 to less than $500,000..... 2.50 2.60 2.25
$500,000 to less than $1,000,000.... 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or
more of Class A shares. However, if you purchase Class A shares without
an initial sales charge as part of an investment of at least $1,000,000
and redeem all or a portion of those shares within two years after
purchase, a CDSC of 1.00% will be imposed at the time of redemption. The
terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares _ Contingent Deferred Sales Charge _
Class B" (other than the amount of the CDSC and its time periods) are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
such shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at NAV. In addition, Class A shares are
offered at NAV to 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 Fund's Board, or the
spouse or minor child of any of the foregoing.
Class A shares will be offered at NAV without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also
may be purchased (including by exchange) at net asset value without a
sales load for Dreyfus-sponsored IRA "Rollover Accounts" with the
distribution proceeds from a qualified retirement plan or a
Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored
403(b)(7) plan (a) met the requirements of an Eligible Benefit Plan and
all or a portion of such plan's assets were invested in funds in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain
funds in the Premier
Page 19
Family of Funds or the Dreyfus Family of Funds or certain other products
made available by the Distributor to such plans.
Holders of Class A accounts of the Fund as of December 19,
1994 may continue to purchase Class A shares of the Fund at NAV. However,
investments by such holders in other funds advised by Dreyfus will be
subject to the applicable front end sales load.
Class A shares may be purchased at NAV through certain
broker-dealers and other financial institutions which have entered into
an agreement with the Distributor, which includes a requirement that such
shares be sold for the benefit of clients participating in a "wrap
account" or a similar program under which such clients pay a fee to such
broker-dealer or other financial institution.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
shares. Dealers receive a larger percentage of the sales load from the
Distributor than they receive for selling most other funds.
CLASS B SHARES_The public offering price for Class B shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on certain redemptions
of Class B shares as described under "How to Redeem Fund Shares." The
Distributor compensates certain Agents for selling Class B shares at the
time of purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these
expenses.
CLASS C SHARES_The public offering price for Class C shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC, however, is imposed on redemptions of Class
C shares made within the first year of purchase. See "Class B shares"
above and "How to Redeem Fund Shares."
CLASS R SHARES_The public offering price for Class R shares
is the NAV per share of that Class.
RIGHT OF ACCUMULATION_CLASS A SHARES_Reduced sales loads
apply to any purchase of Class A shares, shares of other funds in the
Premier Family of Funds, shares of certain other funds advised by Dreyfus
which are sold with a sales load and shares acquired by a previous
exchange of such shares (hereinafter referred to as "Eligible Funds"), by
you and any related "purchaser" as defined in the SAI, where the
aggregate investment, including such purchase, is $50,000 or more. If,
for example, you previously purchased and still hold Class A shares, or
shares of any other Eligible Fund or combination thereof, with an
aggregate current market value of $40,000 and subsequently purchase Class
A shares or shares of an Eligible Fund having a current value of $20,000,
the sales load applicable to the subsequent purchase would be reduced to
4% of the offering price. All present holdings of Eligible Funds may be
combined to determine the current offering price of the aggregate
investment in ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Agent must notify the Distributor if orders are made by wire,
or the Transfer Agent if orders are made by mail. The reduced sales load
is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES) _
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 a filed
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
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.
Page 20
If you have selected the TELETRANSFER Privilege, you may
request a 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, 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,
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 net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or C shares at the time of an exchange; however, Class B or C
shares acquired through an exchange will be subject to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or C shares will be calculated from
the date of the initial purchase of the Class B or C shares exchanged, as
the case may be. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares 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 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.
Page 21
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.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same class of other funds in the Premier
Family of Funds or 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 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 net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales load.
No CDSC will be imposed on Class B or C shares at the time of an
exchange; however, Class B or C shares acquired through an exchange will
be subject to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or C
shares will be calculated from the date of the initial purchase of the
Class B or C shares exchanged, as the case may be. See "Shareholder
Services" in the SAI. 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 Premier Balanced Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. 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 Premier Family of Funds or the Dreyfus Family of Funds
eligible to participate in this privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDER
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 an 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 Premier Balanced Fund, P.O.
Box 6587, Providence, Rhode Island 02940-6587, and the notification will
be effective three business days following receipt. The Fund may modify
or terminate this Privilege at any time or charge a service fee. No such
fee currently is contemplated.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or certain of 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
Page 22
investing in a fund that charges a sales load, such shareholder may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load. If you are investing in a fund or class
that charges a CDSC, the shares purchased will be subject on redemption
to the CDSC, if any, applicable to the purchased shares. See "Shareholder
Services" in the SAI. 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 Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these Privileges by mailing written notification to
Premier Balanced Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a
new Dividend Options Form. Enrollment in or cancellation of these
Privileges is effective three business days following receipt. These
Privileges are available only for existing accounts and may not be used
to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these Privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
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 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.
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 from the
Distributor 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.
Class B and C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
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.
Page 23
LETTER OF INTENT_CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and conditions set forth in the Letter of Intent. A
minimum initial purchase of $5,000 is required. To compute the applicable
sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Eligible Fund that may be used
toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced
sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares of the Fund held in escrow
to realize the difference. Signing a Letter of Intent does not bind you
to purchase, or the Fund to sell, the full amount indicated at the sales
load in effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent.
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 net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Agent.
The Fund imposes no charges (other than any applicable CDSC)
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 net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH 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, TELETRANSFER PURCHASE OR 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 PURSUANT TO THE TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK,
THE TELETRANSFER PURCHASE OR THE 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
Page 24
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.
CONTINGENT DEFERRED SALES CHARGE_CLASS B SHARES_A CDSC
payable to the Distributor is imposed on any redemption of Class B shares
which reduces the current net asset value of your Class B shares to an
amount which is lower than the dollar amount of all payments by you for
the purchase of Class B shares of the Fund held by you at the time of
redemption. No CDSC will be imposed to the extent that the net asset
value of the Class B shares redeemed does not exceed (i) the current net
asset value of Class B shares acquired through reinvestment of dividends
or other distributions, plus (ii) increases in the net asset value of
your Class B shares above the dollar amount of all your payments for the
purchase of Class B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Fund's performance,
a CDSC may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
--------- ---------------------
<S> <C>
First.................................................... 4.00
Second................................................... 4.00
Third.................................................... 3.00
Fourth................................................... 3.00
Fifth.................................................... 2.00
Sixth.................................................... 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and other distributions; then of amounts representing the
increase in net asset value of Class B shares above the total amount of
payments for the purchase of Class B shares made during
the preceding six years; then of amounts representing the cost of shares
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable six-year period.
For example, assume an investor purchased 100 shares at $10
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the NAV had
appreciated to $12 per share, the value of the investor's shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be applied to
the value of the reinvested dividend shares and the amount which
represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the
applicable rate in the second year after purchase) for a total CDSC of
$9.60.
CONTINGENT DEFERRED SALES CHARGE_CLASS C SHARES_A CDSC of
1% payable to the Distributor is imposed on any redemption of Class C
shares within one year of the date of pur-
Page 25
chase. The basis for calculating the payment of any such CDSC will be the
method used in calculating the CDSC for Class B shares. See "Contingent
Deferred Sales Charge_Class B shares" above.
WAIVER OF CDSC_The CDSC applicable to Class B and Class C
shares will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined in Section 72(m)(7) of the
Code, of the shareholder, (b) redemptions by employees participating in
Eligible Benefit Plans, (c) redemptions as a result of a combination of
any investment company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retirement under a tax-deferred
retirement plan or upon attaining age 701/2 in the case of an IRA or
Keogh plan or custodial account pursuant to Section 403(b) of the Code,
and (e) redemptions by such shareholders as the SEC or its staff may
permit. If the Fund's Directors determine to discontinue the waiver of
the CDSC, the disclosure in the Fund's prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such
shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Agent must notify
the Distributor. Any such qualification is subject to confirmation of
your entitlement.
PROCEDURES_You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for Class R
shares, through the TELETRANSFER Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your
Agent authority to instruct the Transfer Agent to redeem shares and to
credit the proceeds of such redemptions to a designated account at your
Agent, you may redeem shares only in this manner and in accordance with
the regular redemption procedure described below. If you wish to use the
other redemption methods described below, you must arrange with your
Agent for delivery of the required application(s) to the Transfer Agent.
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 the
TELETRANSFER 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 TELETRANSFER 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 TELETRANSFER 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 Premier Balanced
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption
requests must be signed by each shareholder, including each owner of a
joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which signature-
guarantees in proper form generally will be accepted from domestic banks,
brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in
Page 26
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 1-800-645-6561.
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.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES).
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 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 TELETRANSFER Privilege, you may
request a 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.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer
of a Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the NYSE (currently 4:00 p.m., New York time), the redemption
request will be effective on that day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the NYSE, the redemption request will be effective on the next business
day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close
of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee prior to the close of its business day
(normally 5:15 p.m., New York time) are effected at the price determined
as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is
the responsibility of the Selected Dealer to transmit orders on a timely
basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE_CLASS A SHARES. Upon written request,
you may reinvest up to the number of Class A shares you have redeemed,
within 30 days of redemption, at the then-prevailing net asset value
without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLAN)
Class A shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C
shares are subject to a Distribution Plan and a Service Plan, each
adopted pursuant to Rule 12b-1. Potential investors should read this
Prospectus in light of
Page 27
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.
DISTRIBUTION PLAN_CLASS A SHARES_The Class A shares of the
Fund bear some of the cost of selling those shares under the Distribution
Plan (the "Plan"). The Plan allows the Fund to spend annually up to 0.25%
of its average daily net assets attributable to Class A shares to
compensate Dreyfus Service Corporation, an affiliate of Dreyfus, for
shareholder servicing activities and the Distributor for shareholder
servicing activities and expenses primarily intended to result in the
sale of Class A 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 Class A
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.
DISTRIBUTION AND SERVICE PLANS_CLASS B AND C. Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and C shares at an
aggregate annual rate of .75 of 1% of the value of the average daily net
assets of Class B and C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B and C shares
a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B and C. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information,
and providing services related to the maintenance of such shareholder
accounts. With regard to such services, each Agent is required to
disclose to its clients any compensation payable to it by the Fund and
any other compensation payable by their clients in connection with the
investment of their assets in Class B and C shares. The Distributor may
pay one or more Agents in respect of distribution and other services for
these Classes of shares. The Distributor determines the amounts, if any,
to be paid to Agents under the Distribution and Service Plans and the
basis on which such payments are made. The fees payable under the
Distribution and Service Plans are payable without regard to actual
expenses incurred.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment
income, if any, four times yearly 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 net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors. Dividends paid by each Class will be calculated
at the same time and in the same manner and will be in the same amount,
except that the expenses attributable solely to a particular Class will
be borne exclusively by that Class. Class B and C shares will receive
lower per share dividends than Class A shares which will receive lower
per share dividends than Class R shares, because of the higher expenses
borne by the relevant Class. 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
Page 28
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.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if (1) an investor redeems those
shares or exchanges those shares for shares of another fund advised or
administered by Dreyfus within 91 days of purchase and (2) in the case of
a redemption, acquires other Fund Class A shares through exercise of the
Reinvestment Privilege or, in the case of an exchange, such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charged the
investor for the original Class A shares, up to the amount of the
reduction of the sales load pursuant to the Reinvestment Privilege or on
the exchange, as the case may be, is not included in the basis of such
shares for purposes of computing gain or loss on the redemption or the
exchange, and instead is added to the basis of the fund shares received
pursuant to the Reinvestment Privilege or the exchange.
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 591/2, 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.
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 pro-
Page 29
ceeds 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 Class B and C should be expected to be
lower than that of Class A and the performance of Class A, B and C 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. Advertisements of the Fund's performance will include the
Fund's average annual total return for one, five and ten year periods, or
for shorter periods depending upon the length of time 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
net asset value (or maximum offering price in the case of Class A shares)
per share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return. Total return also may
be calculated by using the net asset value per share at the beginning of
the period instead of the maximum offering price per share at the
beginning of the period for Class A shares or without giving effect to
any applicable CDSC at the end of the period for Class B or C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the sales load on the Fund's Class A shares, which, if
reflected, would reduce the performance quoted.
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 invest-
Page 30
ment 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, Standard and Poor's Composite Index of 500
Stocks, Lehman Brothers Intermediate Bond Index, CDA Technologies
indexes, other 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 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 Securities and Exchange Commission under the 1940 Act, as a
diversified, open-end 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 four classes_Class A, Class B, Class C
and Class R. 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 Class A, B or C shares, as the
case may be, will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution and Service Plan relating to
that Class.
At January 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, pursuant to the
Company's By-Laws, the holders of at least 10% of the shares outstanding
and entitled to vote may require the Fund to hold a special meeting of
shareholders for purposes of removing a Director from office and for any
other 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.
Page 31
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.
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 32
PDB/P2030195
- ---------------------------------------------------------------------------
PREMIER SMALL COMPANY STOCK FUND
(Lion Logo)
PROSPECTUS MARCH 1, 1995
- ---------------------------------------------------------------------------
Premier Small Company Stock Fund (the "Fund"), formerly called
the "Laurel Smallcap Stock 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 consistently exceed the total return performance of the
Russell 2500trademark Stock Index while maintaining a similar level of
risk. The Fund is neither sponsored by nor affiliated with Frank Russell
Company.
By this Prospectus, the Fund is offering four Classes of
shares_Class A, Class B, Class C and Class R.
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 March 1,
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 1-800-554-4611. 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 THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS 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.
- ---------------------------------------------------------------------------
(Continued from page 1)
Class A shares are subject to a sales charge imposed at the
time of purchase. (Class A shares of the Fund were formerly called
Investor Shares.) Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within six years of purchase.
Class C shares are subject to a 1% contingent deferred sales charge
imposed on redemptions made within the first year of purchase. 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. (Class R shares
of the Fund were formerly called Trust Shares.) Other differences
between the Classes include the services offered to and the expenses
borne by each Class and certain voting rights, as described herein. These
alternatives are offered so an investor may choose the method of
purchasing shares that is most beneficial given the amount of purchase,
the length of time the investor expects to hold the shares and other
circumstances.
You can purchase or redeem all Classes of shares, except
Class R shares, by telephone using the TELETRANSFER Privilege.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate
of Dreyfus. Exchange and shareholder services vary depending upon the
network through which you purchase Fund shares. See "How to Buy Fund
Shares".
Page 2
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
Expense Summary.................................... 3
Financial Highlights............................... 4
Alternative Purchase Methods....................... 5
Description of the Fund............................ 6
Management of the Fund............................. 10
How to Buy Fund Shares............................. 12
Shareholder Services............................... 16
How to Redeem Fund Shares.......................... 20
Distribution Plans (Class A Plan and Class B and C Plan).. 24
Dividends, Other Distributions and Taxes........... 24
Performance Information............................ 26
General Information................................ 27
</TABLE>
<TABLE>
Page 3
EXPENSE SUMMARY
Class A Class B Class C Class R
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
...... (as a percentage of offering price)...... 4.50% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)...... none 4.00% 1.00% none
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.......................... 1.25% 1.25% 1.25% 1.25%
12b-1 Fee1.............................. .25% 1.00% 1.00% none
Other Expenses2 ........................ .00% .00% .00% .00%
------ ------ ------- ------
Total Fund Operating Expenses........... 1.50% 2.25% 2.25% 1.25%
Example
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) except where noted,
redemption at the end of each time period:
1 YEAR $ 60 $ 63/23 3 $33/233 $ 13
3 YEARS $ 90 $100/70 3 $70 $ 40
5 YEARS $123 $140/120 3 $120 $ 69
10 YEARS $216 $221 $258 $151
</TABLE>
1 See "Distribution Plans (Class A Plan and Class B and C Plan)" for
a description of the Fund's Distribution Plan and Service Plan for Class
A, B and C shares.
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.")
3 Assuming no redemption of shares.
- -------------------------------------------------------------------------
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 Class A, B or C 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
Plans (Class A Plan and Class B and C Plan)."
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 Class A, B or C 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
Page 3
payable by the client for various services provided in connection with their
accounts.
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A or Class R
share outstanding through the 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 year ended October 31, 1994 have been audited by KPMG Peat
Marwick LLP, the independent accountants, 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>
PREMIER SMALL COMPANY STOCK FUND
FOR A CLASS A 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 0.06
-------
TOTAL FROM INVESTMENT OPERATIONS 0.07
-------
Net asset value, end of period $10.07
=======
TOTAL RETURN ++ 0.70%
========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 60
Ratio of operating expenses to average net assets 1.50%+
Ratio of net investment income to average net assets 0.83%+
Portfolio turnover rate .8%
- ----------------------------------------------------------------------------------------
* The Fund commenced selling Investor Shares on September 2, 1994.
Effective October 17, 1994, the Fund's Investor Shares were redesignated
as Class A shares.
+ Annualized.
++ Total return represents aggregate total return for the period indicated.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
serves as the Fund's investment manager.
</TABLE>
Page 4
<TABLE>
PREMIER SMALL COMPANY STOCK 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 0.02
Net realized and unrealized gain on investments 0.05
-------
TOTAL FROM INVESTMENT OPERATIONS 0.07
-------
Net asset value, end of period $10.07
======
TOTAL RETURN ++ 0.70%
=======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $10,747
Ratio of operating expenses to average net assets 1.25%+
Ratio of net investment income to average net assets 1.08%+
Portfolio turnover rate 8%
- ----------------------------------------------------------------------------------------
*The Fund commenced selling Trust Shares on September 2, 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, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
serves as the Fund's investment manager.
</TABLE>
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares;
you may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 4.50% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Fund Shares_Class A
shares." These shares are subject to an annual 12b-1 fee at the rate of
0.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan _ Class A shares."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within six years of
purchase. See "How to Buy Fund Shares _ Class B shares" and "How to
Redeem Fund Shares _ Contingent Deferred Sales Charge _ Class B shares."
These shares also are subject to an annual distribution fee at the rate
of 0.75 of 1% of the value of the average daily net assets of Class B. In
addition, Class B shares are subject to an annual service fee at the rate
of 0.25 of 1% of the value of the average daily net assets of Class B.
See "Distribution and Service Plans _ Class B and C." The distribution
fee paid by Class B will cause such Class to have a higher expense ratio
and to pay lower dividends than Class A. Approximately six years after
the date of purchase, Class B shares
Page 5
automatically will convert to Class A shares, based on the relative net
asset values for shares of each such Class, and will no longer be subject
to the distribution fee. (Such conversion is subject to suspension by the
Board of Directors if adverse tax consequences might result.) Class
B shares that have been acquired through the reinvestment of dividends and
other distributions will be converted on a pro rata basis together with
other Class B shares, in the proportion that a shareholder's Class B
shares converting to Class A shares bears to the total Class B shares not
acquired through the reinvestment of dividends and other distributions.
Class C shares are subject to a 1% CDSC, which is assessed
only if you redeem Class C shares within one year of purchase. See "How
to Redeem Fund Shares _ Class C shares." These shares also are subject
to an annual distribution fee at the rate of 0.75 of 1% of the value of
the average daily net assets of Class C. Class C shares are also subject
to an annual service fee at the rate of 0.25 of 1% of the value of the
average daily net assets of Class C. See "Distribution and Service Plans
_ Class B and C." The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
Class R shares generally may not be purchased directly by
individuals, although eligible institutions may purchase Class R shares
for accounts maintained by individuals. Class R shares are sold at net
asset value per share 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. Class A, Class B
and Class C shares are primarily sold to retail investors by Agents that
have entered into Selling Agreements with the Distributor.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment
time frame. For example, while Class C shares have a shorter CDSC period
than Class B shares, Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing distribution fee. Thus, Class B
shares may be more attractive than Class C shares to investors with
longer term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares,
but will not be appropriate for investors who invest less than $50,000 in
Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to consistently exceed the total return
performance of the Russell 2500trademark Stock Index while maintaining a
similar level of risk. There can be no assurance that the Fund will meet
its stated investment objective.
MANAGEMENT POLICIES
The Fund pursues its investment objective by investing in a
portfolio of small to medium sized primarily domestic companies which
offer above-average growth potential. Small to medium sized companies
will include those U.S. companies with market capitalization generally
ranging in value from $100 million to $1.5 billion. Investments in small
to medium sized companies may involve greater risks because the operating
and investment performance his-
Page 6
tories of these companies generally are more limited than those of
companies with larger capitalization, and their securities often
experience higher price volatility. The Fund will normally invest at
least 65% of its total assets in small to medium sized domestic companies.
The Fund may also invest in (1) securities of foreign companies, (2)
American Depository Receipts, (3) stock index futures and
options contracts, (4) repurchase agreements, (5) reverse repurchase
agreements, (6) when-issued transactions, (7) commercial paper, and (8)
initial public offerings.
The Russell 2500trademark Index, published by Frank Russell
Company, is comprised of the bottom 500 companies in the
Russell 1000trademark Index as ranked by total market capitalization,
and all 2,000 stocks in the Russell 2000trademark Index. The Russell
2000trademark Index consists of the smallest 2,000 companies in the
Russell Index 3000trademark, representing approximately 10% of the Russell
3000trademarkIndex total market capitalization. The Russell 3000trademark
Index is composed of 3,000 large U.S. companies, as determined by market
capitalization. The Russell 1000trademark Index consists of the 1,000
largest companies in the Russell 3000trademark Index. Market
capitalization of the stocks contained in the Russell 2500trademark
Index typically ranges from $100 million to $1.5 billion.
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 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 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 Company's Board of Directors
determine it to be in the best interest of the Fund and its shareholders.
In making that determination, the Board of 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 Board of 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.
Page 7
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
government, equity or fixed income securities ("futures contracts"),
options on futures contracts, forward contracts and swaps, and
swap-related products such as equity and equity index swap contracts,
interest rate swaps, currency swaps, caps, collars and floors.
The use of futures, options, forward contracts and swaps
exposes a 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
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by
foreign companies. ADRs are traded in the United States on national
securities exchanges or in the over-the-counter market.
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
Investors Service, F-1 by Fitch Investors Service, Inc., Duff 1 by Duff &
Phelps, Inc., or A1 by IBCA, Inc.
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.
Page 8
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 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.
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
above.
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.
INITIAL PUBLIC OFFERINGS ("IPOS"). The Fund may invest in an
IPO, a corporation's first offering of stock to the public. Shares are
given a market value reflecting expectations for the corporation's future
growth. Special rules of the NASD apply to the distribution of IPOs.
Corporations offering IPOs generally have a limited operating history and
may involve greater risk.
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
amend-
Page 9
ed (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 ("U.S. Government Securities"). In addition to direct obligations
of the U.S. Treasury, U.S. Government Securities 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 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 capital appreciation 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,
security 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.
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.
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 January 31, 1995, Dreyfus managed or
administered approximately $70 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.
Page 10
The Fund is managed by James Wadsworth. Mr. Wadsworth has
managed the Fund since its commencement of operations and has been
employed by Dreyfus as portfolio manager of the Fund since October 17,
1994. Mr. Wadsworth is Vice President and Director of Investment
Research for Mellon Bank. He has been with Mellon Bank since 1977.
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 $201 billion in assets as of September 30,
1994, including $76 billion in mutual fund assets. As of September 30,
1994, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for approximately
$659 billion in assets, including approximately $108 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 1.25% of the
value 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 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. Prior to
October 17, 1994, the Fund was advised by Mellon Bank under the Investment
Management Agreement. For the period from September 2, 1994 (commencement
of operations) through the fiscal year ended October 31, 1994, the Fund
paid Mellon Bank or Dreyfus 1.25% (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) of the Fund were 1.25% (annualized)
of the average daily net assets of each class for both Class A and Class
R.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans."
Dreyfus may pay the Fund's distributor for shareholder
services from Dreyfus's own assets, including past profits but not
including the management fee paid by the Fund. The Fund's distributor may
use part or all of such payments to pay 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
Page 11
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, PA
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, P.O. Box
9671, Providence, Rhode Island 02940-9671. Premier Mutual Fund Services,
Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement, provides various administrative and
corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL_Class A shares, Class B shares and Class C shares
may be purchased only by clients of certain financial institutions (which
may include banks), securities dealers ("Selected Dealers") and Agents,
except that full-time or part-time employees or directors of Dreyfus or
any of its affiliates or subsidiaries, 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 may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to
the Transfer Agent or your Agent.
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. 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.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, an affiliate of Dreyfus. For more
information about purchasing Fund shares through the affiliate network,
call 1-800-548-2868. Please read the Prospectus carefully. Exchange and
shareholder services, including the telephone purchase options, and
minimum and maximum dollar amounts associated with such services, may
vary depending upon the network through which you purchase Fund shares.
When purchasing Fund shares, you must specify which Class is
being purchased. 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.
Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees
which would be in addition to any amounts which might be received under
the Distribution and Service Plans. Each Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Agent in
this regard.
The minimum initial investment is $1,000. 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.
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
Page 12
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
certain qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("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, with the
exception of Class R shares, through the TELETRANSFER Privilege described
below. Checks should be made payable to "Premier Small Company Stock
Fund". Payments to open new accounts which are mailed should be sent to
Premier Small Company Stock Fund, 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 Premier Small Company Stock Fund, P.O. Box 105,
Newark, New Jersey 07101-0105. Neither initial nor subsequent investments
should be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. To purchase
Class A, Class B or Class C shares in your name, immediately available
funds may be transmitted by wire to The Bank of New York, DDA #
8900228253 for Class A shares; DDA # 8900228261 for Class B shares; DDA #
8900228288 for Class C shares. For wire information with respect to Class
R shares, please call 1-800-548-2868.
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 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 The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "1111."
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
Page 13
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 shares of each Class of the
Fund 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, 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 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.
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 investments made by electronic funds
transfer, which are effective two business days 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.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the
public offering price per share determined as of the close of trading on
the floor of the NYSE on that day. Otherwise, the orders will be based on
the next determined public offering price. It is the dealer's
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day.
The NAV of each Class of shares of most of The Premier Funds'
investment portfolios is published in leading newspapers daily. The NAV
of any Premier Fund may also be obtained by calling 1-800-645-6561.
CLASS A SHARES _ The public offering price of Class A shares
is the NAV per share of that Class plus a sales load as shown below:
Page 14
<TABLE>
Total Sales Load
___________________________________
<S> <C> <C> <C>
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
___________---------- _________________ ______________ _____________
Less than $50,000......... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000..... 3.00 3.10 2.75
$250,000 to less than $500,000..... 2.50 2.60 2.25
$500,000 to less than $1,000,000... 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or
more of Class A shares. However, if you purchase Class A shares without
an initial sales charge as part of an investment of at least $1,000,000
and redeem all or a portion of those shares within two years after
purchase, a CDSC of 1.00% will be imposed at the time of
redemption. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares _ Contingent Deferred Sales Charge _
Class B" (other than the amount of the CDSC and its time periods) are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
such shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at NAV, provided that they have furnished the
Distributor with such information as it may request from time to time in
order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with
NASD member firms whose full-time employees are eligible to purchase
Class A shares at NAV. In addition, Class A shares are offered at NAV to
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 Fund's Board, or the spouse or minor
child of any of the foregoing.
Class A shares will be offered at NAV without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also
may be purchased (including by exchange) at net asset value without a
sales load for Dreyfus-sponsored IRA "Rollover Accounts" with the
distribution proceeds from a qualified retirement plan or a
Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored
403(b)(7) plan (a) met the requirements of an Eligible Benefit Plan and
all or a portion of such plan's assets were invested in funds in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain
funds in the Premier Family of Funds or the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans.
Holders of Class A accounts of the Fund as of December 19,
1994 may continue to purchase Class A shares of the Fund at NAV. However,
investments by such holders in OTHER funds advised by Dreyfus will be
subject to the applicable front end sales load.
Class A shares may be purchased at NAV through certain
broker-dealers and other financial institutions which have entered into
an agreement with the Distributor, which includes a requirement that such
shares be sold for the benefit of clients participating in a "wrap
account" or a similar program under which such clients pay a fee to such
broker-dealer or other financial institution.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as
Page 15
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
shares. Dealers receive a larger percentage of the sales load from the
Distributor than they receive for selling most other funds.
CLASS B SHARES_The public offering price for Class B shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on certain redemptions
of Class B shares as described under "How to Redeem Fund Shares." The
Distributor compensates certain Agents for selling Class B shares at the
time of purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these
expenses.
CLASS C SHARES_The public offering price for Class C shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC, however, is imposed on redemptions of Class
C shares made within the first year of purchase. See "Class B shares"
above and "How to Redeem Fund Shares."
CLASS R SHARES_The public offering price for Class R shares
is the NAV per share of that Class.
RIGHT OF ACCUMULATION_CLASS A SHARES_Reduced sales loads
apply to any purchase of Class A shares, shares of other funds in the
Premier Family of Funds, shares of certain other funds advised by Dreyfus
which are sold with a sales load and shares acquired by a previous
exchange of such shares (hereinafter referred to as "Eligible Funds"), by
you and any related "purchaser" as defined in the SAI, where the
aggregate investment, including such purchase, is $50,000 or more. If,
for example, you previously purchased and still hold Class A shares, or
shares of any other Eligible Fund or combination thereof, with an
aggregate current market value of $40,000 and subsequently purchase Class
A shares or shares of an Eligible Fund having a current value of $20,000,
the sales load applicable to the subsequent purchase would be reduced to
4% of the offering price. All present holdings of Eligible Funds may be
combined to determine the current offering price of the aggregate
investment in ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Agent must notify the Distributor if orders are made by wire,
or the Transfer Agent if orders are made by mail. The reduced sales load
is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES) _
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 a filed
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
Fund may modify or terminate this privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TeleTransfer purchase of 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
page 16
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, 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,
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 Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or
C shares at the time of an exchange; however, Class B or C shares
acquired through an exchange will be subject to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or C shares will be calculated from
the date of the initial purchase of the Class B or C shares exchanged, as
the case may be. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares 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 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.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same class of other funds in the Premier
Family of Funds or certain other funds in the Dreyfus Family of
Page 17
Funds of which you are currently an investor. WITH RESPECT TO CLASS R
SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE 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 Class A shares into funds sold with a sales load. No CDSC
will be imposed on Class B or C shares at the time of an exchange;
however, Class B or C shares acquired through an exchange will be subject
to the higher CDSC applicable to the exchanged or acquired shares. The
CDSC applicable on redemption of the acquired Class B or C shares will be
calculated from the date of the initial purchase of the Class B or C
shares exchanged, as the case may be. See "Shareholder Services" in the
SAI. 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 Premier
Small Company Stock Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. The Fund may charge a service fee for the use of this
privilege. No such fee currently is contemplated. 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 Premier Family of Funds or the Dreyfus Family of Funds
eligible to participate in this privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDER
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 an 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 Premier Small Company Stock
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this privilege at any time or charge a
service fee. No such fee currently is contemplated.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or certain of 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, such shareholder may qualify for share prices
which do not include the sales load or which reflect a reduced sales
load. If you are investing in a fund or class that charges a CDSC, the
shares purchased will be subject on redemption to the CDSC, if any,
applicable to the purchased shares. See "Shareholder Services" in the
SAI. 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 desig-
Page 18
nated 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 Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Small Company Stock Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a
new Dividend Options Form. Enrollment in or cancellation of these
Privileges is effective three business days following receipt. These
Privileges are available only for existing accounts and may not be used
to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these Privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
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 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.
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.
Class B and C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
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.
LETTER OF INTENT_CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a
Page 19
13-month period pursuant to the terms and conditions set forth in the
Letter of Intent. A minimum initial purchase of $5,000 is required. To
compute the applicable sales load, the offering price of shares you hold
(on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above
may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares of the Fund held in escrow
to realize the difference. Signing a Letter of Intent does not bind you
to purchase, or the Fund to sell, the full amount indicated at the sales
load in effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent.
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 (other than any applicable CDSC)
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 net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH 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, TELETRANSFER PURCHASE OR 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 TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK,
THE TELETRANSFER PURCHASE OR THE 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.
Page 20
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.
CONTINGENT DEFERRED SALES CHARGE_CLASS B SHARES_A CDSC
payable to the Distributor is imposed on any redemption of Class B shares
which reduces the current net asset value of your Class B shares to an
amount which is lower than the dollar amount of all payments by you for
the purchase of Class B shares of the Fund held by you at the time of
redemption. No CDSC will be imposed to the extent that the net asset
value of the Class B shares redeemed does not exceed (i) the current net
asset value of Class B shares acquired through reinvestment of dividends
or other distributions, plus (ii) increases in the net asset value of
your Class B shares above the dollar amount of all your payments for the
purchase of Class B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Fund's performance,
a CDSC may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
_________ _________________________
<S> <C> <C>
First.................................................... 4.00
Second................................................... 4.00
Third.................................................... 3.00
Fourth................................................... 3.00
Fifth.................................................... 2.00
Sixth.................................................... 1.00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and other distributions; then of amounts representing the
increase in net asset value of Class B shares above the total amount of
payments for the purchase of Class B shares made during
the preceding six years; then of amounts representing the cost of shares
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable six-year period.
For example, assume an investor purchased 100 shares at $10
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the NAV had
appreciated to $12 per share, the value of the investor's shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be applied to
the value of the reinvested dividend shares and the amount which
represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the
applicable rate in the second year after purchase) for a total CDSC of
$9.60.
CONTINGENT DEFERRED SALES CHARGE_CLASS C SHARES_A CDSC of
1% payable to the Distributor is imposed on any redemption of Class C
shares within one year of the date of purchase. The basis for calculating
the payment of any such CDSC will be the method used in calculating the
CDSC for Class B shares. See "Contingent Deferred Sales Charge_Class B
shares" above.
Page 21
WAIVER OF CDSC_The CDSC applicable to Class B and Class C
shares will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined in Section 72(m)(7) of the
Code, of the shareholder, (b) redemptions by employees participating in
Eligible Benefit Plans, (c) redemptions as a result of a combination of
any investment company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retirement under a tax-deferred
retirement plan or upon attaining age 701/2 in the case of an IRA or
Keogh plan or custodial account pursuant to Section 403(b) of the Code,
and (e) redemptions by such shareholders as the SEC or its staff may
permit. If the Fund's Directors determine to discontinue the waiver of
the CDSC, the disclosure in the Fund's prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such
shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Agent must notify
the Distributor. Any such qualification is subject to confirmation of
your entitlement.
PROCEDURES_You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for Class R
shares, through the TELETRANSFER Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your
Agent authority to instruct the Transfer Agent to redeem shares and to
credit the proceeds of such redemptions to a designated account at your
Agent, you may redeem shares only in this manner and in accordance with
the regular redemption procedure described below. If you wish to use the
other redemption methods described below, you must arrange with your
Agent for delivery of the required application(s) to the Transfer Agent.
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 the
TELETRANSFER 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 TELETRANSFER 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 TELETRANSFER 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 Premier Small
Company Stock Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion
Page 22
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
1-800-645-6561.
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.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES). 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 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 TELETRANSFER Privilege, you may
request a 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.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer
of a Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the NYSE (currently 4:00 p.m., New York time), the redemption
request will be effective on that day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the NYSE, the redemption request will be effective on the next business
day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close
of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee prior to the close of its business day
(normally 5:15 p.m., New York time) are effected at the price determined
as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is
the responsibility of the Selected Dealer to transmit orders on a timely
basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE_CLASS A SHARES. Upon written request,
you may reinvest up to the number of Class A shares you have redeemed,
within 30 days of redemption, at the then-prevailing net asset value
without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
Page 23
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLAN)
Class A shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C
shares are subject to a Distribution Plan and a Service Plan, each
adopted pursuant to Rule 12b-1. 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.
DISTRIBUTION PLAN_CLASS A SHARES_The Class A shares of the
Fund bear some of the cost of selling those shares under the Distribution
Plan (the "Plan"). The Plan allows the Fund to spend annually up to 0.25%
of its average daily net assets attributable to Class A shares to
compensate Dreyfus Service Corporation, an affiliate of Dreyfus, for
shareholder servicing activities and the Distributor for shareholder
servicing activities and expenses primarily intended to result in the
sale of Class A 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 Class A
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.
DISTRIBUTION AND SERVICE PLANS_CLASS B AND C. Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and C shares at an
aggregate annual rate of .75 of 1% of the value of the average daily net
assets of Class B and C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B and C shares
a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B and C. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information,
and providing services related to the maintenance of such shareholder
accounts. With regard to such services, each Agent is required to
disclose to its clients any compensation payable to it by the Fund and
any other compensation payable by their clients in connection with the
investment of their assets in Class B and C shares. The Distributor may
pay one or more Agents in respect of distribution and other services for
these Classes of shares. The Distributor determines the amounts, if any,
to be paid to Agents under the Distribution and Service Plans and the
basis on which such payments are made. The fees payable under the
Distribution and Service Plans are payable without regard to actual
expenses incurred.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund ordinarily declares and pays (on the first business
day of the following month) dividends four times yearly 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 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
Page 24
Retirement Plans are reinvested automatically in additional Fund shares
at net asset value. All expenses are accrued daily and deducted before
declaration of dividends to investors. Dividends paid by each Class will
be calculated at the same time and in the same manner and will be in the
same amount, except that the expenses attributable solely to a particular
Class will be borne exclusively by that Class. Class B and C shares will
receive lower per share dividends than Class A shares which will receive
lower per share dividends than Class R shares, because of the higher
expenses borne by the relevant Class. 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.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if (1) an investor redeems those
shares or exchanges those shares for shares of another fund advised or
administered by Dreyfus within 91 days of purchase and (2) in the case of
a redemption, acquires other Fund Class A shares through exercise of the
Reinvestment Privilege or, in the case of an exchange, such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charged the
investor for the original Class A shares, up to the amount of the
reduction of the sales load pursuant to the Reinvestment Privilege or on
the exchange, as the case may be, is not included in the basis of such
shares for purposes of computing gain or loss on the redemption or the
exchange, and instead is added to the basis of the fund shares received
pursuant to the Reinvestment Privilege or the exchange.
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
Page 25
591/2, 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.
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 Class B and C should be expected to be
lower than that of Class A and the performance of Class A, B and C 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. Advertisements of the Fund's performance will include the
Fund's average annual total return for one, five and ten year periods, or
for shorter periods depending upon the length of time 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
net asset value (or maximum offering price in the case of Class A shares)
per share at the
Page 26
beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return. Total return also may
be calculated by using the net asset value per share at the beginning of
the period instead of the maximum offering price per share at the
beginning of the period for Class A shares or without giving effect to
any applicable CDSC at the end of the period for Class B or C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the sales load on the Fund's Class A shares, which, if
reflected, would reduce the performance quoted.
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, Standard and Poor's Composite Index of 500
Stocks, Russell 2500 Stock Index, 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, 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
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
four classes_Class A, Class B, Class C and Class R. 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 Class A, B or C shares, as the
case may be, will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution and Service Plan relating to
that Class.
Page 27
At January 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, pursuant to the
Company's By-Laws, 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 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.
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 28
PCS/p2030195
- ---------------------------------------------------------------------------
PREMIER LIMITED TERM INCOME FUND
(Lion Logo)
PROSPECTUS MARCH 1, 1995
- ----------------------------------------------------------------------------
Premier Limited Term Income Fund (the "Fund"), formerly
called the "Laurel Intermediate Income 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 obtain as high a level of current income as is consistent with
safety of principal and maintenance of liquidity by investing in fixed
income obligations with average maturities not in excess of ten years.
By this Prospectus, the Fund is offering four Classes of
shares_Class A, Class B, Class C and Class R.
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 March 1,
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 1-800-554-4611. 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 THE FUND IS SUBJECT ARE SUMMARIZED IN THE
"EXPENSE SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS 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.
- --------------------------------------------------------------------------
(Continued from page 1)
Class A shares are subject to a sales charge imposed at the
time of purchase. (Class A shares of the Fund were formerly called
Investor Shares.) Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within five years of purchase.
Class C shares are subject to a .75% contingent deferred sales charge
imposed on redemptions made within the first year of purchase. 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. (Class R shares
of the Fund were formerly called Trust Shares.) Other differences between
the Classes include the services offered to and the expenses borne by each
Class and certain voting rights, as described herein. These alternatives
are offered so an investor may choose the method of purchasing shares
that is most beneficial given the amount of purchase, the length of time
the investor expects to hold the shares and other circumstances.
You can purchase or redeem all Classes of shares, except
Class R shares, by telephone using the TELETRANSFER Privilege.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, N.A. ("Mellon Bank"), an affiliate
of Dreyfus. Exchange and shareholder services vary depending upon the
network through which you purchase Fund shares. See "How to Buy Fund
Shares".
Page 2
TABLE OF CONTENTS
Expense Summary.................................... 4
Financial Highlights............................... 5
Alternative Purchase Methods....................... 7
Description of the Fund............................ 8
Management of the Fund............................. 14
How to Buy Fund Shares............................. 15
Shareholder Services............................... 20
How to Redeem Fund Shares.......................... 23
Distribution Plans (Class A Plan and Class B and C Plan).. 27
Dividends, Other Distributions and Taxes........... 27
Performance Information............................ 29
General Information................................ 30
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
Class A Class B Class C Class R
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......... 3.00% none none none
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... none 3.00% .75% none
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fee.......................... .60% .60% .60% .60%
12b-1 Fee1.............................. .25% .75% .75% none
Other Expenses2 ........................ .00% .00% .00% .00%
Total Fund Operating Expenses........... .85% 1.35% 1.35% .60%
</TABLE>
<TABLE>
<CAPTION>
Example:
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) except where noted,
redemption at the end of each time period:
<S> <C> <C> <C> <C>
1 YEAR $ 38 $ 44/$143 $ 21/$143 $ 6
3 YEARS $ 56 $63/$433 $ 43 $19
5 YEARS $ 76 $ 84/$743 $ 74 $33
10 YEARS $132 $136 $162 $75
</TABLE>
- -------------------------
1 See "Distribution Plans (Class A Plan and Class B and C Plan)" for a
description of the Fund's Distribution Plan and Service Plan for Class A,
B and C shares.
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.")
3 Assuming no redemption of shares.
- ------------------------------------------------------------------------
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 Class A, B or C 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
Plans (Class A Plan and Class B and C Plan)."
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 Class A, B or C 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.
<TABLE>
<CAPTION>
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Class A or Class R
share outstanding through each fiscal year 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 year ended October 31, 1994 have been audited by
KPMG Peat Marwick LLP, the independent accountants, 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.
PREMIER LIMITED TERM INCOME FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD ENDED
10/31/94*#
--------------
<S> <C>
Net asset value, beginning of period $10.49
______
Income from investment operations:
Net investment income 0.28
Net realized and unrealized loss on investments (0.27)
______
Total from investment operations 0.01
______
Less distributions:
Distributions from net investment income (0.28)
Total distributions (0.28)
______
Net asset value, end of period $10.22
=======
Total return+ 0.11%
=======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 932
Ratio of operating expenses to average net assets 0.83%**
Ratio of net investment income to average net assets 4.47%**
Portfolio turnover rate 117%
- --------------------------------------------------------------------------------------
* The Fund commenced selling Investor Shares on April 7, 1994. Effective
as of October 17, 1994, the Fund's Investor Shares were redesignated as
Class A shares.
** Annualized.
+ Total return represents aggregate total return for the period
indicated.
# Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus
Corporation serves as the Fund's investment manager.
</TABLE>
<TABLE>
<CAPTION>
PREMIER LIMITED TERM INCOME FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH 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 period $11.07 $10.71 $10.41 $10.00
_______ _______ ------ ------
Income from investment operations:
Net investment income 0.49# 0.51 0.62 0.19
Net realized and unrealized gain/(loss) on
investments (0.75) 0.46 0.30 0.36
_______ _______ ------ ------
Total from investment operations (0.26) 0.97 0.92 0.55
_______ _______ ------ ------
Less distributions:
Distributions from net investment income (0.53) (0.52) (0.62) (0.14)
Distributions from net realized
capital gains (0.06) (0.09) -- --
_______ _______ ------ ------
Total Distributions (0.59) (0.61) (0.62) (0.14)
_______ _______ ------ ------
Net asset value, end of period $10.22 $11.07 $10.71 $10.41
======= ======= ======= =======
Total return++ (2.46%) 9.33% 9.11% 5.49%
======= ======= ======= =======
Ratios to average net assets/
supplemental data:
Net assets, end of year (in 000's) $82,406 $59,534 $20,619 $9,608
Ratio of expenses to average
net assets+++ 0.60% 0.60% 0.51% 0.02%**
Ratio of net investment income to average
net assets 4.70%** 4.81% 5.91% 7.16%**
Portfolio turnover rate 117% 112% 67% 23%
- ---------------------------------------------------------------------------------------------------------------------
* The Fund commenced operations on July 11, 1991.
The Fund commenced selling Investor Shares on April 7, 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 as Class R shares.
** Annualized.
+ Annualized expense ratio before reimbursement of expenses by the
investment adviser was .60% for the year ended October 31, 1994.
++ Total return represents aggregate total return for the periods
indicated.
+++ For the year ended October 31, 1992 and the period ended October 31,
1991, the investment adviser waived all or a portion of
its advisory fee amounting to $0.0064 and $0.0107 per share,
respectively. For the years ended October 31, 1993 and 1992 and the
period ended October 31, 1991, the investment adviser reimbursed
expenses of the Fund amounting to $.0509, $.1147, and $.0732 per share,
respectively.
# Net investment income before reimbursement of expenses by the
investment adviser was $0.49 for the year ended October 31, 1994.
## Prior to October 17, 1994, Mellon Bank, N.A. served as the Fund's
investment manager. Effective October 17, 1994, The Dreyfus Corporation
serves as the Fund's investment manager.
</TABLE>
Page 6
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares; you
may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your
shares and any other relevant circumstances. Each Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 3.0% of the public offering price imposed
at the time of purchase. The initial sales charge may be reduced or
waived for certain purchases. See "How to Buy Fund Shares_Class A
shares." These shares are subject to an annual 12b-1 fee at the rate of
0.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan_Class A shares."
Class B shares are sold at net asset value per share with no
initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are
subject to a maximum 3% contingent deferred sales charge ("CDSC"), which
is assessed only if you redeem Class B shares within five years of
purchase. See "How to Buy Fund Shares _ Class B shares" and "How to
Redeem Fund Shares _ Contingent Deferred Sales Charge _ Class B shares."
These shares also are subject to an annual distribution fee at the rate
of 0.50 of 1% of the value of the average daily net assets of Class B. In
addition, Class B shares are subject to an annual service fee at the rate
of 0.25 of 1% of the value of the average daily net assets of Class B.
See "Distribution and Service Plans _ Class B and C." The distribution
fee paid by Class B will cause such Class to have a higher expense ratio
and to pay lower dividends than Class A. Approximately six years after
the date of purchase, Class B shares automatically will convert to Class
A shares, based on the relative net asset values for shares of each such
Class, and will no longer be subject to the distribution fee. (Such
conversion is subject to suspension by the Board of Directors if adverse
tax consequences might result.) Class B shares that have been acquired
through the reinvestment of dividends and other distributions will be
converted on a pro rata basis together with other Class B shares, in the
proportion that a shareholder's Class B shares converting to Class A
shares bears to the total Class B shares not acquired through the
reinvestment of dividends and other distributions.
Class C shares are subject to a .75% CDSC, which is assessed
only if you redeem Class C shares within one year of purchase. See "How
to Redeem Fund Shares _ Class C shares." These shares also are subject to
an annual distribution fee at the rate of 0.50 of 1% of the value of the
average daily net assets of Class C. Class C shares are also subject to
an annual service fee at the rate of 0.25 of 1% of the value of the
average daily net assets of Class C. See "Distribution and Service Plans
_ Class B and C." The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
Class R shares generally may not be purchased directly by
individuals, although eligible institutions may purchase Class R shares
for accounts maintained by individuals. Class R shares are sold at net
asset value per share 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. Class A, Class B
and Class C shares are primarily sold to retail investors by Agents that
have entered into Selling Agreements with the Distributor.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A
shares. Additionally, investors qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A shares because the accumulated
continuing distribution fees on Class B or Class C shares may exceed the
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect
Page 7
of the CDSC period and any conversion rights of the Classes in the
context of your own investment time frame. For example, while Class C
shares have a shorter CDSC period than Class B shares, Class C shares do
not have a conversion feature and, therefore, are subject to an ongoing
distribution fee. Thus, Class B shares may be more attractive than Class
C shares to investors with longer term investment outlooks. Generally,
Class A shares may be more appropriate for investors who invest $1,000,000
or more in Fund shares, but will not be appropriate for investors who
invest less than $100,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to obtain as high a level of current income
consistent with safety of principal and maintenance of liquidity by
investing in fixed income obligations with average maturities not in
excess of ten years. There can be no assurance that the Fund will meet
its stated investment objective.
MANAGEMENT POLICIES
Investment selections will be based on fundamental economic,
market and other factors leading to valuation by sector, maturity,
quality and such other criteria as are appropriate to meet the stated
objectives. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in fixed income obligations of domestic and
foreign issuers. The Fund will invest in investment grade bonds rated at
least Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard and Poor's Ratings Group ("Standard & Poor's") rating services,
or, if unrated, of comparable quality as determined by the Fund's
investment adviser, Dreyfus. The Fund's dollar-weighted average maturity
will not be in excess of ten years.
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 some
speculative characteristics. Further, while bonds rated BBB by Standard &
Poor's exhibit adequate 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 not invest in securities rated less than Baa by
Moody's or BBB by Standard & Poor's, or in unrated securities determined
to be of a lesser credit quality than those designations. The Fund will
dispose in a prudent and orderly fashion of bonds whose ratings drop
below these minimum ratings.
The Fund may invest in obligations of foreign issuers which
are U.S. dollar-denominated. Investments in foreign obligations may be
affected by governmental action in the country of domicile. In addition,
evidences of ownership of Fund securities may be held outside of the U.S.
and the Fund may be subject to the risks associated with the holding of
such property overseas. Examples of governmental actions would be the
imposition of currency controls, interest limitations, seizure of assets,
or the declaration of a moratorium on payment of principal or interest.
Other instruments in which the Fund will invest 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 or instrumentalities; (3) mortgage-related securities backed by
U.S. Government agencies or instrumentalities; (4) 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") (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 Service ("Fitch"),
Duff 1 by Duff & Phelps, Inc. or A1 by IBCA, Inc. (6) floating rate
securities; (7) variable amount master demand notes; (8) repurchase
agreements; (9) when-issued transactions; (10) Eurodollar bonds and
notes; and (11) American Depository Receipts ("ADRs").
Page 8
The Fund may utilize reverse repurchase agreements. It may
also enter into futures contracts and related options for hedging
purposes, but does not intend to do so during the coming year.
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 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
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 Company's Board of Directors determine it to be in the
best interest of the Fund and its shareholders. In making that
determination, the Board of 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
Board of 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
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 a 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
Page 9
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
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by
foreign companies. ADRs are traded in the United States on national
securities exchanges or in the over-the-counter market.
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, Inc., or A1 by IBCA, Inc.
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. 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.
EURODOLLAR BONDS AND NOTES. The Fund may invest in Eurodollar
bonds and notes. Eurodollar bonds and notes are obligations that 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.
FIXED-INCOME SECURITIES. The Fund may invest in fixed-income
securities. 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 a fund from the
continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields 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 a 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 be expected to decline.
Conversely, when interest rates decline, the value of a portfolio of
fixed-income securities can be expected to increase.
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
Page 10
generally allows less opportunity for capital appreciation and
depreciation than investing in comparable fixed income securities.
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.
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.
GNMA CERTIFICATES. The Fund may invest in Government National
Mortgage Association ("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 Certificates. Reinvestment of prepayments may occur at higher or
lower rates than the original yield of the Certificates. Due to the
prepayment feature and the need to reinvest prepayments of principal at
current rates, GNMA Certificates, with underlying mortgages bear-
Page 11
ing 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 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 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 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
Untied States. The securities are "pass-through" securities because they
provide investors with monthly payments of principal and interest that,
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 GNMA. Government related
issuers include the Federal Home Loan Mortgage Corporation ("FHLMC"), and
the Federal National Mortgage Association ("FNMA"), a
government-sponsored corporation 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. 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
Page 12
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 ("U.S. Government Securities"). In addition to direct obligations
of the U.S. Treasury, U.S. Government Securities 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.
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 by entities that Dreyfus considers creditworthy.
PORTFOLIO TURNOVER. While securities are purchased for the
Fund on the basis of potential for high current income and not for
short-term trading profits, in the past the portfolio turnover rate of
the 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 Fund were replaced once in a period of one year. In past
years the Fund's rate of portfolio turnover exceeded that of certain
other mutual funds with the same investment objective. A higher rate of
portfolio turnover (100% or greater) 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,
security 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.
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.
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.
Page 13
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 January 31, 1995, Dreyfus managed or
administered approximately $70 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 objectives, policies and restrictions.
The Fund is managed by Laurie Carroll. Ms. Carroll, a
portfolio manager at Dreyfus, has managed the Fund since its commencement
of operations and has been employed by Dreyfus since 1994. Ms. Carroll is
a Senior Vice President and portfolio manager at Mellon Bank. Ms. Carroll
has been employed by Mellon Bank since 1986.
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 $201 billion in assets as of September 30,
1994, including $76 billion in mutual fund assets. As of September 30,
1994, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for approximately
$659 billion in assets, including approximately $108 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 0.60 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. Prior 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, 0.28% (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 Fund paid Mellon Bank or Dreyfus 0.30%
(annualized) of its average daily net assets in investment management
fees, less fees and expenses of the non-interested Directors (including
counsel fees).
Page 14
For the fiscal year ended October 31, 1994, total operating
expenses (excluding Rule 12b-1 fees) (net of expenses reimbursed) of the
Fund were 0.60% (annualized) of the average daily net assets of each
class for both Class B and Class R. Without the reimbursement, operating
expenses would have been higher.
In addition, Class A, B and C shares may be subject to
certain distribution and service fees. See "Distribution Plans."
Dreyfus may pay the Fund's Distributor for shareholder
services from Dreyfus's own assets, including past profits but not
including the management fee paid by the Fund. The Fund's Distributor may
use part or all of such payments to pay 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, PA
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, P.O. Box
9671, Providence, Rhode Island 02940-9671. Premier Mutual Fund Services,
Inc. serves as the Fund's sub-administrator and, pursuant to a
Sub-Administration Agreement, provides various administrative and
corporate secretarial services to the Fund.
HOW TO BUY FUND SHARES
GENERAL- Class A shares, Class B shares and Class C shares
may be purchased only by clients of certain financial institutions (which
may include banks), securities dealers ("Selected Dealers") and Agents,
except that full-time or part-time employees or directors of Dreyfus or
any of its affiliates or subsidiaries, 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 may purchase Class A shares directly
through the Distributor. Subsequent purchases may be sent directly to the
Transfer Agent or your Agent.
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. 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.
Shares of the Fund are also available through a servicing
network associated with Mellon Bank, an affiliate of Dreyfus. For more
information about purchasing Fund shares through the affiliate network,
call 1-800-548-2868. Please read that Prospectus carefully. Exchange and
shareholder services, including the telephone purchase options, and
minimum and maximum dollar amounts associated with such services, may
vary depending upon the network through which you purchase Fund shares.
Page 15
When purchasing Fund shares, you must specify which Class is
being purchased. 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.
Agents may receive different levels of compensation for
selling different Classes of shares. Management understands that some
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees
which would be in addition to any amounts which might be received under
the Distribution and Service Plans. Each Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Agent in
this regard.
The minimum initial investment is $1,000. 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.
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
certain qualified or non-qualified employee benefit plans or other
programs, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments ("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, with the
exception of Class R shares, through the TELETRANSFER Privilege described
below. Checks should be made payable to "Premier Limited Term Income
Fund". Payments to open new accounts which are mailed should be sent to
Premier Limited Term Income Fund, 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 Premier Limited Term Income Fund, Inc., P.O. Box
105, Newark, New Jersey 07101-0105. Neither initial nor subsequent
investments should be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Class' DDA # as shown below, for purchase of
Fund shares in your name:
DDA# 8900104252 Premier Limited Term Income Fund/Class A shares;
DDA# 8900227869 Premier Limited Term Income Fund/Class B shares;
DDA# 8900227877 Premier Limited Term Income Fund/Class C shares;
DDA# 8900227842 Premier Limited Term Income 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 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
Page 16
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 The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "1111."
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 shares of each Class of the
Fund 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, 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 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.
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
Page 17
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 investments made by electronic funds
transfer, which are effective two business days 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.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on the
public offering price per share determined as of the close of trading on
the floor of the NYSE on that day. Otherwise, the orders will be based on
the next determined public offering price. It is the dealer's
responsibility to transmit orders so that they will be received by the
Distributor or its designee before the close of its business day.
The NAV of most shares of investment portfolios advised by
Dreyfus is published in leading newspapers daily. The NAV of any Fund may
also be obtained by calling 1-800-645-6561.
CLASS A SHARES _ The public offering price of Class A shares
is the NAV per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>
Total Sales Load
--------------------------------------
As a % of As a % of Dealers' Reallowance
Offering Price Net Asset Value as a % of
Amount of Transaction Per Share Per Share Offering Price
--------------------- ------- ---------- --------------------
<S> <C> <C> <C>
Less than $50,000................... 4.50 4.70 4.25
Less than $100,000.................. 3.00 3.10 2.75
$100,000 to less than $250,000...... 2.75 2.80 2.50
$250,000 to less than $500,000...... 2.25 2.30 2.00
$500,000 to less than $1,000,000.... 2.00 2.00 1.75
</TABLE>
There is no initial sales charge on purchases of $1,000,000 or more of
Class A shares. However, if you purchase Class A
shares without an initial sales charge as part of an investment of at
least $1,000,000 and redeem all or a portion of those shares within two
years after purchase, a CDSC of 1.00% will be imposed at the time of
redemption. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares _ Contingent Deferred Sales Charge _
Class B" (other than the amount of the CDSC and its time periods) are
applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
such shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at NAV, provided that they have furnished the
Distributor with such information as it may request from time to time in
order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with
NASD member firms whose full-time employees are eligible to purchase
Class A shares at NAV. In addition, Class A shares are offered at net
asset value to 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 Fund's Board, or the spouse
or minor child of any of the foregoing.
Class A shares will be offered at net asset value without a
sales load to employees participating in Eligible Benefit Plans. Class A
shares also may be purchased (including by exchange) at NAV without a
sales load for Dreyfus-sponsored IRA "Rollover Accounts" with the
distribution proceeds from a qualified retirement plan or a
Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored
403(b)(7)
Page 18
plan (a) met the requirements of an Eligible Benefit Plan and
all or a portion of such plan's assets were invested in funds in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain
funds in the Premier Family of Funds or the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans.
Holders of Class A accounts of the Fund as of December 19,
1994, may continue to purchase Class A shares of the Fund at NAV.
However, investments by such holders in OTHER funds advised by Dreyfus
will be subject to the applicable front end sales load.
Class A shares may be purchased at net asset value through
certain broker-dealers and other financial institutions which have
entered into an agreement with the Distributor, which includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer or other financial institution.
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by Dreyfus which are sold with a sales load, such as
Class A shares. In some instances, those incentives may be offered only
to certain dealers who have sold or may sell significant amounts of
shares. Dealers receive a larger percentage of the sales load from the
Distributor than they receive for selling most other funds.
CLASS B SHARES_The public offering price for Class B shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC is imposed, however, on certain redemptions
of Class B shares as described under "How to Redeem Fund Shares." The
Distributor compensates certain Agents for selling Class B shares at the
time of purchase from the Distributor's own assets. The proceeds of the
CDSC and the distribution fee, in part, are used to defray these
expenses.
CLASS C SHARES_The public offering price for Class C shares
is the NAV per share of that Class. No initial sales charge is imposed at
the time of purchase. A CDSC, however, is imposed on redemptions of Class
C shares made within the first year of purchase. See "Class B shares"
above and "How to Redeem Fund Shares."
CLASS R SHARES_The public offering price for Class R shares
is the NAV per share of that Class.
RIGHT OF ACCUMULATION_CLASS A SHARES_Reduced sales loads
apply to any purchase of Class A shares, shares of other funds in the
Premier Family of Funds, shares of certain other funds advised by Dreyfus
which are sold with a sales load and shares acquired by a previous
exchange of such shares (hereinafter referred to as "Eligible Funds"), by
you and any related "purchaser" as defined in the SAI, where the
aggregate investment, including such purchase, is $100,000 or more. If,
for example, you previously purchased and still hold Class A shares, or
shares of any other Eligible Fund or combination thereof, with an
aggregate current market value of $80,000 and subsequently purchase Class
A shares or shares of an Eligible Fund having a current value of $40,000,
the sales load applicable to the subsequent purchase would be reduced to
2.75% of the offering price. All present holdings of Eligible Funds may
be combined to determine the current offering price of the aggregate
investment in ascertaining the sales load applicable to each subsequent
purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Agent must notify the Distributor if orders are made by wire,
or the Transfer Agent if orders are made by mail. The reduced sales load
is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES) _
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 a filed
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the
Page 19
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 iscontemplated.
If you have selected the TELETRANSFER Privilege, you may
request a 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, 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,
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 Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or C
shares at the time of an exchange; however, Class B or C shares
acquired through an exchange will be subject to the higher CDSC
applicable to the exchanged or acquired shares. The CDSC applicable on
redemption of the acquired Class B or C shares will be calculated from
the date of the initial purchase of the Class B or C shares exchanged, as
the case may be. If you are exchanging Class A shares into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares 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 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 connec-
Page 20
tion 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.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same class of other funds in the Premier
Family of Funds or 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 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 net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales load.
No CDSC will be imposed on Class B or C shares at the time of an
exchange; however, Class B or C shares acquired through an exchange will
be subject to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or C
shares will be calculated from the date of the initial purchase of the
Class B or C shares exchanged, as the case may be. See "Shareholder
Services" in the SAI. 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 Premier Limited Term Income Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. The Fund may charge a service fee
for the use of this Privilege. No such fee currently is contemplated. 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 Premier Family of Funds or the Dreyfus
Family of Funds eligible to participate in this Privilege, or to obtain
an Auto-Exchange Authorization Form, please call toll free
1-800-645-6561.
AUTOMATIC ASSET BUILDER
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 an 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 Premier Limited Term Income
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
Page 21
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or certain of 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, such shareholder may qualify for share prices
which do not include the sales load or which reflect a reduced sales
load. If you are investing in a fund or class that charges a CDSC, the
shares purchased will be subject on redemption to the CDSC, if any,
applicable to the purchased shares. See "Shareholder Services" in the
SAI. 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 Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these Privileges by mailing written notification to
Premier Limited Term Income Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. To select a new fund after cancellation, you must submit a
new Dividend Options Form. Enrollment in or cancellation of these
Privileges is effective three business days following receipt. These
privileges are available only for existing accounts and may not be used
to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these Privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
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 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 from the Distributor 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.
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.
Class B and C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
Page 22
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.
LETTER OF INTENT_CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and conditions set forth in the Letter of Intent. A
minimum initial purchase of $5,000 is required. To compute the applicable
sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Eligible Fund that may be used
toward "Right of Accumulation" benefits described above may be used as a
credit toward completion of the Letter of Intent. However, the reduced
sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares of the Fund held in escrow
to realize the difference. Signing a Letter of Intent does not bind you
to purchase, or the Fund to sell, the full amount indicated at the sales
load in effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent.
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 net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Agent.
The Fund imposes no charges (other than any applicable CDSC)
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 net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the SEC.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE TELETRANSFER
PRIVILEGE OR THROUGH 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, TELETRANSFER PURCHASE OR AUTOMATIC ASSET BUILDER ORDER,
Page 23
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 TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER
PURCHASE OR THE 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.
CONTINGENT DEFERRED SALES CHARGE_CLASS B SHARES_A CDSC
payable to the Distributor is imposed on any redemption of Class B shares
which reduces the current net asset value of your Class B shares to an
amount which is lower than the dollar amount of all payments by you for
the purchase of Class B shares of the Fund held by you at the time of
redemption. No CDSC will be imposed to the extent that the net asset
value of the Class B shares redeemed does not exceed (i) the current net
asset value of Class B shares acquired through reinvestment of dividends
or other distributions, plus (ii) increases in the net asset value of
your Class B shares above the dollar amount of all your payments for the
purchase of Class B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Fund's performance,
a CDSC may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
---------- ---------------
<S> <C>
First...................................................... 3.00
Second..................................................... 3.00
Third...................................................... 2.00
Fourth..................................................... 2.00
Fifth...................................................... 1.00
Sixth...................................................... .00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and other distributions; then of amounts representing the
increase in net asset value of Class B shares above the
total amount of payments for the purchase of Class B shares made during
the preceding five years; then of amounts representing the cost of shares
purchased five years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the NAV had
appreciated to $12 per share, the value of the investor's shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be
Page 24
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 3%
(the applicable rate in the second year after purchase) for a total CDSC
of $7.20.
CONTINGENT DEFERRED SALES CHARGE_CLASS C SHARES_A CDSC of
.75% payable to the Distributor is imposed on any redemption of Class C
shares within one year of the date of purchase. The basis for calculating
the payment of any such CDSC will be the method used in calculating the
CDSC for Class B shares. See "Contingent Deferred Sales Charge_Class B
shares" above.
WAIVER OF CDSC_The CDSC applicable to Class B and Class C
shares will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined in Section 72(m)(7) of the
Code, of the shareholder, (b) redemptions by employees participating in
Eligible Benefit Plans, (c) redemptions as a result of a combination of
any investment company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retirement under a tax-deferred
retirement plan or upon attaining age 70-1/2 in the case of an IRA or
Keogh plan or custodial account pursuant to Section 403(b) of the Code,
and (e) redemptions by such shareholders as the SEC or its staff may
permit. If the Fund's Directors determine to discontinue the waiver of the
CDSC, the disclosure in the Fund's prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such
shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Agent must notify
the Distributor. Any such qualification is subject to confirmation of
your entitlement.
PROCEDURES_You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, or, except for Class R
shares, through the TELETRANSFER Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your
Agent authority to instruct the Transfer Agent to redeem shares and to
credit the proceeds of such redemptions to a designated account at your
Agent, you may redeem shares only in this manner and in accordance with
the regular redemption procedure described below. If you wish to use the
other redemption methods described below, you must arrange with your
Agent for delivery of the required application(s) to the Transfer Agent.
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 the
TELETRANSFER Privilege or telephone exchange privilege, 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 TELETRANSFER 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 TELETRANSFER redemption had been used. During the delay, the
Fund's net asset value may fluctuate.
REGULAR REDEMPTION. Under the regular redemption procedure,
you may redeem your shares by written request mailed to Premier Limited
Term Income Fund, P.O. Box 6587, Providence,
Page 25
Rhode Island 02940-6587. Redemption requests must be signed by each
shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants
in the New York Stock Exchange Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP"), and the Stock
Exchanges Medallion Program. 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.
TELETRANSFER PRIVILEGE (NOT APPLICABLE TO CLASS R SHARES). 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 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 TELETRANSFER Privilege, you may
request a 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.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer
of a Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the NYSE (currently 4:00 p.m., New York time), the redemption
request will be effective on that day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the NYSE, the redemption request will be effective on the next business
day. It is the responsibility of the Selected Dealer to transmit a
request so that it is received in a timely manner. The proceeds of the
redemption are credited to your account with the Selected Dealer. See
"How to Buy Fund Shares" for a discussion of additional conditions or
fees that may be imposed upon redemption.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares
held by shareholders. Repurchase orders received by dealers by the close
of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee prior to the close of its business day
(normally 5:15 p.m., New York time) are effected at the price determined
as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is
the responsibility of the Selected Dealer to transmit orders on a timely
basis. The Selected Dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE_CLASS A SHARES. Upon written request,
you may reinvest up to the number of Class A shares you have redeemed,
within 30 days of redemption, at the then-prevailing net asset value
without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be
exercised only once.
Page 26
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLAN)
Class A shares are subject to a Distribution Plan adopted
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). Class B and C
shares are subject to a Distribution Plan and a Service Plan, each
adopted pursuant to Rule 12b-1. 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.
DISTRIBUTION PLAN_CLASS A SHARES_The Class A shares of the
Fund bear some of the cost of selling those shares under the Service Plan
(the "Plan"). The Plan allows the Fund to spend annually up to 0.25% of
its average daily net assets attributable to Class A 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 Class A 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 Class A
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.
DISTRIBUTION AND SERVICE PLANS_CLASS B AND C. Under a
Distribution Plan adopted pursuant to Rule 12b-1, the Fund pays the
Distributor for distributing the Fund's Class B and C shares at an
aggregate annual rate of .50 of 1% of the value of the average daily net
assets of Class B and C. Under a Service Plan adopted pursuant to Rule
12b-1, the Fund pays Dreyfus Service Corporation or the Distributor for
the provision of certain services to the holders of Class B and C shares
a fee at the annual rate of .25 of 1% of the value of the average daily
net assets of Class B and C. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information,
and providing services related to the maintenance of such shareholder
accounts. With regard to such services, each Agent is required to
disclose to its clients any compensation payable to it by the Fund and
any other compensation payable by their clients in connection with the
investment of their assets in Class B and C shares. The Distributor may
pay one or more Agents in respect of distribution and other services for
these Classes of shares. The Distributor determines the amounts, if any,
to be paid to Agents under the Distribution and Service Plans and the
basis on which such payments are made. The fees payable under the
Distribution and Service Plans are payable without regard to actual
expenses incurred.
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, 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 net asset value.
All expenses are accrued daily and deducted before declaration of
dividends to investors. Shares purchased on a day on which the Fund
calculates its NAV will begin to accrue dividends on that day, and
redemption orders
Page 27
effected on any particular day will receive dividends declared only
through the business day prior to the day of redemption. 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.
Class B and C shares will receive lower per share dividends
than Class A shares which will receive lower per share dividends than
Class R shares, because of the higher expenses borne by the relevant
Class. 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.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares if (1) an investor redeems those
shares or exchanges those shares for shares of another fund advised or
administered by Dreyfus within 91 days of purchase and (2) in the case of
a redemption, acquires other Fund Class A shares through exercise of the
Reinvestment Privilege or, in the case of an exchange, such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charged the
investor for the original Class A shares, up to the amount of the
reduction of the sales load pursuant to the Reinvestment Privilege or on
the exchange, as the case may be, is not included in the basis of such
shares for purposes of computing gain or loss on the redemption or the
exchange, and instead is added to the basis of the fund shares received
pursuant to the Reinvestment Privilege or the exchange.
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 591/2, generally will be
subject to
Page 28
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.
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 Class B and C should be expected to be
lower than that of Class A and the performance of Class A, B and C 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. Advertisements of the Fund's performance will include the
Fund's average annual total return for one, five and ten year periods, or
for shorter periods depending upon the length of time 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
net asset value (or maximum offering price in the case of Class A shares)
per share at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value
Page 29
of a hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return. Total return also may
be calculated by using the net asset value per share at the beginning of
the period instead of the maximum offering price per share at the
beginning of the period for Class A shares or without giving effect to
any applicable CDSC at the end of the period for Class B or C shares.
Calculations based on the net asset value per share do not reflect the
deduction of the sales load on the Fund's Class A shares, which, if
reflected, would reduce the performance quoted.
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 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 Fund is registered
with the SEC under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end 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's shares are
classified into four classes_Class A, Class B, Class C and Class R. The
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 Class A, B or C shares, as the
case may be, will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution and Service Plan relating to
that Class.
At January 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.
Page 30
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, pursuant to the
Company's By-Laws, 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 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.
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PLI/P2030195
