<PAGE>
As filed with the Securities and Exchange Commission on September 22, 1995
Registration Nos. 811-5270
33-16338
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_/
Pre-Effective Amendment No. __ /_/
Post-Effective Amendment No. 39 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /_/
Amendment No. 40 /X/
THE DREYFUS/LAUREL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
200 Park Avenue - 55th floor
New York, New York 10166
(Address of Principal Executive Office) (ZIP Code)
Registrant's Telephone Number, including Area Code: (800) 225-5267
John E. Pelletier
Secretary
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue - 55th floor
New York, New York 10166
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as possible after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate
box):
/_/ immediately upon filing pursuant to paragraph (b)
/_/ on (date) pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on (date) pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940; accordingly, no fee is payable herewith.
A Rule 24f-2 Notice for the Registrant's most recent fiscal year ended
October 31, 1994 was filed with the Commission on December 30, 1994.
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The Dreyfus/Laurel Funds, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
---------------------------------------------
Items in
Part A of
Form N-1A Caption Prospectus Caption
--------- ------- ------------------
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Not Applicable
Information
4. General Description of Description of the Fund--
Registrant Investment Objective, Management
Policies, Investment Techniques,
Certain Portfolio Securities;
General Information
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Description of the Fund--
Securities General; Dividends, Other
Distributions and Taxes;
Shareholder Services -- Dreyfus
Dividend Options; General
Information
7. Purchase of Securities Expense Summary; Management of
Being Offered the Fund; How to Buy Fund
Shares; Distribution Plan
(Investor Shares Only);
Shareholder Services
8. Redemption or How to Redeem Fund Shares;
Repurchase Shareholder Services--Automatic
Withdrawal Plan
<PAGE>
Items in
Part A of
Form N-1A Caption Prospectus Caption
--------- ------- ------------------
9. Pending Legal Not Applicable
Proceedings
The Dreyfus/Laurel Funds, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
---------------------------------------------
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
--------- ------- -----------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Cover Page
History
13. Investment Objectives Investment Objective and
and Policies Management Policies--Portfolio
Securities, Management Policies,
Investment Restrictions
14. Management of the Fund Directors and Officers
15. Control Persons and Controlling Shareholder;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory and Management Arrangements;
Other Services Distribution Plan; Custodian,
Transfer and Dividend Disbursing
Agent, Counsel and Independent
Auditors
17. Brokerage Allocation Portfolio Transactions
and Other Practices
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Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
--------- ------- -----------
18. Capital Stock and Other Cover Page; Information About
Securities the Fund; (See Prospectus
Captions: Description of the
Fund--General; General
Information)
19. Purchase, Redemption Purchase of Fund Shares;
and Pricing of Redemption of Fund Shares;
Shareholder Securities
BeingServices; Determination of
Net OfferedAsset Value
20. Tax Status Dividends, Other Distributions
and Taxes
21. Underwriters (See Prospectus Caption:
Management of the Fund)
22. Calculation of Performance Information
Performance Data
23. Financial Statements Not Applicable
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The Dreyfus/Laurel Funds, Inc.
Contents of Post-Effective Amendment
This Post-Effective Amendment to the Registration Statement on Form N-1A
for The Dreyfus/Laurel Funds, Inc. (the "Registrant") contains the
following documents:
Facing Sheet
Cross-Reference Sheet
Part A* - The Prospectus for Dreyfus Disciplined Intermediate Bond
Fund
Part B* - The Statement of Additional Information for Dreyfus
Disciplined Intermediate Bond Fund
Part C - Other Information
Signatures
Exhibits
---------------
* This Post-Effective Amendment does not affect the currently effective
Prospectuses and Statements of Additional Information for the following
other series of the Registrant:
Dreyfus Bond Market Index Fund
Dreyfus International Equity Allocation Fund
Dreyfus Disciplined Stock Fund
Dreyfus Disciplined Midcap Stock Fund
Dreyfus Institutional S&P 500 Stock Index Fund
Dreyfus Equity Income Fund
Dreyfus European Fund
Dreyfus Money Market Reserves
Dreyfus U.S. Treasury Reserves
Dreyfus Municipal Reserves
Dreyfus Institutional Prime Money Market Fund
Dreyfus Institutional U.S. Treasury Money Market Fund
Dreyfus Institutional Government Money Market Fund
Dreyfus/Laurel Short Term Government Securities Fund
Dreyfus/Laurel Institutional U.S. Treasury Only Money Market Fund
Dreyfus/Laurel Institutional Short-Term Bond Fund
Premier Balanced Fund
Premier Small Company Stock Fund
Premier Limited Term Income Fund
<PAGE>
PART A
--------------------------------------------------------------------------
PROSPECTUS November __, 1995
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
--------------------------------------------------------------------------
Dreyfus Disciplined Intermediate Bond Fund (the "Fund") is a
separate portfolio of The Dreyfus/Laurel Funds, Inc., an open-end,
diversified management investment company (the "Company"), known as a
mutual fund. The Fund seeks to outperform the Lehman Brothers Aggregate
Bond Index, while maintaining a similar level of risk, by investing
primarily in domestic and foreign investment-grade debt securities and by
actively managing bond market and maturity exposure. Under normal market
conditions, the Fund expects to maintain a dollar-weighted average
maturity of between three and ten years.
By this Prospectus, the Fund is offering Investor shares and
Class R 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. ("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
sold primarily to retail investors by the Fund's distributor and by banks,
brokers, dealers and other financial institutions that have entered into a
Selling Agreement with the Fund's distributor.
Shares of the Fund are sold without a sales load. Investor
shares of the Fund are subject to distribution and shareholder servicing
fees.
You can purchase or redeem Fund shares by telephone using the
Dreyfus TeleTransfer Privilege.
The Dreyfus Corporation serves as the Fund's investment manager.
The Dreyfus Corporation is referred to as "Dreyfus."
________________________
This Prospectus sets forth concisely information about the Fund
that you should know before investing. It should be read carefully before
you invest and retained for future reference.
The Statement of Additional Information ("SAI") dated November
__, 1995, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters that 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 144.
________________________
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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 AN
AFFILIATE OF MELLON BANK 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.
__________________________________________________________________________
2
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Table of Contents
Page
Expense Summary . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Fund . . . . . . . . . . . . . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . . . . .
How to Buy Fund Shares . . . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . . . . .
How to Redeem Fund Shares . . . . . . . . . . . . . . . . . . .
Distribution Plan (Investor Shares Only) . . . . . . . . . . .
Dividends, Other Distributions and Taxes . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . . . . .
3
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Expense Summary
Investor Class R
Shares Shares
------ ------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases........ none none
Maximum Sales Load Imposed on Reinvestments.... none none
Deferred Sales Load ........................... none none
Redemption Fee................................. none none
Exchange Fee................................... none none
Estimated Annual Fund Operating Expenses:
(as a percentage of net assets)
Management Fee ................................ 0.55% 0.55%
12b-1 Fee(1) .................................. 0.25% none
Other Expenses(2) ............................. 0.00% 0.00%
Total Fund Operating Expenses.................. 0.80% 0.55%
Example:
An investor would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual
return and (2) redemption at the end of each
time period:
Investor Class R
Shares Shares
1 Year $8 $6
3 Years $___ $___
5 Years N/A N/A
10 Years N/A N/A
(1) See "Distribution Plan (Investor Shares Only)" for a description of
the Fund's Distribution Plan for the Investor 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 by 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.")
4
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_____________________________________________________________________
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. Other Expenses and Total Fund Operating Expenses are
based on estimated amounts for the current fiscal year. 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 (Investor Shares Only)."
The Company understands that banks, brokers, dealers or other
financial institutions (including Dreyfus and its affiliates)
(collectively "Agents") may charge fees to their clients who are owners of
the Fund's Investor shares for various services provided in connection
with a client's account. These fees would be in addition to any amounts
received by an Agent under its Selling Agreement ("Agreement") with
Premier Mutual Fund Services, Inc. (the "Distributor"). The Agreement
requires each Agent to disclose to its clients any compensation payable to
such Agent by the Distributor and any other compensation payable by the
clients for various services provided in connection with their accounts.
5
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Description of the Fund
General
By this Prospectus, the Fund is offering Investor shares and
Class R shares. Investor shares and Class R shares are identical, except
as to the services offered to and the expenses borne by each class. Class
R shares are sold primarily to Banks acting on behalf of customers having
a qualified trust or investment account or relationship at such
institution or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship.
Investor shares are sold primarily to retail investors by the Fund's
Distributor and by Agents that have entered into an Agreement with the
Fund's Distributor. If shares of the Fund are held in an account at a
Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit transaction requests to the Fund's transfer
agent or to the Fund's Distributor. Distribution and shareholder
servicing fees paid by Investor shares will cause Investor shares to have
a higher expense ratio and to pay lower dividends than Class R shares.
Investment Objective
The Fund seeks to outperform the Lehman Brothers Aggregate Bond
Index (the "Benchmark"), while maintaining a similar level of risk, by
investing primarily in domestic and foreign investment-grade debt
securities and by actively managing bond market and maturity exposure.
There can be no assurance that the Fund will achieve its investment
objective. Under normal market conditions, the Fund expects to maintain a
dollar-weighted average maturity of between three and ten years. The Fund
is not (nor will it be operated as) an index fund, and the Fund's
portfolio investments will not be limited to debt issues included in the
Benchmark.
Management Policies
Dreyfus seeks to achieve the Fund's investment objective by
actively managing the Fund's portfolio. Dreyfus' techniques include
security selection and management of bond market and maturity exposure.
Dreyfus selects the Fund's portfolio investments on the basis of, among
other factors, yields, credit quality, the level of interest rates and
inflation, general economic and financial trends, and its outlook for the
securities markets. Although the Fund may maintain aggregate investment
characteristics similar to the Benchmark, the Fund seeks to invest in
individual debt securities that together will provide a higher total
return than the Benchmark. Dreyfus' investment techniques utilize a
disciplined control of fund risk and a process of rigorous control and
testing. Prior to security selection, quality, duration, coupon, maturity
and sector are targeted within pre-determined ranges as a percentage of
the total portfolio. The selection must fit within strategies that are
constantly being developed to meet the targeted positions. The security
selection process is completed only after computer modeling is employed to
stress and scenario test the strategies through "what if" portfolios for a
variety of possible changes in market conditions. Dreyfus will use
various investment techniques to attempt to protect against risks (such as
adverse interest rate fluctuations or bond market movements) and to manage
the effective maturity of the Fund's portfolio securities. However, if
Dreyfus judges market conditions incorrectly or employs a management
6
<PAGE>
strategy that does not correlate well with the Fund's investments, these
techniques could result in a loss, regardless of whether Dreyfus intended
to increase the Fund's total return or to reduce risk.
Under normal market conditions, the Fund will invest at least 65%
of its total assets in debt securities, such as bonds, notes and
debentures, of domestic and foreign issuers. See "Certain Portfolio
Securities" below. The issuers of these debt securities include the U.S.
Government and foreign governments, their political subdivisions, agencies
and municipalities, and domestic and foreign corporations. The Fund
currently intends to limit its investments in debt securities to those
rated at least investment-grade. Investment-grade debt securities are
securities that, at the time of purchase, are rated within one of the four
highest grades assigned by Moody's Investors Service, Inc. ("Moody's")
(Aaa, Aa, A or Baa) or Standard & Poor's ("S&P") (AAA, AA, A or BBB) or,
if unrated, are determined by Dreyfus to be of comparable quality. At
least 55% of the value of the Fund's net assets will normally consist of
debt securities that, at the time of purchase, are rated at least Aa or AA
or, if unrated, are determined by Dreyfus to be of comparable quality.
Debt securities rated Baa by Moody's or BBB by S&P are considered
by those rating agencies to be "investment grade" securities, although
Moody's considers securities rated Baa to have speculative
characteristics. Furthermore, although bonds rated BBB by S&P exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and principal on debt in this category than on debt in higher
rated categories. The Fund will, in a prudent and orderly fashion, sell
securities whose ratings drop below investment-grade (or comparable)
quality. A discussion of the Moody's and S&P rating categories appears in
the SAI.
The debt securities in which the Fund may 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 and instrumentalities; (3) mortgage-related securities backed by
the U.S. Government, its agencies and instrumentalities, or by private
issuers; (4) repurchase agreements; (5) taxable obligations issued by or
on behalf of states, territories and possessions of the United States and
the District of Columbia and their political subdivisions, agencies and
instrumentalities, or multi-state agencies or authorities; (6) corporate
debt securities; and (7) Eurodollar bonds and notes. The Fund may invest
up to 20% of its total assets in debt securities issued by foreign
governments and foreign corporations.
The Fund generally invests in debt securities with intermediate-
term maturities, which securities are expected to pay higher yields and
experience greater fluctuations in value than securities with short-term
maturities. Under normal market conditions, the Fund expects to maintain
a dollar-weighted average maturity of between three and ten years. Within
this limitation, the Fund may purchase individual debt securities with
effective maturities of greater than ten years. Under normal market
conditions, the longer the average maturity of the Fund's holdings, the
greater the expected yield and price volatility.
The Fund may also invest in convertible debt obligations,
convertible preferred stocks, and zero coupon bonds and, to maintain
liquidity, may invest in commercial paper and in obligations of U.S. and
7
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foreign banks, including certificates of deposit, bankers' acceptances,
time deposits, Eurodollar Certificates of Deposit ("ECDs"), Yankee
Certificates of Deposit ("Yankee CDs"), and Eurodollar Time Deposits
("ETDs"). The Fund currently intends to limit its investments in any one
of these types of instruments to 5% or less of its net assets (except when
maintaining a temporary defensive position). The Fund will not invest in
common stocks and will sell any common stocks received upon the conversion
of convertible securities as promptly as it can and in a manner that it
believes will reduce its risk of loss in connection with the sale.
The debt securities in which the Fund may invest have fixed,
floating or variable rates of interest, and some debt securities, such as
zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. The Fund may purchase any of the
securities in which it may invest on a when-issued or delayed delivery
basis. The Fund may also engage in options and futures transactions.
Although Dreyfus normally invests the Fund's assets according to
the Fund's investment strategy, when Dreyfus determines that adverse
market conditions exist, the Fund may adopt a defensive position and
invest temporarily and without limitation in money market and other short-
term debt instruments. To the extent that the Fund so invests, it may not
achieve its investment objective.
The Benchmark is a broad market weighted index composed of the
Lehman Brothers Government/Corporate Bond Index and Mortgage-Backed
Securities Index and includes fixed-income, investment-grade U.S. Treasury
and agency issues, corporate bond issues, and mortgage-backed securities.
All issues have at least one year to maturity.
Investment Techniques
In connection with its investment objective and policies, the
Fund may engage in the following
investment techniques, among others, to attempt to hedge various market
risks or to enhance total return:
Borrowing Money. The Fund is authorized, within specified
limits, to borrow money for temporary administrative purposes and to
pledge its assets in connection with such borrowings.
When-Issued and Delayed Delivery Transactions. To secure
advantageous prices or yields, the Fund may purchase debt 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 securities in an amount at least equal
at all times to the amount of its when-issued and delayed delivery
commitments.
8
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Futures, Options and Other Derivative Instruments. The Fund may
purchase and sell various financial instruments ("Derivative
Instruments"), such as financial futures contracts (including interest
rate, index and foreign currency futures contracts), options (including
options on securities, indices, foreign currencies and futures contracts),
forward currency contracts and interest rate and currency swaps, caps,
collars and floors. The index Derivative Instruments the Fund may use may
be based on indices of U.S. or foreign equity or debt securities. These
Derivative Instruments may be used, for example, to preserve a return or
spread, to lock in unrealized market value gains or losses, to facilitate
or substitute for the sale or purchase of securities, to manage the
duration of securities, to alter the exposure of a particular investment
or portion of the Fund's portfolio to fluctuations in interest rates or
currency rates, to uncap a capped security or to convert a fixed rate
security into a variable rate security or a variable rate security into a
fixed rate security.
The Fund's ability to use Derivative Instruments may be limited
by market conditions, regulatory limits and tax considerations. The Fund
might not use any of these strategies and there can be no assurance that
any strategy that is used will succeed. See the SAI for more information
regarding Derivative Instruments and the risks relating thereto.
Foreign Currency Transactions. The Fund may engage in currency
exchange transactions on a spot or forward basis and may hold foreign
currency deposits. (See "ECDs, ETDs and Yankee CDs".) The Fund may
exchange foreign currency on a spot basis at the spot rate then prevailing
for purchasing or selling foreign currencies in the foreign exchange
market.
The Fund may also enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date either
with respect to specific transactions or portfolio positions in order to
minimize the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies. For example, when the
Fund anticipates purchasing or selling a security denominated in a foreign
currency, the Fund may enter into a forward contract in order to set the
exchange rate at which the transaction will be made. The Fund may also
enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of the Fund's securities positions
denominated in that currency. The Fund will not enter into or maintain a
position in forward contracts if their consummation would obligate the
Fund to deliver an amount of foreign currency greater than the value of
the Fund's assets denominated or quoted in, or currency convertible into,
such currency.
Forward currency contracts may substantially change the Fund's
investment exposure to changes in currency exchange rates and could result
in losses if currencies do not perform as Dreyfus anticipates. There is
no assurance that Dreyfus' use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time.
Risks of Derivative Instruments. The use of Derivative
Instruments involves special risks, including: (1) possible imperfect or
no correlation between price movements of the portfolio investments (held
or intended to be purchased) involved in the transaction and price
movements of the Derivative Instruments involved in the transaction; (2)
possible lack of a liquid secondary market for any particular Derivative
9
<PAGE>
Instrument at a particular time; (3) the need for additional portfolio
management skills and techniques; (4) losses due to unanticipated market
price movements; (5) the fact that, while such strategies can reduce the
risk of loss, they can also reduce the opportunity for gain, or even
result in losses, by offsetting favorable price movements in portfolio
investments; (6) incorrect forecasts by Dreyfus concerning interest or
currency exchange rates or direction of price fluctuations of the
investment involved in the transaction, which may result in the strategy
being ineffective; (7) loss of premiums paid by the Fund on options it
purchases; and (8) the possible inability of the Fund to purchase or sell
a portfolio security at a time when it would otherwise be favorable for it
to do so, or the need to sell a portfolio security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to segregate
securities in connection with such transactions and the possible inability
of the Fund to close out or liquidate its positions.
New financial products and risk management techniques continue to
be developed. The Fund may use these instruments and techniques to the
extent consistent with its investment objective and polices, and
regulatory requirements applicable to investment companies.
Mortgage Dollar Rolls. The Fund may enter into mortgage "dollar
rolls" in which the Fund sells mortgage-related securities for delivery in
the current month and simultaneously contracts to purchase substantially
similar securities on a specified future date. The mortgage-related
securities that are purchased will be of the same type and will have the
same interest rate as those securities sold, but generally will be
supported by different pools of mortgages with different prepayment
histories than those sold. The Fund forgoes principal and interest paid
during the roll period on the securities sold in a dollar roll, but the
Fund is compensated by the difference between the current sales price and
the lower price for the future purchase, as well as by any interest earned
on the proceeds of the securities sold. The Fund could be compensated
also through the receipt of fee income equivalent to a lower forward
price. The dollar rolls entered into by the Fund normally will be
"covered". A covered roll is a specific type of dollar roll for which
there is an offsetting cash position or a cash equivalent security
position that matures on or before the forward settlement date of the
related dollar roll transaction. Covered rolls are not treated as a
borrowing or other senior security and will be excluded from the
calculation of the Fund's borrowings and other senior securities.
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 determines it to be
in the best interest of the Fund and its shareholders. In making that
determination, the Company's 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.
10
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Certain Portfolio Securities
U.S. Government Securities. The Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the full faith and credit of the United States
("U.S. Government Securities"). 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 ("GNMA"), General Services Administration
and Maritime Administration. The Fund may also invest 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 ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC"), or other
instrumentalities.
Mortgage-Related Securities. Mortgage-related securities are
securities that, directly or indirectly, represent interests in, or are
secured by and payable from, loans secured by real property, including
pass-through securities such as GNMA, FNMA and FHLMC certificates, private
pass-through securities, commercial mortgage-related securities, and
certain collateralized mortgage obligations. There are currently three
basic types of mortgage-related securities: (1) those issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, such as GNMA,
FNMA and FHLMC; (2) those issued by private issuers that represent
interests in, or are collateralized by, mortgage-related securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities;
and (3) those issued by private issuers that represent interests in, or
are collateralized by, whole loan mortgages or mortgage-related securities
without a government guarantee, but usually with some other form of credit
support. Investors should note that mortgage-related securities in which
the Fund may invest are developed and marketed from time-to-time and that,
consistent with its investment limitations, the Fund may invest in those
mortgage-related securities that Dreyfus believes may assist the Fund in
achieving its investment objective.
The yield characteristics of mortgage-related securities differ
from those of traditional debt securities. Among the major differences
are that interest and principal payments on mortgage-related securities
are made more frequently, generally once a month, and that principal
prepayments on mortgage-related securities may occur at any time because
the underlying mortgage loans generally may be prepaid at any time. As a
result, if the Fund purchases mortgage-related securities at a premium, a
prepayment rate that is faster than expected will reduce yield to
maturity, while a prepayment rate that is slower than expected will have
the opposite effect of increasing yield to maturity. Conversely, if the
Fund purchases mortgage-related securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments
will reduce, yield to maturity. The timing and magnitude of prepayments
cannot be predicted. Generally, however, prepayments on fixed-rate
mortgage loans will increase during a period of falling mortgage interest
rates and will decrease during a period of rising mortgage interest rates.
Amounts available for reinvestment by the Fund are likely to be greater
during a period of falling interest rates and, as a result, are likely to
be reinvested at lower interest rates than during a period of rising
interest rates. Accelerated prepayments on mortgage-related securities
purchased by the Fund at a premium also impose a risk of loss of principal
because the premium may not have been fully amortized at the time the
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<PAGE>
principal is repaid in full. The value of mortgage-related securities may
be significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved.
Timely payment of principal and interest on pass-through
securities of GNMA (but not of FNMA or FHLMC) is guaranteed by the full
faith and credit of the United States. This is not a guarantee against
market decline of the value of these securities or the shares of the Fund.
It is possible that the availability (i.e., liquidity) of these securities
could be adversely affected by actions of the U.S. Government to tighten
the availability of its credit. Timely payment of principal and interest
on pass-through securities of FNMA or FHLMC is guaranteed by the
respective entity.
Collateralized mortgage obligations ("CMOs") are debt obligations
collateralized by mortgage-related securities issued by GNMA, FNMA or
FHLMC, or by whole loans or private issuer pass-through securities. CMOs
may be issued by GNMA, FNMA, FHLMC or private issuers. CMOs are
structured to direct payments on underlying collateral to different series
or classes of the obligations. CMO classes may be specially structured in
a manner that provides any of a wide variety of investment
characteristics, such as yield, effective maturity and interest rate
sensitivity. CMO structuring is accomplished by in effect stripping out
portions of the cash flows (comprised of principal and interest payments)
on the underlying mortgage assets and prioritizing the payments of those
cash flows. In the most extreme case, one class will be entitled to
receive all of the interest, but none of the principal, from the
underlying mortgage assets (the interest-only or "IO" class) and one class
will be entitled to receive all of the principal, but none of the interest
(the principal-only or "PO" class). CMOs may be structured in other ways
that, based on mathematical modeling or similar techniques, are expected
to provide certain results. As market conditions change, however, and
particularly during periods of rapid or unanticipated changes in market
interest rates, the attractiveness of a CMO class and the ability of a
structure to provide the anticipated investment characteristics may be
significantly reduced. Such changes can result in volatility in the
market value, and in some instances reduced liquidity, of the CMO class.
The Fund may invest up to 20% of its total assets in CMOs.
In determining the Fund's average maturity, the maturity of a
mortgage-related security is deemed to be its effective life (i.e., the
average time in which the principal amount of the security is repaid), as
estimated by Dreyfus based on scheduled principal amortization and an
anticipated rate of principal prepayments, which rate, in turn, is based
on past prepayment patterns, prevailing interest rates and other factors.
The effective life of a mortgage-related security generally is
substantially shorter than its stated maturity.
Asset-Backed Securities. Asset-backed securities are securities
that represent direct or indirect participations in, or are secured by and
payable from, assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property, and receivables from revolving credit (credit card) agreements.
Such assets are securitized through the use of trusts and special purpose
corporations. The value of such securities partly depends on loan
repayments by individuals, which may be adversely affected during general
downturns in the economy. Payments or distributions of principal and
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<PAGE>
interest on asset-backed securities may be supported by credit
enhancements, such as various forms of cash collateral accounts or letters
of credit. Like mortgage-related securities, asset-backed securities are
subject to the risk of prepayment. The risk that recovery on repossessed
collateral might be unavailable or inadequate to support payments on
asset-backed securities, however, is greater than is the case for
mortgage-backed 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,
adverse political and economic developments, 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 generally are not 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."
Municipal Bonds and Other Municipal Obligations. The Fund may
invest in debt obligations issued by or on behalf of states, territories
and possessions of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. The Fund limits its investments in
municipal obligations to those obligations the interest on which is
subject to federal income tax. Municipal obligations generally include
debt obligations issued to obtain funds for various public purposes as
well as industrial development bonds issued by public authorities.
Municipal obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal
and interest. Revenue bonds are payable from the revenue derived from a
particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Notes are short-term instruments that are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
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<PAGE>
revenues. Municipal obligations bear fixed, floating or variable rates of
interest that are determined in some instances by formulas under which the
municipal obligation's interest rate will change directly or inversely to
changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum.
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 Fund's yield may tend
to be lower. Also, in periods of falling interest rates, 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 a fund investing in fixed-income securities also may change
as general levels of interest rates fluctuate. When interest rates rise,
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 rise.
Variable and Floating Rate Securities. The Fund may invest in
variable and floating rate securities. A variable rate security provides
for the adjustment of its interest either at predesignated periodic
intervals or whenever the market rate to which the security's interest
rate is tied changes. A floating rate security provides for the automatic
adjustment of its interest whenever a specified interest rate changes.
Interest rates on floating rate 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 variable and
floating rate securities than on the market value of comparable fixed-
income obligations. Thus, investing in variable and floating rate
securities generally allows less opportunity for capital appreciation and
depreciation than investing in comparable fixed-income securities.
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. (See "Foreign 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 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.
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
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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 at the time of
purchase A-1 by S&P, 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. (See "Foreign Securities.")
Illiquid Investments. The Fund will not knowingly invest more
than 15% of the value of its net assets in illiquid investments.
Investments currently considered to be illiquid include securities for
which market quotations are not readily available; repurchase agreements
and time deposits with maturities in excess of seven days; certain
mortgage-related securities; securities involved in swap, cap, collar and
floor transactions; and certain options traded in the over-the-counter
market and securities used to cover such options. The Fund may not be
able to sell illiquid securities when Dreyfus considers it desirable to do
so or may have to sell such securities at a price lower than the price
that could be obtained if they were more liquid. Illiquid securities may
be more difficult to value due to the unavailability of reliable market
quotations for such securities, and investment in illiquid securities may
have an adverse impact on the Fund's net asset value. See the SAI for
more information regarding these investments.
Portfolio Turnover. While securities are purchased for the Fund
on the basis of potential for high current income and possible capital
appreciation and not for short-term trading profits, the Fund's portfolio
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 (100% or
higher) 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 Risk. 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.
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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 in 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 June 30, 1995, Dreyfus managed or
administered approximately $76 billion in assets for more than 1.8 million
investor accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus
supervises and assists in the overall management of the Fund's affairs
under an Investment Management Agreement with the Fund, subject to the
overall authority of the Company's Board of Directors in accordance with
Maryland law. Pursuant to the Investment Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As the Fund's investment manager, Dreyfus manages
the Fund by making investment decisions based on the Fund's investment
objective, policies and restrictions.
The Fund is managed by Ridgway H. Powell. Mr. Powell is a Vice
President and portfolio manager for Mellon Bank. He has been with Mellon
Bank since 1994. Mr. Powell has been employed by Dreyfus as portfolio
manager of the Fund since the Fund commenced operations.
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
$203 billion in assets as of June 30, 1995, including approximately $73
billion in mutual fund assets. As of June 30, 1995, Mellon, through
various subsidiaries, provided non-investment services, such as custodial
or administration services, for approximately $707 billion in assets,
including approximately $71 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 0.55 of 1% of the value of
the Fund's daily net assets. Dreyfus pays all of the Fund's expenses,
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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 by 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.
In addition, Investor shares may be subject to certain
distribution and shareholder servicing fees. See "Distribution Plan
(Investor Shares Only)."
Dreyfus may pay the Fund's distributor for shareholding 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. 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 with Dreyfus, provides various administrative and
corporate secretarial services to the Fund. Dreyfus provides the Fund's
fund accountant services.
How to Buy Fund Shares
General--Investor shares are offered to any investor and may be
purchased through the Distributor or through Agents that have entered into
Agreements with the Distributor.
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Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship
at such institution or to customers who have received and hold shares of
the Fund distributed to them by virtue of such an account or relationship.
A "Retirement Plan" is a 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. Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Plan.
Institutions effecting transactions in Class R shares for the accounts of
their clients may charge their clients direct fees in connection with such
transactions.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the
right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent that 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. Investor shares are offered without regard to the minimum
initial investment requirements through Dreyfus-Automatic Asset Builder,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan pursuant to the Dreyfus Step Program (described under "Shareholder
Services"). These services enable you to make regularly scheduled
investments and may provide you with a convenient way to invest for long-
term financial goals. You should be aware, however, that periodic
investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
The Internal Revenue Code of 1986, as amended (the "Code"),
imposes various limitations on the amount that may be contributed to
certain 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.
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You may purchase Fund shares by check or wire, or through the
Dreyfus TeleTransfer Privilege described below. Checks should be made
payable to "The Dreyfus Family of Funds" or, if for Dreyfus retirement
plan accounts, to "The Dreyfus Trust Company, Custodian." Payments to
open new accounts which are mailed should be sent to The Dreyfus Family of
Funds, P.O. Box 9387, Providence, Rhode Island 02940-9387, together with
your Account Application indicating which Class of shares is being
purchased. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus retirement plan accounts, both initial and subsequent
investments should be sent to The Dreyfus Trust Company, Custodian, P.O.
Box 6427, Providence, Rhode Island 02940-6427. Neither initial nor
subsequent investments should be made by third party check. Purchase
orders may be delivered in person only to a Dreyfus Financial Center.
THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call the telephone number listed under "General
Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank
having a correspondent bank in New York City. Immediately available funds
may be transmitted by wire to Boston Safe Deposit & Trust Co., together
with the applicable Class' DDA # as shown below, for purchase of Fund
shares in your name:
DDA# _________ Dreyfus Disciplined Intermediate Bond
Fund/Investor shares;
DDA# _________ Dreyfus Disciplined Intermediate Bond Fund/Class R
shares.
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, you should call 1-800-645-6561 after
you have completed the wire payment in order to obtain your Fund account
number. You should include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received.
You may obtain further information about remitting funds in this manner
from your bank. All payments should be made in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks. A charge will be
imposed if any check used for investment in your account does not clear.
The Fund makes available to certain large institutions the ability to
issue purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH to Boston Safe Deposit & Trust Co. with instructions to credit your
Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "_____" for
Investor shares and "_____" for Class R shares.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
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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 per share ("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 the NAV for the Fund may be summarized as follows:
The portfolio securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price.
If no sale is reported, the mean of the latest bid and asked prices is
used. Securities traded over-the-counter are priced at the mean of the
latest bid and asked prices but will be valued at the last sale price if
required by regulations of the SEC. When market quotations are not
readily available, securities and other assets are valued at fair value as
determined in good faith in accordance with procedures established by the
Board of Directors.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established
by the Board of Directors.
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 such close of business are effective on, and will receive the
price next determined on, that day. Investment, exchange and redemption
requests received after such close of business are effective on, and
receive the share price determined on, the next business day.
The public offering price of Investor shares and Class R shares
is the NAV of that Class.
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Dreyfus TeleTransfer Privilege--You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have
checked the appropriate box and supplied the necessary information on the
Fund's Account Application or have filed a Shareholder Services Form with
the 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 Fund shares by telephoning 1-
800-221-4060 or, if calling from overseas, 1-401-455-3306.
Shareholder Services
The services and privileges described under this heading may not
be available to clients of certain Agents and some Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Agent in this
regard.
Fund Exchanges
You may purchase, in exchange for shares of a Class, shares of
the same class of certain other funds managed or administered by Dreyfus,
to the extent such shares are offered for sale in your state of residence.
These funds have different investment objectives which may be of interest
to you. If you desire to use this service, please call 1-800-645-6561 to
determine if it is available and whether any conditions are imposed on its
use. With respect to Class R shares held by Retirement Plans, exchanges
may be made only between a shareholder's Retirement Plan account in one
fund and such shareholder's Retirement Plan account in another fund.
To request an exchange, you or your Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy
of the current prospectus of the fund into which the exchange is being
made. Prospectuses may be obtained by calling 1-800-645-6561. Except in
the case of personal Retirement Plans, the shares being exchanged must
have a current value of at least $500; furthermore, when establishing a
new account by exchange, the shares being exchanged must have a value of
at least the minimum initial investment required for the fund into which
the exchange is being made. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless you
check the relevant "No" box on the Account Application, indicating that
you specifically refuse this privilege. The Telephone Exchange Privilege
may be established for an existing account by written request, signed by
all shareholders on the account, or by a Shareholder Services Form, also
available by calling 1-800-645-6561. If you previously have established
the Telephone Exchange Privilege, you may telephone exchange instructions
by calling 1-800-221-4060 or, if calling from overseas, 1-401-455-3306.
See "How to Redeem Fund Shares--Procedures." Upon an exchange, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TeleTransfer Privilege,
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<PAGE>
and the dividends and distributions payment option (except for Dreyfus
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 the
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
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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 the 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 NAV; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales
load. If you are investing in a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load. See "Shareholder Services" in the SAI.
Dreyfus Dividend ACH permits you to transfer electronically on the payment
date dividends or dividends and capital gain distributions, if any, from
the Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an ACH member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You
may cancel these privileges by mailing written notification to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
Enrollment in or cancellation of these privileges is effective three
business days following receipt. These privileges are available only for
existing accounts and may not be used to open new accounts. Minimum
subsequent investments do not apply for Dreyfus Dividend Sweep. The Fund
may modify or terminate these privileges at any time or charge a service
fee. No such fee currently is contemplated. Shares held under Keogh
Plans, IRAs or other retirement plans are not eligible for Dreyfus
Dividend Sweep.
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<PAGE>
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.
Dreyfus Step Program
Dreyfus Step Program enables you to purchase Investor shares
without regard to the Fund's minimum initial investment requirements
through Dreyfus-Automatic Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Fund's
Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this program, or to
request the necessary authorization form(s), please call toll free 1-800-
782-6620. You may terminate your participation in this Program at any
time by discontinuing your participation in Dreyfus-Automatic Asset
Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll
Savings Plan, as the case may be, as provided under the terms of such
Privilege(s). The Fund reserves the right to redeem your account if you
have terminated your participation in the Program and your account's net
asset value is $500 or less. See "How to Redeem Fund Shares." The Fund
may modify or terminate this Program at any time. Investors who wish to
purchase Investor shares through the Dreyfus Step Program in conjunction
with a Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs
and IRA "Rollover Accounts."
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<PAGE>
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 a
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 from the Automatic Withdrawal Plan. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Retirement Plans
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-
IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-
800-322-7880.
How to Redeem Fund Shares
General--You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined NAV as described below. If you
hold Fund shares of more than one Class, any request for redemption must
specify the Class of shares being redeemed. If you fail to specify the
Class of shares to be redeemed or if you own fewer shares of the Class
than specified to be redeemed, the redemption request may be delayed until
the Transfer Agent receives further instructions from you or your Agent.
The Fund imposes no charges when shares are redeemed directly
through the Distributor. Agents or other institutions may charge their
clients a nominal fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be submitted
with the redemption request. The value of the shares redeemed may be more
or less than their original cost, depending upon the Fund's then-current
NAV.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the SEC.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS
TELETRANSFER PRIVILEGE, OR THROUGH THE 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
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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 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
Telephone Redemption Privilege or Telephone Exchange Privilege, which is
granted automatically unless you refuse it, you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's NAV may
fluctuate.
Regular Redemption. Under the regular redemption procedure, you
may redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671 or, if for
Dreyfus retirement plan accounts, to The Dreyfus Trust Company, Custodian,
P.O. Box 6427, Providence, Rhode Island 02940-6427. Redemption requests
may be delivered in person only to a Dreyfus Financial Center. THESE
REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call the telephone number listed under "General
26
<PAGE>
Information." Redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature must be guar-
anteed. 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 the
telephone number 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 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 redemption
request made by telephone, including requests made shortly after a change
of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at any time by the
Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are
not eligible for this Privilege.
Dreyfus Teletransfer Privilege. You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between your Fund account and the
bank account designated in one of these documents. Only a bank account
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<PAGE>
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"). The
Investor shares of the Fund bear some of the cost of selling those shares
under the Plan. The Plan allows the Fund to spend annually up to 0.25% of
its average daily net assets attributable to Investor shares to compensate
Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing
activities and for activities 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 Agreements with the Distributor.
Under the Agreements, the Agents are obligated to provide distribution-
related services with regard to the Fund and/or shareholder services to
the Agent's clients that own Investor shares of the Fund.
The Fund and the Distributor may suspend or reduce payments under
the Plan at any time, and payments are subject to the continuation of the
Fund's Plan and the Agreements described above. From time to time, the
Agents, the Distributor and the Fund may agree to voluntarily reduce the
maximum fees payable under the Plan. See the SAI for more details on the
Plan.
Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. An Agent entitled to
receive compensation for selling and servicing the Fund's shares may
receive different compensation with respect to one class of shares over
another.
Dividends, Other Distributions and Taxes
The Fund declares daily and pays monthly dividends from its net
investment income 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
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<PAGE>
any, have been utilized or have expired. Investors other than qualified
Retirement Plans may choose whether to receive dividends and other
distributions in cash, to receive dividends in cash and reinvest other
distributions in additional Fund shares, or to reinvest both dividends and
other distributions; dividends and other distributions payable 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 for treatment 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 (collectively, "Dividend Distributions"),
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
capital gain (the excess of net long-term capital gain over net short-term
capital loss) 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.
Dividend Distributions paid by the Fund to a non-resident foreign
investor generally will be 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 capital gain paid by
the Fund to a non-resident foreign investor, as well as the proceeds of
any redemptions from a non-resident 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 that will include information as to
dividends and distributions from net capital gain, if any, paid during the
year.
Dividends and other distributions 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 distributions paid to such plans. Generally,
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<PAGE>
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.
If a distributee of an "eligible rollover distribution" from a qualified
Retirement Plan does not elect to have the eligible rollover distribution
paid directly from the plan to an eligible retirement plan in a "direct
rollover," the eligible rollover distribution is subject to a 20% income
tax withholding.
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 capital gain 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 that
the TIN furnished in connection with opening an account is correct and
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 distribution and shareholder servicing fees. As a result, at
any given time, the performance of Investor shares should be expected to
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be lower than that of Class R shares. Performance for each Class will be
calculated separately.
Average annual total return is calculated pursuant to a
standardized formula, which assumes that an investment was purchased with
an initial payment of $1,000 and that the investment was redeemed at the
end of a stated period of time, after giving effect to the reinvestment of
dividends and other distributions during the period. The return is
expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end
of the period. 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
NAV at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return.
The Fund may also advertise the yield on a Class of shares. The
Fund's yield is calculated by dividing a Class of shares' annualized net
investment income per share during a recent 30-day (or one month) period
by the maximum public offering price per Class of such share on the last
day of that period. Because 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, the Lehman Brothers Aggregate Bond Index, other indices
created by Lehman Brothers, CDA Technologies indices, 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
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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
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 _____, 1995, Mellon Bank, Dreyfus' parent, owned of record
through its direct and indirect subsidiaries more than 25% of the
Company's outstanding voting shares, and is deemed, under the 1940 Act, to
be a controlling shareholder.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of
Directors or the appointment of auditors. However, the holders of at
least 10% of the shares outstanding and entitled to vote may require the
Company to hold a special meeting of shareholders for purposes of removing
a Director from office and for any other proper purpose. Company
shareholders may remove a Director by the affirmative vote of a majority
of the Company's 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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PART B
--------------------------------------------------------------------
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
INVESTOR SHARES AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
November __, 1995
--------------------------------------------------------------------
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of the Dreyfus Disciplined Intermediate Bond Fund (the "Fund"),
dated November __, 1995, as it may be revised from time to time. The Fund
is a separate portfolio of The Dreyfus/Laurel Funds, Inc. (formerly, The
Laurel Funds, Inc.), an open-end, diversified, management investment
company (the "Company"), known as a mutual fund. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation ("Dreyfus") serves as the
Fund's investment manager.
Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
----
Investment Objective and Management Policies . . . . . . . . B-
Management of the Fund . . . . . . . . . . . . . . . . . . B-
Management Arrangements . . . . . . . . . . . . . . . . . B-
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . B-
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-
Shareholder Services . . . . . . . . . . . . . . . . . . . B-
Determination of Net Asset Value . . . . . . . . . . . . . B-
Dividends, Other Distributions and Taxes . . . . . . . . . B-
Portfolio Transactions . . . . . . . . . . . . . . . . . . B-
Performance Information . . . . . . . . . . . . . . . . . . B-
Information About the Fund . . . . . . . . . . . . . . . . B-
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . B-
Financial Statements . . . . . . . . . . . . . . . . . . . B-
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . B-
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"DESCRIPTION OF THE FUND."
Portfolio Securities
Government Obligations. The Fund may invest in a variety of
U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance: (a) U.S. Treasury bills have a maturity
of one year or less, (b) U.S. Treasury notes have maturities of one to ten
years, and (c) U.S. Treasury bonds generally have maturities of greater
than ten years.
In addition to U.S. Treasury obligations, the Fund may invest
in obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the
full faith and credit of the U.S. Treasury (such as Government National
Mortgage Association ("GNMA") participation certificates), (b) the right
of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, (c) the discretionary authority of the U.S.
Government agency or instrumentality, or (d) the credit of the
instrumentality. (Examples of agencies and instrumentalities are: Federal
Land Banks, Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Central Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Home Loan Banks, General
Services Administration, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Inter-American Development
Bank, Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development, Federal Home Loan
Mortgage Corporation ("FHLMC"), and Federal National Mortgage Association
("FNMA")). No assurance can be given that the U.S. Government will provide
financial support to such U.S. Government agencies or instrumentalities
described in (b), (c) and (d) in the future, other than as set forth
above, because it is not obligated to do so by law.
Repurchase Agreements. The Fund may enter into repurchase
agreements with U.S. Government securities dealers recognized by the
Federal Reserve Board, with member banks of the Federal Reserve System, or
with such other brokers or dealers that meet the credit guidelines of the
Board of Directors. In a repurchase agreement, the Fund buys a security
from a seller that has agreed to repurchase the same security at a
mutually agreed upon date and price. The Fund's resale price will be in
excess of the purchase price, reflecting an agreed upon interest rate.
This interest rate is effective for the period of time the Fund is
invested in the agreement and is not related to the coupon rate on the
underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of
these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for
more than one year. The Fund will always receive as collateral securities
whose market value including accrued interest is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
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might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of
a repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. Dreyfus seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the credit guidelines of
the Company's Board of Directors.
When-Issued Securities. In when-issued transactions, delivery
and payment for the securities normally takes place approximately 7 to 15
days after the date the buyer commits to purchase them (delivery and
payment could take place considerably later in the case of some mortgage-
related securities). The payment obligation and the interest rate that
will be received on securities purchased on a when-issued basis are each
fixed at the time the buyer enters into the commitment. The Fund will make
commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
or dispose of the commitment before the settlement date if Dreyfus deems
it advisable as a matter of investment strategy. Cash or marketable high-
grade debt securities equal to the amount of the above commitments will be
segregated on the Fund's records. For the purpose of determining the
adequacy of these securities the segregated securities will be valued at
market. If the market value of such securities declines, additional cash
or securities will be segregated on the Fund's records on a daily basis so
that the market value of the account will equal the amount of such
commitments by the Fund.
Securities purchased on a when-issued basis and the securities
held by the Fund are subject to changes in market value based upon the
public's perception of changes in the level of interest rates. Generally,
the value of such securities will fluctuate inversely to changes in
interest rates -- i.e., they will increase in value when interest rates
fall and decrease in value when interest rates rise. Therefore, if in
order to achieve higher interest income the Fund remains substantially
fully invested at the same time that it has purchased securities on a
"when-issued" basis, there will be a greater possibility of fluctuation in
the Fund's net asset value.
When payment for when-issued securities is due, the Fund will
meet its obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities or, and although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations
carries with it a greater potential for the realization of capital gains,
which are subject to federal income taxes.
Mortgage Pass-Through Certificates. Mortgage pass-through
certificates are issued by governmental, government-related and private
entities and are backed by pools of mortgages (including those on
residential properties and commercial real estate). The mortgage loans are
made by savings and loan institutions, mortgage bankers, commercial banks
and other lenders. The securities are "pass-through" securities because
they provide investors with monthly payments of principal and interest
which, in effect, are a "pass-through" of the monthly payments made by the
individual borrowers on the underlying mortgages, net of any fees paid to
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the issuer or guarantor of the pass-through certificates. 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 FHLMC and 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 and commercial
mortgage loans. Such issuers may be the originators of the underlying
mortgage loans as well as the guarantors of the mortgage-related
securities.
(1) GNMA Mortgage Pass-Through Certificates ("Ginnie
Maes"). Ginnie Maes represent an undivided interest in a pool of mortgages
that are insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. Ginnie Maes
entitle the holder to receive all payments (including prepayments) of
principal and interest owed by the individual mortgagors, net of fees paid
to GNMA and to the issuer which assembles the mortgage pool and passes
through the monthly mortgage payments to the certificate holders
(typically, a mortgage banking firm), regardless of whether the individual
mortgagor actually makes the payment. Because payments are made to
certificate holders regardless of whether payments are actually received
on the underlying mortgages, Ginnie Maes are of the "modified
pass-through" mortgage certificate type. The GNMA is authorized to
guarantee the timely payment of principal and interest on the Ginnie Maes
as securities backed by an eligible pool of mortgages. The GNMA guarantee
is backed by the full faith and credit of the United States, and the GNMA
has unlimited authority to borrow funds from the U.S. Treasury to make
payments under the guarantee. The market for Ginnie Maes is highly liquid
because of the size of the market and the active participation in the
secondary market of securities dealers and a variety of investors.
(2) FHLMC Mortgage Participation Certificates ("Freddie
Macs"). Freddie Macs represent interests in groups of specified first lien
residential conventional mortgages underwritten and owned by the FHLMC.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection
or timely payment of all principal payments on the underlying mortgage
loans. In cases where the FHLMC has not guaranteed timely payment of
principal, the FHLMC may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after it becomes
payable. Freddie Macs are not guaranteed by the United States or by any of
the Federal Home Loan Banks and do not constitute a debt or obligation of
the United States or of any Federal Home Loan Bank. The secondary market
for Freddie Macs is highly liquid because of the size of the market and
the active participation in the secondary market of the FHLMC, securities
dealers and a variety of investors.
(3) FNMA Guaranteed Mortgage Pass-Through Certificates
("Fannie Maes"). Fannie Maes represent an undivided interest in a pool of
conventional mortgage loans secured by first mortgages or deeds of trust,
on one family, or two to four family, residential properties. The FNMA is
obligated to distribute scheduled monthly installments of principal and
interest on the mortgages in the pool, whether or not received, plus full
principal of any foreclosed or otherwise liquidated mortgages. The
obligation of the FNMA under its guaranty is solely the obligation of the
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FNMA and is not backed by, nor entitled to, the full faith and credit of
the United States.
(4) Private issuer mortgage certificates are pass-through
securities structured in a similar fashion to GNMA, FNMA and FHLMC
certificates. Private issuer mortgage certificates are generally backed
by conventional single family, multi-family and commercial mortgages.
Private issuer mortgage certificates typically are not guaranteed by the
U.S. Government, its agencies or instrumentalities, but generally have
some form of credit support in the form of over-collateralization, pool
insurance or other form of credit enhancement.
The market value of mortgage-related securities depends on,
among other things, the level of interest rates, the certificates' coupon
rates and the payment history of the mortgagors of the underlying
mortgages.
Municipal Bonds and Other Municipal Obligations. The Fund
limits its investments in municipal obligations to those obligations the
interest on which is subject to federal income tax.
Municipal Bonds. Municipal bonds, which generally have a
maturity of more than one year when issued, have two principal
classifications: general obligation bonds and revenue bonds. A private
activity bond is a particular kind of revenue bond. The classification of
general obligation bonds, revenue bonds and private activity bonds are
discussed below.
(1) General Obligation Bonds. The proceeds of these
obligations are used to finance a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and
sewer systems. General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal
and interest.
(2) Revenue Bonds. Revenue bonds are issued to finance a
wide variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. The principal security for a
revenue bond is generally the net revenues derived from a particular
facility, group of facilities or, in some cases, the proceeds of a special
excise or other specific revenue source. Although the principal security
behind these bonds may vary, many provide additional security in the form
of a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Some authorities
provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
(3) Private Activity Bonds. Private activity bonds are
issued by or on behalf of public authorities to raise money to finance
various privately operated facilities for business and manufacturing,
housing, sports and pollution control. These bonds are also used to
finance public facilities such as airports, mass transit systems, ports
and parking. The payment of the principal and interest on such bonds is
dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal
property so financed as security for such payment.
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Municipal Notes. Municipal notes generally are used to provide
for short-term capital needs and generally have maturities of thirteen
months or less. Municipal notes include:
(1) Tax Anticipation Notes. Tax anticipation notes are
issued to finance working capital needs of municipalities. Generally, they
are issued in anticipation of various seasonal tax revenue, such as
income, sales, use and business taxes, and are payable from these specific
future taxes.
(2) Revenue Anticipation Notes. Revenue anticipation
notes are issued in expectation of receipt of other kinds of revenue, such
as Federal revenues available under the Federal Revenue Sharing Programs.
(3) Bond Anticipation Notes. Bond anticipation notes are
issued to provide interim financing until long-term financing can be
arranged. In most cases, the long-term bonds then provide the money for
the repayment of the notes.
Municipal Commercial Paper. Issues of municipal commercial
paper typically represent short-term, unsecured, negotiable promissory
notes. These obligations are issued by agencies of state and local
governments to finance seasonal working capital needs of municipalities or
to provide interim construction financing and are paid from general
revenues of municipalities or are refinanced with long-term debt. In most
cases, municipal commercial paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.
Convertible Securities. The Fund may purchase convertible
securities, which are fixed-income securities such as bonds or preferred
stock that may be converted into or exchanged for a specified number of
shares of common stock of the same or a different issuer within a
specified period of time and at a specified price or formula. Convertible
securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt
securities. Before conversion, convertible securities ordinarily provide
a stable stream of income with yields generally higher than those on
common stock, but lower than those on non-convertible debt securities of
similar quality. 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 rises, 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. The Fund does not intend to exercise conversion rights for
any convertible security that it may hold and does not intend to hold any
security that has been subject to conversion.
Zero Coupon Securities. The Fund may invest in zero coupon
securities, which are debt securities that do not entitle the holder to
any periodic payment of interest, but instead are issued or sold at a
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discount from their face value. The amount of the discount varies
depending on, among other factors, prevailing interest rates, the
liquidity of the security, and the perceived creditworthiness of the
issuer. Zero coupon securities may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a
greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Illiquid Investments. Over-the-counter ("OTC") options
purchased by the Fund will be considered illiquid for purposes of the
Fund's operating policy that provides that it may not invest more than 15%
of its net assets in illiquid investments. When the Fund sells OTC
options, it will segregate assets or cover its obligations with respect to
OTC options written by it. The assets used as cover for OTC options
written by the Fund will also be considered illiquid investments for
purposes of this limitation unless the OTC options are sold to qualified
dealers who agree that the Fund may repurchase any OTC option it writes at
a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure
would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the
option.
Under current guidelines of the staff of the SEC, IOs and POs
are also considered to be illiquid; however, IO and PO classes of fixed-
rate mortgage-related securities issued by the U.S. Government or one of
its agencies or instrumentalities will not be considered illiquid if
Dreyfus determines that they are liquid pursuant to guidelines established
by or under the direction of the Company's Board of Directors.
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
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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 a Fund or other holder.
The Fund does not currently intend to invest in Section 4(2) paper or Rule
144A securities.
Management Policies
The Fund engages, except as noted, in the following practices
in furtherance of its investment objective.
Derivative Instruments.
General. As discussed in the Prospectus, the Fund may purchase
and sell various financial instruments ("Derivative Instruments"), such as
financial futures contracts (including interest rate, index and foreign
currency futures contracts), options (including options on securities,
indices, foreign currencies and futures contracts), forward currency
contracts, and interest rate and currency swaps, caps, collars and floors.
The index Derivative Instruments the Fund may use may be based on indices
of U.S. or foreign equity or debt securities. These Derivative
Instruments may be used, for example, to preserve a return or spread, to
lock in unrealized market value gains or losses, to facilitate or
substitute for the sale or purchase of securities, to manage the duration
of securities, to alter the exposure of a particular investment or portion
of the Fund's portfolio to fluctuations in interest rates or currency
rates, to uncap a capped security or to convert a fixed rate security into
a variable rate security or a variable rate security into a fixed rate
security.
Hedging strategies can be broadly categorized as "short hedges"
and "long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose
price is expected to move in the opposite direction of the price of the
investment being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in
the acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is
sometimes referred to as an anticipatory hedge. In an anticipatory hedge
transaction, the Fund does not own a corresponding security and,
therefore, the transaction does not relate to a security the Fund owns.
Rather, it relates to a security that the Fund intends to acquire. If the
Fund does not complete the hedge by purchasing the security it anticipated
purchasing, the effect on the Fund's portfolio is the same as if the
transaction were entered into for speculative purposes.
Derivative Instruments on securities generally are used to
hedge against price movements in one or more particular securities
positions that the Fund owns or intends to acquire. Derivative
Instruments on indices, in contrast, generally are used to attempt to
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<PAGE>
hedge against price movements in market sectors in which the Fund has
invested or expects to invest. Derivative Instruments on debt securities
may be used to hedge either individual securities or broad debt market
sectors.
The use of Derivative Instruments is subject to applicable
regulations of the Securities and Exchange Commission ("SEC"), the several
options and futures exchanges upon which they are traded, the Commodity
Futures Trading Commission ("CFTC") and various state regulatory
authorities. In addition, the Fund's ability to use Derivative
Instruments will be limited by tax considerations. See "Dividends, Other
Distributions and Taxes."
In addition to the instruments, strategies and risks described
below and in the Prospectus, Dreyfus expects to discover additional
opportunities in connection with other Derivative Instruments. These new
opportunities may become available as Dreyfus develops new techniques, as
regulatory authorities broaden the range of permitted transactions and as
new techniques are developed. Dreyfus may utilize these opportunities to
the extent that they are consistent with the Fund's investment objective,
and permitted by the Fund's investment policies and applicable regulatory
authorities. The Fund's Prospectus or Statement of Additional Information
will be supplemented to the extent that new products or techniques involve
materially different risks than those described below or in the
Prospectus.
Special Risks. The use of Derivative Instruments involves
special considerations and risks, certain of which are described below.
Risks pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends
upon Dreyfus' ability to predict movements of the overall securities,
currency and interest rate markets, which requires different skills than
predicting changes in the prices of individual securities. There can be
no assurance that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no
correlation, between price movements of a Derivative Instrument and price
movements of the investments being hedged. For example, if the value of a
Derivative Instrument used in a short hedge increased by less than the
decline in value of the hedged investment, the hedge would not be fully
successful. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which Derivative
Instruments are traded. The effectiveness of hedges using Derivative
Instruments on indices will depend on the degree of correlation between
price movements in the index and price movements in the securities being
hedged.
Because there are a limited number of types of exchange-traded
options and futures contracts, it is likely that the standardized
contracts available will not match the Fund's current or anticipated
investments exactly. The Fund may invest in options and futures contracts
based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Fund's other investments.
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<PAGE>
Options and futures prices can also diverge from the prices of
their underlying instruments, even if the underlying instruments match the
Fund's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of
demand in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. The Fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends
to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not
be successful in all cases. If price changes in the Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
(3) If successful, the above-discussed strategies can
reduce risk of loss by wholly or partially offsetting the negative effect
of unfavorable price movements. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements. For example, if the Fund entered into a short hedge because
Dreyfus projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from
that increase might be wholly or partially offset by a decline in the
price of the Derivative Instrument. Moreover, if the price of the
Derivative Instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not attempted to hedge at all.
(4) As described below, the Fund might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in Derivative Instruments involving
obligations to third parties (i.e., Derivative Instruments other than
purchased options). If the Fund were unable to close out its positions in
such Derivative Instruments, it might be required to continue to maintain
such assets or accounts or make such payments until the position expired
or matured. These requirements might impair the Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security
at a disadvantageous time. The Fund's ability to close out a position in
a Derivative Instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a
market, the ability and willingness of the other party to the transaction
("contra party") to enter into a transaction closing out the position.
Therefore, there is no assurance that any position can be closed out at a
time and price that is favorable to the Fund.
(5) Dreyfus may use Derivative Instruments, including
securities with embedded derivatives, for hedging purposes (to adjust the
risk characteristics of the Fund's portfolio) and may use these
instruments to adjust the return characteristics of the Fund's portfolio
of investments. This can increase investment risk. If Dreyfus judges
market conditions incorrectly or employs a strategy that does not
correlate well with the Fund's investments, these techniques could result
in a loss, regardless of whether the intent was to reduce risk or increase
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return. These techniques may increase the volatility of the Fund and may
involve a small investment of cash relative to the magnitude of the risk
assumed. In addition, these techniques could result in a loss if the
contra party to the transaction does not perform as promised or if there
is not a liquid secondary market to close out a position that the Fund has
entered into.
(6) The ordinary spreads between the prices in the cash
and futures markets, due to the nature of such markets, are subject to
distortion. Due to the possibility of distortion, a correct forecast of
general interest, foreign currency or securities price trends by Dreyfus
may still not result in a successful transaction. Dreyfus may be
incorrect in its expectations as to the extent of various interest rate,
foreign exchange rate or securities price movements, or the time span
within which the movements take place.
(7) Options and futures transactions may increase
portfolio turnover rates, which results in correspondingly greater
commission expenses and transaction costs, and may result in certain tax
consequences.
Cover for Derivative Instruments. Transactions using
Derivative Instruments may expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, futures,
options, currencies or forward contracts or (2) cash and short-term liquid
debt securities with a value sufficient at all times to cover its
potential obligations to the extent not covered as provided in (1) above.
The Fund will comply with SEC guidelines regarding cover for Derivative
Instruments and will, if the guidelines so require, set aside cash, U.S.
Government securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be
sold while the position in the corresponding Derivative Instrument is
open, unless they are replaced with other appropriate assets. As a
result, the commitment of a large portion of the Fund's assets to cover or
segregated accounts could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy,
and obligates the writer to sell, the underlying investment at the agreed
upon exercise price during the option period. A put option gives the
purchaser the right to sell, and obligates the writer to buy, the
underlying investment at the agreed upon exercise price during the option
period. A purchaser of an option pays an amount, known as the premium, to
the option writer in exchange for rights under the option contract.
Options on indices are similar to options on securities or
currencies except that all settlements are in cash and gain or loss
depends on changes in the index in question rather than on price movements
in individual securities or currencies.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
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<PAGE>
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge
because declines in the value of the hedged investment would be offset to
the extent of the premium received for writing the option. However, if
the investment appreciates to a price higher than the exercise price of
the call option, it can be expected that the option will be exercised and
the Fund will be obligated to sell the investment at less than its market
value.
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
investment depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the
Fund will be obligated to purchase the investment at more than its market
value.
The value of an option position will reflect, among other
things, the current market value of the underlying investment, the time
remaining until expiration, the relationship of the exercise price to the
market price of the underlying investment, the historical price volatility
of the underlying investment and general market conditions. Options that
expire unexercised have no value.
The Fund may effectively terminate its right or obligation
under an option by entering into a closing transaction. For example, the
Fund may terminate its obligation under a call or put option that it had
written by purchasing an identical call or put option; this is known as a
closing purchase transaction. Conversely, the Fund may terminate a
position in a put or call option it had purchased by writing an identical
put or call option; this is known as a closing sale transaction. Closing
transactions permit the Fund to realize profits or limit losses on an
option position prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and OTC
options. Exchange-traded options in the United States are issued by a
clearing organization that, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its contra party (usually a securities
dealer or a bank) with no clearing organization guarantee. Thus, when the
Fund purchases an OTC option, it relies on the contra party from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the contra party to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction.
Generally, the OTC debt and foreign currency options used by
the Fund are European-style options. This means that the option is only
exercisable immediately prior to its expiration. This is in contrast to
American-style options, which are exercisable at any time prior to the
expiration date of the option.
OTC options purchased by the Fund will be considered illiquid
for purposes of the Fund's operating policy that provides that it may not
invest more than 15% of its net assets in illiquid investments. See
"Illiquid Investments."
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<PAGE>
The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market.
However, there can be no assurance that such a market will exist at any
particular time. Closing transactions can be made for OTC options only by
negotiating directly with the contra party, or by a transaction in the
secondary market if any such market exists. Although the Fund will enter
into OTC options only with major dealers in unlisted options, there is no
assurance that the Fund will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of
insolvency of the contra party, the Fund might be unable to close out an
OTC option position at any time prior to its expiration.
If the Fund were unable to effect a closing transaction for an
option it had purchased, it would have to exercise the option to realize
any profit. The inability to enter into a closing purchase transaction
for a covered call option written by the Fund could cause material losses
because the Fund would be unable to sell the investment used as cover for
the written option until the option expires or is exercised.
Futures Contracts and Options on Futures Contracts. When the
Fund purchases a futures contract, it incurs an obligation to take
delivery of a specified amount of the obligation underlying the futures
contract at a specified time in the future for a specified price. When
the Fund sells a futures contract, it incurs an obligation to deliver a
specified amount of the obligation underlying the futures contract at a
specified time in the future for an agreed upon price. With respect to
index futures, no physical transfer of the securities underlying the index
is made. Rather, the parties settle by exchanging in cash an amount based
on the difference between the contract price and the closing value of the
index on the settlement date.
When the Fund writes an option on a futures contract, it
becomes obligated, in return for the premium paid, to assume a position in
a futures contract at a specified exercise price at any time during the
term of the option. If the Fund has written a call, it assumes a short
futures position. If the Fund has written a put, it assumes a long
futures position. When the Fund purchases an option on a futures
contract, it acquires the right, in return for the premium it pays, to
assume a position in a futures contract (a long position if the option is
a call and a short position if the option is a put).
The purchase of futures or call options on futures can serve as
a long hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures
contracts can serve as a limited short hedge, using a strategy similar to
that used for writing call options on securities or indices. Similarly,
writing put options on futures contracts can serve as a limited long
hedge.
Futures strategies also can be used to manage the average
duration of the Fund's fixed-income portfolio. If Dreyfus wishes to
shorten the average duration of the Fund's fixed-income portfolio, the
Fund may sell an interest rate futures contract or a call option thereon,
or purchase a put option on that futures contract. If Dreyfus wishes to
lengthen the average duration of the Fund's fixed-income portfolio, the
Fund may buy an interest rate futures contract or a call option thereon,
or sell a put option thereon.
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<PAGE>
No price is paid upon entering into a futures contract.
Instead, at the inception of a futures contract the Fund is required to
deposit "initial margin" consisting of cash or U.S. Government securities
in an amount generally equal to 10% or less of the contract value. Margin
must also be deposited when writing a call or put option on a futures
contract, in accordance with applicable exchange rules. Unlike margin in
securities transactions, initial margin on futures contracts does not
represent a borrowing, but rather is in the nature of a performance bond
or good-faith deposit that is returned to the Fund at the termination of
the transaction if all contractual obligations have been satisfied. Under
certain circumstances, such as periods of high volatility, the Fund may be
required by an exchange to increase the level of its initial margin
payment.
Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a
process known as "marking-to-market." Variation margin does not involve
borrowing, but rather represents a daily settlement of the Fund's
obligations to or from a futures broker. When the Fund purchases an
option on a future, the premium paid plus transaction costs is all that is
at risk. In contrast, when the Fund purchases or sells a futures contract
or writes a call or put option thereon, it is subject to daily variation
margin calls that could be substantial in the event of adverse price
movements. If the Fund has insufficient cash to meet daily variation
margin requirements, it might need to sell securities at a time when such
sales are disadvantageous.
Purchasers and sellers of futures contracts and options on
futures can enter into offsetting closing transactions, similar to closing
transactions on options, by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Positions in
futures and options on futures may be closed only on an exchange or board
of trade that provides a secondary market. Although the Fund intends to
enter into futures and options on futures only on exchanges or boards of
trade where there appears to be a liquid secondary market, there can be no
assurance that such a market will exist for a particular contract at a
particular time. In such event, it may not be possible to close a futures
contract or options position.
Under certain circumstances, futures exchanges may establish
daily limits on the amount that the price of a futures or an option on a
futures contract can vary from the previous day's settlement price; once
that limit is reached, no trades may be made that day at a price beyond
the limit. Daily price limits do not limit potential losses because
prices could move to the daily limit for several consecutive days with
little or no trading, thereby preventing liquidation of unfavorable
positions.
If the Fund were unable to liquidate a futures or options on
futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund
would continue to be subject to market risk with respect to the position.
In addition, except in the case of purchased options, the Fund would
continue to be required to make daily variation margin payments and might
be required to maintain the position being hedged by the future or option
or to maintain cash or securities in a segregated account.
B-14
<PAGE>
Foreign Currency Strategies - Special Considerations. The Fund
may use Derivative Instruments on foreign currencies to hedge against
movements in the values of the foreign currencies in which the Fund's
securities are denominated. Such currency hedges can protect against
price movements in a security that the Fund owns or intends to acquire
that are attributable to changes in the value of the currency in which it
is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
The Fund might seek to hedge against changes in the value of
particular currency when no Derivative Instruments on that currency are
available or such Derivative Instruments are more expensive than certain
other Derivative Instruments. In such cases, the Fund may hedge against
price movements in that currency by entering into transactions using
Derivative Instruments on another currency or a basket of currencies, the
values of which Dreyfus believes will have a high degree of positive
correlation to the value of the currency being hedged. The risk that
movements in the price of the Derivative Instrument will not correlate
perfectly with movements in the price of the currency being hedged is
magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies
depends on the value of the underlying currency relative to the U.S.
dollar. Because foreign currency transactions occurring in the interbank
market might involve substantially larger amounts than those involved in
the use of foreign currency Derivative Instruments, the Fund could be
disadvantaged by having to deal in the odd lot market (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might
be required to take place within the country issuing the underlying
currency. Thus, the Fund might be required to accept or make delivery of
the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange
contract ("forward contract") is a contract to purchase or sell a currency
at a future date. The two parties to the contract set the number of days
and the price. Forward contracts are used as a hedge against future
movements in foreign exchange rates. The Fund may enter into forward
contracts to purchase or sell foreign currencies for a fixed amount of
U.S. dollars or other foreign currency.
Forward contracts may serve as long hedges -- for example, the
Fund may purchase a forward contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to
acquire. Forward contracts may also serve as short hedges -- for example,
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<PAGE>
the Fund may sell a forward contract to lock in the U.S. dollar equivalent
of the proceeds from the anticipated sale of a security denominated in a
foreign currency or from anticipated dividend or interest payments
denominated in a foreign currency. Dreyfus may seek to hedge against
changes in the value of a particular currency by using forward contracts
on another foreign currency or basket of currencies, the value of which
Dreyfus believes will bear a positive correlation to the value of the
currency being hedged.
The cost to the Fund of engaging in forward contracts varies
with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because forward
contracts are usually entered into a principal basis, no fees or
commissions are involved. When the Fund enters into a forward contract,
it relies on the contra party to make or take delivery of the underlying
currency at the maturity of the contract. Failure by the contra party to
do so would result in the loss of any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into
offsetting closing transactions by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Secondary
markets generally do not exist for forward contracts, with the result that
closing transactions generally can be made for forward contracts only by
negotiating directly with the contra party. Thus, there can be no
assurance that the Fund will in fact be able to close out a forward
contract at a favorable price prior to maturity. In addition, in the
event of insolvency of the contra party, the Fund might be unable to close
out a forward contract at any time prior to maturity. In either event,
the Fund would continue to be subject to market risk with respect to the
position, and would continue to be required to maintain a position in the
securities or currencies that are the subject of the hedge or to maintain
cash or securities in a segregated account.
The precise matching of forward currency contract amounts and
the value of the securities involved generally will not be possible
because the value of such securities measured in the foreign currency will
change after the forward contract has been established. Thus, the Fund
might need to purchase or sell foreign currencies in the spot (cash)
market to the extent such foreign currencies are not covered by forward
contracts. The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain.
Swaps, Caps, Collars and Floors. Swap agreements, including
interest rate and currency swaps, caps, collars and floors, may be
individually negotiated and structured to include exposure to a variety of
different types of investments or market factors. Swaps involve two
parties exchanging a series of cash flows at specified intervals. In the
case of an interest rate swap, the parties exchange interest payments
based on an agreed upon principal amount (referred to as the "notional
principal amount"). Under the most basic scenario, Party A would pay a
fixed rate on the notional principal amount to Party B, which would pay a
floating rate on the same notional principal amount to Party A. Depending
on their structure, swap agreements may increase or decrease the Fund's
exposure to long or short-term interest rates (in the U.S. or abroad),
foreign currency values, mortgage securities, corporate borrowing rates,
or other factors. Swap agreements can take many different forms and are
known by a variety of names.
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In a typical cap or floor agreement, one party agrees to make
payments only under specified circumstances, usually in return for payment
of a fee by the other party. For example, the buyer of an interest rate
cap obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
The Fund will set aside cash or appropriate liquid assets to
cover its current obligations under swap transactions. If the Fund enters
into a swap agreement on a net basis (that is, the two payment streams are
netted out, with the Fund receiving or paying, as the case may be, only
the net amount of the two payments), the Fund will maintain cash or liquid
assets with a daily value at least equal to the excess, if any, of the
Fund's accrued obligations under the swap agreement over the accrued
amount the Fund is entitled to receive under the agreement. If the Fund
enters into a swap agreement on other than a net basis or writes a cap,
collar or floor, it will maintain cash or liquid assets with a value equal
to the full amount of the Fund's accrued obligations under the agreement.
The most important factor in the performance of swap agreements
is the change in the specific interest rate, currency or other factor(s)
that determine the amounts of payments due to and from the Fund. If a
swap agreement calls for payments by the Fund, the Fund must be prepared
to make such payments when due. In addition, if the contra party's
creditworthiness declines, the value of a swap agreement would likely
decline, potentially resulting in losses.
The Fund will enter into swaps, caps, collars and floors only
with banks and recognized securities dealers believed by Dreyfus to
present minimal credit risks in accordance with guidelines established by
the Board. If there is a default by the other party to such a
transaction, the Fund will have to rely on its contractual remedies (which
may be limited by bankruptcy, insolvency or similar laws) pursuant to the
agreement relating to the transaction.
The Fund understands that it is the position of the staff of
the SEC that assets involved in swap transactions are illiquid and,
therefore, are subject to the limitations on illiquid investments. See
"Illiquid Investments."
Investment Restrictions
The following limitations have been adopted by the Fund. The
Fund may not change any of these fundamental investment limitations
without the consent of: (a) 67% or more of the shares present at a meeting
of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
The Fund may not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase
to be invested in the securities of one or more issuers
conducting their principal activities in the same industry.
(For purposes of this limitation, U.S. Government securities,
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<PAGE>
and state or municipal governments and their political
subdivisions are not considered members of any industry.)
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended ("1940 Act"), except
that (a) the Fund may borrow money in an amount not exceeding
one-third of the Fund's total assets at the time of such
borrowings, and (b) the Fund may issue multiple classes of
shares. The purchase or sale of futures contracts, options,
forward contracts, swaps, caps, collars and floors shall not be
considered to involve the borrowing of money or issuance of
senior securities.
3. Purchase with respect to 75% of the Fund's total assets
securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in the securities of that
issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all
such loans. For purposes of this limitation debt instruments,
swaps, caps, collars, floors, and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall
not prevent the Fund from investing in securities or other
instruments backed by real estate, including mortgage loans, or
securities of companies that engage in real estate business or
invest or deal in real estate or interests therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of
such securities in accordance with the Fund's investment
program may be deemed an underwriting.
7. Purchase or sell commodities, except that the Fund may purchase
and sell foreign currency, futures contracts, options, forward
currency contracts, swaps, caps, collars and floors, and other
similar instruments.
The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its investable assets in securities of
a single open-end management investment company with substantially the
same investment objective, policies and limitations as the Fund.
The Fund has adopted the following additional non-fundamental
restrictions. These non-fundamental restrictions may be changed without
shareholder approval, in compliance with applicable law and regulatory
policy.
1. The Fund shall not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amounts
to the securities sold short, and provided that transactions in
futures contracts, options, forward contracts, swaps, caps,
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<PAGE>
collars, floors, and other similar financial instruments are
not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that
the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin
payments in connection with futures contracts, options, forward
contracts, swaps, caps, collars, floors, and other similar
financial instruments shall not constitute purchasing
securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any
issuer if the officers, Directors of the Fund, its advisers, or
managers, owning beneficially more than one half of 1% of the
securities of such issuer, together own beneficially more than
5% of such securities.
5. The Fund will not purchase securities of issuers (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof, the value of the Fund's investment
in securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated
as the issuer of a security.
6. The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time
deposits with maturities in excess of seven days and other
securities which are not readily marketable. For purposes of
this limitation, illiquid securities shall not include
interest-only (IO) and principal-only (PO) classes of fixed-
rate mortgage-related securities issued by the U.S. Government
or one of its agencies or instrumentalities; provided, that the
Board of Directors, or its delegate, determines that such
securities are liquid pursuant to guidelines established by or
under the direction of the Board of Directors. Also, for
purposes of this limitation, illiquid securities shall not
include Section 4(2) paper, or securities that may be resold
under Rule 144A under the Securities Act of 1933; provided,
that the Board of Directors, or its delegate, determines that
such securities are liquid based upon the trading markets for
the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets and except to the extent
otherwise permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of the Fund's total assets are
outstanding.
B-19
<PAGE>
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets
would be invested in warrants, or (b) more than 2% of the value
of the Fund's assets would be invested in warrants that are not
listed on the New York or American Stock Exchange (for purposes
of this limitation, warrants acquired by the Fund in units or
attached to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and
any combination thereof if, as a result of such purchase, the
value of its aggregate investment in such securities will
exceed 5% of its total assets, except that: (a) this limitation
shall not apply to standby commitments, and (b) this limitation
shall not apply to the Fund's transactions in futures contracts
and options on futures contracts.
To the extent that the Fund enters into futures contracts,
options on futures contracts, or options on foreign currencies traded on
an exchange regulated by the CFTC, in each case other than for bona fide
hedging purposes (as defined by the CFTC), the aggregate initial margin
and premiums required to establish those positions (excluding the amount
by which options are "in-the-money" at the time of purchase) will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts the
Fund has entered into. This policy does not limit to 5% the percentage of
the Fund's assets that are at risk in futures contracts and options on
futures contracts.
MANAGEMENT OF THE FUND
CONTROLLING SHAREHOLDER
Mellon Bank Corporation, a Pennsylvania corporation registered
as a bank holding company under the Bank Holding Company Act of 1956, as
amended, owned of record, through its direct and indirect subsidiaries,
more than 25% of the issued and outstanding voting shares of the Company
as of _______, 1995, and is, as a consequence, deemed to be a controlling
shareholder of the Company as that term is defined under the 1940 Act. The
address of Mellon Bank Corporation is: Mellon Bank Corporation, Mutual
Fund Department, 3 Mellon Bank Center, Pittsburgh, PA 15259. As of the
date of this Statement of Additional Information, [the Distributor] owned
[all] of the outstanding shares of the Fund.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve System from
having certain affiliations with an entity engaged principally in that
business. The activities of Mellon Bank, N.A. ("Mellon Bank") in
informing its customers of, and performing, investment and redemption
services in connection with the Fund, and in providing services to the
Fund as custodian and fund accountant, as well as Dreyfus' investment
advisory activities, may raise issues under these provisions. Mellon Bank
has been advised by counsel that the activities contemplated under these
arrangements are consistent with its statutory and regulatory obligations.
B-20
<PAGE>
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations, could prevent
Mellon Bank or Dreyfus from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus was prohibited from serving the Fund in any of its present
capacities, the Board of Directors would seek an alternative provider(s)
of such services.
DIRECTORS AND OFFICERS
The Company has a Board composed of thirteen Directors which
supervises the Fund's investment activities and reviews contractual
arrangements with companies that provide the Fund with services. The
following lists the Directors and officers and their positions with the
Company and their present and principal occupations during the past five
years. Each Director who is an "interested person" of the Company (as
defined in the 1940 Act) is indicated by an asterisk(*). Each of the
Directors also serves as a Trustee of The Dreyfus/Laurel Funds Trust, The
Dreyfus/Laurel Investment Series, and The Dreyfus/Laurel Tax-Free
Municipal Funds (collectively, the "Dreyfus/Laurel Family of Funds").
o + RUTH MARIE ADAMS. Director of the Company; Professor of English and
Vice President Emeritus, Dartmouth College; Senator, United Chapters of
Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution. Age: 80
years old. Address: 1026 Kendal Lyme Road, Hanover, New Hampshire 03755.
o + FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts
Business Development Corp.; Director, Boston Mutual Insurance
Company. Age: 78 years old. Address: Massachusetts Business
Development Corp., One Liberty Square, Boston, Massachusetts
02109.
o * JOSEPH S. DiMARTINO. Director of the Company since February 1995.
Since January 1995, Mr. DiMartino has served as Chairman of the
Board for various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President and a
director of Dreyfus and Executive Vice President and a director
of Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus. From August 1994 to December 31, 1994, he was a
director of Mellon Bank Corporation. He is Chairman of the
Board of Noel Group, Inc., a venture capital company; a trustee
of Bucknell University; and a director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, Belding
Heminway, Inc., a manufacturer and marketer of industrial
threads, specialty yarns, home furnishings and fabrics, Curtis
Industries, Inc., a national distributor of security products,
chemicals and automotive and other hardware, Simmons Outdoor
Corporation, and Staffing Resources, Inc. Age: 51 years old.
Address: 200 Park Avenue, New York, New York 10166.
o + JAMES M. FITZGIBBONS. Director of the Company; Chairman, Howes
Leather Company, Inc.; Director, Fiduciary Trust Company;
Chairman, CEO and Director, Fieldcrest-Cannon Inc.; Director,
Lumber Mutual Insurance Company; Director, Barrett Resources,
B-21
<PAGE>
Inc. Age: 60 years old. Address: 40 Norfolk Road, Brookline,
Massachusetts 02167.
o * J. TOMLINSON FORT. Director of the Company; Since 1990, Partner,
Reed, Smith, Shaw & McClay (law firm). Age: 65 years old.
Address: 204 Woodcock Drive, Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Director of the Company; Director and Chairman of
the Board, Rexene Corporation; Director, Calgon Carbon
Corporation; Director, National Picture Frame Corporation;
Director and Chairman of the Board, Tetra Corporation, 1991-
1993; Director, Medalist Corporation, 1992-1993. Since May
1991, Mr. Goeschel has served as Trustee of Sewickley Valley
Hospital. Age: 73 years old. Address: Way Hollow Road and
Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of the Company; former Director, The
Boston Company, Inc. and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; and Managing Partner,
Franklin Federal Partners. Age: 49 years old. Address:
Himmel and Company, Inc., 101 Federal Street, 22nd Floor,
Boston, Massachusetts 02110.
o * ARCH S. JEFFERY. Director of the Company; Financial Consultant. Age:
76 years old. Address: 1817 Foxcroft Lane, Unit 306, Allison
Park, Pennsylvania 15101.
o + STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company, Inc.; CEO, LDG Reinsurance Underwriters,
SRRF Management Inc. and Medical Reinsurance Underwriters Inc.
Age: 48 years old. Address 401 Edgewater Place, Wakefield,
Massachusetts 01880.
o + ROBERT D. McBRIDE. Director of the Company; Director and Chairman,
McLouth Steel; Director, Salem Corporation. Director,
SMS/Concast, Inc. (1983-1991). Age: 67 years old. Address:
15 Waverly Lane, Grosse Pointe Farms, Michigan 48236.
o + JOHN L. PROPST. Director of the Company; Of Counsel, Reed, Smith,
Shaw & McClay (law firm). Age: 81 years old. Address: 5521
Dunmoyle Street, Pittsburgh, Pennsylvania 15217.
o + JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban
Redevelopment Authority of Pittsburgh. Age: 62 years old.
Address: 321 Gross Street, Pittsburgh, Pennsylvania 15224.
o + ROSLYN M. WATSON. Director of the Company; Principal, Watson
Ventures, Inc.; Director, American Express Centurion Bank;
Director, Harvard Community Health Plan, Inc.; Director,
Massachusetts Electric Company; Director, The Hymias
Foundation, Inc.; prior to February 1993, Real Estate
Development Project Manager and Vice President, The Gunwyn
Company. Age: 45 years old. Address: 25 Braddock Park,
Boston, Massachusetts 02116-5816.
B-22
<PAGE>
# MARIE E. CONNOLLY. President and Treasurer of the Company, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Vice President of the Company (March 1994 to
September 1994); President, Funds Distributor, Inc. (since
1992); Treasurer, Funds Distributor, Inc. (July 1993 to April
1994); COO, Funds Distributor, Inc. (since April 1994);
Director, Funds Distributor, Inc. (since July 1992); President,
COO and Director, Premier Mutual Fund Services, Inc. (since
April 1994); Senior Vice President and Director of Financial
Administration, The Boston Company Advisors, Inc. (December
1988 to May 1993). Age: 37 years old. Address: One Exchange
Place, Boston, Massachusetts 02109.
# FREDERICK C. DEY. Vice President and Assistant Treasurer of the
Company, The Dreyfus/Laurel Investment Series, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Senior Vice President,
Premier Mutual Fund Services, Inc. (since August 1994); Vice
President, Funds Distributor, Inc. (since August 1994);
Fundraising Manager, Swim Across America (October 1993 to
August 1994); General Manager, Spring Industries (August 1988
to October 1993). Age: 33 years old. Address: Premier Mutual
Fund Services, Inc., 200 Park Avenue, New York, New York 10166.
# ERIC B. FISCHMAN. Vice President and Assistant Secretary of the
Company, The Dreyfus/Laurel Investment Series, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since September 1994); Vice President and
Associate General Counsel, Premier Mutual Fund Services, Inc.
(since August 1994); Vice President and Associate General
Counsel, Funds Distributor, Inc. (since August 1994); Staff
Attorney, Federal Reserve Board (September 1992 to June 1994);
Summer Associate, Venture Economics (May 1991 to September
1991); Summer Associate, Suffolk County District Attorney (June
1990 to August 1990). Age: 30 years old. Address: Premier
Mutual Fund Services, Inc., 200 Park Avenue, New York, New York
10166.
LESLIE M. GAYNOR. Assistant Treasurer of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since October 1994);
Assistant Treasurer/Manager of Treasury Services, Funds
Distributor, Inc. (since July 1994); Vice President, The Boston
Company, Inc. (1989 to July 1994). Address: One Exchange
Place, Boston, Massachusetts 02109.
RICHARD W. HEALEY. Vice President of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since March 1994);
Senior Vice President, Funds Distributor, Inc. (since March
1993); Vice President, The Boston Company, Inc. (March 1993 to
May 1993); Vice President of Marketing, Calvert Group (1989 to
March 1993); Fidelity Investments (prior to 1989). Address:
One Exchange Place, Boston, Massachusetts 02109.
B-23
<PAGE>
# JOHN E. PELLETIER. Vice President and Secretary of the Company, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Senior Vice President, General Counsel and
Secretary, Funds Distributor, Inc. (since April 1994); Senior
Vice President, General Counsel and Secretary, Premier Mutual
Fund Services, Inc. (since August 1994); Counsel, The Boston
Company Advisors, Inc. (February 1992 to March 1994);
Associate, Ropes & Gray (August 1990 to February 1992);
Associate, Sidley & Austin (June 1989 to August 1990). Age: 30
years old. Address: One Exchange Place, Boston, Massachusetts
02109.
# JOSEPH F. TOWER, III. Assistant Treasurer of the Company, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Senior Vice President and Chief Financial
Officer of Premier Mutual Fund Services, Inc. From July 1988
to August 1994, he was employed by The Boston Company, Inc.
where he held various management positions in the Corporate
Finance and Treasury areas. Age: 32 years old. Address: One
Exchange Place, Boston, Massachusetts 02109.
# JOHN J. PYBURN. Assistant Treasurer of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Vice President of Premier Mutual Fund Services, Inc. From 1984
to July 1994, he was Assistant Vice President in the Mutual
Fund Accounting Department of the Manager. Age: 59 years old.
Address: Premier Mutual Fund Services, Inc., 200 Park Avenue,
New York, New York 10166.
# PAUL D. FURCINITO. Assistant Secretary of the Company, The
Dreyfus/Laurel Investment Series, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Tax-Free Municipal Funds (since
September 1994); Assistant Vice President of Premier Mutual
Fund Services, Inc. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and from January 1990 to January
1992, he was mutual fund accountant, for The Boston Company
Advisors, Inc. Age: 28 years old. Address: Premier Mutual
Fund Services, Inc., 200 Park Avenue, New York, New York 10166.
# RUTH D. LEIBERT. Assistant Secretary of the Company, The Dreyfus/Laurel
Investment Series, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since September 1994);
Assistant Vice President of Premier Mutual Fund Services, Inc.
From March 1992 to July 1994, she was a Compliance Officer for
The Managers Funds, a registered investment company. From
March 1990 until September 1991, she was Development Director
of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National
Affairs. Age: 50 years old. Address: Premier Mutual Fund
Services, Inc., 200 Park Avenue, New York, New York 10166.
____________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
B-24
<PAGE>
# Officer also serves as an officer for other investment companies
advised by Dreyfus.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the total Investor and Class R shares of the
Fund outstanding as of the date of this Statement of Additional
Information.
No officer or employee of Premier (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Company for
serving as an officer or Director of the Company. In addition, no officer
or employee of Dreyfus (or of any parent or subsidiary thereof) serves as
an officer or Director of the Company. The Dreyfus/Laurel Family of Funds
pays each Director/Trustee who is not an officer or employee of Premier
(or of any parent, subsidiary or affiliate thereof) or of Dreyfus $27,000
per annum (and an additional $75,000 for the Chairman of the Board of
Directors/Trustees of the Dreyfus/Laurel Family of Funds). In addition,
the Dreyfus/Laurel Family of Funds pays each Director/Trustee $1,000 per
joint Dreyfus/Laurel Family of Funds Board meeting attended, plus $750 per
joint Dreyfus/Laurel Family of Funds Audit committee meeting attended, and
reimburses each Director/Trustee for travel and out-of-pocket expenses.
For the fiscal year ended October 31, 1994, the aggregate
amount of fees and expenses received by each Director from the Company and
all other Funds in the Dreyfus/Laurel Family of Funds for which such
person is a Board member were as follows:
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement from the Company
Aggregate Benefits Accrued Estimated Annual and Fund Complex
Compensation From as Part of the Benefits Upon Paid to Board
Name of Board Member the Company # Company's Expenses Retirement Member
-------------------- ----------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $19,685 None None $ 37,500
Francis P. Brennan* 52,809 None None 112,500
Joseph S. DiMartino** N/A N/A N/A N/A
James M. Fitzgibbons 17,685 None None 31,750
J. Tomlinson Fort 7,500 None None 7,500
Arthur L. Goeschel 26,185 None None 32,500
Kenneth A. Himmel 18,685 None None 35,750
Arch S. Jeffery 27,185 None None 33,500
Steven J. Lockwood 18,685 None None 35,750
Robert D. McBride 27,185 None None 33,500
John L. Propst 27,185 None None 33,500
John J. Sciullo 27,185 None None 33,500
Roslyn M. Watson 19,685 None None 36,750
B-25
<PAGE>
</TABLE>
# Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $10,876 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by The
Dreyfus/Laurel Family of Funds to be Chairman of the Board.
** Joseph S. DiMartino was not a Director of the Company as of
October 31, 1994.
MANAGEMENT ARRANGEMENTS
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "MANAGEMENT
OF THE FUND."
Management Agreement. Dreyfus serves as the investment manager
for the Fund pursuant to an Investment Management Agreement with the
Company dated April 4, 1994 ("Management Agreement"), transferred to
Dreyfus as of October 17, 1994. Pursuant to the Management Agreement,
Dreyfus provides, or arranges for one or more third parties to provide,
investment advisory, administrative, custody, fund accounting and transfer
agency services to the Fund. As investment manager, Dreyfus manages the
Fund by making investment decisions based on the Fund's investment
objective, policies and restrictions. The Management Agreement is subject
to review and approval at least annually by the Board of Directors.
The Management Agreement will continue from year to year
provided that a majority of the Directors who are not interested persons
of the Company and either a majority of all Directors or a majority of the
shareholders of the Fund approve its continuance. The Company may
terminate the Management Agreement, without prior notice to Dreyfus, upon
the vote of a majority of the Board of Directors or upon the vote of a
majority of the Fund's outstanding voting securities. Dreyfus may
terminate the Management Agreement upon sixty (60) days' written notice to
the Company. The Management Agreement will terminate immediately and
automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman--Operations and
Administration; Daniel C. Maclean, Vice President and General Counsel;
Barbara E. Casey, Vice President--Dreyfus Retirement Services; Henry D.
Gottmann, Vice President--Retail Sales and Service; Elie M. Genadry, Vice
President--Institutional Sales; Mark N. Jacobs, Vice President--Fund Legal
and Compliance and Secretary; Jeffrey N. Nachman, Vice President--Mutual
Fund Accounting; Diane M. Coffey, Vice President--Corporate
Communications; Katherine C. Wickham, Vice President--Human Resources;
William F. Glavin, Jr., Vice President--Product Management; Andrew S.
Wasser, Vice President--Information Services; Maurice Bendrihem,
Controller; Elvira Oslapas, Assistant Secretary; Mandell L. Berman, Frank
V. Cahouet, Alvin E. Freidman, Lawrence M. Greene, Julian M. Smerling and
David B. Truman, directors.
B-26
<PAGE>
PURCHASE OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY
FUND SHARES."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
Dreyfus Teletransfer Privilege. Dreyfus Teletransfer purchase
orders may be made between the hours of 8:00 a.m. and 4:00 p.m., New York
time, on any business day that The Shareholder Services Group, Inc., the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), and
the New York Stock Exchange ("NYSE") are open. Such purchases will be
credited to the shareholder's Fund account on the next bank business day.
To qualify to use the Dreyfus Teletransfer Privilege, the initial payment
for purchase of shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares--Dreyfus Teletransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year in which the account is closed or during the following
calendar year, provided the information on the old Account Application is
still applicable.
DISTRIBUTION PLAN
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"DISTRIBUTION PLAN."
Investor shares are subject to fees for distribution and
shareholder services.
Distribution Plan--Investor Shares. The SEC has adopted Rule
12b-1 under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Company may, directly or indirectly, bear
the expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule. With respect to
the Investor shares of the Fund, the Company has adopted a Distribution
Plan ("Plan") and may enter into Agreements with Agents pursuant to the
Plan.
Under the Plan, the Fund may spend annually up to 0.25% of its
average daily net assets attributable to Investor shares for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, the Investor shares.
B-27
<PAGE>
The Plan provides that a report of the amounts expended under
the Plan, and the purposes for which such expenditures were incurred, must
be made to the Company's Directors for their review at least quarterly.
In addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
the Company (as defined in the 1940 Act) and who do not have any direct or
indirect financial interest in the operation of the Plan, cast in person
at a meeting called for the purpose of considering such amendments. The
Plan is subject to annual approval by the entire Board of Directors and by
the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Plan, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The
Plan is terminable, as to the Fund's Investor shares, at any time by vote
of a majority of the Directors who are not interested persons and have no
direct or indirect financial interest in the operation of the Plan or by
vote of the holders of a majority of the outstanding Investor shares of
the Fund.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO
REDEEM FUND SHARES."
Wire Redemption Privilege. By using this Privilege, the
investor authorizes the Transfer Agent to act on wire or telephone
redemption instructions from any person representing himself or herself to
be the investor, or a representative of the investor's Agent, and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt if the Transfer Agent receives the
redemption request in proper form. Redemption proceeds will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder
Services Form. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the following
transmittal code, which may be used for domestic or overseas
transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP
B-28
<PAGE>
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT Cables
operator at 1-800-654-7171, toll free. Investors should advise the
operator that the above transmittal code must be used and should also
inform the operator of the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the NYSE
Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and "Signature-
Guaranteed" must appear with the signature. The Transfer Agent may
request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus Teletransfer Privilege. Investors should be aware that
if they have selected the Dreyfus Teletransfer Privilege, any request for
a wire redemption will be effected as a Dreyfus Teletransfer transaction
through the ACH system unless more prompt transmittal specifically is
requested. Redemption proceeds will be on deposit in the investor's
account at an ACH member bank ordinarily two business days after receipt
of the redemption request. See "Purchase of Fund Shares--Dreyfus
Teletransfer Privilege."
Redemption Commitment. The Fund has committed itself to pay in
cash all redemption requests by any shareholder of record of the Fund,
limited in amount during any 90-day period to the lesser of $250,000 or 1%
of the value of the Fund's net assets at the beginning of such period.
Such commitment is irrevocable without the prior approval of the SEC. In
the case of requests for redemptions in excess of such amount, the Board
of Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of
the existing shareholders. In this event, the securities would be valued
in the same manner as the Fund's portfolio is valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the
NYSE is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC so that disposal of the
B-29
<PAGE>
Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the SEC by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"SHAREHOLDER SERVICES."
Fund Exchanges. Shares of any Class of the Fund may be
exchanged for shares of the respective Class of certain other funds
advised or administered by Dreyfus. Shares of the same Class of such
funds purchased by exchange will be purchased on the basis of relative net
asset value per share as follows:
A. Exchanges for shares of funds that are offered without
a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other
funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares
purchased with a sales load and additional shares
acquired through reinvestment of dividends or other
distributions of any such funds (collectively referred
to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred
to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds
the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the
Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
E. Shares of funds subject to a contingent deferred sales
charge ("CDSC") that are exchanged for shares of
another fund will be subject to the higher applicable
CDSC of the two funds and, for purposes of calculating
CDSC rates and conversion periods, if any, will be
deemed to have been held since the date the shares
being exchanged were initially purchased.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
Exchanges of Class R shares held by a Retirement Plan may be
made only between the investor's Retirement Plan account in one fund and
such investor's Retirement Plan account in another fund.
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<PAGE>
To establish a personal Retirement Plan by exchange, shares of
the fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and Simplified Employee Pension
Plans ("SEP-IRAs") with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans, 403(b)(7)
Plans and IRAs set up under a SEP-IRA with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500
invested among the funds in the Dreyfus Family of Funds. To exchange
shares held in a personal retirement plan account, the shares exchanged
must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange
Privilege permits an investor to purchase, in exchange for shares of the
Fund, shares of the same Class of another fund in the Dreyfus Family of
Funds. This Privilege is available only for existing accounts. With
respect to Class R shares held by a Retirement Plan, exchanges may be made
only between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund. Shares will be
exchanged on the basis of relative net asset value as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of
this Privilege is effective three business days following notification by
the investor. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Dreyfus Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund exchanges and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the
fund being acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
Shareholder Services Forms and prospectuses of the other funds
may be obtained from the Distributor. The Fund reserves the right to
reject any exchange request in whole or in part. The Fund exchange
service or Dreyfus Auto-Exchange Privilege may be modified or terminated
at any time upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan
permits an investor with a $5,000 minimum account to request withdrawal of
a specified dollar amount (minimum of $50) on either a monthly or
quarterly basis. Withdrawal payments are the proceeds from sales of Fund
shares, not the yield on the shares. If withdrawal payments exceed
reinvested dividends and other distributions, the investor's shares will
be reduced and eventually may be depleted. An Automatic Withdrawal Plan
may be established by completing the appropriate application available
from the Distributor. There is a service charge of $.50 for each with-
drawal check. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal
Plan.
B-31
<PAGE>
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows
investors to invest on the payment date their dividends or dividends and
capital gain distributions, if any, from the Fund in shares of the same
Class of certain other funds in the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this Privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and other distributions paid by a fund may
be invested without imposition of a sales load in
shares of other funds that are offered without a sales
load.
B. Dividends and other distributions paid by a fund which
does not charge a sales load may be invested in shares
of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and other distributions paid by a fund which
charges a sales load may be invested in shares of
other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum
sales load charged by the fund from which dividends or
other distributions are being swept, without giving
effect to any reduced loads, the difference will be
deducted.
D. Dividends and other distributions paid by a fund may
be invested in shares of other funds that impose a
CDSC and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
also are available.
Investors who wish to purchase Fund shares in conjunction with
a Keogh Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may
request from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans
or IRAs may charge a fee, payment of which could require the liquidation
of shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by
direct remittance to the entity acting as custodian. Purchases for these
plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum on subsequent purchases. The
minimum initial investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-
IRAs and 403(b)(7) Plans with only one participant, is normally $750, with
B-32
<PAGE>
no minimum on subsequent purchases. Individuals who open an IRA may also
open a non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details on
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY
FUND SHARES."
Restricted securities, as well as securities or other assets
for which market quotations are not readily available, or which are not
valued by a pricing service approved by the Board of Directors, are valued
at fair value as determined in good faith by the Board of Directors. The
Board of Directors will review the method of valuation on a current basis.
In making their good faith valuation of restricted securities, the
Directors generally will take the following factors into consideration:
restricted securities which are securities of the same class of securities
for which a public market exists usually will be valued at market value
less the same percentage discount at which purchased. This discount will
be reviewed periodically by the Board of Directors if the Directors
believe that it no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a
public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Directors.
New York Stock Exchange Closings. The holidays (as observed)
on which the NYSE is closed currently are: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DIVIDENDS,
OTHER DISTRIBUTIONS AND TAXES."
The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
To qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"),
the Fund (1) must distribute to its shareholders each year at least 90% of
its investment company taxable income (generally consisting of net
investment income, net short-term capital gains and net gains from certain
foreign currency transactions) ("Distribution Requirement"), (2) must
derive at least 90% of its annual gross income from specified sources
("Income Requirement"), (3) must derive less than 30% of its annual gross
income from gain on the sale or disposition of any of the following that
are held for less than three months -- (a) securities, (b) non-foreign-
B-33
<PAGE>
currency options and futures and (c) foreign currencies (or foreign
currency options, futures and forward contracts) that are not directly
related to the Fund's principal business of investing in securities (or
options and futures with respect thereto) ("Short-Short Limitation") --
and (4) must meet certain asset diversification and other requirements.
Any dividend or other distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
the shares below the cost of his investment. Such a dividend or other
distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, if a
shareholder holds shares of the Fund for six months or less and has
received a capital gain distribution with respect to those shares, any
loss incurred on the sale of those shares will be treated as a long-term
capital loss to the extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in Octo-
ber, November or December of any year and payable to shareholders of
record on a date in any of those months are deemed to have been paid by
the Fund and received by the shareholders on December 31 of that year if
the distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
Interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign invest-
ors.
Income from foreign currencies (except certain gains therefrom
that may be excluded by future regulations), and income from transactions
in options, futures and forward contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options and futures contracts (other than
those on foreign currencies) will be subject to the Short-Short Limitation
if they are held for less than three months. Income from the disposition
of foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of
investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in
value of a position that is part of a "designated hedge" will be offset by
any decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net
gain (if any) from the designated hedge will be included in gross income
for purposes of that limitation. The Fund will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
extent the Fund does not so qualify, it may be forced to defer the closing
out of certain options, futures and forward contracts beyond the time when
it otherwise would be advantageous to do so, in order for the Fund to
qualify as a RIC.
B-34
<PAGE>
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain and loss. However, a portion
of the gain or loss from the disposition of foreign currencies and certain
foreign currency denominated securities (including debt instruments and
certain financial forward, futures and option contracts and preferred
stock) may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of any gain realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income. Moreover, all or a portion of the gain realized from
engaging in "conversion transactions" may be treated as ordinary income
under Section 1258 of the Code. "Conversion transactions" are defined to
include certain forward, futures, option and straddle transactions,
transactions marketed or sold to produce capital gains and transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by
the Fund from certain futures and forward contracts and options
transactions will be treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. Gain or loss will arise upon exercise or
lapse of such contracts and options as well as from closing transactions.
In addition, any such contracts or options remaining unexercised at the
end of the Fund's taxable year will be treated as sold for their then fair
market value (a process known as "marking to market"), resulting in
additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by the Fund involving certain
contracts or options may constitute "straddles". "Straddles" are defined
to include "offsetting positions" in actively traded personal property.
The tax treatment of straddles is governed by Sections 1092 and 1258 of
the Code, which, in certain circumstances, override or modify Sections
1256 and 988. As such, all or a portion of any capital gain from certain
straddle transactions may be recharacterized to ordinary income. If the
Fund were treated as entering into straddles by reason of its engaging in
certain forward contracts or options transactions, such straddles would be
characterized as "mixed straddles" if the forward contracts or options
transactions comprising a part of such straddles were governed by Section
1256. The Fund may make one or more elections with respect to mixed
straddles. Depending on which election is made, if any, the results to
the Fund may differ. If no election is made, then to the extent the
straddle and conversion transactions rules apply to positions established
by the Fund, losses realized by the Fund will be deferred to the extent of
unrealized gain in the offsetting position. Moreover, as a result of the
straddle rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gains may
be treated as short-term capital gains or ordinary income.
Investment by the Fund in securities issued or acquired at a
discount (for example, zero coupon securities) [or providing for deferred
interest or for payment of interest in the form of additional obligations
(for example, "pay-in-kind" or "PIK" securities)] could, under special tax
rules, affect the amount, timing and character of distributions to
shareholders by causing the Fund to recognize income prior to the receipt
of cash payments. For example, the Fund would be required to take into
gross income annually a portion of the discount (or deemed discount) at
which the securities were issued and could need to distribute such income
to satisfy the Distribution Requirement and to avoid imposition of the 4%
excise tax referred to in the Fund's Prospectus under "Dividends, Other
B-35
<PAGE>
Distributions and Taxes." In such case, the Fund may have to dispose of
securities it might otherwise have continued to hold in order to generate
cash to satisfy these requirements.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which it is deemed to be conducting
business, it may be subject to the tax laws of such states or localities.
Shareholders are advised to consult their tax advisers concerning the
application of state and local taxes.
Foreign Shareholders - U.S. Federal Income Taxation. U.S.
federal income taxation of a shareholder who, as to the United States, is
a non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the
Fund, such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them
of an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. If
the income from the Fund is not effectively connected with a U.S. trade or
business carried on by the foreign shareholder, distributions of
investment company taxable income generally will be subject to a U.S.
federal withholding tax of 30% (or lower treaty rate).
Capital gains realized by foreign shareholders on the sale of
Fund shares and distributions to them of net capital gain (the excess of
net long-term capital gain over net short-term capital loss) generally
will not be subject to U.S. federal income tax unless the foreign
shareholder is a non-resident alien individual and is physically present
in the United States for more than 182 days during the taxable year. In
the case of certain foreign shareholders, the Fund may be required to
withhold U.S. Federal income tax at a rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder furnishes the Fund with a certificate regarding the
shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a
foreign shareholder's ownership of Fund shares is effectively connected
with a U.S. trade or business carried on by a foreign shareholder, then
all distributions to that shareholder and any gains realized by that
shareholder on the disposition of the Fund shares will be subject to U.S.
federal income tax at the graduated rates applicable to U.S. citizens and
domestic corporations, as the case may be. Foreign shareholders also may
be subject to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals
generally are subject to U.S. federal estate tax on their U.S. situs
property, such as shares of the Fund, that they own at the time of their
death. Certain credits against that tax and relief under applicable tax
treaties may be available.
B-36
<PAGE>
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of
the Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that
a dealer (the securities firm or bank dealing with the Fund) makes a
market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a
spread. Other portfolio transactions may be executed through brokers
acting as agent. The Fund will pay a spread or commissions in connection
with such transactions. Dreyfus uses its best efforts to obtain execution
of portfolio transactions at prices which are advantageous to the Fund and
at spreads and commission rates, if any, which are reasonable in relation
to the benefits received. Dreyfus also places transactions for other
accounts that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to
be purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 of the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or
the purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as
clearance and settlement).
The receipt of research services from broker-dealers may be
useful to Dreyfus in rendering investment management services to the Fund
and/or its other clients; and, conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of other
clients of Dreyfus may be useful to these organizations in carrying out
their obligations to the Fund. The receipt of such research services does
not reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt
to develop comparable information through their own staffs.
The Company's Board of Directors periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and reviews the prices paid
B-37
<PAGE>
by the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the
Fund, investment decisions for the Fund are made independently from
decisions made for these other accounts. It sometimes happens that the
same security is held by more than one of the accounts managed by Dreyfus.
Simultaneous transactions may occur when several accounts are managed by
the same investment manager, particularly when the same investment
instrument is suitable for the investment objective of more than one
account.
When more than one account is simultaneously engaged in the
purchase or sale of the same investment instrument, the prices and amounts
are allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment manager to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year.
PERFORMANCE INFORMATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED
"PERFORMANCE INFORMATION."
Average annual total return is calculated by determining the
ending redeemable value of an investment purchased with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and other distributions), dividing by the amount
of the initial investment, taking the "n"th root of the quotient (where
"n" is the number of years in the period) and subtracting 1 from the
result.
Total return is calculated by subtracting the amount of the
Fund's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and other distributions during the
period), and dividing the result by the net asset value per share at the
beginning of the period.
The Fund may also advertise yield from time to time. Yields
are computed by using standardized methods of calculation required by the
SEC. Yields are calculated by dividing the net investment income per
share earned during a 30-day (or one-month) period by the maximum offering
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<PAGE>
price per share on the last day of the period, according to the following
formula:
6
YIELD = 2[(a-b + 1) -1]
---
cd
Where: a = dividends and interest earned during the
period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of shares outstanding
during the period that were entitled to
receive dividends; and
d = maximum offering price per share on the last
day of the period.
Performance information for the Fund may be compared, in
reports and promotional literature, to indexes including, but not limited
to: (i) the Lehman Brothers Aggregate Bond Index; (ii) other Lehman
Brothers indices, the Dow Jones Industrial Average, or other appropriate
unmanaged domestic or foreign indices of performance of various types of
investments so that investors may compare the Fund's results with those of
indices widely regarded by investors as representative of the securities
markets in general; (iii) other groups of mutual funds tracked by Lipper
Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, or
tracked by other services, companies, publications, or persons who rank
mutual funds on overall performance or other criteria; (iv) the Consumer
Price Index (a measure of inflation) to assess the real rate of return
from an investment in the Fund; and (v) products managed by a universe of
money managers with similar country allocation and performance objectives.
Unmanaged indices may assume the reinvestment of dividends but generally
do not reflect deductions or administrative and management costs and
expenses.
INFORMATION ABOUT THE FUND
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "GENERAL
INFORMATION."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares have no preemptive or subscription rights and are
freely transferable.
The Fund will send annual and semi-annual financial statements
to all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Mellon Bank, One Mellon Bank Center, Pittsburgh, PA 15258, is
the Fund's custodian. The Shareholder Services Group, Inc., a subsidiary
of First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-
B-39
<PAGE>
9671, is the Fund's transfer and dividend disbursing agent. The
Shareholder Services Group, Inc. and Mellon Bank, as custodian, have no
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 M Street, N.W., South Lobby -
9th Floor, Washington, D.C. 20036, has passed upon the legality of the
shares offered by the Prospectus and this Statement of Additional
Information.
_____________ was appointed by the Directors to serve as the
Fund's independent auditors for the year ending October 31, 1996,
providing audit services including (1) examination of the annual financial
statements, (2) assistance, review and consultation in connection with the
SEC, and (3) review of the annual federal income tax return and the
Pennsylvania excise tax return filed on behalf of the Fund.
B-40
<PAGE>
FINANCIAL STATEMENTS
B-41
<PAGE>
APPENDIX
DESCRIPTIONS OF SECURITIES RATINGS
Debt Instruments Ratings
------------------------
Moody's Investors Service, Inc. (Moody's):
------------------------------------------
Aaa -- Bonds rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa Securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A -- Bonds rated A possess many favorable investment
attributes and are considered "upper medium-grade obligations."
Baa -- Bonds rated Baa are considered medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present,
but certain protective elements may be lacking or may be
characteristically unreliable on any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Those Bonds in the Aa and A groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa 1 and A 1.
Standard & Poor's ("S&P"):
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas it instantly
B-42
<PAGE>
exhibits adequate protection changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt
in this category than in higher rated categories.
Plus (+) or Minus (-): The AA rating may be modified by the
addition of a plus or minus sign to show relative standing within the AA
rating category.
Commercial Paper Ratings
------------------------
Moody's:
--------
Commercial paper rated Prime by Moody's is based upon its
evaluation of many factors including: (1) management of the issuer; (2)
the issuer's industry or industries and the speculative-type risks which
may be inherent in certain areas; (3) the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
factors determine whether the issuer's commercial paper is rated Prime-1,
Prime-2, or Prime-3.
Prime-1 indicates a superior capacity for repayment of short-
term promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics: (1) leading market positions
in well established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
(5) well established access to a range of financial markets and assured
sources of alternative liquidity.
S&P:
---
Commercial paper rated by S&P has the following
characteristics: liquidity ratios adequate to meet cash requirements.
Long-term senior debt is rated A or better. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow
have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a
strong position within the industry. The reliability and quality of
management are unquestioned. Relative strength or weakness of the above
factors determines whether the issuer's commercial paper is rated A-1, A-
2, or A-3.
A-1 -- This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
Fitch Investors Service, Inc. ("Fitch"):
---------------------------------------
Commercial paper rated by Fitch reflects Fitch's current
appraisal of the degree of assurance of timely payment of such debt. An
B-43
<PAGE>
appraisal results in the rating of an issuer's paper as F-1, F-2, F-3, or
F-4.
F-1 -- This designation indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
Duff & Phelps, Inc. ("Duff & Phelps"):
-------------------------------------
Duff & Phelps' short-term ratings are consistent with the
rating criteria utilized by money market participants. The ratings apply
to all obligations with maturities of under one year including commercial
paper, the uninsured portion of certificates of deposit, unsecured bank
loans, master notes, bankers' acceptances, irrevocable letters of credit,
and current maturities of long-term debt. Asset-backed commercial paper
is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only
cash from operations, but also access to alternative sources of funds
including trade credit, bank lines, and the capital markets. An important
consideration is the level of an obligor's reliance on short-term funds on
an ongoing basis.
The distinguishing feature of Duff & Phelps' short-term
ratings is the refinement of the traditional "1" category. The majority
of short-term debt issuers carry the highest rating, yet quality
differences exist within that tier. As a consequence, Duff & Phelps has
incorporated gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing those differences.
Duff l+ -- Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
Duff 1 -- Very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
Duff 1- -- High certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors.
Risk factors are very small.
IBCA, Inc. ("IBCA"):
-------------------
In addition to conducting a careful review of an institution's
reports and published figures, IBCA's analysts regularly visit the
companies for discussions with senior management. These meetings are
fundamental to the preparation of individual reports and ratings. To keep
abreast of any changes that may affect assessments, analysts maintain
contact throughout the year with the management of the companies they
cover.
IBCA's analysts speak the languages of the countries they
cover, which is essential to maximize the value of their meetings with
management and to properly analyze a company's written materials. They
also have a thorough knowledge of the laws and accounting practices that
govern the operations and reporting of companies within the various
countries.
B-44
<PAGE>
Often, in order to ensure a full understanding of their
position, companies entrust IBCA with confidential data. While these data
cannot be disclosed in reports, they are taken into account when assigning
IBCA's ratings. Before dispatch to subscribers, a draft of the report is
submitted to each company to permit correction of any factual errors and
to enable clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review
all ratings and to ensure that individual ratings are assigned
consistently for institutions in all the countries covered. Following the
Committee meetings, ratings are issued directly to subscribers. At the
same time, the company is informed of the ratings as a matter of courtesy,
but not for discussion.
A1+ -- Obligations supported by the highest capacity for
timely repayment.
A1 -- Obligations supported by a very strong capacity for
timely repayment.
B-45
<PAGE>
THE DREYFUS/LAUREL FUNDS, INC.
(formerly, The Laurel Funds, Inc.)
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
--------------------
Included in Part A:
Not Applicable.
Included in Part B:
Not Applicable.
(b) Exhibits:
--------
1(a) Articles of Incorporation dated July 31, 1987.
Incorporated by reference to Pre-Effective Amendment
No. 1 to the Registrant's Registration Statement on
Form N-1A filed on August 6, 1987 -- Registration No.
33-16338 ("Registration Statement").
1(b) Articles Supplementary dated October 15, 1993
increasing authorized capital stock. Filed herewith.
1(c) Articles of Amendment dated March 31, 1994.
Incorporated by reference to Post-Effective Amendment
No. 29 to the Registrant's Registration Statement on
Form N-1A ("Post-Effective Amendment No. 29") filed on
May 19, 1994
1(d) Articles Supplementary dated March 31, 1994
reclassifying shares. Incorporated by reference to
Post-Effective Amendment No. 29.
1(e) Articles Supplementary dated May 24, 1994 designating
and classifying shares. Filed herewith.
1(f) Articles of Amendment dated October 17, 1994.
Incorporated by reference to Post-Effective Amendment
No. 31 filed on December 13, 1994.
1(g) Articles Supplementary dated December 19, 1994
designating classes. Incorporated by reference to
Post-Effective Amendment No. 32 filed on December 19,
1994.
C-1
<PAGE>
1(h) Articles of Amendment dated June 9, 1995. Filed
herewith.
1(i) Articles of Amendment dated August 30, 1995. Filed
herewith.
1(j) Articles Supplementary dated August 31, 1995
reclassifying shares. Filed herewith.
1(k) Articles Supplementary dated _____, 1995 designating
and classifying shares. To be filed by amendment.
2 Bylaws. Incorporated by reference to the Registration
Statement.
3 Not Applicable.
4 Specimen security. To be filed by amendment.
5(a) Investment Sub-Advisory Agreement among Mellon Bank,
N.A., S.A.M. Finance S.A. and the Registrant for the
European Fund. Incorporated by reference to
Post-Effective Amendment No. 22 filed on September 3,
1993.
5(b) Investment Management Agreement between Mellon Bank,
N.A. and the Registrant. Incorporated by reference to
Post-Effective Amendment No. 29.
5(c) Investment Sub-Advisory Agreement among Mellon Bank,
N.A., S.A.M. Finance S.A. and the Registrant for the
International Equity Allocation Fund. Incorporated by
reference to Post-Effective Amendment No. 31 filed on
December 13, 1994.
5(d) Assignment and Assumption Agreement among Mellon Bank,
N.A., The Dreyfus Corporation and the Registrant
(relating to Investment Management Agreement).
Incorporated by reference to Post-Effective Amendment
No. 31 filed on December 13, 1994.
5(e) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the European Fund). To be filed by
amendment.
5(f) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the International Equity Allocation
Fund). To be filed by amendment.
C-2
<PAGE>
6 Distribution Agreement between Premier Mutual Fund
Services, Inc. and the Registrant. Incorporated by
reference to Post-Effective Amendment No. 31 filed on
December 13, 1994.
7 Not Applicable.
8(a) Custody Agreement with Boston Safe Deposit and Trust
Company with respect to the European Fund.
Incorporated by reference to Post-Effective Amendment
No. 23 filed on December 30, 1993.
8(b) Custody and Fund Accounting Agreement between the
Registrant and Mellon Bank, N.A. Incorporated by
reference to Post-Effective Amendment No. 29.
8(c) Supplement to Custody Agreement with Boston Safe
Deposit and Trust Company with respect to the European
Fund. Incorporated by reference to Post-Effective
Amendment No. 29.
8(d) Custody Agreement with Boston Safe Deposit and Trust
Company with respect to the International Equity
Allocation Fund. To be filed by amendment.
8(e) Sub-Custodian Agreement between Mellon Bank, N.A. and
Boston Safe Deposit and Trust Company. To be filed be
amendment.
9(a) Fund Accounting Services Agreement. Incorporated by
reference to the Registration Statement.
9(b) Fund Accounting Services Agreement with Boston Safe
Deposit and Trust Company with respect to the European
Fund. Incorporated by reference to Post-Effective
Amendment No. 23 filed on December 30, 1993.
9(c) Supplement to Fund Accounting Services Agreement with
Boston Safe Deposit and Trust Company with respect to
the European Fund. Incorporated by reference to
Post-Effective Amendment No. 29.
10 Opinion of counsel is incorporated by reference to the
Registration Statement and to Post-Effective Amendment
No. 32 filed on December 19, 1994. Consent of counsel
is filed herewith.
11 Not Applicable.
12 Not Applicable.
13 Letter of Investment Intent. Incorporated by
reference to the Registration Statement.
14 Not Applicable.
C-3
<PAGE>
15(a) Restated Distribution Plan (relating to Investor
Shares and Class A Shares). Incorporated by reference
to Post-Effective Amendment No. 31 filed on December
13, 1994.
15(b) Form of Distribution and Service Plans (relating to
Class B Shares and Class C Shares). Incorporated by
reference to Post-Effective Amendment No. 32 filed on
December 19, 1994.
16 Schedule for Computation of Performance Calculation.
Incorporated by reference to Post-Effective Amendment
No. 26 filed on March 1, 1994.
18 Rule 18f-3 Plans dated April 26, 1995. Incorporated
by reference to Post-Effective Amendment No. 36 filed
on May 16, 1995.
25 Powers of Attorney of the Directors and Officers dated
April 5, 1995. Incorporated by reference to
Post-Effective Amendment No. 35 filed on April 7,
1995.
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities
-------------------------------
Set forth below are the number of recordholders of securities
of the Registrant as of September 18, 1995:
------------
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class Investor Class Class R Class I Class II Class III
-------------- -------------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Dreyfus Bond Market Index Fund 16 15 -- -- --
Dreyfus International Equity Allocation Fund 658 109 -- -- --
Dreyfus Disciplined Stock Fund 2233 10438 -- -- --
Dreyfus Disciplined Midcap Stock Fund 147 103 -- -- --
Dreyfus Institutional S&P 500 Stock Index Fund 13 1078 -- -- --
Dreyfus Equity Income Fund 96 13 -- -- --
Dreyfus European Fund 84 144 -- -- --
Dreyfus Money Market Reserves 15798 1178 -- -- --
C-4
<PAGE>
Number of Record Holders
Title of Class Investor Class Class R Class I Class II Class III
-------------- -------------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Dreyfus U.S. Treasury Reserves 1845 277 -- -- --
Dreyfus Municipal Reserves 1204 643 -- -- --
Dreyfus Institutional Prime Money Market Fund -- -- 191 -- --
Dreyfus Institutional U.S. Treasury Money Market -- -- 68 -- --
Fund
Dreyfus Institutional Government Money Market Fund -- -- 26 -- --
Dreyfus/Laurel Short Term Government Securities 2 2 -- -- --
Fund
Dreyfus/Laurel Institutional U.S. Treasury Only -- -- 3 2 --
Money Market Fund
Dreyfus/Laurel Institutional Short-Term Bond Fund -- -- 1 -- --
Class A Class B Class C Class R
------- ------- ------- -------
Premier Balanced Fund 79 187 2 104
Premier Small Company Stock Fund 124 63 6 432
Premier Limited Term Income Fund 105 13 1 1507
</TABLE>
Item 27. Indemnification
---------------
Incorporated by reference to Registration Statement.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the investment
adviser, manager and distributor for sponsored investment companies
registered under the Investment Company Act of 1940 and as an investment
adviser to institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various pension
plans, institutions and individuals.
C-5
<PAGE>
Officers and Directors of Investment Adviser
--------------------------------------------
Name and Position with Other Businesses
Dreyfus ----------------
---------------------
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite
370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund++++
JULIAN M. SMERLING None
Director
C-6
<PAGE>
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board Dreyfus Acquisition Corporation*;
and Chief Executive The Dreyfus Consumer Credit
Officer Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the The Boston Company
Board One Boston Place
Boston, Massachusetts 02108;
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
C-7
<PAGE>
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation*;
Operating Officer, Former Executive Vice President:
and a Director Prudential Investment Corporation
751 Board Street
Newark, New Jersey 07102
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Chief Kleinwort Benson Investment Management
Investment Officer, and Americas, Inc.*
a Director
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman- Executive Officer:
Distribution The Boston Company Advisors, Inc.
and a Director 53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108
C-8
<PAGE>
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman- Officer:
Operations The Dreyfus Trust Company++;
and Administration Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank
F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit
Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management,
Inc.+;
Dreyfus Service Organization, Inc.*;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division of
Dreyfus Retirement Dreyfus Service Corporation*;
Services Executive Vice President:
Boston Safe Deposit & Trust
Co.
One Boston Place
Boston, Massachusetts 02108
DIANE M. COFFEY None
Vice President-
Corporate
Communications
C-9
<PAGE>
ELIE M. GENADRY President:
Vice President- Institutional Services Division of
Institutional Sales Dreyfus Service Corporation*;
Broker-Dealer Division of Dreyfus
Service Corporation*;
Group Retirement Plans Division of
Dreyfus Service Corporation*;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service
Sales and Service Corporation*;
Vice President:
Dreyfus Precious Metals,
Inc.*
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and Dreyfus Precious Metals,
General Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit
Corporation*;
Director and Secretary:
Dreyfus Partnership
Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President-Mutual
Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President-Product The Boston Company Advisors,
Management Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
C-10
<PAGE>
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and
Human Resources Recreation of the City of
New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice Mellon Bank Corporation
President-Information One Mellon Bank Center
Services Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management,
Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit
Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals, Inc.*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation*;
The Truepenny Corporation*
C-11
<PAGE>
________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
+ The address of the business so indicated is Atrium Building, 80
Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama
Islands.
Item 29. Principal Underwriter
---------------------
(a) Premier Mutual Fund Services, Inc. ("Premier") currently
serves as the exclusive distributor for The Dreyfus/Laurel Funds, Inc.
Premier is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. Premier is a wholly-owned subsidiary of Institutional
Administration Services, Inc., the parent company of which is Boston
Institutional Group, Inc. Premier also currently serves as the exclusive
distributor or principal underwriter for the following investment
companies:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus LifeTime Portfolios, Inc.
C-12
<PAGE>
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus Michigan Municipal Money Market Fund, Inc.
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wilshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc
75) Dreyfus Third Century Fund, Inc.
76) General California Municipal Bond Fund, Inc.
77) General California Municipal Money Market Fund
78) General Government Securities Money Market Fund, Inc.
79) General Money Market Fund, Inc.
80) General Municipal Bond Fund, Inc.
81) General Municipal Money Market Fund, Inc.
C-13
<PAGE>
82) General New York Municipal Bond Fund, Inc.
83) General New York Municipal Money Market Fund
84) Pacifica Funds Trust -
Pacifica American Money Market Portfolio
Pacifica American U.S. Treasury Portfolio
85) Peoples Index Fund, Inc.
86) Peoples S&P MidCap Index Fund, Inc.
87) Premier Insured Municipal Bond Fund
88) Premier California Municipal Bond Fund
89) Premier GNMA Fund
90) Premier Growth Fund, Inc.
91) Premier Municipal Bond Fund
92) Premier New York Municipal Bond Fund
93) Premier State Municipal Bond Fund
94) Premier Global Investing, Inc.
95) The Dreyfus/Laurel Funds Trust
96) The Dreyfus/Laurel Tax-Free Municipal Funds
97) The Dreyfus/Laurel Investment Series
(b) The names of the principal executive officers of Premier,
together with their respective positions with Premier and their positions
and offices with the Registrant, are set forth below.
Position and
Position and Office(s) Office(s) with
Name and Address with Premier Registrant
---------------- --------------------- -------------
Marie E. Connolly* Director, President & President &
Chief Operating Officer Treasurer
John E. Pelletier* Senior Vice President, Vice President &
Secretary & General Secretary
Counsel
Joseph F. Tower, Senior Vice President & Assistant
III* Chief Financial Officer Treasurer
John J. Pyburn** Vice President & Assistant
Assistant Treasurer Treasurer
Jean M. O'Leary* Assistant Secretary None
Lynn H. Johnson* Vice President None
Eric B. Fischman** Vice President & Vice President &
Associate General Assistant
Counsel Secretary
C-14
<PAGE>
Position and
Position and Office(s) Office(s) with
Name and Address with Premier Registrant
---------------- --------------------- -------------
Frederic C. Dey** Senior Vice President Vice President &
Assistant
Treasurer
Ruth D. Leibert** Assistant Vice President Assistant
Secretary
Paul D. Furcinito** Assistant Vice President Assistant
Secretary
Paul Prescott* Assistant Vice President None
Leslie M. Gaynor* Assistant Treasurer Assistant
Treasurer
Mary Nelson* Assistant Treasurer None
John W. Gomez* Director None
William J. Nutt* Director None
_________________
* Address: Funds Distributor, Inc., One Exchange Place, Boston, MA
02109.
** Address: Premier Mutual Fund Services, Inc., 200 Park Avenue, New
York, NY 10166.
Item 30. Location of Accounts and Records
--------------------------------
(1) The Dreyfus/Laurel Funds, Inc.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(2) Mellon Bank, N.A.
c/o The Boston Company Advisers, Inc.
4th Floor
One Exchange Place
Boston, MA 02109
(3) Mellon Bank, N.A.
c/o The Boston Company, Inc.
5th Floor
One Boston Place
Boston, MA 02108
(4) Mellon Bank, N.A
The Park Square Building
31 St. James Avenue
Boston, MA 02116
(5) The Shareholder Services Group, Inc.
1 American Express Plaza
Providence, RI 02903
C-15
<PAGE>
(6) Mellon Bank, N.A.
One Mellon Bank Center
39th Floor
Pittsburgh, PA 15258
(7) The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Item 31. Management Services
-------------------
Not Applicable.
Item 32. Undertakings
------------
(a) Not Applicable.
(b) Registrant undertakes to file a post-effective amendment,
using financial statements for Dreyfus Disciplined Intermediate Bond Fund
that need not be certified, within four to six months from the effective
date of the post-effective amendment to the Registrant's 1933 Act
Registration Statement under which the Fund becomes operational.
(c) Registrant has elected to include its Management's
discussion of fund performance required under Form N-1A, Item 5A in its
annual report. Registrant therefore undertakes to provide annual reports
without charge to any recipient of a Prospectus who requests the
information.
C-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant, The
Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds, Inc.), has duly
caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
New York, State of New York on the 21st day of September, 1995.
THE DREYFUS/LAUREL FUNDS, INC.
/s/Marie E. Connolly*
---------------------
Marie E. Connolly*
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Marie E. Connolly*
_______________________ President, Treasurer 9/21/95
Marie E. Connolly
/s/Francis P. Brennan*
_______________________ Director,
Francis P. Brennan Chairman of the Board 9/21/95
/s/Ruth Marie Adams*
_______________________ Director 9/21/95
Ruth Marie Adams
/s/Joseph S. DiMartino*
_______________________ Director 9/21/95
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Director 9/21/95
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Director 9/21/95
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Director 9/21/95
Stephen J. Lockwood
C-17
<PAGE>
/s/Roslyn M. Watson*
________________________ Director 9/21/95
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Director 9/21/95
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Director 9/21/95
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Director 9/21/95
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Director 9/21/95
Robert D. McBride
/s/John L. Propst*
________________________ Director 9/21/95
John L. Propst
/s/John J. Sciullo*
________________________ Director 9/21/95
John J. Sciullo
*By: /s/Eric B. Fischman
______________________
Eric B. Fischman,
Attorney-in-Fact
C-18
<PAGE>
<PAGE>
THE LAUREL FUNDS, INC.
ARTICLES SUPPLEMENTARY
These Articles Supplementary are made this 15th day of October, 1993 to
the Articles of Incorporation of The Laurel Funds, Inc. (the
"Corporation") dated July 31, 1987.
WITNESSETH:
WHEREAS, the Corporation is a registered open-end investment management
company under the Investment Company Act of 1940; and
WHEREAS, pursuant to Section 5.1 of the Articles of Incorporation, the
total number of shares of capital stock which the Corporation shall have
the authority to issue is five billion (5,000,000,000) shares, of the par
value of one-tenth of one cent ($.001) and the aggregate par value of five
million dollars ($5,000,000); and
WHEREAS, in accordance with Section 2-105(c) of the Annotated Code of
Maryland, the Board of Directors of the Corporation have authorized an
increase the aggregate number of shares of stock;
NOW, THEREFORE, the first sentence of Section 5.1 of the Articles of
Incorporation is hereby amended to read as follows:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is twenty five billion
(25,000,000,000) shares, of the par value of one-tenth of one
cent ($.001) (the "Shares"), and of the aggregate par value of
twenty five million dollars ($25,000,000)."
The undersigned hereby certifies that these Articles Supplementary as set
forth above have been duly adopted in accordance with the provisions of
the Articles of Incorporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of date
and year first above written.
Attest THE LAUREL FUNDS, INC.
/s/ Amy L. Oster /s/ Thomas A. Early
------------------------- -----------------------
Amy L. Oster Thomas A. Early
Assistant Secretary Vice President and Secretary
<PAGE>
STATE OF WASHINGTON )
COUNTY OF PIERCE )
The undersigned, Thomas A. Early, being first duly sworn, deposes and
says:
That he has executed the foregoing Supplementary Articles for and on
behalf of The Laurel Funds, Inc., that he is a Vice President and the
Secretary of The Laurel Funds, Inc. and is fully authorized to execute and
file such Supplementary Articles; that he is familiar with the content of
the Supplementary Articles; and that to the best of his knowledge,
information and belief the statements made in such Supplementary Articles
are true.
/s/ Thomas A. Early
-------------------------------
Thomas A. Early
Subscribed and sworn to before me
this 15th day of October, 1993
/s/ Margaret Foster
---------------------------------
NOTARY PUBLIC
In and for the County of Pierce
State of Washington
My Commission Expires: 6/15/94
(Notarial Seal)
<PAGE>
<PAGE>
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
THE LAUREL FUNDS, INC.
The Laurel Funds, Inc. ("Company"), a Maryland
corporation, organized on August 6, 1987, having its principal office in
Maryland in Baltimore, Maryland, hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: By action of the Board of Directors of the
Company in accordance with the Company's Articles of Incorporation and the
Maryland Corporations and Associations Code Annotated Section 2-105(c)
(Supp. 1993), one hundred eighty million (180,000,000) shares of capital
stock that the Company is authorized to issue have been classified as
shares of Global Income Fund, Trust Class (36 million), Global Income
Fund, Investor Class (24 million), International Equity Allocation Fund,
Trust Class (36 million), International Equity Allocation Fund, Investor
Class (24 million), International Stock Fund, Trust Class (36 million) and
International Stock Fund, Investor Class (24 million). Such shares are in
addition to shares previously classified.
The aggregate number of shares of all classes and series
remains twenty-five billion (25,000,000,000), the par value per share
remains $.001, and the aggregate par value of all authorized stock remains
twenty-five million dollars ($25,000,000). All authorized shares not
heretofore designated or classified remain available for future
designation and classification by the Board of Directors.
SECOND: The Company is registered with the Securities
and Exchange Commission as an open-end investment company under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the undersigned hereby executes these
Articles Supplementary on behalf of the Company, acknowledging such to be
the act of the Company, and further states under penalties of perjury
that, to the best of his knowledge, information and belief, the matters
and facts set forth herein are true in all material respects.
Dated: May 24, 1994. THE LAUREL FUNDS, INC.
By:/s/ Lynn L. Anderson
--------------------
Name: Lynn L. Anderson
Title: President
Attest:/s/ Deedra A. Smith
-------------------
Name: Deedra A. Smith
Title: Assistant Secretary
<PAGE>
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE DREYFUS/LAUREL FUNDS, INC.
Pursuant to Sections 2-605(a)(4) and 2-607 of the Maryland
General Corporation Law, The Dreyfus/Laurel Funds, Inc. (the
"Corporation") adopts the following Articles of Amendment to the
Corporation's Articles of Incorporation, effective as of June 9, 1995:
FIRST: The name of each of the following Series of capital stock
of the Corporation and Classes thereof is changed as follows:
Dreyfus/Laurel Prime Money Market Fund; R Class to
Dreyfus Money Market Reserves; R Class
Dreyfus/Laurel Prime Money Market Fund; Investor Class to
Dreyfus Money Market Reserves; Investor Class
Dreyfus/Laurel Tax-Exempt Money Market Fund; R Class to
Dreyfus Municipal Reserves; R Class
Dreyfus/Laurel Tax-Exempt Money Market Fund; Investor Class to
Dreyfus Municipal Reserves; Investor Class
Dreyfus/Laurel U.S. Treasury Money Market Fund; R Class to
Dreyfus U.S. Treasury Reserves; R Class
Dreyfus/Laurel U.S. Treasury Money Market Fund; Investor Class to
Dreyfus U.S. Treasury Reserves; Investor Class
SECOND: The Amendments contained herein were approved by a
majority of the entire Board of Directors of the Corporation and are
limited to changes expressly permitted by Section 2-605(a)(4) of the
Maryland General Corporation Law to be made without action by the
stockholders of the Corporation.
THIRD: The Corporation is registered with the Securities and
Exchange Commission as an open-end management investment company under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the undersigned hereby executes these
Articles of Amendment to the Corporation's Articles of Incorporation on
behalf of the Corporation, acknowledging it to be the act of the
Corporation, and further states under the penalties of perjury that, to
the best of his or her knowledge, information and belief, the matters and
facts set forth herein are true in all material respects.
THE DREYFUS/LAUREL FUNDS, INC.
/s/ Eric Fischman /s/ John E. Pelletier
Attest: ___________________ By: ____________________________________
Name: Eric Fischman Name: John E. Pelletier
Title: Assistant Secretary Title: Vice President and Secretary
<PAGE>
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE DREYFUS/LAUREL FUNDS, INC.
Pursuant to Sections 2-605(a)(4) and 2-607 of the Maryland
General Corporation Law, The Dreyfus/Laurel Funds, Inc. (the
"Corporation") adopts the following Articles of Amendment to the
Corporation's Articles of Incorporation:
FIRST: The name of "Dreyfus S&P 500 Stock Index Fund" is changed
to "Dreyfus Institutional S&P 500 Stock Index Fund" effective September 1,
1995.
SECOND: The name of each of the following series of the
Corporation is changed as follows effective September 18, 1995:
"Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund" to "Dreyfus
Institutional U.S. Treasury Money Market Fund"; "Dreyfus/Laurel
Institutional Government Money Market Fund" to "Dreyfus Institutional
Government Money Market Fund"; and "Dreyfus/Laurel Institutional Prime
Money Market Fund" to "Dreyfus Institutional Prime Money Market Fund."
THIRD: The Amendments contained herein were approved by a
majority of the entire Board of Directors of the Corporation and are
limited to changes expressly permitted by Section 2-605(a)(4) of the
Maryland General Corporation Law to be made without action by the
stockholders of the Corporation.
FOURTH: The Corporation is registered with the Securities and
Exchange Commission as an open-end management investment company under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the undersigned hereby executes these
Articles of Amendment to the Corporation's Articles of Incorporation on
behalf of the Corporation, acknowledging it to be the act of the
Corporation, and further states under the penalties of perjury that, to
the best of his or her knowledge, information and belief, the matters and
facts set forth herein are true in all material respects.
Dated: August 30, 1995
THE DREYFUS/LAUREL FUNDS, INC.
Attest: /s/Ruth Leibert By: /s/Eric Fischman
--------------- ----------------
Name: Ruth Leibert Name: Eric Fischman
Title: Assistant Secretary Title: Vice President
<PAGE>
<PAGE>
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
THE DREYFUS/LAUREL FUNDS, INC.
The Dreyfus/Laurel Funds, Inc. (the "Corporation"), a Maryland
Corporation, incorporated on August 6, 1987, having its principal office
in Maryland in Baltimore, Maryland, hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors (the "Board") of the Corporation by Article FIFTH of the
Articles of Incorporation of the Corporation, the Board has heretofore
duly designated, in accordance with Section 2-105(c) of the Maryland
General Corporation Law, the aggregate number of shares of capital stock
which the Corporation is authorized to issue at twenty-five billion
(25,000,000,000) shares of capital stock, par value $.001 per share,
amounting in the aggregate to a par value of twenty-five million dollars
($25,000,000). Such shares of capital stock have heretofore been
classified by the Board among the series of the Corporation as follows:
Dreyfus Money Market Reserves, Class R
(2 billion shares)
Dreyfus Money Market Reserves, Investor Class
(2 billion shares)
Dreyfus U.S. Treasury Reserves, Class R
(1 billion shares)
Dreyfus U.S. Treasury Reserves, Investor Class
(1 billion shares)
Dreyfus Municipal Reserves, Class R
(1 billion shares)
Dreyfus Municipal Reserves, Investor Class
(1 billion shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class I
(1 billion shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class II
(500 million shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class III
(500 million shares)
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class I
(2 billion shares)
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class II
(1 billion shares)
<PAGE>
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class III
(1 billion shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class I
(1 billion shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class II
(500 million shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class III
(500 million shares)
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class I
(1 billion shares)
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class II
(500 million shares)
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class III
(500 million shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class I
(200 million shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class II
(200 million shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class III
(200 million shares)
Premier Balanced Fund, Class R
(50 million shares)
Premier Balanced Fund, Class A
(50 million shares)
Premier Balanced Fund, Class B
(50 million shares)
Premier Balanced Fund, Class C
(50 million shares)
Dreyfus Bond Market Index Fund, Class R
(100 million shares)
Dreyfus Bond Market Index Fund, Investor Class
(50 million shares)
Premier Limited Term Income Fund, Class R
(100 million shares)
Premier Limited Term Income Fund, Class A
(50 million shares)
Premier Limited Term Income Fund, Class B
(50 million shares)
Premier Limited Term Income Fund, Class C
(50 million shares)
Dreyfus/Laurel Short-Term Government Securities Fund, Class R
(75 million shares)
Dreyfus/Laurel Short-Term Government Securities Fund, Investor Class
(75 million shares)
2
<PAGE>
Dreyfus Equity Income Fund, Class R
(30 million shares)
Dreyfus Equity Income Fund, Investor Class
(20 million shares)
Dreyfus Disciplined Midcap Stock Fund, Class R
(66 million shares)
Dreyfus Disciplined Midcap Stock Fund, Investor Class
(22 million shares)
Premier Small Company Stock Fund, Class R
(41 million shares)
Premier Small Company Stock Fund, Class A
(27 million shares)
Premier Small Company Stock Fund, Class B
(50 million shares)
Premier Small Company Stock Fund, Class C
(50 million shares)
Dreyfus Disciplined Stock Fund, Class R
(165 million shares)
Dreyfus Disciplined Stock Fund, Investor Class
(80 million shares)
Dreyfus S&P 500 Stock Index Fund (to be renamed "Dreyfus Institutional S&P
500 Stock Index Fund" effective September 1, 1995), Class R
(63 million shares)
Dreyfus S&P 500 Stock Index Fund (to be renamed "Dreyfus Institutional S&P
500 Stock Index Fund" effective September 1, 1995), Investor Class
(7 million shares)
Dreyfus European Fund, Class R
(12 million shares)
Dreyfus European Fund, Investor Class
(8 million shares)
Dreyfus International Equity Allocation Fund, Class R
(36 million shares)
Dreyfus International Equity Allocation Fund, Investor Class
(24 million shares)
Laurel Global Income Fund, Class R
(36 million shares)
Laurel Global Income Fund, Investor Class
(24 million shares)
Laurel International Stock Fund, Class R
(36 million shares)
Laurel International Stock Fund, Investor Class
(24 million shares)
Laurel Ginnie Mae Fund, Class R
(15 million shares)
Laurel Ginnie Mae Fund, Investor Class
(35 million shares)
Laurel Tactical Asset Allocation Fund, Class R
(40 million shares)
Laurel Tactical Asset Allocation Fund, Investor Class
(10 million shares)
Laurel Wilshire 4500 Stock Index Fund, Class R
(27 million shares)
3
<PAGE>
Laurel Wilshire 4500 Stock Index Fund, Investor Class
(3 million shares)
SECOND: Pursuant to authority expressly vested in the Board of
the Corporation by Article FIFTH of the Articles of Incorporation of the
Corporation, the Board has, in accordance with Sections 2-105(c) and 2-
208.1(a) of the Maryland General Corporation Law, determined to combine
the shares designated to Class R and Investor Class of the Dreyfus S&P 500
Stock Index Fund (to be renamed "Dreyfus Institutional S&P 500 Stock Index
Fund" effective September 1, 1995) into a single class of shares of such
fund effective September 1, 1995:
Dreyfus S&P 500 Stock Index Fund (to be renamed "Dreyfus Institutional S&P
500 Stock index Fund" effective September 1, 1995)
(70 million shares)
THIRD: Pursuant to authority expressly vested in the Board of
the Corporation by Article FIFTH of the Articles of Incorporation of the
Corporation, the Board has, in accordance with Sections 2-105(c) and 2-
208.1(a) of the Maryland General Corporation Law, determined to decrease
the number of shares in the designated classes of the following series of
the Corporation to zero (0), effective September 18, 1995:
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class II
(0 shares)
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class III
(0 shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class II
(0 shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class III
(0 shares)
FOURTH: Pursuant to authority expressly vested in the Board of
the Corporation by Article FIFTH of the Articles of Incorporation of the
Corporation, the Board has, in accordance with Sections 2-105(c) and 2-
208.1(a) of the Maryland General Corporation Law, determined to increase
the number of shares in Class I of the following series of the Corporation
from one billion to two billion (2,000,000,000), effective September 18,
1995:
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class I
(2 billion shares)
4
<PAGE>
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class I
(2 billion shares)
FIFTH: Based on the foregoing and effective as indicated above,
the number of shares of capital stock of the Corporation are classified
among the series of the Corporation as follows:
Dreyfus Money Market Reserves, Class R
(2 billion shares)
Dreyfus Money Market Reserves, Investor Class
(2 billion shares)
Dreyfus U.S. Treasury Reserves, Class R
(1 billion shares)
Dreyfus U.S. Treasury Reserves, Investor Class
(1 billion shares)
Dreyfus Municipal Reserves, Class R
(1 billion shares)
Dreyfus Municipal Reserves, Investor Class
(1 billion shares)
Dreyfus/Laurel Institutional Government Money Market Fund (to be renamed
"Dreyfus Institutional Government Money Market Fund" effective September
18, 1995), Class I
(2 billion shares)
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class I
(2 billion shares)
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class II
(1 billion shares)
Dreyfus/Laurel Institutional Prime Money Market Fund (to be renamed
"Dreyfus Institutional Prime Money Market Fund" effective September 18,
1995), Class III
(1 billion shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class I
(1 billion shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class II
(500 million shares)
Dreyfus/Laurel Institutional Short-Term Bond Fund, Class III
(500 million shares)
Dreyfus/Laurel Institutional U.S. Treasury Money Market Fund (to be
renamed "Dreyfus Institutional U.S. Treasury Money Market Fund" effective
September 18, 1995), Class I
(2 billion shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class I
(200 million shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class II
(200 million shares)
Dreyfus/Laurel U.S. Treasury Only Money Market Fund, Class III
5
<PAGE>
(200 million shares)
Premier Balanced Fund, Class R
(50 million shares)
Premier Balanced Fund, Class A
(50 million shares)
Premier Balanced Fund, Class B
(50 million shares)
Premier Balanced Fund, Class C
(50 million shares)
Dreyfus Bond Market Index Fund, Class R
(100 million shares)
Dreyfus Bond Market Index Fund, Investor Class
(50 million shares)
Premier Limited Term Income Fund, Class R
(100 million shares)
Premier Limited Term Income Fund, Class A
(50 million shares)
Premier Limited Term Income Fund, Class B
(50 million shares)
Premier Limited Term Income Fund, Class C
(50 million shares)
Dreyfus/Laurel Short-Term Government Securities Fund, Class R
(75 million shares)
Dreyfus/Laurel Short-Term Government Securities Fund, Investor Class
(75 million shares)
Dreyfus Equity Income Fund, Class R
(30 million shares)
Dreyfus Equity Income Fund, Investor Class
(20 million shares)
Dreyfus Disciplined Midcap Stock Fund, Class R
(66 million shares)
Dreyfus Disciplined Midcap Stock Fund, Investor Class
(22 million shares)
Premier Small Company Stock Fund, Class R
(41 million shares)
Premier Small Company Stock Fund, Class A
(27 million shares)
Premier Small Company Stock Fund, Class B
(50 million shares)
Premier Small Company Stock Fund, Class C
(50 million shares)
Dreyfus Disciplined Stock Fund, Class R
(165 million shares)
Dreyfus Disciplined Stock Fund, Investor Class
(80 million shares)
Dreyfus S&P 500 Stock Index Fund (to be renamed "Dreyfus Institutional S&P
500 Stock Index Fund" effective September 1, 1995)
(70 million shares)
Dreyfus European Fund, Class R
(12 million shares)
Dreyfus European Fund, Investor Class
(8 million shares)
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Dreyfus International Equity Allocation Fund, Class R
(36 million shares)
Dreyfus International Equity Allocation Fund, Investor Class
(24 million shares)
Laurel Global Income Fund, Class R
(36 million shares)
Laurel Global Income Fund, Investor Class
(24 million shares)
Laurel International Stock Fund, Class R
(36 million shares)
Laurel International Stock Fund, Investor Class
(24 million shares)
Laurel Ginnie Mae Fund, Class R
(15 million shares)
Laurel Ginnie Mae Fund, Investor Class
(35 million shares)
Laurel Tactical Asset Allocation Fund, Class R
(40 million shares)
Laurel Tactical Asset Allocation Fund, Investor Class
(10 million shares)
Laurel Wilshire 4500 Stock Index Fund, Class R
(27 million shares)
Laurel Wilshire 4500 Stock Index Fund, Investor Class
(3 million shares)
SIXTH: The aggregate number of shares of all classes and series
of the Corporation remains twenty-five billion (25,000,000,000), the par
value per share remains $.001, and the aggregate par value of all
authorized stock remains twenty-five million dollars ($25,000,000). All
authorized shares not designated or classified above remain available for
future designation and classification by the Board.
SEVENTH: The Corporation is registered with the Securities and
Exchange Commission as an open-end investment company under the Investment
Company Act of 1940, as amended.
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IN WITNESS WHEREOF, the undersigned hereby executes these
Articles Supplementary on behalf of the Corporation, acknowledging it to
be the act of the Corporation, and further states under the penalties of
perjury that, to the best of his or her knowledge, information and belief,
the matters and facts set forth herein are true in all material respects.
Dated: August 31, 1995 THE DREYFUS/LAUREL FUNDS, INC.
By: /s/Eric Fischman
--------------------
Name: Eric Fischman
Title: Vice President
Attest: /s/Ruth Leibert
---------------------
Name: Ruth Leibert
Title: Assistant Secretary
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KIRKPATRICK & LOCKHART LLP
1800 M Street, N.W.
Washington, D.C. 20036
(202) 778-9000
September 21, 1995
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
Dear Sir or Madam:
In connection with the filing of Post-Effective Amendment No. 39
to the Registration Statement on Form N-1A (File No. 33-16338) of The
Dreyfus/Laurel Funds, Inc. which you are about to file with the Securities
and Exchange Commission, we hereby consent to the reference to our firm as
"Legal Counsel" in the Statement of Additional Information incorporated by
reference into the Prospectus.
Sincerely yours,
/s/ Kirkpatrick & Lockhart LLP
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