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. 48 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /_/
Amendment No. 48 /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)
/X/ on August 5, 1996 pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on (date) pursuant to paragraph (a)(1)
/_/ 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, 1995
was filed with the Commission on December 28, 1995.
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 Financial Highlights
Information
4. General Description of Description of the Fund--Investment
Registrant 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--General;
Securities Dividends, Other Distributions and
Taxes; Shareholder Services--
Dreyfus Dividend Options; General
Information
7. Purchase of Securities Expense Summary; Management of the
Being Offered 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
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 Management
and Policies 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 Management Arrangements;
and Other Services Distribution Plan; Custodian,
Transfer and Dividend Disbursing
Agent, Counsel and Independent
Auditors
17. Brokerage Allocation Portfolio Transactions
and Other Practices
18. Capital Stock and Other Cover Page; Information About the
Securities Fund; (See Prospectus Captions:
Description of the Fund--General;
General Information)
19. Purchase, Redemption Purchase of Fund Shares; Redemption
and Pricing of of Fund Shares; Shareholder
Securities Being Services; Determination of Net
Offered Asset 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
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 - Prospectus
Dreyfus International Equity Allocation Fund
Part B - Statement of Additional Information
Dreyfus International Equity Allocation Fund
Part C - Other Information
Dreyfus International Equity Allocation Fund
Signatures
- ------------------------------------------------------------------------------
PROSPECTUS AUGUST 5, 1996
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
- ------------------------------------------------------------------------------
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND (THE "FUND"), FORMERLY
CALLED THE "LAUREL INTERNATIONAL EQUITY ALLOCATION FUND," IS A SEPARATE,
DIVERSIFIED PORTFOLIO OF THE DREYFUS/LAUREL FUNDS, INC., AN OPEN-END
MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL FUND. THE
FUND'S OBJECTIVE IS TO EXCEED THE TOTAL RETURN OF THE MORGAN STANLEY CAPITAL
INTERNATIONAL -- EUROPE AUSTRALIA FAR EAST (MSCI EAFE) INDEX. THE FUND
PURSUES ITS OBJECTIVE THROUGH AN INVESTMENT PROCESS CONSISTING OF: (I) COUNTRY
ALLOCATION; (II) STOCK SELECTION; (III) CURRENCY ALLOCATION; AND (IV)
PORTFOLIO CONSTRUCTION AND RISK MANAGEMENT.
BY THIS PROSPECTUS, THE FUND IS OFFERING INSTITUTIONAL SHARES AND
RETAIL SHARES. (INSTITUTIONAL AND RETAIL SHARES OF THE FUND WERE FORMERLY
CALLED INVESTOR AND CLASS R SHARES, RESPECTIVELY.) INSTITUTIONAL SHARES AND
RETAIL SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES OFFERED TO AND THE
EXPENSES BORNE BY EACH CLASS. RETAIL SHARES ARE OFFERED TO ANY INVESTOR.
INSTITUTIONAL SHARES ARE OFFERED ONLY TO CLIENTS OF BANKS, SECURITIES BROKERS
OR DEALERS AND OTHER FINANCIAL INSTITUTIONS (COLLECTIVELY, "AGENTS") THAT
HAVE ENTERED INTO A SELLING AGREEMENT ("AGREEMENT") WITH PREMIER MUTUAL FUND
SERVICES, INC. (THE "DISTRIBUTOR") AND OMNIBUS ACCOUNTS HELD BY INSTITUTIONS
THAT PROVIDE SUB-ACCOUNTING OR RECORDKEEPING SERVICES TO THEIR CLIENTS. YOU
SHOULD CONSULT YOUR AGENT TO DETERMINE WHICH CLASS OF SHARES IS OFFERED BY
THE AGENT. UNLESS THE FUND IS OTHERWISE INSTRUCTED, NEW PURCHASES OR
EXCHANGES BY EXISTING SHAREHOLDERS WILL BE IN THE SAME CLASS OF SHARES THAT
THE SHAREHOLDER THEN HOLDS.
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 DATED AUGUST 5, 1996 (THE
"SAI"), WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION
OF CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF
INTEREST TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. THE SEC
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE SAI MATERIAL
INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE FUND. FOR A
FREE COPY OF THE SAI, WRITE TO THE FUND AT 144 GLENNCURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK
FOR OPERATOR 144.
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, N.A. ("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.
- ------------------------------------------------------------------------------
(Continued from Page 1)
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INSTITUTIONAL
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.
TABLE OF CONTENTS
EXPENSE SUMMARY................................. 4
FINANCIAL HIGHLIGHTS............................ 5
DESCRIPTION OF THE FUND......................... 6
MANAGEMENT OF THE FUND.......................... 12
HOW TO BUY FUND SHARES.......................... 14
SHAREHOLDER SERVICES............................ 17
HOW TO REDEEM FUND SHARES....................... 20
DISTRIBUTION PLAN (INSTITUTIONAL SHARES ONLY)... 23
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES........ 24
PERFORMANCE INFORMATION......................... 25
GENERAL INFORMATION............................. 26
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INSTITUTIONAL SHARES RETAIL SHARES
<C>
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................ none none
Maximum Sales Load Imposed on Reinvestments............ none none
Deferred Sales Load.................................... none none
Redemption Fee......................................... none none
Exchange Fee........................................... none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee ........................................ 1.25% 1.25%
12b-1 Fee(1)........................................... 0.25% none
Other Expenses......................................... 0.00% 0.00%
------ ------
Total Fund Operating Expenses ......................... 1.50% 1.25%
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:
INSTITUTIONAL SHARES RETAIL SHARES
1 YEAR $15 $13
3 YEARS $47 $40
5 YEARS $82 $69
10 YEARS $179 $151
(1) See "Distribution Plan (Institutional Shares Only)" for a description of
the Fund's Distribution Plan for Institutional shares.
</TABLE>
- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors will bear,
directly or indirectly, the payment of which will reduce investors' return on
an annual basis. The information in the foregoing table has been restated to
reflect the reduction of the Fund's management fee from 1.50% to 1.25% of the
Fund's average daily net assets, effective as of August 5, 1996. Long-term
investors in Institutional shares could pay more in 12b-1 fees than the
economic equivalent of paying the maximum front-end sales charges applicable
to mutual funds sold by members of the National Association of Securities
Dealers, Inc. The information in the foregoing table does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. Certain
Agents may charge their clients direct fees for effecting transactions in
Fund shares; such fees are not reflected in the foregoing table. See
"Management of the Fund," "How to Buy Fund Shares" and "Distribution Plan
(Institutional Shares Only)."
The Company understands that Agents (including Mellon Bank and
its affiliates) may charge fees to their clients who are owners of the Fund's
Institutional shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Agreement with the Distributor. The Agreement requires
each Agent to disclose to its clients any compensation payable to such Agent
by the Distributor and any other compensation payable by the clients for
various services provided in connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The tables below are based upon a single Institutional share or
Retail share outstanding throughout each fiscal year or period and the six
months ended April 30, 1996 (unaudited), and should be read in conjunction
with the financial statements and related notes that appear in the Fund's
Annual Report dated October 31, 1995 and Semi-Annual Report dated April 30,
1996 (unaudited), each of which is incorporated by reference in the SAI. The
financial statements included in the Fund's Annual Report for the year ended
October 31, 1995 have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report appears in the Fund's Annual Report. Further
information about, and management's discussion of, the Fund's performance is
contained in the Fund's Annual Report. The Fund's Annual Report and
Semi-Annual Report may be obtained without charge by writing to the address
or calling the number set forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
SIX MONTHS YEAR PERIOD
ENDED 4/30/96 ENDED ENDED
(UNAUDITED) 10/31/95 10/31/94#
<S> <C> <C> <C>
Net asset value, beginning of period $10.11 $10.06 $10.00
-------- --------- -----------
Investment operations:
Net investment income (loss) (0.04) 0.01 0.01
Net realized and unrealized gain on investments 1.66 0.06 0.05
-------- --------- -----------
Total from investment operations 1.62 0.07 0.06
-------- --------- -----------
Distributions:
Dividends from net investment income (0.06) (0.02) --
-------- --------- -----------
Dividends from net realized gain on investments (0.18) -- --
-------- --------- -----------
Total Distributions (0.24) (0.02) --
-------- --------- -----------
Net asset value, end of period $11.49 $10.11 $10.06
======== ========= ===========
Total Return 16.36%## 0.67% 0.60%
Ratios to average net assets/Supplemental data:
Net Assets, end of period (in 000's) $4,593## $4,088 $71
Ratio of expenses to average net assets 0.87%## 1.75% 0.39%##
Ratio of net investment income to average net assets (0.24)%## 0.04% 0.44%##
Portfolio turnover rate 19.27%## 64.85% 0%
Average Commission rate paid $0.0199 -- --
* The Fund commenced operations on August 12, 1994. Effective July 15,
1996, the Fund's Investor shares were redesignated as Institutional shares.
Annualized.
Total return represents aggregate total return for the periods indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
## Not annualized.
</TABLE>
Page 5
<TABLE>
<CAPTION>
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
FOR A RETAIL SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
SIX MONTHS YEAR PERIOD
ENDED 4/30/96 ENDED ENDED
(UNAUDITED) 10/31/95 10/31/94#
Net asset value, beginning of period $10.12 $10.06 $10.00
-------- --------- -----------
<S> <C> <C> <C>
Investment operations:
Net investment income (loss) (0.01) 0.06 0.02
Net realized and unrealized gain on investments 1.65 0.02 0.04
-------- --------- -----------
Total from investment operations 1.64 0.08 0.06
-------- --------- -----------
Distributions:
Dividends from net investment income (0.09) (0.02) --
-------- --------- -----------
Dividends from net realized gain on investments (0.18) -- --
-------- --------- -----------
Total Distributions (0.27) (0.02) --
-------- --------- -----------
Net asset value, end of period $11.49 $10.12 $10.06
======== ========= ===========
Total Return 16.55%## 0.81% 0.60%
Ratios to average net assets/Supplemental data:
Net Assets, end of period (in 000's) $15,135 $13,174 $11,844
Ratio of expenses to average net assets 0.75%## 1.50% 0.33%##
Ratio of net investment income to average net assets (0.11)%## 0.52% 0.49%##
Portfolio turnover rate 19.27%## 64.85% 0%
Average Commission rate paid $0.0199 -- --
* The Fund commenced operations on August 12, 1994. Effective October 17,
1994, the Fund's Trust Shares were redesignated as
Class R shares. Effective July 15, 1996, the Fund's Class R shares were
redesignated as Retail shares.
Annualized.
Total return represents aggregate total return for the period
indicated.
# Prior to October 17, 1994, Mellon Bank served as the Fund's investment
manager. Effective October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
##Not annualized.
</TABLE>
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, the Fund is offering Institutional shares and
Retail shares. (Institutional and Retail shares of the Fund were formerly
called Investor and Class R shares, respectively.) Institutional shares and
Retail shares are identical, except as to the services offered to and the
expenses borne by each Class. Retail shares are offered to any investor.
Institutional shares are offered only to clients of Agents that have entered
into an Agreement with the Fund's Distributor and omnibus accounts held by
institutions that provide sub-accounting or recordkeeping services to their
clients. You should consult your Agent to determine which Class of shares is
offered by the Agent. Unless the Fund is otherwise instructed, new purchases
or exchanges by existing shareholders will be in the same Class of shares
that the shareholder then holds. All 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
Page 6
Institutional shares will cause Institutional shares to have a higher expense
ratio and pay lower dividends than Retail shares.
INVESTMENT OBJECTIVE
The Fund's objective is to exceed the total return of the Morgan
Stanley Capital International--Europe Australia Far East (MSCI EAFE) Index
(the "Benchmark"). The Fund pursues its objective through country allocation,
stock selection, currency allocation, and portfolio construction and risk
management. The Fund is not an index fund. In addition to investing in
securities in countries represented in the Benchmark, the Fund may invest up
to 20% of its total assets in securities of issuers in emerging market
countries. There can be no assurance that the Fund will meet its investment
objective. Under normal circumstances, the Fund will invest at least 65% of
its total assets in equity securities of issuers in at least three countries
outside of the United States.
MANAGEMENT POLICIES
The Benchmark is a diversified, capitalization-weighted index of
equity securities of companies located in Australia and 14 countries of
Europe and 5 countries of the Far East. The countries represented in the
Benchmark are: Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Singapore/Malaysia, Spain, Sweden, Switzerland and the United
Kingdom. The Fund may also invest in securities of issuers in other countries
added to the Benchmark from time to time. Stocks in the Benchmark are
selected to represent proportionally each country and each major industrial
sector within each country. Each stock in the Benchmark is weighted according
to its market value as a percentage of the total market value of all stock in
the Benchmark.
The investment process utilized by Dreyfus in structuring the
Fund has four basic components: (1) country allocation; (2) stock selection;
(3) currency allocation; and (4) portfolio construction and risk management.
The country and currency allocation components employ a combination of
quantitative research using proprietary financial models and fundamental
research.
Under normal circumstances, the Fund expects to be fully invested
in securities of issuers in countries included in the Benchmark, securities
of emerging market countries, and derivative securities, except for such
amounts as are needed to meet short-term cash needs and redemptions and
amounts pending investment. These amounts may be held as cash or temporarily
invested in repurchase agreements and in high quality short-term debt
instruments of the U.S. Government or foreign governments, their agencies or
instrumentalities. Generally, the Fund's assets are allocated to the
countries contained in the Benchmark, with the exception of France, Germany,
Japan and the United Kingdom, approximately in proportion to the weightings
of such countries within the Benchmark (the "Tier One Country Allocation").
Dreyfus uses its country allocation model to allocate the Fund's remaining
assets among France, Germany, Japan and the United Kingdom based generally on
earning and dividend forecasts of stocks in each of these countries (the
"Tier Two Country Allocation"). Dreyfus may, however, alter the amount of
assets it allocates between the Tier One Country Allocation and the Tier Two
Country Allocation if it believes it to be in the best interests of the Fund
and may reduce the amount of assets it allocates pursuant to the Tier One
Country Allocation and/or the Tier Two Country Allocation to enable it to
invest in emerging market countries and derivative securities and to enable
it to maintain amounts needed to meet short-term cash needs and redemptions
and amounts pending investment. No more than 20% of the Fund's total assets
will be invested in the securities of emerging market countries, including
Argentina, Brazil, Chile, People's Republic of China, Colombia, Czech
Republic, Greece, South Korea, Hungary, India, Indonesia, Israel, Jordan,
Mexico, Pakistan, Peru, Philippines, Poland, Portugal, Sri Lanka, Taiwan,
Thailand, Turkey and Venezuela, subject to the satisfaction of regulatory
Page 7
standards for the custody of assets and securities clearance systems. The
Fund may also invest in securities of other emerging markets. Each emerging
market country is analyzed from a macroeconomic and financial perspective
giving equal consideration to four factors: (1) the relative and historical
market valuation; (2) the currency risk; (3) the outlook for economic growth;
and (4) the country political risk.
Unless all of the stocks contained in the Benchmark can be
purchased on behalf of the Fund, Dreyfus will utilize statistical sampling
techniques to purchase a representative sample of stocks from each industry
sector included in the Benchmark in proportion to the industry weighting in
the Benchmark for the Fund's portfolio. Dreyfus employs an active process for
selecting stocks of emerging market countries for the Fund's portfolio.
The Fund may invest in forward foreign currency exchange
contracts, futures contracts, options on securities and on foreign
currencies, currency indices, futures contracts, and securities indices to
adjust its risk exposure relative to the Benchmark and to its investment in
emerging market countries. Dreyfus will manage currency exposure for the Fund
utilizing its proprietary currency allocation model, which is designed to
forecast the movement of foreign currencies based generally on differences in
real interest rates among countries. Dreyfus will manage and monitor the
total risk of the portfolio, including the country and currency exposure
resulting from the implementation of its country and currency models.
In no event will the Fund purchase securities which would cause
25% or more of the market value of the Fund's total assets to be invested in
securities of one or more issuers having their principal business activities
in the same industry. This limit does not apply with respect to the Fund's
investments in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund has a non-fundamental investment
limitation which provides that in no event will it purchase securities which
would cause more than 25% of the market value of its total assets to be
invested in securities issued or guaranteed by a single government or its
agencies and instrumentalities. The Fund may also invest in commercial paper
and may lend its portfolio securities. Under unusual circumstances, such as
drastic political or economic changes, severe social unrest or acts of war,
the Fund may be primarily invested in securities of U.S. companies, and
securities of the U.S. Government, its agencies, instrumentalities and
municipalities.
INVESTMENT TECHNIQUES
In connection with its investment objective and policies, the
Fund may employ, among others, the following investment techniques:
BORROWING. The Fund is authorized, within specified limits, to
borrow money for temporary administrative purposes and to pledge its assets
in connection with such borrowings.
SECURITIES LENDING. To increase return on Fund securities, the
Fund may lend its portfolio securities to broker-dealers and other
institutional investors pursuant to agreements requiring that the loans be
continuously secured by collateral equal at all times in value to at least
the market value of the securities loaned. There may be risks of delay in
receiving additional collateral or in recovering the securities loaned or
even a loss of rights to the collateral should the borrower of the securities
fail financially. Securities loans, however, are made only to borrowers
deemed by Dreyfus to be of good standing and when, in its judgment, the
income to be earned from the loan justifies the attendant risks.
CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in currency
exchange transactions. Generally, the Fund's foreign currency exchange
transactions will be conducted on a spot basis at the spot rate then
prevailing for purchasing or selling currencies in the foreign exchange
market. The Fund may, to a limited extent, deal in forward foreign currency
exchange contracts involving currencies of the different countries in which
it will invest as a hedge against possible variations in the foreign exchange
rates between these currencies. This is accomplished through contractual
agreements to pur-
Page 8
chase or sell a specified currency at a specified future
date (up to one year) and price set at the time of the contract. The Fund's
dealings in forward foreign currency exchange contracts are limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
exchange contracts with respect to specific receivables (including dividends)
or payables of the Fund accruing in connection with the ownership, purchase
and sale of its portfolio securities and the sale and redemption of shares of
the Fund. Position hedging is the sale of forward foreign currency contracts
with respect to portfolio security positions denominated or quoted in such
foreign currency. The Fund will not enter into or maintain a position in such
contracts if their consummation would obligate the Fund to deliver an amount
of foreign currency greater than the value of the Fund's assets denominated
or quoted in, or currency convertible into, such currency.
Forward contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specified security or
securities index or currency at a specified future time and at a specified
price. Forward contracts differ from futures contracts as the terms of the
contract are not standardized and forward contracts are not traded on
regulated exchanges. Transactions are executed over the counter. If the
counterparty defaults, the Fund might incur a loss. Dreyfus seeks to minimize
the risk of loss through forward contracts by analyzing the creditworthiness
of the counterparty under forward contract agreements. The Fund's use of
forward contracts will be restricted to the purchase or sale of foreign
currency. The Fund will selectively employ currency forward contracts in
order to hedge currency risk allocated with investments in foreign equity
securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. To
secure advantageous prices or yields, the Fund may purchase U.S. Government
Securities on a when-issued basis or may purchase or sell securities for
delayed delivery. In such transactions, delivery of the securities occurs
beyond the normal settlement periods, but no payment or delivery is made by
the Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the marketplace, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transaction. The Fund will establish
a segregated account consisting of cash, U.S. Government Securities or other
high-grade debt obligations in an amount at least equal at all times to the
amounts of its when-issued and delayed delivery commitments.
MASTER/FEEDER OPTION. The Company may in the future seek to
achieve the Fund's investment objective by investing all of the Fund's net
investable assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at least
30 days' prior notice of any such investment. Such investment would be made
only if the Company's Board of Directors 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 efficiency. Although the Fund believes that the Board of
Directors will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may
purchase and sell various financial instruments ("Derivative Instruments"),
such as financial futures contracts (such as interest rate, index and foreign
currency futures contracts), options (such as options on securities, indices,
foreign currencies and futures contracts), forward currency contracts and
interest rate, equity index 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
Page 9
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 adjust its risk exposure relative to the
Benchmark, or to alter the exposure of a particular investment or portion of
the Fund's portfolio to fluctuations in interest rates or currency rates.
The Fund's ability to use these 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 these
instruments and the risks relating thereto.
The Fund may not purchase put or call options that are traded on a
national stock exchange in an amount exceeding 5% of its net assets.
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 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.
Dreyfus may use Derivative Instruments 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 the 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 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 counterparty 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.
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.
CERTAIN PORTFOLIO SECURITIES
COMMERCIAL PAPER. The Fund may invest in commercial paper. These
instruments are short-term obligations issued by banks and corporations that
have maturities ranging from 2 to 270 days. Each instrument may be backed
only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper of U.S. and foreign
companies rated at the time of purchase at least A-1 by Standard & Poor's,
Prime-1 by Moody's Investors Service, Inc., F-1 by Fitch Investors Service,
Inc., Duff 1 by Duff & Phelps, Inc., or A1 by IBCA, Inc.
Page 10
FOREIGN SECURITIES. The Fund will purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund, including withholding of dividends. Foreign securities
may be subject to foreign government taxes that would reduce the yield on
such securities.
Among the foreign securities in which the Fund may invest are
those issued by companies located in developing countries, which are
countries in the initial stages of their industrialization cycles. Investing
in the equity and debt markets of developing countries involves exposure to
economic structures that are generally less diverse and less mature, and to
political systems that can be expected to have less stability, than those of
developed countries. The markets of developing countries historically have
been more volatile than the markets of the more mature economies of developed
countries, but often have produced higher rates of return to investors.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities
issued by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with
its own operations.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements. A repurchase agreement involves the purchase of a security by the
Fund and a simultaneous agreement (generally with a bank or broker-dealer) to
repurchase that security from the Fund at a specified price and date or upon
demand. This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause the Fund to suffer a
loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the
associated limits discussed under "Certain Portfolio Securities _ Illiquid
Securities."
U.S. GOVERNMENT SECURITIES. The Fund may invest in obligations
issued or guaranteed as to both principal and interest by the U.S. Government
or backed by the full faith and credit of the United States. In addition to
direct obligations of the U.S. Treasury, these include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration and Maritime Administration. Investments may also be made in
U.S. Government obligations that do not carry the full faith and credit
guarantee, such as those issued by the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation or other instrumentalities.
PORTFOLIO TURNOVER. While securities are purchased for the Fund
on the basis of potential for exceeding the total return of the Benchmark and
not for short-term trading profits, the Fund's turnover rate may exceed 100%.
A portfolio turnover rate of 100% would occur, for example, if all the
securities held by the Fund were replaced once in a period of one year. A
higher rate of portfolio turnover (100% or more) involves correspondingly
greater brokerage commissions and other expenses that must be borne directly
Page 11
by the Fund and, thus, indirectly by its shareholders. In addition, a high
rate of portfolio turnover may result in the realization of larger amounts of
short-term capital gains that, when distributed to the Fund's shareholders,
are taxable to them as ordinary income. Nevertheless, securities transactions
for the Fund will be based only upon investment considerations and will not
be limited by any other considerations when Dreyfus deems it appropriate to
make changes in the Fund's assets.
RISK FACTORS
LIMITING INVESTMENT RISKS. The Fund is subject to a number of
investment limitations. Certain limitations are matters of fundamental policy
and may not be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. As a fundamental policy, the Fund
may not (i) borrow money in an amount exceeding 331/3% of the Fund's total
assets at the time of borrowing; (ii) make loans or lend securities in excess
of 331/3% of the Fund's total assets; (iii) purchase, with respect to 75% of
the Fund's total assets, securities of any one issuer representing more than
5% of the Fund's total assets (other than securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities) or more than 10% of
that issuer's outstanding voting securities; and (iv) invest more than 25% of
the value of the Fund's total assets in the securities of one or more issuers
conducting their principal activities in the same industry; provided that
there shall be no such limitation on investments in obligations of the U.S.
Government, state and municipal governments and their political subdivisions
or investments in domestic banks, including U.S. branches of foreign banks
and foreign branches of U.S. banks. The SAI describes all of the Fund's
fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of the
shareholder's then-current position and needs.
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the investment
policies and restrictions described in this Prospectus and the SAI. Should
the Fund determine that any such commitment is no longer in the best interest
of the Fund, it may consider terminating sales of its shares in the states
involved.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of June 28, 1996, Dreyfus managed or administered
approximately $79 billion in assets for more than 1.7 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.
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,
includ-
Page 12
ing Dreyfus, Mellon managed approximately $237 billion in assets as of
March 31, 1996, including $83 billion in mutual fund assets. As of March 31,
1996, Mellon, through various subsidiaries, provided non-investment services,
such as custodial or administration services, for more than $886 billion in
assets, including approximately $61 billion in mutual fund assets.
Effective August 5, 1996, the Investment Management Agreement
between the Company, on behalf of the Fund, and Dreyfus was amended to
reflect a reduction in the annual management fee payable by the Fund to
Dreyfus from 1.50% to 1.25% of the value of the Fund's average daily net
assets. Dreyfus pays all of the Fund's expenses, except brokerage fees,
taxes, interest, Rule 12b-1 fees (if applicable) and extraordinary 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. For the fiscal
year ended October 31, 1995, the Fund paid Dreyfus 1.50% of its average daily
net assets in investment management fees.
For the fiscal year ended October 31, 1995, total operating
expenses (excluding Rule 12b-1 fees) of the Fund were 1.50% of the average
daily net assets of each Class for both the Institutional and Retail shares.
The Fund's portfolio manager is Charles J. Jacklin. Mr. Jacklin
has managed the Fund since August 5, 1996 and is a portfolio manager at
Dreyfus. He is also a Senior Vice President and Director of Asset Allocation
Strategies for Mellon Capital Management ("MCM") since January 1994. He
manages and develops global asset allocation strategies, and implements MCM's
value-added investment strategies. Prior to joining MCM, Mr. Jacklin was an
Assistant Professor at Stanford University. He also has served as Senior
Staff Economist for Financial Markets and Banking for the President's Council
of Economic Advisors. He has published a number of articles on finance and
investment in academic research journals, and is an associate editor for the
Review of Quantative Finance and Accounting. Mr. Jacklin holds a Ph.D. in
Finance from Stanford University.
Effective August 5, 1996, the investment sub-advisory agreement
among the Company, on behalf of the Fund, S.A.M. Finance, S.A. ("CCF S.A.M.")
and Dreyfus (the "Former Sub-Advisory Agreement") was terminated. CCF S.A.M.
provided investment advice and portfolio management services to the Fund in
its capacity as sub-adviser to the Fund and received a sub-advisory fee at
the annual rate of .25% of the Fund's average daily net assets from Dreyfus
pursuant to the Former Sub-Advisory Agreement. Payment of the fee was the
obligation of Dreyfus and not of the Fund.
For the fiscal year ended October 31, 1995, Dreyfus paid CCF
S.A.M. advisory fees of .25% of the Fund's average daily net assets.
In addition, Institutional shares may be subject to certain
distribution and shareholder servicing fees. See "Distribution Plan
(Institutional Shares Only)."
Dreyfus may pay the Fund's distributor for shareholder services
from Dreyfus' own assets, including past profits but not including the
management fee paid by the Fund. The Fund's distributor may use part or all
of such payments to pay Agents in respect of these services.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, advised or administered by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the SAI.
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
Page 13
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.
DISTRIBUTOR. The Fund's distributor is Premier Mutual Fund Services,
Inc. (the "Distributor"). The Distributor is located at 60 State Street,
Boston, Massachusetts 02109. The Distributor is a wholly-owned subsidiary of
FDI Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR. Boston Safe Deposit and Trust Company (One Boston Place,
Boston, Massachusetts 02109), an indirect wholly-owned subsidiary of Mellon,
serves as the Fund's custodian. As custodian, Boston Safe Deposit and Trust
Company maintains possession of the Fund's investment securities and provides
portfolio recordkeeping services. Boston Safe Deposit and Trust Company is
authorized to deposit securities in securities depositories or to use the
services of subcustodians. The Fund's transfer and dividend disbursing agent
is Dreyfus Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary
of Dreyfus, located at One American Express Plaza, Providence, Rhode Island
02903. Premier Mutual Fund Services, Inc. serves as the Fund's
sub-administrator and, pursuant to a Sub-Administration Agreement with
Dreyfus, provides various administrative and corporate secretarial services
to the Fund.
HOW TO BUY FUND SHARES
GENERAL. Retail shares are offered to any investor.
Institutional shares are offered only to clients of Agents that
have entered in an Agreement with the Distributor and omnibus accounts held
by institutions that provide sub-accounting or recordkeeping services to
their clients.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100.
However, the minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750, with no
minimum on subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum initial investment of $250. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, Board members of a fund advised by
Dreyfus including members of the Company's Board, or the spouse or minor
child of any of the foregoing, the minimum initial investment for Retail
shares 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
for Retail shares 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.
Retail shares are also 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 conve-
Page 14
nient 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.
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. The
Internal Revenue Code of 1986, as amended (the "Code"), imposes various
limitations on the amount that may be contributed to Retirement Plans. These
limitations apply with respect to participants at the plan level and,
therefore, do not directly affect the amount that may be invested in the Fund
by a Retirement Plan. Participants and plan sponsors should consult their tax
advisers for details.
You may purchase Fund shares by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds" or, if for Dreyfus Retirement Plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus Retirement
Plan accounts, both initial and subsequent investments should be sent to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode Island
02940-6427. Neither initial nor subsequent investments should be made by
third party check. Purchase orders of Retail shares 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 and Trust Company, together with
the applicable Class' DDA # as shown below, for purchase of Fund shares in
your name:
DDA# 043702 Dreyfus International Equity Allocation
Fund/Institutional shares;
DDA# 043699 Dreyfus International Equity Allocation Fund/Retail
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 and Trust Company with instructions to credit your
Fund account. The instructions must specify your Fund account registration
and Fund account number PRECEDED BY THE DIGITS "4480" for Institutional
shares and "4470" for Retail shares.
The Distributor may pay dealers a fee of up to 0.5% of the amount
invested through such deal-
Page 15
ers in Fund shares by employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). The determination of the number of employees eligible for
participation in a plan or program shall be made on the date Fund shares are
first purchased by or on behalf of employees participating in such plan or
program and on each subsequent January 1st. All present holdings of shares of
funds in the Dreyfus Family of Funds by Eligible Benefit Plans will be
aggregated to determine the fee payable with respect to each purchase of Fund
shares. The Distributor reserves the right to cease paying these fees at any
time. The Distributor will pay such fees from its own funds, other than
amounts received from the Fund, including past profits or any other source
available to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
NET ASSET VALUE PER SHARE ("NAV"). An investment portfolio's NAV
refers to the worth of one share. The NAV for Institutional shares and Retail
shares is computed by adding, with respect to such Class of shares, the value
of the Fund's investments, cash and other assets attributable to that Class
deducting liabilities of the Class and dividing the result by number of
shares of that Class outstanding. Shares of each Class of the Fund are
offered on a continuous basis. The valuation of assets for determining NAV
for the Fund may be summarized as follows:
Equity securities of the Fund listed or traded on a stock
exchange, except as otherwise noted, are valued at the latest sale price. If
no sale is reported, the current bid is used. An equity security which is
listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security by Dreyfus.
All other equity securities not so traded are valued at the last sales price
prior to the time of valuation.
Bonds are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices
provided by investment dealers in accordance with procedures established by
the Board of Directors.
For purposes of determining the Fund's NAV, all assets and
liabilities initially expressed in foreign currency values will be converted
into U.S. dollar values at the mean between the bid and offered quotations of
such currencies against U.S. dollars as last quoted by any recognized dealer.
If an event were to occur after the value of a portfolio instrument was so
established but before the NAV is determined which is likely to materially
change the NAV, then the portfolio instrument would be valued using fair
value considerations established by the Company's Board of Directors. Because
of the need to obtain prices as of the close of trading of various worldwide
exchanges, the calculation of NAV does not take place contemporaneously with
the determination of the prices of the majority of the Fund's securities.
NAV is determined on each day that the New York Stock Exchange
("NYSE") is open (a "business day"), as of the close of business of the
regular session of the NYSE (usually 4 p.m. Eastern Time). Investments and
requests to exchange or redeem shares received by the Fund in proper form
before such close of business are effective on, and will receive the price
determined on, that day (except purchase orders made through the Dreyfus
TELETRANSFER Privilege, which are effective one business day after your
call). Investment, exchange and redemption requests received after such
close of business are effective on, and receive the share price determined
on, the next business day.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the NYSE on any business day and transmitted
to the Distributor or its designee by the close of its
Page 16
business day (normally 5:15p.m., New York time) will be based on the public
offering price per share determined as of the close of trading on the floor
of the NYSE on that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealer's responsibility to
transmit orders so that they will be received by the Distributor or its
designee before the close of its business day.
The public offering price of Institutional shares and Retail
shares, both of which are sold on a continuous basis, is the NAV of that
Class.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares
(minimum $500 and maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the Trans-
r Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
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
certain other eligible 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 FUND 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, by a separate signed Shareholder Services Form, available by calling
1-800-645-6561 or, by oral request from any of the authorized signatories on
the account, also by calling 1-800-645-6561. If you previously have
established the Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-800-645-6561 or, if calling from overseas,
516-794-5452. See "How to Redeem Fund Shares_Procedures." Upon an exchange,
the following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Wire Redemption Privilege,
Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and the
divi-
Page 17
dends 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 Fund shares into funds
sold with a sales load. If you are exchanging Fund 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 certain other eligible funds in the Dreyfus
Family of Funds of which you are currently an investor. WITH RESPECT TO FUND
SHARES HELD BY RETIREMENT PLANS, EXCHANGES PURSUANT TO THE DREYFUS
AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however, a sales load may be charged with respect to exchanges of Fund shares
into funds sold with a sales load. The right to exercise this Privilege may
be modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. The exchange of shares of
one fund for shares of another is treated for Federal income tax purposes as
a sale of the shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize, or an exchange on behalf of a Retirement
Plan which is not tax exempt may result in, a taxable gain or loss. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a
Page 18
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 certain other eligible funds in the Dreyfus Family of Funds
of which you are an investor. Shares of the other fund will be purchased at
the then-current NAV; however, a sales load may be charged with respect to
investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. See
"Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you to
transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an ACH member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction)
by having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. You
should consider whether Direct Deposit of your entire payment into a fund
with fluctuating NAV, such as the Fund, may be appropriate for you. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Page 19
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 Retail shares without
regard to the Fund's minimum initial investment requirements through Dreyfus-A
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 Retail 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."
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal
of a specified dollar amount (minimum of $50) on a monthly or quarterly if
you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus-sponsored
retirement plans, may permit certain participants to establish an automatic
withdrawal plan from such Retirement Plans. Participants should consult their
Retirement Plan sponsor and tax adviser for details. Such a withdrawal plan
is different 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 Fun
d or the Transfer Agent. Shares for which certificates have been issued may
not be redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL. You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined NAV as described below. If you hold Fund shares
of more than one Class, any request for redemption must specify the Class of
shares being redeemed. If you fail to specify the Class of shares to be
redeemed or if you own fewer shares of the Class than specified to be redeemed
, the redemption request may be delayed until the Transfer Agent receives
further instructions from you or your 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.
Page 20
Any certificates representing Fund shares being redeemed must be submitted
with the redemption request. The value of the shares redeemed may be more or
less than their original cost, depending upon the Fund's then-current NAV.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU
HAVE PURCHASED FUND SHARES BY CHECK, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option
upon not less than 45 days' written notice if the net asset value of your
account is $500 or less and remains so during the notice period.
PROCEDURES. You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Wire Redemption
Privilege, the Telephone Redemption Privilege or through the Dreyfus TELE-
TRANSFER Privilege, or, if you are a client of a Selected Dealer, through the
Selected Dealer. If you have given your Agent authority to instruct the
Transfer Agent to redeem Institutional shares and to credit the proceeds of
such redemptions to a designated account at your Agent, you may redeem shares
only in this manner and in accordance with the regular redemption procedure
described below. If you wish to use the other redemption methods described
below, you must arrange with your Agent for delivery of the required
application(s) to the Transfer Agent. Other redemption procedures may be in
effect for clients of certain Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select the 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.
Page 21
REGULAR REDEMPTION. Under the regular redemption procedure, you
may redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or if for the
Dreyfus retirement plan accounts to The Dreyfus Trust Company, Custodian,
P.O. Box 6427, Providence, Rhode Island 02940-6427. Redemption requests of
Retail shares may be delivered in person only to a Dreyfus Financial Center. T
THESE REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center,
please call the telephone number listed under "General Information."
Redemption requests must be signed by each shareholder, including each owner
of a joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which signature-guarantees
in proper form generally will be accepted from domestic banks, brokers,
dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP") and the Stock
Exchanges Medallion Program. For more information with respect to
signature-guarantees, please call 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 1-800-645-6561 or,
if calling from overseas, 516-794-5452. The Fund reserves the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at anytime by the Transfer Agent
or the Fund. The Fund's SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares
(maximum $150,000 per day) by telephone if you checked the appropriate box on
the Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The redemption proceeds will be paid by check and mailed
to your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. The Fund reserves
the right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. This Privilege may be modified or terminated at any
time by the Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs
or other retirement plans, and shares for which certificates have been
issued, are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer of
certain banks, securities brokers or dealers ("Selected Dealers") you may
make redemption requests to your Selected Dealer. If the Selected Dealer
transmits the redemption request that is received by the Transfer Agent prior
to the close of trading on the floor of the NYSE (currently 4:00 p.m., New
York time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent
Page 22
after the close of trading on the floor of the NYSE, the redemption request
will be effective on the next business day. It is the responsibility of the
Selected Dealer to transmit a request so that is received in a timely manner.
The proceeds of the redemption are credited to your account with the
Selected Dealer.
In addition, the Distributor will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of Fund shares
held by shareholders. Repurchase orders received by dealers by the close of
trading on the floor of the NYSE on any business day and transmitted to the
Distributor or its designee prior to the close of its business day (normally
5:15 p.m., New York time) are effected at the price determined as of the
close of trading on the floor of the NYSE on that day. Otherwise, the Fund
shares will be redeemed at the next determined NAV. It is the responsibility
of the Selected Dealer to transmit orders on a timely basis. The Selected
Dealer may charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at any time.
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 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 TELE-
TRANSFER 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
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
DISTRIBUTION PLAN
(INSTITUTIONAL SHARES ONLY)
Institutional shares are subject to a Distribution Plan (the
"Plan") adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1"). The
Institutional 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 Institutional 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 Institutional 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 Institutional 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.
Page 23
From time to time, the Agents, the Distributor and the Fund may agree to
voluntarily reduce the maximum fees payable under the Plan. See the SAI for
more details on the Plan.
Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive
different compensation with respect to one class of shares over another.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net investment income
and distributes net realized gains, if any, once a year, but it may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized gains unless capital loss carryovers, if any, have been utilized or
have expired. Investors other than qualified Retirement Plans may choose
whether to receive dividends and other distributions in cash, to receive
dividends in cash and reinvest other distributions in additional Fund shares,
or to reinvest both dividends and other distributions in additional Fund
shares; dividends and other distributions paid to qualified Retirement
Plans are reinvested automatically in additional Fund shares at NAV. All
expenses are accrued daily and deducted before declaration of dividends to
investors. Dividends paid by each Class will be calculated at the same time
and in the same manner and will be in the same amount, except that the
expenses attributable solely to a particular Class will be borne exclusively
by that Class. Institutional shares will receive lower per share dividends
than Retail shares because of the higher expenses borne by the Institutional
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 that 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 non-resident 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 which 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
Page 24
not report to the IRS dividends paid to such plans. Generally, distributions
from qualified Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 591/2, generally will
be subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the year
in which the participant reaches age 701/2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian
of such a Retirement Plan will be responsible for reporting distributions
from such plans to the IRS. Moreover, certain contributions to a qualified
Retirement Plan in excess of the amounts permitted by law may be subject to
an excise tax. 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 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 Institutional shares should be expected to be lower than that of Retail
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
Page 25
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 NAV of such Class on the last day of that period. Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in a Class of
shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed-upon or guaranteed fixed yield for
a stated period of time.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
The Fund may compare the performance of its shares with various
industry standards of performance including Lipper Analytical Services, Inc.
Ratings, Morgan Stanley Capital International -- Europe Australia Far East
Index, CDA Technologies Indexes, the Consumer Price Index, and the Dow Jones
Industrial Average. Performance rankings as reported in CHANGING TIMES,
BUSINESS WEEK, INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL,
IBC/DONOGHUE'S MONEY FUND REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR,
MONEY MAGAZINE, MORNINGSTAR MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT,
FORBES, FORTUNE, BARRON'S and similar publications may also be used in
comparing the Fund's performance. Furthermore, the Fund may quote its shares'
total returns and yields in advertisements or in shareholder reports. The
Fund may also advertise non-standardized performance information, such as
total return for periods other than those required to be shown or cumulative
performance data. The Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
GENERAL INFORMATION
The Company was incorporated in Maryland on August 6, 1987 under
the name The Laurel Funds, Inc., and changed its name to The Dreyfus/Laurel
Funds, Inc. on October 17, 1994. The Company is registered with the SEC under
the 1940 Act, as an open-end 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_Institutional shares and Retail
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 Class are entitled to vote, each as a separate class. Only
holders of Institutional shares will be entitled to vote on matters submitted
to shareholders pertaining to the Distribution Plan relating to that Class.
Page 26
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of
Directors or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Company to
hold a special meeting of shareholders for purposes of removing a Director
from office and for any other proper purpose. Company shareholders may remove
a Director by the affirmative vote of a majority of the Company's outstanding
voting shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and will
send you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144 or by calling toll
free 1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 27
International
Equity Allocation
Fund
Prospectus
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
323/723p080596
Page 28
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
INSTITUTIONAL AND RETAIL SHARES
PART B
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 5, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the Dreyfus International Equity Allocation Fund (formerly, the Laurel
International Equity Allocation Fund) (the "Fund"), dated August 5, 1996,
as it may be revised from time to time. The Fund is a separate,
diversified portfolio of The Dreyfus/Laurel Funds, Inc., an open-end
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 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. ("Premier") is the distributor of
the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . B-16
Management Arrangements . . . . . . . . . . . . . . . . . . . . . B-21
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . B-22
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . B-23
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . B-24
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . B-26
Determination of Net Asset Value. . . . . . . . . . . . . . . . . B-29
Dividends, Other Distributions and Taxes. . . . . . . . . . . . . B-29
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . B-33
Performance Information . . . . . . . . . . . . . . . . . . . . . B-35
Information about the Fund. . . . . . . . . . . . . . . . . . . . B-37
Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors. . . . . . . . . . . . . . . . . . . . B-37
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . B-37
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."
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 of Reconstruction and Development and Federal National
Mortgage Association ("FNMA")). No assurance can be given that the U.S.
Government will provide financial support to such U.S. Government agencies
or instrumentalities described in (b), (c) and (d) in the future, other
than set forth above, since it is not obligated to do so by law.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the credit guidelines of the Board of
Directors. In a repurchase agreement, the Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually agreed
upon date and price. The Fund's resale price will be in excess of the
purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate of the underlying security.
Repurchase agreements may also be viewed as a fully collateralized loan of
money by the Fund to the seller. The period of these repurchase agreements
will usually be short, from overnight to one week, and at no time will the
Fund invest in repurchase agreements for more than one year. The Fund will
always receive as collateral securities whose market value including
accrued interest is, and during the entire term of the agreement remains,
at least equal to 100% of the dollar amount invested by the Fund in each
agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of
the Custodian. If the seller defaults, the Fund might incur a loss if the
value of the collateral securing the repurchase agreement declines and
might incur disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of a security which is the subject of a repurchase
agreement, realization upon the collateral by the Fund may be delayed or
limited. 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
Board of Directors. No more than 5% of the Fund's net assets will be
invested in repurchase agreements at any one time.
When-Issued Securities. New issues of securities are often offered on
a when-issued basis. This means that delivery and payment for the
securities normally will take place approximately 7 to 45 days after the
date the buyer commits to purchase them. The payment obligation and the
interest rate that will be received on securities purchased on a when-
issued basis are each fixed at the time the buyer enters into the
commitment. The Fund will make commitments to purchase such securities
only with the intention of actually acquiring the securities, but the Fund
may sell these securities or dispose of the commitment before the
settlement date if it is deemed advisable as a matter of investment
strategy. Cash or marketable high grade debt securities equal to the
amount of the above commitments will be segregated on the Fund's records.
For the purpose of determining the adequacy of these securities the
segregated securities will be valued at market. If the market value of
such securities declines, additional cash or securities will be segregated
on the Fund's records on a daily basis so that the market value of the
account will equal the amount of such commitments by the Fund.
Securities purchased on a when-issued basis and the securities held by
the Fund are subject to changes in market value based upon the public's
perception of changes in the level interest rates. Generally, the value of
such securities will fluctuate inversely to changes in interest rates --
i.e., they will appreciate in value when interest rates decline and
decrease in value when interest rates rise. Therefore, if in order to
achieve higher interest income the Fund remains substantially fully
invested at the same time that it has purchased securities on a "when
issued" basis, there will be a greater possibility of fluctuation in the
Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligation from then-available cash flow, the sale of segregated
securities, the sale of other securities, and/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.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors who agree that
they are purchasing the paper for an investment and not with a view to
public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) paper is normally resold to other investors
through or with the assistance of the issuer or investment dealers who make
a market in Section 4(2) paper, thus providing liquidity. Pursuant to
guidelines established by the Company's Board of Directors, Dreyfus may
determine that Section 4(2) paper is liquid for the purposes of complying
with the Fund's investment restriction relating to investments in illiquid
securities.
Management Policies
The Fund engages, except as noted, in the following practices in
furtherance of its investment objective.
Loans of Fund Securities. The Fund has authority to lend its
portfolio securities provided (1) the loan is secured continuously by
collateral consisting of U.S Government securities or cash or cash
equivalents adjusted daily to make a market value at least equal to the
current market value of these securities loaned; (2) the Fund may at any
time call the loan and regain the securities loaned; (3) the Fund will
receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated
that the Fund may share with the borrower some of the income received on
the collateral for the loan or that it will be paid a premium for the loan.
In determining whether to lend securities, Dreyfus considers all relevant
factors and circumstances including the creditworthiness of the borrower.
Derivative Instruments. As discussed in the Prospectus, the Fund may
purchase and sell various financial instruments ("Derivative Instruments"),
such as financial futures contracts (such as interest rate, index and
foreign currency futures contracts), options (such as options on
securities, indices, foreign currencies and futures contracts), forward
currency contracts and interest rate, equity index 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 adjust
its risk exposure relative to the Benchmark, or to alter the exposure of a
particular investment or portion of the Fund's portfolio to fluctuations in
interest rates or currency rates.
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 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.
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 the
ability of Dreyfus to predict movements of the overall securities, currency
and other 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.
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
("counterparty") 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.
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
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 over-the-
counter ("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 counterparty (usually a securities
dealer or a bank) with no clearing organization guarantee. Thus, when the
Fund purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty 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. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of
such transaction, the sum of (i) the market value of outstanding OTC
options purchased by the Fund, (ii) the market value of the underlying
securities covered by outstanding OTC call options written by the Fund, and
(iii) the market value of all other assets of the Fund that are illiquid or
are not otherwise readily marketable, would exceed 15% of the net assets of
the Fund, taken at market value. However, if an OTC option is sold by the
Fund to a primary U.S. Government securities dealer recognized by the
Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the
amount by which the option is "in-the-money" (the difference between the
current market value of the underlying securities and the option's strike
price). The repurchase price with primary dealers is typically a formula
price that is generally based on a multiple of the premium received for the
option plus the amount by which the option is "in-the-money."
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.
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 counterparty, 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
counterparty, 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.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call option
on the same security with a lower strike price.
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.
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.
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.
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,
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
counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty 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 counterparty. 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 counterparty, 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, equity index 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.
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 counterparty'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.
Investment Restrictions
The following limitations have been adopted by the Fund. The Fund may
not change any of these fundamental investment limitations without the
consent of: (a) 67% or more of the shares present at a meeting of
shareholders duly called if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy; or (b) more than
50% of the outstanding shares of the Fund, whichever is less. The Fund may
not:
1. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. (For purposes of this
limitation, U.S. Government securities, and state or municipal governments
and their political subdivisions are not considered members of any
industry. In addition, this limitation does not apply to investments in
domestic banks, including U.S. branches of foreign banks and foreign
branches of U.S. banks).
2. Borrow money or issue senior securities as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") except that (a)
the Fund may borrow money in an amount not exceeding one-third of the
Fund's total assets at the time of such borrowings, and (b) the Fund may
issue multiple classes of shares. The purchase or sale of futures
contracts and related options shall not be considered to involve the
borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets
securities of any one issuer (other than securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments and repurchase agreements
shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
real estate business or invest or deal in real estate or interests
therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and later disposition of such
securities in accordance with the Fund's investment program may be deemed
an underwriting.
7. Purchase or sell commodities except that the Fund may enter into
futures contracts and related options, forward currency contracts and other
similar instruments.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a
single, open-end management investment company with substantially the same
investment 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
and options are not deemed to constitute selling short.
2. The Fund shall not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options shall not constitute purchasing securities on
margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any issuer
if the officers, Directors of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such
issuer, together own beneficially more than 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 Section 4(2) paper and securities which may be resold under Rule
144A under the Securities Act of 1933, provided that the Board of
Directors, or its delegate, determines that such securities are liquid
based upon trading markets for the specific security.
7. The Fund may not invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets and except to be extent otherwise
permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings
representing more than 5% of Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such
purchase: (a) more than 5% of the value of the Fund's assets would be
invested in warrants, or (b) more than 2% of the value of the Fund's assets
would be invested in warrants that are not listed on the New York Stock
Exchange ("NYSE") or American Stock Exchange (for purposes of this
limitation, warrants acquired by the Fund in units or attached to
securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and
any combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total assets
except that: (a) this limitation shall not apply to standby commitments,
and (b) this limitation shall not apply to the Fund's transactions in
future contracts and related options.
11. The Fund will not invest more than 25% of the market value of the
Fund's total assets in securities issued or guaranteed by a single
government or its agencies and instrumentalities.
As an operating policy, the Fund will not invest more the 25% of the value
of the Fund's total assets, at the time of such purchase, in domestic
banks, including U.S. branches of foreign banks and foreign branches of
U.S. banks. The Board of Directors may change this operating policy
without shareholder approval. Notice will be given to shareholders if this
policy is changed by the Board of Directors.
MANAGEMENT OF THE FUND
PRINCIPAL SHAREHOLDERS
The following shareholder(s) owned of record 5% or more of the
Institutional shares of the Fund at July 5, 1996:
Mac & Company, P.O. Box 3198, Pittsburgh, PA 15230-3198, 8% record.
The following shareholder(s) owned of record 5% or more of the Retail
shares of the Fund at July 5, 1996:
MBC Investment Corporation, 4500 New Linden Hill Road, Wilmington, DE
19808-2922, 39% record; Boston & Company, P.O. Box 3198, Pittsburgh, PA
15230-3198, 6% record; Mac & Company, P.O. Box 3198, Pittsburgh, PA 15230-
3198, 5% record.
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, as well as the Manager's investment advisory activities, may
raise issues under these provisions. Mellon Bank has been advised by
counsel that these activities are consistent with its statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of such future statutes and regulations could prevent
Mellon Bank or the Manager from continuing to perform all or a part of the
above services for its customers and/or the Fund. If Mellon Bank or
Dreyfus were prohibited from serving the Fund in any of its present
capacities, the Directors would seek an alternative provider(s) of such
services.
DIRECTORS AND OFFICERS
The Company has a Board composed of twelve Directors which supervises
the Company's investment activities and reviews contractual arrangements
with companies that provide the Fund with services. The following lists
the Directors and officers and their positions with the Company and their
present and principal occupations during the past five years. Each
Director who is an "interested person" of the Company, as defined in the
1940 Act, is indicated by an asterisk (*). Each of the Directors also
serves as a Trustee of The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (collectively, with the Company,
the "Dreyfus/Laurel Funds") and Mr. DiMartino serves as a Board member for
93 other funds advised by Dreyfus.
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. He is Chairman of
the Board of Noel Group Inc., a venture capital company; and a
director of the Muscular Dystrophy Association, Staffing Resources,
Inc., Health Plans Services Corporation, Belding Heminway, Inc., and
Curtis Industries, Inc.. For more than five years prior to January
1995, he was President and a director of Dreyfus and Executive Vice
President 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. Age: 52 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, Inc. Age: 60 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
o * J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith, Shaw
& McClay (law firm). Age: 65 years old. Address: 204 Woodcock
Drive, Pittsburgh, Pennsylvania 15215.
o + ARTHUR L. GOESCHEL. Director of the Company; Chairman of the Board and
Director, Rexene Corporation; Director, Calgon Carbon Corporation;
Director, National Picture Frame Corporation; Chairman of the Board
and Director, Tetra Corporation 1991-1993; Director, Medalist
Corporation 1992-1993. Since May 1991, Mr. Goeschel has served as
Trustee of Sewickley Valley Hospital. Age: 73 years old. Address:
Way Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o + KENNETH A. HIMMEL. Director of the Company; Director, The Boston
Company, Inc. and Boston Safe Deposit and Trust Company; President and
Chief Executive Officer, Himmel & Co., Inc.; Vice Chairman, Sutton
Place Gourmet, Inc. and Florida Hospitality Group; Managing Partner,
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, 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 J. SCIULLO. Director of the Company; Dean Emeritus and Professor
of Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Age: 63 years old. Address: 321 Gross
Street, Pittsburgh, Pennsylvania 15224.
+ 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 Hyman 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.
# ELIZABETH BACHMAN. Vice President and Assistant Secretary of the
Company, The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax
Free Municipal Funds (since January 1996); Counsel, Premier Mutual
Fund Services, Inc. Prior to September 1995, she was enrolled at the
Fordham University School of Law and received her J.D. in May 1995.
Prior to September 1992, she was an Assistant at the National
Association for Public Interest Law. Age: 26 years old. Address: 200
Park Avenue, New York, New York 10166.
# MARIE E. CONNOLLY. President and Treasurer of the Company, 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: 60 State Street, Boston, Massachusetts 02109.
# DOUGLAS C. CONROY. Vice President and Assistant Secretary of the
Company, The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax
Free Municipal Funds (since July 1996); Supervisor of Treasury
Services and Administration of Funds Distributor, Inc. From April
1993 to January 1995, Mr. Conroy was a Senior Fund Accountant for
Investors Bank & Trust Company. From December 1991 to March 1993, Mr.
Conroy was employed as a Fund Accountant at The Boston Company. Prior
to December 1991, Mr. Conroy attended Merrimack College where he
received a bachelors degree in Business Administration. Age: 27 years
old. Address: 60 State Street, Boston, Massachusetts 02109.
# RICHARD W. INGRAM. Vice President and Assistant Treasurer of the
Company, The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax
Free Municipal Funds (since July 1996); Senior Vice President and
Director of Client Services and Treasury Operations of Funds
Distributor, Inc. From March 1994 to November 1995, Mr. Ingram was
Vice President and Division Manager for First Data Investor Services
Group. From 1989 to 1994, Mr. Ingram was Vice President, Assistant
Treasurer and Tax Director-Mutual Funds of The Boston Company. Age:
40 years old. Address: 60 State Street, Boston, Massachusetts 02109.
# MARY A. NELSON. Vice President and Assistant Treasurer of the Company,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free
Municipal Funds (since July 1996); Vice President and Manager of
Treasury Services and Administration of Funds Distributor, Inc. From
1989 to July 1994, Ms. Nelson was an Assistant Vice President and
Client Manager for The Boston Company. Age: 32 years old. Address:
60 State Street, Boston, Massachusetts 02109.
# JOHN E. PELLETIER. Vice President and Secretary of the Company, 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: 31 years old. Address: 60 State Street,
Boston, Massachusetts 02109.
# JOSEPH S. TOWER, III. Assistant Treasurer and Vice President (since July
1996) of the Company, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Tax-Free Municipal Funds (since January 1996); Senior
Vice President, Treasurer and Chief Financial Officer of Premier
Mutual Fund Services, Inc. and an officer of other investment
companies advised or administered by Dreyfus. 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: 33 years old. Address: 60 State Street, Boston,
Massachusetts 02109.
____________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by The Dreyfus Corporation.
The officers and Directors of the Company as a group owned
beneficially less than 1% of the Fund's total shares outstanding as of July
5, 1996.
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, subsidiary or affiliate thereof)
serves as an officer or Director of the Company. The Dreyfus/Laurel Funds
pay each Director/Trustee who is not an "interested person" of the Company
(as defined in the 1940 Act), $27,000 per annum (and an additional $25,000
for the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel
Funds). In addition, the Dreyfus/Laurel Funds pay each Director/Trustee
who is not an "interested person" of the Company (as defined in the 1940
Act), $1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus
$750 per joint Dreyfus/Laurel Funds Audit Committee meeting attended, and
reimburses each Director/Trustee who is not an "interested person" of the
Company (as defined in the 1940 Act), for travel and out-of-pocket
expenses.
For the fiscal year ended October 31, 1995, the aggregate amount of
fees and expenses received by each current Director from the Company and
all other funds in the Dreyfus Family of Funds for which such person is a
Board member were as follows:
Total
Pension or Compensation
Retirement From the
Benefits Estimated Company
Aggregate Accrued as Annual and Fund
Compensation Part of Benefits Complex Paid
From the the Company's Upon to Board
Name of Board Member Company # Expenses Retirement Member
Ruth M. Adams $27,800 None None $ 34,500
Francis P. Brennan* 86,683 None None 110,500
Joseph S. DiMartino** None None None 448,618***
James M. Fitzgibbons 27,795 None None 34,500
J. Tomlinson Fort** None None None None
Arthur L. Goeschel 27,604 None None 35,500
Kenneth A. Himmel 26,381 None None 32,750
Arch S. Jeffery** None None None None
Stephen J. Lockwood 26,387 None None 32,750
Robert D. McBride 27,800 None None 35,500
John J. Sciullo 27,800 None None 34,500
Roslyn M. Watson 27,795 None None 34,500
# Amounts required to be paid by the Company directly to the non-interested
Directors, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-
interested Directors. Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $12,342 for the Company.
* Compensation of Francis Brennan includes $75,000 paid by the Dreyfus/Laurel
Funds to be Chairman of the Board. Effective May 1, 1996, Mr. Brennan's
annual compensation to be Chairman of the Board was reduced to $25,000.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid
directly by Dreyfus for serving as Board members of the Company and the
funds in the Dreyfus/Laurel Funds. For the fiscal year ended October 31,
1995, the aggregate amount of fees and expenses received by Joseph
DiMartino, J. Tomlinson Fort and Arch S. Jeffery from Dreyfus for serving
as a Board member of the Company were $17,563, $28,604 and $27,800,
respectively, and for serving as a Board member of all funds in the
Dreyfus/Laurel Funds (including the Company) were $23,500, $35,500 and
$35,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $3,186 for expenses attributable to the
Company's Board meetings ($3,186 is not included in the $12,342 above).
*** Estimated amounts for the fiscal year ending October 31, 1995.
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 (the "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.
For the period from August 12, 1994 (commencement of operations)
through August 4, 1996, S.A.M. Finance, S.A. ("CCF SAM"), 115 Avenue des
Champs-Elysees, Paris, France 75008, served as investment sub-adviser for
the Fund pursuant to the former Sub-Advisory Agreement among the Company,
on behalf of the Fund, CCF SAM and Mellon Bank dated July 18, 1994 (the
"Former Sub-Advisory Agreement") transferred to Dreyfus effective as of
October 17, 1994. CCF SAM is a wholly-owned subsidiary of Credit
Commercial de France, a French bank. Under the Former Sub-Advisory
Agreement, CCF SAM directed the investments of substantially all of the
Fund's assets in accordance with its investment objective, policies and
limitations. Effective August 5, 1996, Dreyfus assumed responsibility for
providing these services pursuant to the Management Agreement.
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 the 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 outstanding
voting securities of the Fund on 60 days' written notice to Dreyfus.
Dreyfus may terminate the Management Agreement upon written notice to the
Company. The Management Agreement and the Sub-Advisory Agreement each will
terminate immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Elie M. Genadry, Vice President-
Institutional Sales; William F. Glavin, Jr., Vice President-Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Patrice M. Kozlowski, Vice President-Corporate Communications; Mary Beth
Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice President-
Mutual Fund Accounting; Andrew S. Wasser, Vice President-Information
Systems; Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank
V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling,
directors.
For the period from August 12, 1994 (commencement of operations)
through October 31, 1994, and for the fiscal year ended October 31, 1995,
the Fund has had the following expenses:
For the Fiscal Year Ended October 31,
1995 1994
Management fees (gross of waiver) $249,080 $29,370
Expense Reimbursement from
investment manager -- --
Management fees waived -- --
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the NYSE are open
for business will be credited to the shareholder's Fund Account on the next
bank business day following such purchase order. Purchase orders made
after 4:00 P.M., New York time, on any business day the Transfer Agent and
the NYSE are open for business, or orders made on Saturday, Sunday or any
Fund holiday (e.g., when the NYSE is not open for business), will be
credited to the shareholder's Fund account on the second bank business day
following such purchase order.
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.
In-Kind Purchases. If the following conditions are satisfied, the
Fund may at its discretion, permit the purchase of shares through an "in-
kind" exchange of securities. Any securities exchanged must meet the
investment objective, policies and limitations of the Fund, must have a
readily ascertainable market value, must be liquid and must not be subject
to restrictions on resale. The market value of any securities exchanged,
plus any cash, must be at least equal to $25,000. Shares purchased in
exchange for securities generally cannot be redeemed for fifteen days
following the exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAV of the
shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities. For
further information about "in-kind" purchases, call 1-800-645-6561.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan (Institutional Shares Only)."
Institutional shares are subject to fees for distribution and
shareholder services.
Distribution Plan--Institutional Shares. The SEC has adopted Rule
12b-l under the 1940 Act ("Rule") regulating the circumstances under which
investment companies such as the Company may, directly or indirectly, bear
the expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule. With respect to
the Institutional shares of the Fund, the Company has adopted a
Distribution Plan ("Plan"), and may enter into Agreements with banks,
security brokers or dealers and other financial institutions ("Agents")
pursuant to the Plan.
Under the Plan, the Fund may spend annually up to 0.25% of the average
daily net assets attributable to Institutional shares for costs and
expenses incurred in connection with the distribution of, and shareholder
servicing with respect to, the Fund's Institutional shares.
The Plan provides that a report of the amounts expended under the
Plan, and the purposes for which such expenditures were incurred, must be
made to the Company's Directors for their review at least quarterly. In
addition, the Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to
the Plan without approval of the Fund's shareholders, and that other
material amendments of the Plan must be approved by the vote of a majority
of the Directors and of the Directors who are not "interested persons" of
the Company or Dreyfus (as defined in the 1940 Act) and who do not have any
direct or indirect financial interest in the operation the Plan, cast in
person at a meeting called for the purpose of considering such amendments.
The Plan is subject to annual approval by the entire Board of Directors and
by the Directors who are neither interested persons nor have any direct or
indirect financial interest in the operation of the Plan, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The Plan
is terminable, as to the Fund's Institutional shares, at any time by vote
of a majority of the Directors who are not interested persons and have no
direct or indirect financial interest in the operation of the Plan or by
vote of the holders of a majority of the outstanding shares of the such
Class of the Fund.
For the fiscal year ended October 31, 1995, the Fund paid $5,612
pursuant to the Plan.
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
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contracting 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 redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In this event, the securities would be valued in
the same manner as the Fund's portfolio is valued. If the recipient sold
such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the NYSE is
closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Fund ordinarily utilizes is restricted, or when
an emergency exists as determined by the SEC so that disposal of the Fund's
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit
to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of certain other eligible funds advised or administered by Dreyfus.
Shares of a 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.
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 Fund shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and 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, in
shares of certain other eligible funds in the Dreyfus Family of Funds.
This Privilege is available only for existing accounts. With respect to
Fund 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 by calling 1-800-645-6561. 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 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. Automatic
Withdrawal may be terminated at any time by the investor, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of certain other eligible
funds in the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of a Class of other funds purchased pursuant to this
Privilege will be purchased on the basis of relative net asset value per
share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund
makes available Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover
Accounts," and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request from
the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or 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 revised
periodically by the Board of Directors if the Directors believe that it no
longer reflects the value of the restricted securities. Restricted
securities not of the same class as securities for which a public market
exists usually will be valued initially at cost. Any subsequent adjustment
from cost will be based upon considerations deemed relevant by the Board of
Directors.
New York Stock Exchange Closings. The holidays (as observed) on which
the NYSE is closed currently are: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving 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.
General. To qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the
Fund -- which is treated as a separate corporation for federal tax
purposes-- must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (generally consisting of
net investment income, net short-term capital gain and net gains from
certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, futures, or
forward contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were held
for less than three months - options or futures (other than those on
foreign currencies), or foreign currencies (or options, futures or forward
contacts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and futures with respect
thereto) ("Short-Short Limitation"); (3) at the close of each quarter of
the Fund's taxable year, at least 50% of the value of its total assets must
be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with those other securities
limited, in respect of any one issuer, to an amount that does not exceed 5%
of the value of the Fund's total assets and that does not represent more
than 10% of the issuer's outstanding voting securities; and (4) at the
close of each quarter of the Fund's taxable year, not more than 25% of the
value its total assets may be invested in securities (other than U.S.
government securities or securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Accordingly, those distributions will be taxed to the shareholders for the
year in which that December 31 falls.
If Fund shares are sold at a loss after being held six months or less,
the loss will be treated as a long-term, instead of short-term, capital
loss to the extent of capital gain distributions on those shares.
Investors also should be aware that if shares are purchased shortly before
the record date for any dividend or other distribution, the shareholder
will pay full price for the shares and receive some portion of the price
back as a taxable distribution.
If the Fund retains net capital gain (the excess of net long-term
capital gain over net short-term capital loss) for reinvestment, although
it has no plans to do so, it may elect to treat such amounts as having been
distributed to its shareholders. As a result, the shareholders would be
subject to tax on the undistributed net capital gain, would be able to
claim their proportionate share of the federal income tax paid by the Fund
on that gain as a credit against their own federal income tax liabilities,
and would be entitled to an increase in their basis for their Fund shares.
Hedging Transactions. The Fund may employ hedging strategies, such as
writing (selling) and purchasing options and futures contracts and entering
into forward contracts. The use of these strategies involves complex rules
that will determine for income tax purposes the character and timing of
recognition of the gains and losses the Fund realizes in connection
therewith. Income from foreign currencies (except certain gains therefrom
may be excluded by future regulations), and income from transactions in
options, futures and forward contracts derived by the Fund with respect to
its business of investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement. However, income from
the disposition of options and futures contracts, other than those on
foreign currencies, will be subject to the Short-Short Limitation if they
are held for less than three months. Income from the disposition of
foreign currencies, and options, futures and forward contracts thereon,
that are not directly related to the Fund's principal business of investing
in securities (or options and futures with respect thereto) also will be
subject to the Short-Short Limitation if they are held for less than three
months.
If the Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining whether
the Fund satisfies the Short-Short Limitation. Thus, only the net gain (if
any) from the designated hedge will be included in gross income for
purposes of that limitation. The Fund will consider, when it engages in
hedging strategies, whether it should seek to qualify for this treatment.
To the extent the Fund does not qualify therefor, it may be forced to defer
the closing out of certain options, futures and forward contracts beyond
the time when it otherwise would be advantageous to do so, in order for the
Fund to qualify as a RIC.
Certain futures contracts in which the Fund may invest are "section
1256 contracts." Section 1256 contracts held by the Fund at the end of
each taxable year are "marked-to-market" (that is, treated as sold for
their fair market value) for federal income tax purposes, with the result
that unrealized gains or losses are treated as though they were realized.
Sixty percent of any net gain or loss recognized on these deemed sales, and
60% of any net realized gain or loss from any actual sales of section 1256
contracts, are treated as long-term capital gain or loss, and the balance
is treated as short-term capital gain or loss. Section 1256 contracts also
may be marked-to-market for purposes of the 4% excise tax described in the
Prospectus ("Excise Tax").
Certain futures contracts entered into by the Fund may result in
"straddles" for federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund on straddle
positions. In addition, losses realized by the Fund on straddle positions
may be deferred under the straddle rules. If the Fund makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions will be determined under rules
that vary according to the elections made.
Passive Foreign Investment Companies. The Fund may invest in the
stock of foreign corporations that are classified as "passive foreign
investment companies" ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least one-half of its assets constitute
investment-type assets or 75% or more of its gross income is passive
income. If the Fund holds stock of a PFIC, an "excess distribution"
received with respect to the stock and gain from the disposition of the
stock (collectively "PFIC income") will be treated as having been realized
ratably over the entire period during which the Fund held the stock. The
Fund itself will be subject to tax on the portion, if any, of the PFIC
income that is allocated to the part of that holding period in prior
taxable years (and an interest factor will be added to the tax, as if the
tax had actually been payable in those prior taxable years), even if the
Fund distributes the corresponding income to shareholders. All PFIC income
is taxable as ordinary income.
The Fund may elect alternative tax treatment with respect to any PFIC
stock that it holds. Under such an election, the Fund generally would be
required to include in its gross income each year its share of the PFIC's
earnings and capital gains for the year, regardless of whether any
distributions are received from the PFIC, and the special rules in the
preceding paragraph would not apply; the amount so included in the Fund's
income would have to be distributed to its shareholders to satisfy the
Distribution Requirement and to avoid imposition of the Excise Tax. In
most instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund,
would be entitled to elect to "mark-to-market" their stock in certain
PFICs. "Marking-to-market," in this context, means recognizing as gain for
each taxable year the excess, as of the end of that year, of the fair
market value of such a PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election
was in effect).
Foreign Currency Gains and Losses. Gains and losses attributable to
fluctuations in foreign currency exchange rates that occur between the time
the Fund accrues dividends, interest or other receivables, or expenses or
other liabilities, denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on the disposition
of a debt security denominated in a foreign currency, or of an option or
forward contract on a foreign currency, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security, option or contract and the date of disposition
also are treated as ordinary income or loss. These gains or losses may
increase or decrease the amount of the Fund's investment company taxable
income to be distributed to its shareholders.
Foreign Taxes. Dividends and interest received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors. If more than 50% of the value of the Fund's total assets at the
close of its taxable year consists of securities of foreign corporations,
it will be eligible to, and may, file an election ("Election") with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign
or U.S. possessions' income taxes paid by it. Pursuant to the Election,
the Fund would treat those taxes as dividends paid to its shareholders and
each shareholder would be required to (1) include in gross income, and
treat as paid by him or her, his or her proportionate share of those taxes,
(2) treat his or her share of those taxes and of any dividend paid by the
Fund that represents income from foreign or U.S. possession sources as his
or her own income from those sources and (3) either deduct the taxes deemed
paid by him or her in computing his or her taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against his or her federal income tax. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions.
Generally, a credit for foreign taxes may not exceed the shareholder's
federal income tax attributable to his total foreign source taxable income.
The Fund will report to its shareholders shortly after each taxable year
their respective shares of the income from sources within, and taxes paid
to, foreign countries and U.S. possessions if it makes the Election.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a non-
resident alien individual, a foreign trust or estate, a foreign corporation
or a foreign partnership (a "foreign shareholder") depends on whether the
income from the Fund is "effectively connected" with a U.S. trade or
business carried on by the shareholder, as discussed generally below.
Special U.S. federal income tax rules that differ from those described
below may apply to certain foreign persons who invest in the Fund, 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 a foreign
shareholder's income from the Fund is not effectively connected with a U.S.
trade or business carried on by the foreign shareholder, distributions of
the Fund's investment company taxable income generally will be subject to
U.S. federal withholding tax of 30% (or lower treaty rate).
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 federal
income tax at a rate of 31% from capital gain distributions and the gross
proceeds from a redemption of Fund shares unless the shareholder furnishes
the Fund with a certificate regarding the shareholder's foreign status.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of the Fund's shares is effectively connected with
a U.S. trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that
shareholder on the disposition of Fund shares will be subject to federal
income tax at the graduated rates applicable to U.S. citizens or domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be available.
State and Local Taxes. Depending on the Fund's activities in states
and localities in which it is deemed to be conducting business, the Fund
may be subject to the tax laws thereof. Shareholders are advised to
consult their tax advisers concerning the application of state and local
taxes.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the
Fund by Dreyfus. Debt securities purchased and sold by the Fund are
generally traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as brokers, or otherwise involve
transactions directly with the issuer of the instrument. This means that a
dealer (the securities firm or bank dealing with the Fund) makes a market
for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
Other portfolio transactions may be executed through brokers acting as
agent. The Fund will pay a spread or commissions in connection with such
transactions. Dreyfus uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Fund and at
spreads and commission rates, if any, which are reasonable in relation to
the benefits received. Dreyfus also places transactions for other accounts
that it provides with investment advice.
Brokers and dealers involved in the execution of portfolio
transactions on behalf of the Fund are selected on the basis of their
professional capability and the value and quality of their services. In
selecting brokers or dealers, Dreyfus will consider various relevant
factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution
services rendered on a continuing basis; and the reasonableness of any
spreads (or commissions, if any). Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 of the 1940 Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities;
however, it enables these organizations to avoid the additional expenses
which might otherwise be incurred if these organizations were to attempt to
develop comparable information through their own staffs.
The Company's Board of Directors periodically reviews Dreyfus'
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund and reviews the prices paid by
the Fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the Fund.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions
made for these other accounts. It sometimes happens that the same security
is held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment adviser, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase
or sale of the same investment instrument, the prices and amounts are
allocated in accordance with a formula considered by Dreyfus to be
equitable to each account. In some cases this system could have a
detrimental effect on the price or volume of the investment instrument as
far as the Fund is concerned. In other cases, however, the ability of the
Fund to participate in volume transactions will produce better executions
for the Fund. While the Directors will continue to review simultaneous
transactions, it is their present opinion that the desirability of
retaining Dreyfus as investment adviser to the Fund outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
During the period from August 12, 1994 (commencement of operations) to
October 31, 1994, the Fund paid no brokerage commissions. During the
fiscal year ended October 31, 1995, the Fund paid brokerage commissions of
$31,984.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases
of portfolio securities (exclusive of purchases and sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of securities in the Fund during the year. The Fund
commenced operations August 12, 1994, and its portfolio turnover rates for
the period ended October 31, 1994 and for the fiscal year ended October 31,
1995, were 0% and 64.85%, respectively.
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.
The Fund's total return for the period September 15, 1994
(commencement of operations) to April 30, 1996 for Institutional shares and
Retail shares was 17.85% and 18.20%, respectively. 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.
Average annual total return (expressed as a percentage) for
Institutional shares of the Fund for each of the periods noted was:
Average Annual Total Return for the
Periods Ended April 30, 1996
1 Year 5 Years 10 Years Inception
Institutional Shares 17.52% __ __ 10.64%
(9/15/94)
Inception date appears in parentheses following the average annual total
return since inception.
Average annual total return (expressed as a percentage) for Retail
shares of the Fund for each of the periods noted was:
Average Total Return for the
Periods Ended April 30, 1996
1 Year 5 Years 10 Years Inception
Retail Shares 17.83% __ __ 10.84%
(9/15/94)
Inception date appears in parentheses following the average annual total
return since inception.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Morgan Stanley Capital International-Europe Australia Far East Index; (ii)
the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, or other appropriate unmanaged domestic or foreign
indices of performance of various types of investments so that investors
may compare the Fund's results with those of indices widely regarded by
investors as representative of the securities markets in general; (iii)
other groups of mutual funds tracked by Lipper Analytical Services, a
widely used independent research firm which ranks mutual funds by overall
performance, investment objectives and assets, or tracked by other
services, companies, publications, or persons who rank mutual funds on
overall performance or other criteria; (iv) the Consumer Price Index (a
measure of inflation) to assess the real rate of return from an investment
in the Fund; and (v) products managed by a universe of money managers with
similar country allocation and performance objectives. Unmanaged indices
may assume the reinvestment of dividends but generally do not reflect
deductions or administrative and management costs and expenses.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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, 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
of its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
Boston Safe Deposit and Trust Company, One Boston Place, Boston, MA
02109, is the Fund's custodian. Dreyfus Transfer, Inc., a wholly-owned
subsidiary of the Manager, is located at One American Express Plaza,
Providence, Rhode Island 02903, and serves as the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. Dreyfus Transfer, Inc. and Boston Safe
Deposit and Trust Company, 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 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C. 20036, has passed upon the legality of the shares
offered by the Prospectus and this Statement of Additional Information.
KPMG Peat Marwick LLP was appointed by the Directors to serve as the
Fund's independent auditors for the year ending October 31, 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 filed on behalf
of the Fund.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1995,
including notes to the financial statements and supplementary information
and the Independent Auditors' Report, are included in the Annual Report to
shareholders. A copy of the Annual Report, and of the Semi-Annual Report
(unaudited) for the six months ended April 30, 1996, accompanies this
Statement of Additional Information. The financial statements from the
Annual Report and Semi-Annual Report are incorporated herein by reference.
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks-98.2% Shares Value
------------ --------------
<S> <C> <C> <C>
Australia-2.7% Amcor 24,000 $ 172,680
Broken Hill Proprietary 3,053 47,081
Coca Cola Amatil 18,897 199,186
ICI Australia 1,000 9,250
Pacific Dunlop 5,912 14,427
Westpac Banking 17,000 82,703
------------
525,327
------------
Austria-.2% Oesterreichische El Wirtsch 300 21,188
Strabag Oesterreich AG 300 22,970
------------
44,158
------------
Belgium-1.2% Electrabel 50 11,224
Electrabel Strip VVPR 50 135
Fortis VVPR AG 102 12,681
Petrofina SA 600 177,806
Solvay Et Cie, Series A, NPV 50 29,412
------------
231,258
------------
Denmark-.7% Danisco 3,000 146,341
------------
Finland-.5% Enso-Gutzeit Oy A 5,000 39,791
Kone B 400 43,822
Nokia AB, Cl. K 200 7,069
------------
90,682
------------
France-10.8% Accor 102 14,155
Banque Nationale de Paris 1,012 42,209
CPR Cie Parisienne De Reescompte 800 69,269
CarnaudMetalbox 400 17,395
Carrefour 150 117,066
Casino Guichard Perrachon Et Cie 200 7,518
Chargeurs 10 2,658
Compagnie Bancaire SA 1,033 114,001
Compagnie De St. Gobain 369 44,146
Compagnie Financiale (Paribas) 1,555 99,900
Credit Foncier de France 351 4,270
L'Air Liquide 700 127,039
Lafarge 2,500 159,934
L'Oreal 550 169,763
Lyonnaise des Eaux 1,300 130,402
Pechiney A 335 (a) 15,766
Peugeot 200 27,909
Pinault-Printemps Redante 550 166,786
Promodes 500 143,506
Rhone-Poulenc 3,068 73,528
SAGEM 50 31,165
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Common Stocks (continued) Shares Value
------------ --------------
France (continued) Saint Louis Bouchon 100 $ 29,088
Salomon 150 104,368
Sanofi 1,600 128,952
Sefimeg Ste Francaise 100 6,846
Societe National Elf Aquitaine 1,857 137,929
Thomson CSF 1,044 27,765
Total B 12 813
Unibail 200 19,521
Union des Assurances de Paris 4,000 86,509
Union Immobiliere De France 150 13,104
------------
2,133,280
------------
Germany-4.7% Agiv AG 2,500 53,209
Allianz AG 50 85,852
BASF AG 200 54,580
Bayer AG 100 32,186
Bilfinger & Berger Bau AG 50 18,917
Brau Und Brunnen 50 5,451
Ckag Colonia Koncern 7 (a) 4,799
Continental AG 1,000 17,268
Daimler-Benz AG 200 109,486
Dresdner Bank 2,500 62,871
Linde AG 100 61,109
Muenchener Rueckvesicherungs 50 90,749
RWE Aktiengesellschaft 3,000 116,733
Schering AG 1,000 73,448
Siemen AG 200 109,460
Victoria Holdings AG 40 22,850
------------
918,968
------------
Hong Kong-3.2% Cheung Kong (Holdings) 25,000 178,566
China Light & Power 8,740 41,241
HSBC Holdings 3,756 56,084
Hong Kong & China Gas 69,120 113,484
Hong Kong Telecommunications 23,218 44,274
Shangri-La Asia 100,000 137,682
South China Morning Post 90,000 61,085
Sun Hung Kai Properties 220 2,098
------------
634,514
------------
Italy-2.5% Aedes Spa-Ligure Lombard 5,000 24,015
Assicurazioni Generali 1,200 29,860
Banca Commercial Italiana SPA 25,000 56,004
Fiat SPA 20,000 68,063
Finanziaria Autogrill SPA 24,000 (a) 25,637
Italgas 30,000 103,304
Mediobanca 10,000 71,918
SME Meridonale 24,000 (a) 26,728
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Common Stocks (continued) Shares Value
------------ --------------
Italy (continued) Telecom Italia Mobile 30,680 $ 67,313
Telecom Italia Mobile SPA 5,680 11,553
------------
484,395
------------
Japan-48.7% Ajinomoto 20,800 259,406
Asahi Chemical Industry 70,900 536,610
Asahi Glass 800 9,673
Bank of Tokyo-Mitsubishi 2,620 60,373
Bridgestone 400 7,388
Canon 2,100 41,584
Chudenko 4,000 140,518
Chugai Pharmaceutical 400 3,884
Dai-Ichi Kango Bank 4,210 85,370
Dai Nippon Printing 800 15,004
Dai-Tokoy Fire & Marine Insurance 11,000 86,081
Daido Steel 200 1,101
Daiichi Pharmaceutical 5,000 83,778
Daikyo Kanko 2,000 14,928
Daishowa Paper Manufacturing 400 (a) 3,694
Daiwa House Industry 8,400 133,549
Denki Kagaku Kougyo 600 2,313
Fuji Bank 4,900 106,826
Fuji Photo Film 200 6,207
Fujita 17,000 84,644
Fujitsu 12,800 131,607
Furukawa Electric 13,000 78,465
Haseko 12,000 (a) 55,065
Hitachi 13,900 149,534
Honda Motor 400 9,101
House Food Industrial 220 4,398
Industrial Bank of Japan 2,200 58,644
Itochu 1,500 11,381
Japan Air Lines 3,600 (a) 28,686
Japan Energy 600 2,451
Joyo Bank 420 3,423
Kajima 800 8,987
Kamigumi 400 4,113
Kandenko 105 1,438
Kansai Electric Power 9,999 241,788
Kawasaki Steel 16,600 60,527
Kinki Nippon Railway 995 7,711
Kirin Brewery 7,000 90,632
Komatsu 600 5,769
Konica 25,000 195,164
Kumagai-Gumi 27,000 115,413
Kyocera 3,200 240,061
Kyushu Electric Power 101 2,500
Mabuchi Motor 1,000 61,310
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Common Stocks (continued) Shares Value
------------ --------------
Japan (continued) Maeda Road Construction 200 $ 3,656
Marubeni 74,000 441,718
Marudai Food 200 1,590
Maruha 400 (a) 1,561
Marui 3,000 65,975
Matsushita Electric Works 10,400 183,168
Mitsubishi 31,000 439,737
Mitsubishi Chemical 900 (a) 4,918
Mitsubishi Heavy Industries 44,700 397,466
Mitsubishi Trust & Banking 200 3,446
Mitsui & Company 400 3,797
Mitsui Marine & Fire Insurance 600 5,067
Mitsui Trust & Banking 600 7,197
NEC 800 10,129
Nikon 10,600 142,289
Nippon Express 8,000 83,016
Nippon Fire & Marine Insurance 38,000 276,752
Nippon Light Metal 400 2,589
Nippon Oil 800 5,522
Nippon Steel 5,100 18,353
Nippon Yusen Kaisha 10,800 65,289
Nomura Securities 4,000 86,824
Oji Paper 30,000 276,181
Orient 26,000 163,366
Orix 2,000 82,445
Osaka Gas 45,000 179,503
Sakura Bank 28,600 334,901
Sanwa Shutter 200 1,881
Sekisui House 12,000 148,515
Seven-Eleven Japan NPV 119 8,395
Sharp 8,000 138,614
Shizuoka Bank 400 5,407
Snow Brand Milk Products 500 3,613
Sony 940 60,853
Sumitomo Bank 14,307 305,100
Sumitomo Coal Mining 22,000 123,153
Sumitomo Electric Industries 800 11,424
Sumitomo Marine & Fire 6,000 56,893
Sumitomo Metal Industries 40,000 127,951
Sumitomo Trust & Banking 850 12,381
Takara Standard 12,000 138,233
Takeda Chemical Industries 1,000 17,232
Tokai Bank 6,800 86,748
Tokio Marine & Fire Insurance 800 10,967
Tokyo Broadcasting System 12,000 199,924
Tokyo Electric Power 1,272 34,513
Tokyo Gas 35,000 136,948
Tokyu 11,820 95,987
Toppan Printing 12,000 175,933
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Common Stocks (continued) Shares Value
------------ --------------
Japan (continued) Toray Industries 21,000 $ 142,346
Toshiba 10,000 77,494
Toyo Engineering 5,000 36,415
Toyobo 1,200 4,855
Toyota Motor 25,014 569,150
Ube Industries 600 2,462
Yakult Honsha 200 2,932
Yamato Transport 400 4,874
Yasuda Trust & Banking 43,000 284,101
Yokogawa Electric 2,900 33,682
------------
9,596,530
------------
Malaysia-2.3% Amsteel Berhad 110,000 89,130
Malayan Banking Berhad 7,000 68,231
Perusahaan Otomobil 9,000 44,404
Renong Berhad 14,000 24,372
Resorts World Berhad 23,000 139,310
Tanjong 25,000 95,267
------------
460,714
------------
Netherlands-3.7% Akzo Nobel 800 92,936
Elsevier 15,000 225,920
Ihc Caland 3,000 117,863
Internationale Nederlanden Groep 1,025 79,164
Philips Electronics 3,000 105,954
Royal Dutch Petroleum 100 14,250
Stad Rotterdam 3,069 103,017
------------
739,104
------------
New Zealand-.4% Fisher & Paykel 23,959 78,621
------------
Norway-.4% Aker 4,500 83,506
------------
Singapore-1.0% Keppel 10,000 90,359
Singapore Airlines 11,000 111,135
------------
201,494
------------
Spain-1.8% Banco Bilbao Vizcaya 1,800 68,398
Empresa Nacional De Electricidad 1,400 87,913
Fomento de Construcciones y Contratas 700 59,690
Repsol 1,100 40,329
Telefonica de Espana 6,000 106,807
------------
363,137
------------
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Common Stocks (continued) Shares Value
------------ --------------
Sweden-1.9% Asea 2,000 $ 202,255
Astra 2,000 88,046
Esselte 4,000 79,961
Stora Kopparbergs 1,000 13,449
------------
383,711
------------
Switzerland-4.7% BBC Brown Boveri & Cie, Series A 63 75,762
CS Holding (Regd Shrs) 1,000 90,635
Ciba Geigy (Regd Shrs) 45 52,126
Nestle 53 58,837
Roche Holding 39 306,137
Sandoz 50 54,341
Sandoz (Regd Shrs) 55 59,952
Schweizerische Bankgesellschaft 121 120,027
Schweizerische Rueckversicherungs 100 104,502
------------
922,319
------------
United Kingdom-6.8% Allied Irish Banks 11,036 57,745
Amersham International 3,000 48,494
Arjo Wiggins Appleton 11,000 30,271
B.A.T. Industries 15,000 113,658
Barclays 9,796 108,717
British Petroleum 221 1,998
British Telecommunications 22,000 120,920
East Midlands Electricity 8,000 75,576
Glaxo Wellcome 9,000 109,383
Grand Metropolitan 739 4,870
Hanson 33,959 100,877
Kwik Save 3,000 21,307
Legal & General 9,000 97,169
Marks & Spencer 1,000 6,688
Meyer International 277 1,894
National Westminster Bank 6,506 60,089
Northern Foods 11,000 29,773
Redland 434 2,811
Royal Bank of Scotland 9,000 70,366
Scapa Group 11,241 40,426
Smithkline Beecham, Cl. A 5,393 57,290
Southern Water 5,000 57,413
Tesco 113 478
Unigate 6,000 37,591
Williams Holdings 16,000 83,236
Wolseley 373 2,635
------------
1,341,675
------------
TOTAL COMMON STOCKS
(cost $17,163,177) $19,379,734
------------
------------
<PAGE>
Dreyfus International Equity Allocation Fund
- ----------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1996 (Unaudited)
Preferred Stocks-.3% Shares Value
------------ --------------
Germany; Friedrich Grohe
(cost $88,928) 300 $ 70,314
------------
------------
<CAPTION>
Principal
Amount
---------
<S> <C> <C> <C>
Commercial Paper; General Electric Capital Co.,
5.35%, 5/1/1996
(cost $148,000) $148,000 $148,000
------------
------------
TOTAL INVESTMENTS (cost $17,400,105) 99.3% $19,598,048
------- ------------
CASH AND RECEIVABLES (NET) .7% $ 130,189
------- ------------
------- ------------
NET ASSETS 100.0% $19,728,237
------- ------------
------- ------------
</TABLE>
Note to Statement of Investments;
- ----------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- --------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $17,400,105)-see statement................................... $19,598,048
Cash................................................................. 43,900
Dividends and interest receivable.................................... 79,103
Receivable for investment securities sold............................ 19,137
Net unrealized appreciation on forward currency exchange
contracts-Note 1(d)................................................ 39,890
-----------
19,780,078
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)............................. $46,867
Due to Distributor-Note 2(c)......................................... 899
Directors' fee payable-Note 2(d)..................................... 2,457
Payable for investment securities purchased.......................... 1,618 51,841
------- -----------
NET ASSETS............................................................... $19,728,237
-----------
-----------
REPRESENTED BY:
Paid-in capital...................................................... $16,750,044
Accumulated distributions in excess of investment income-net......... (89,835)
Accumulated undistributed net realized gain on investments........... 831,751
Accumulated net unrealized appreciation on investments and
foreign currency transactions...................................... 2,236,277
-----------
NET ASSETS at value...................................................... $19,728,237
-----------
-----------
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
(24 million shares of $.001 par value Capital Stock authorized)
($4,593,097 / 399,621 shares of Capital Stock outstanding)......... $11.49
-------
-------
Class R Shares
(36 million shares of $.001 par value Capital Stock authorized)
($15,135,140 / 1,317,571 shares of Capital Stock outstanding)...... $11.49
-------
-------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- ---------------------------------------------------------------------------
Statement of Operations six months ended April 30, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Cash dividends (net of $18,406 foreign taxes withheld
at source)..................................................... $ 117,965
Interest........................................................... 383
----------
Total Income................................................... $ 118,348
Expenses:
Investment management fee-Note 2(a,b).............................. 137,771
Distribution fee (Investor shares)-Note 2(c)....................... 5,376
Directors' fees and expenses-Note 2(d)............................. 925
----------
Total Expenses................................................. 144,072
----------
INVESTMENT (LOSS)-NET.......................................... (25,724)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency
transactions-Note 3................................................ $ 518,614
Net realized gain on forward currency exchange
contracts-Note 1(d)................................................ 213,187
----------
Net Realized Gain.................................................. 731,801
Net unrealized appreciation on investments and foreign
currency transactions.............................................. 2,137,314
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 2,869,115
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $2,843,391
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
Six Months Ended Year Ended
April 30, 1996 October 31,
(Unaudited) 1995
-------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net......................................... $ (25,724) $ 76,451
Net realized gain on investments..................................... 731,801 414,513
Net unrealized appreciation on investments for the period............ 2,137,314 60,242
------------- -------------
Net Increase In Net Assets Resulting From Operations............... 2,843,391 551,206
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Investor Shares.................................................... (24,383) (180)
Class R Share...................................................... (116,090) (26,993)
Net realized gain on investments:
Investor Shares.................................................... (73,149) -
Class R Shares..................................................... (241,414) -
------------- -------------
Total Dividends.................................................. (455,036) (27,173)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares.................................................... 1,185,228 671,731
Class R Shares..................................................... 1,056,340 7,539,619
Issued in exchange for shares of Dreyfus/Laurel International Fund;
Investor Shares.................................................... - 6,499,140
Dividends reinvested:
Investor Shares.................................................... 92,802 70
Class R Shares..................................................... 325,030 12,651
Cost of shares redeemed:
Investor Shares.................................................... (1,328,814) (3,340,391)
Class R Shares..................................................... (1,252,691) (6,559,623)
------------- -------------
Increase In Net Assets From Capital Stock Transactions........... 77,895 4,823,197
------------- -------------
Total Increase In Net Assets................................... 2,466,250 5,347,230
NET ASSETS:
Beginning of period.................................................. 17,261,987 11,914,757
------------- -------------
End of period [including distributions in excess of investment income-net
of ($89,835) in 1996 and undistributed investment income-net of $76,362
in 1995]........................................................... $19,728,237 $17,261,987
------------- -------------
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
Investor Shares Class R Shares
--------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 1996 October 31, April 30, 1996 October 31,
(Unaudited) 1995 (Unaudited) 1995
--------------------------------- --------------------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 110,156 266,245 99,963 773,150
Shares issued in connection with the
acquisition of Dreyfus/Laurel
International Fund................ - 470,442 - -
Shares issued for dividends reinvested 9,080 7 31,835 1,314
Shares redeemed..................... (124,080) (339,264) (116,360) (650,043)
---------- --------- --------- --------
Net Increase (Decrease) In
Shares Outstanding.............. (4,844) 397,430 15,438 124,421
---------- --------- --------- --------
---------- --------- --------- --------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------
Financial Highlights
Reference is made to pages 5 and 6 of the Fund's Prospectus
dated August 5, 1996.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1-Significant Accounting Policies:
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering
seventeen series including the Dreyfus International Equity Allocation Fund
(the "Fund"). The Fund's investment objective is to exceed the total return
of the Morgan Stanley Capital International--Europe Australia Far East (MSCI
EAFE) Index through active country allocation, stock selection, currency
allocation, and portfolio contstruction and risk control. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund is currently authorized to issue
two classes of shares: Investor shares and Class R shares. Investor shares
are sold primarily to retail investors and bear a distribution fee. Class R
shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank, N.A. and its affiliates) acting on
behalf of customers having a qualified trust or investment account or
relationship at such institution, and bear no distribution fee. Each class of
shares has identical rights and privileges, except with respect to the
distribution fee and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) ,
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked priced is used for
valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(b) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(c) Foreign currency transactions: The Fund does not isolate that portion
of the results of the operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in the market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference
<PAGE>
Dreyfus International Equity Allocation Fund
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
between the amount of dividends, interest, and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities, resulting from changes in exchange rates. Such
gains and losses are included with net realized and unrealized gain or loss
on investments.
(d) Forward currency contracts: The Fund enters into forward currency
exchange contracts in order to hedge its exposure to changes in foreign
currency exchange rates on its foreign portfolio holdings. When executing
forward currency exchange contracts, the Fund is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of forward currency exchange contracts, the Fund would incur
a loss if the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The Fund
realizes a gain if the value of the contract decreases between those dates.
With respect to purchases of forward currency exchange contracts, the Fund
would incur a loss if the value of the contract decreases between the date
the forward contract is opened and the date the forward contract is closed.
The Fund realizes a gain if the value of the contract increases between those
dates. The Fund is also exposed to credit risk associated with counter party
nonperformance on these forward currency exchange contracts which is
typically limited to the unrealized gains on such contracts that are
recognized in the statement of assets and liabilities. In addition, the
following summarizes open forward currency exchange contracts at April 30,
1996.
<TABLE>
<CAPTION>
Foreign Currency U.S. Dollar Unrealized
Foreign Currency Sale Contracts Amount Proceeds Value Appreciation
------------------------------ -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
French Franc, expiring 5/28/96........... 5,769,058 $ 752,758 $ 735,251 $17,507
German Deutschmarks, expiring 5/28/96.... 550,000 381,018 359,595 21,423
Japanese Yen, expiring 5/21/96........... 357,000,000 3,408,424 3,407,464 960
--------
$39,890
--------
--------
</TABLE>
(e) Distributions to shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the distributio
n requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(f) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $1,563,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1995. The
amount of this loss which can be utilized in subsequent years is subject to
an annual limitation due to the Fund's merger with Dreyfus Laurel
International Fund. If not applied, $1,536,000 of the carryover expires in
fiscal 2000 and $27,000 expires in fiscal 2002.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 2- Investment Management Fee and Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. The Manager also directs the investments of the Fund in accordance with
its investment objective, policies and limitations. For these services, the
Fund is contractually obligated to pay the Manager a fee, calculated daily
and paid monthly, at the annual rate of 1.50% of the value of the Fund's
average daily net assets. Out of its fee, the Manager pays all of the
expenses of the Fund except brokerage fees, taxes, interest, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Directors
(including counsel fees) and extraordinary expenses. In addition, the Manager
is required to reduce its fee in an amount equal to the Fund's allocable
portion of fees and expenses of the non-interested Directors (including
counsel).
(b) Sub-Advisory Agreement: S.A.M. Finance, S.A. (the "Sub-Advisor"), a
wholly-owned subsidiary of Credit Commercial de France, serves as the Fund's
Sub-Advisor pursuant to a sub-advisory agreement among the Fund, the
Sub-Advisor and the Manager. For its services, the Sub-Advisor is paid an
annual fee of .25% of the value of the Fund's average daily net assets and is
paid by the Manager out of its fee.
(c) Distribution plan: The Fund has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its Investor
shares. Under the Plan, the Fund may pay annually up to .25% of the value of
the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the six months ended April 30,
1996, the distribution fee for the Investor shares was $5,376.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Directors who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
(d) Directors' fees: Each director who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000 for each Board meeting
attended and $750 for each Audit Committee attended and is reimbursed for
travel and out-of-pocket expenses. These expenses are paid in total by the
following funds: The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and The Dreyfus/Laurel Funds Trust. In addition the
Chairman of the Board recieves an annual fee of $75,000 per year. These fees
and expenses are charged and allocated to each series based on net assets.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 3-Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the six months ended April 30, 1996 amounted to $3,549,265 and
$3,892,068, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
and foreign currency exchange contracts was $2,237,833, consisting of
$2,684,991 gross unrealized appreciation and $447,158 gross unrealized
depreciation.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4-Subsequent Event
At a meeting held on April 25, 1996, the Board of Directors approved the
termination of the Sub-Advisory Agreement between the Fund and Sub-Advisor.
The manager will be taking over day-to-day portfolio management
responsibility for the Fund pursuant to the Investment Management Agreement
between the Company, on behalf of the Fund, and the Manager (the "Management
Agreement"'). The Board also approved a change from an "active" stock
selection process to a "passive" stock selection process. The Board also
approved amending the Management Agreement to provide for a reduction in the
management fee payable by the Fund to Dreyfus from 1.50% to 1.25% of the
value of the Fund's average daily net assets. Each of these changes will
become effective on or about August 5, 1996.
<PAGE>
Dreyfus International
Equity Allocation
Fund
Annual Report
October 31, 1995
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
For the twelve-month period ending October 31, 1995, the Dreyfus
International Equity Allocation Fund's Class R shares and Investor shares
posted total returns of .81% and .67%, respectively.* The Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE ) Index, the Fund's
benchmark index, had a loss of .37% for that same period.**
ECONOMIC REVIEW
Over the past 12 months, European economies have rebounded from
their previously recessionary condition. Real economic growth in the European
Union was above 3% in 1994 and we believe that it will show an increase of
about 2.5% for 1995. Signs of a cyclical slowdown were apparent in the third
quarter of this year, yet we expect growth to remain solidly above 2% in
1996.
The forthcoming European Monetary Union and its prospects for a
wider economic unification with Eastern Europe play a major role in
formulating the political agenda for many European governments. Reducing
budget deficits and increasing the competitiveness of business are universal
priorities. The large privatization programs underway all over Europe bear
witness to this. While there are difficulties in gaining a political
consensus on these issues -- as evidenced by the civil service strikes in
France and the political instability in Italy -- the wave of economic reform
seems unstoppable. The European Commission is fostering an aggressive
campaign of deregulation. Local monopolies of telephone companies and
utilities are primary targets. Even the sacred cow of the wasteful Common
Agricultural policy is undergoing substantial reform. We believe these
reforms, combined with continuing low inflation, should result in significant
reductions in interest rates in most European countries, particularly in the
south where real interest rates are very high.
The Japanese economy suffered a series of dramatic events during
the year. The recession was worsened by the Kobe earthquake, the strong yen
and the troubled financial sector. During the summer, the Japanese Government
and the Bank of Japan, aided by the Fed and the Bundesbank, intervened
heavily to halt the yen's rise. The Bank of Japan lowered its discount rate
to an all-time low (0.5% per annum). At the same time, the Japanese
Government announced an unprecedented 14 trillion yen package designed to
stimulate the economy. Although some uncertainty persists regarding the fate
of smaller financial institutions, we believe it appears likely that the
Japanese economy will recover to an above 2% growth rate in the coming year.
THE PORTFOLIO AND THE MARKET
As of October 31, 1995, the Fund's portfolio was invested in 235
stocks spread over 20 countries. Countries are weighted using proprietary
asset allocation models that examine the risk associated with each individual
market in relation to its expected returns. Additional models seek to
identify stocks that have attractive valuations relative to peer companies
and possess above-average growth potential. The Fund carries some exposure to
Malaysia, Hong Kong and Singapore (aggregating to 6.2% of total Fund assets
as of October 31, 1995) resulting in access to the southeastern Asia
high-growth zone. Because of size and liquidity concerns, the Fund has so far
refrained from investing in emerging economies.
The Fund was most heavily weighted in Japan (42.1%), the United
Kingdom (11.8%), France (9.2%), and Germany (7.6%) as of October 31, 1995.
We believe that fundamentals are currently rather attractive for equity
investment in Europe given low and possibly declining interest rates and the
continuation of healthy corporate profit growth.
In Germany and the United Kingdom the earlier export-driven
recovery has become more domestically oriented and relies heavily on
corporate restructuring. The stock markets of Germany and the United Kingdom
managed 12-month gains of 9.0% and 8.5%, respectively, as of October 31,
1995. The Fund's overweighting in Germany (7.6%) compared to the EAFE Index
(6.9%) helped performance. The Fund's U.K. holdings also helped performance.
France was hampered by political uncertainty earlier in the year. Yet social
security reforms paved the way for much-needed interest rate reductions which
could enhance the environment for equity investors. Overweighting in France
(9.2% vs. the EAFE Index's 6.5%) also benefitted the portfolio's performance
as the French stock market rose 3.5% over the past year. In Italy (an
underweighted sector compared to the EAFE Index - 1.9% for the Fund, 2.3% for
the Index), the market was hurt by a weak lira and political worries. Despite
some significant progress on the reform front, the Italian stock market
declined 8.5% for the twelve months ending October 31, 1995, and the Fund's
holdings hindered portfolio performance.
The Japanese stock market's performance reflected the difficulties
outlined above and declined 11.4% for the 12-month period ended October 31,
1995. The Fund's large position and slight overweighting (42.1%) in Japan
compared to that of the EAFE Index (39.6%) retarded investment performance.
We believe, however, that very low interest rates and extensive corporate
restructuring (including massive investments in the low-cost areas of Asia)
should help propel corporate profits higher next year.
Included in this report is a series of detailed statements about
your Fund's holdings and its financial condition. We hope they are
informative. Please know that we appreciate greatly your continued confidence
in the Fund.
Very truly yours,
Patrice Conxicoeur
Portfolio Manager
S.A.M. Finance, S.A.
November 15, 1995
Paris, France
* Total return includes reinvestment of dividends and any capital gains
paid.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE ) Index is an unmanaged
index composed of a sample of companies representative of the market
structure of European and Pacific Basin Countries. The return indicated
includes net dividends reinvested. The Index is the property of Morgan
Stanley & Co., Incorporated.
<PAGE>
Dreyfus International Equity Allocation Fund October 31, 1995
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS INTERNATIONAL
EQUITY ALLOCATION FUND INVESTOR SHARES AND CLASS R SHARES AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFE(R)) INDEX
Morgan Stanley
Capital
International International International
Equity Equity Europe,
Allocation Allocation Australasia,
Fund (Investor Fund Far East
Class Shares) (Class R Shares) (EAFE(R)) Index*
9/15/94 10,000 10,000 10,000
10/31/94 10,050 10,050 10,008
1/31/95 9,386 9,390 9,218
4/30/95 10,027 10,032 10,133
7/31/95 10,338 10,342 10,449
10/31/95 10,128 10,142 9,970
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
Investor Class Shares Class R Shares
-------------------------------- -------------------------------
Period ended 10/31/95 Period ended 10/31/95
-------------------------------- -------------------------------
1 Year 0.67% 1 Year 0.81%
From Inception (9/15/94) 1.13 From Inception (9/15/94) 1.26
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Investor
Class shares and Class R shares of Dreyfus International Equity Allocation
Fund on 9/15/94 (Inception Date) to a $10,000 investment made in the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFERegistration
Mark) Index on that date. For comparative purposes, the value of the Index
on 8/31/94 is used as the beginning value on 9/15/94. All dividends and
capital gain distributions are reinvested.
The Fund's objective is to exceed the total return of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFERegistration Mark)
Index through active stock selection, country allocation and currency
allocation. The Fund's performance shown in the line graph takes into
account all applicable fees and expenses. The Index, which is the property
of Morgan Stanley & Co. Incorporated, is an unmanaged index composed of a
sample of companies representative of the market structure of European and
Pacific Basin countries and includes net dividends reinvested. The Index
does not take into account charges, fees and other expenses. Further
information relating to Fund performance, including expense reimbursements,
if applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
Statement of Investments October 31, 1995
<TABLE>
<CAPTION>
Common Stocks--98.7% Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Australia--2.6% Amcor ......................................... 24,000 $ 179,603
Broken Hill Proprietary ....................... 3,009 40,686
Coca Cola Amatil .............................. 18,750 144,875
ICI Australia ................................. 1,000 6,844
Pacific Dunlop ................................ 5,912 14,297
Westpac Banking ............................... 17,000 69,684
-----------
455,989
-----------
Austria--.3% Oesterreichische El Wirtsch ................... 300 18,311
Strabag Oesterreich AG ........................ 300 29,963
-----------
48,274
-----------
Belgium--1.4% Electrabell VVPR .............................. 50 11,205
Fortis AG ..................................... 100 10,721
Fortis VVPR AG ................................ 2 216
Petrofina SA .................................. 600 186,051
Solvay Et Cie, Series A, NPV .................. 50 25,207
-----------
233,400
-----------
Denmark--1.1% Danisco ....................................... 4,000 182,350
-----------
Finland--.4% Kone B ........................................ 400 36,488
Nokia AB, Class K ............................. 200 11,691
Pohjola Insurance Co., Class B ................ 1,000 14,614
-----------
62,793
-----------
France--9.2% Accor ......................................... 102 12,137
Banque Nationale de Paris ..................... 1,012 41,723
CPR Cie Parisienne De Reescompte .............. 800 61,607
Cap Gemini Sogeti ............................. 3,000 (a) 82,949
CarnaudMetalbox ............................... 1,400 58,781
Carrefour ..................................... 150 88,233
Casino Guichard Perrachon Et Cie .............. 200 5,734
Chargeurs ..................................... 10 2,060
Compagnie Bancaire SA ......................... 1,533 159,187
Compagnie De St. Gobain ....................... 419 50,031
Compagnie Financiale (Paribas)................. 1,555 85,672
Credit Foncier de France ...................... 351 6,505
L'Oreal ....................................... 50 12,237
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
France (continued) Pechiney International ........................ 600 $ 13,689
Peugeot ....................................... 200 26,093
Pinault-Printemps Redante ..................... 550 119,406
Rhone-Poulenc ................................. 3,068 66,983
SAGEM ......................................... 200 111,418
Saint Louis Bouchon ........................... 100 28,796
Salomon ....................................... 400 231,209
Sanofi ........................................ 1,600 102,209
Sefimeg Ste Francaise ......................... 100 6,635
Simco-Union Pout L'Habitation ................. 104 8,413
Societe National Elf Aquitaine ................ 1,857 126,652
Sommer-Allibert ............................... 100 26,482
Thomson CSF ................................... 1,044 21,788
Total B ....................................... 12 742
Unibail ....................................... 200 18,453
Union Immobiliere De France ................... 150 12,589
-----------
1,588,413
-----------
Germany--7.6% Agiv AG ....................................... 6,500 136,647
BASF AG ....................................... 1,800 395,036
Bayer AG ...................................... 300 79,772
Bilfinger & Berger Bau AG ..................... 50 18,394
Brau Und Brunnen .............................. 50 8,487
Ckag Colonia Koncern .......................... 7 (a) 5,468
Continental AG ................................ 1,000 14,133
Daimler-Benz AG ............................... 200 96,377
Dresdner Bank ................................. 5,000 133,522
Dyckeroff AG .................................. 200 88,068
Linde AG....................................... 100 61,434
RWE Aktiengesellschaft ........................ 300 106,747
Schering AG .................................. 1,000 69,744
Siemen AG ..................................... 200 104,829
-----------
1,318,658
-----------
Hong Kong--3.1% Cheung Kong (Holdings) ........................ 25,000 140,994
China Light & Power ........................... 8,740 46,577
HSBC Holdings PLC ............................. 3,756 54,656
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Hong Kong (continued) Hong Kong & China Gas.......................... 57,600 $ 93,504
Hong Kong Telecommunications................... 22,700 39,639
Shangri-La Asia................................ 100,000 110,593
South China Morning Post....................... 90,000 52,386
Sun Hung Kai Properties........................ 220 1,757
-----------
540,106
-----------
Italy--1.9% Aedes Spa-Ligure Lombard....................... 5,000 28,284
Assicurazioni Generali......................... 1,200 28,020
Fiat SPA....................................... 20,000 65,241
Italgas........................................ 30,000 79,951
Mediobanca..................................... 10,000 66,939
Telecom Italia Mobile.......................... 30,680 51,583
Telecom Italia Mobile SPA...................... 5,680 (a) 8,639
-----------
328,657
-----------
Japan--42.1% Ajinomoto...................................... 20,800 205,658
Asahi Chemical Industry........................ 70,900 498,399
Asahi Glass.................................... 800 7,831
Bank of Tokyo.................................. 13,000 189,623
Bridgestone.................................... 400 5,560
Canon.......................................... 2,100 35,976
Chugai Pharmaceutical.......................... 400 3,657
Dai-Ichi Kango Bank............................ 4,210 71,300
Dai Nippon Printing............................ 800 12,765
Dai-Tokoy Fire & Marine Insurance.............. 11,000 70,748
Daido Steel.................................... 200 890
Daiichi Pharmaceutical......................... 5,000 69,995
Daikyo Kanko................................... 2,000 13,372
Daishowa Paper Manufacturing................... 400 (a) 2,940
Daiwa House Industry........................... 8,400 125,814
Denki Kagaku Kougyo............................ 600 (a) 2,020
Fuji Bank...................................... 4,900 91,140
Fuji Photo Film................................ 200 4,953
Fujita......................................... 17,000 77,386
Fujitsu........................................ 800 9,554
Furukawa Electric.............................. 13,000 58,414
Haseko......................................... 12,000 42,760
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Japan (continued) Hitachi........................................ 13,900 $ 142,878
Honda Motor.................................... 400 6,970
House Food Industrial.......................... 220 4,005
Industrial Bank of Japan....................... 2,200 60,088
Ito-Yokado..................................... 1,000 54,723
Itochu......................................... 1,500 8,898
Japan Air Lines................................ 3,600 (a) 21,674
Japan Energy................................... 600 1,721
Joyo Bank...................................... 420 3,017
Kajima......................................... 800 7,393
Kamigumi....................................... 400 3,622
Kandenko....................................... 96 1,184
Kansai Electric Power.......................... 5,999 140,955
Kawasaki Steel................................. 16,600 55,252
Kinki Nippon Railway........................... 966 7,470
Kirin Brewery.................................. 7,000 70,582
Komatsu........................................ 600 4,698
Konica......................................... 25,000 167,645
Kumagai-Gumi................................... 27,000 103,612
Kyocera........................................ 200 16,407
Kyushu Electric Power.......................... 101 2,392
Mabuchi Motor.................................. 1,000 60,597
Maeda Road Construction........................ 200 3,582
Marubeni....................................... 74,000 360,763
Marudai Food................................... 200 1,350
Maruha......................................... 400 (a) 1,174
Marui.......................................... 3,000 51,982
Matsushita Electric Works...................... 10,400 147,626
Mitsubishi..................................... 31,000 342,927
Mitsubishi Bank................................ 210 4,111
Mitsubishi Chemical............................ 900 4,088
Mitsubishi Heavy Industries.................... 44,700 345,259
Mitsubishi Trust & Banking..................... 200 2,799
Mitsui & Company............................... 400 3,187
Mitsui Marine & Fire Insurance................. 600 3,612
Mitsui Trust & Banking......................... 600 4,804
NEC............................................ 800 10,572
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Japan (continued) Nikon.......................................... 600 $ 8,575
Nippon Express................................. 8,000 65,002
Nippon Fire & Marine Insurance................. 38,000 204,601
Nippon Light Metal............................. 400 2,169
Nippon Oil..................................... 800 4,252
Nippon Steel................................... 5,100 16,925
Nippon Yusen Kaisha............................ 800 4,283
Nomura Securities.............................. 4,000 73,225
Oji Paper...................................... 30,000 275,770
Orient......................................... 26,000 118,100
Orix........................................... 2,000 70,484
Sakura Bank.................................... 8,600 83,348
Sanwa Shutter.................................. 200 1,360
Sekisui House.................................. 12,000 138,619
Seven-Eleven Japan NPV......................... 108 7,210
Sharp.......................................... 8,000 111,209
Shimachu....................................... 4,000 105,726
Shizuoka Bank.................................. 400 4,738
Snow Brand Milk Products....................... 500 3,279
Sony........................................... 940 42,329
Sumitomo Bank.................................. 14,307 253,506
Sumitomo Coal Mining........................... 22,000 93,039
Sumitomo Electric Industries................... 800 9,241
Sumitomo Marine & Fire......................... 6,000 42,878
Sumitomo Metal Industries...................... 40,000 (a) 108,467
Sumitomo Trust & Banking....................... 850 9,818
Takeda Chemical Industries..................... 1,000 14,096
Tokai Bank..................................... 6,800 71,228
Tokio Marine & Fire Insurance.................. 800 8,223
Tokyo Broadcasting System...................... 12,000 176,211
Tokyo Electric Power........................... 1,272 33,387
Tokyo Tatemono................................. 11,000 44,366
Tokyu.......................................... 11,820 75,328
Toppan Printing................................ 12,000 158,590
Toray Industries............................... 21,000 131,365
Toshiba........................................ 10,000 72,540
Toyo Engineering............................... 5,000 27,410
Toyobo......................................... 1,200 3,947
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Japan (continued) Toyota Motor................................... 25,014 $ 465,262
Ube Industries................................. 600 1,985
Yakult Honsha.................................. 200 2,545
Yamatake Honeywell............................. 5,000 68,037
Yamato Transport............................... 400 4,307
Yasuda Trust & Banking......................... 43,000 192,373
Yokogawa Electric.............................. 2,900 22,143
-----------
7,265,870
-----------
Malaysia--2.0% Malayan Banking Berhad......................... 7,000 56,518
Perusahaan Otomobil............................ 9,000 32,256
Renong Berhad.................................. 14,000 21,394
Resorts World Berhad........................... 23,000 112,327
Tanjong........................................ 45,000 113,432
-----------
335,927
-----------
Netherlands--3.7% Akzo Nobel..................................... 800 91,044
Elsevier....................................... 15,000 193,797
Ihc Caland..................................... 3,000 85,307
Internationale Nederlanden Groep............... 1,025 61,084
Philips Electronics............................ 3,000 115,896
Royal Dutch Petroleum.......................... 100 12,406
Stad Rotterdam................................. 3,040 83,749
-----------
643,283
-----------
New Zealand--.4% Fisher & Paykel................................ 23,446 76,296
-----------
Norway--.6% Aker........................................... 8,500 107,223
-----------
Singapore--1.1% Keppel......................................... 10,000 82,094
Singapore Airlines............................. 11,000 101,982
-----------
184,076
-----------
Spain--1.6% Banco Bilbao Vizcaya........................... 1,800 55,032
Empresa Nacional De Electricidad............... 1,400 69,655
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
Spain (continued) Fomento de Construcciones y Contratas.......... 700 $ 49,459
Repsol......................................... 1,100 32,864
Telefonica de Espana........................... 6,000 75,740
-----------
282,750
-----------
Sweden--2.0% Asea........................................... 2,000 197,543
Astra.......................................... 2,000 72,381
Esselte........................................ 4,000 58,810
Stora Kopparbergs.............................. 1,000 12,139
-----------
340,873
-----------
Switzerland--5.8% BBC Brown Boveri & Cie, Series A............... 63 73,070
CS Holding (Regd Shrs)......................... 1,000 102,157
Ciba Geigy..................................... 100 86,305
Ciba Geigy (Regd Shrs)......................... 45 38,956
Jelmoli Holdings............................... 200 95,992
Nestle......................................... 103 107,943
Roche Holding.................................. 39 283,360
Sandoz......................................... 50 41,611
Sandoz (Regd Shrs)............................. 55 45,385
Schweizerische Bankgesellschaft................ 121 131,070
-----------
1,005,849
-----------
United Kingdom--11.8% Allied Irish Banks............................. 26,036 131,753
Barclays....................................... 14,496 170,275
British Petroleum.............................. 8,134 59,900
British Telecommunications..................... 21,000 125,080
Grand Metropolitan............................. 739 5,120
Hanson......................................... 33,434 102,479
Marks & Spencer................................ 12,000 80,492
Meyer International............................ 12,274 67,961
National Westminster Bank...................... 12,351 123,390
Northumbrian Water............................. 10,000 156,934
Redland........................................ 29,000 159,884
Reed International............................. 3,000 45,656
Scapa Group.................................... 28,241 104,544
Smithkline Beecham Cl A........................ 20,295 212,064
</TABLE>
<PAGE>
Dreyfus International Equity Allocation Fund
- ------------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------ -------- -----------
<S> <C> <C> <C>
United Kingdom (continued) St. James Place Capital........................ 30,000 $ 55,528
TSB Group...................................... 40,000 236,043
Tesco.......................................... 5,560 26,387
Trafalgar House................................ 30,000 10,797
Williams Holdings.............................. 16,000 79,353
Wolseley....................................... 12,184 75,558
-----------
2,029,198
-----------
Total Common Stocks
(cost $16,982,912)........................... $17,029,985
-----------
Preferred Stocks--.4%
- ------------------------------------------------------------------------------
Germany; Friedrich Grohe
(cost $84,265)............................... 300 $ 72,017
-----------
TOTAL INVESTMENTS (cost $17,067,177).......................................... 99.1% $17,102,002
------ -----------
CASH AND RECEIVABLES (NET).................................................... 0.9% $ 159,985
------ -----------
NET ASSETS.................................................................... 100.0% $17,261,987
------ -----------
-----------
<FN>
Note to Statement of Investments;
- ------------------------------------------------------------------------------
(a) Non-income producing.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $17,067,177)--See Statement of Investments...................... $17,102,002
Receivable for investment securities sold............................... 155,979
Dividends receivable.................................................... 62,961
Net unrealized appreciation on forward currency exchange
contracts--Note 1(d).................................................. 61,139
-----------
17,382,081
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $ 1,428
Cash overdraft due to Custodian......................................... 116,258
Directors' fee payable.................................................. 2,408 120,094
--------- -----------
NET ASSETS.................................................................. $17,261,987
-----------
-----------
REPRESENTED BY:
Paid-in capital......................................................... $16,672,149
Accumulated undistributed investment income--net........................ 76,362
Accumulated undistributed net realized gain on investments.............. 414,513
Accumulated net unrealized appreciation on investments and
foreign currency transactions......................................... 98,963
-----------
NET ASSETS at value......................................................... $17,261,987
-----------
-----------
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
(24 million shares of $.001 par value Capital Stock authorized)
($4,088,358 / 404,465 shares of capital stock outstanding)............ $10.11
------
------
Class R Shares
(36 million shares of $.001 par value Capital Stock authorized)
($13,173,629 / 1,302,133 shares of capital stock outstanding)......... $10.12
------
------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- -------------------------------------------------------------------------------
Statement of Operations Year ended October 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Cash dividends (net of $38,500 withheld at source)...................... $314,253
Interest................................................................ 18,163
--------
Total Income.......................................................... $332,416
Expenses:
Investment management fee--Note 2(a,b)................................ 249,080
Distribution fee (Investor shares)-Note 2(c).......................... 5,612
Directors' fees and expenses--Note 2(d)............................... 1,273
--------
Total Expenses.................................................... 255,965
--------
INVESTMENT INCOME--NET............................................ 76,451
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency
transactions--Note 1(c)............................................... $ 218,728
Net realized gain on forward currency exchange contracts--Note 1(d)..... 195,785
--------
Net Realized Gain..................................................... 414,513
Net unrealized appreciation on investments and foreign currency
transactions-Note 1(c)................................................ 60,242
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................... 474,755
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $551,206
--------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------
1995 1994*
----------- -----------
<S> <C> <C>
Investment income--net............................................... $ 76,451 $ 43,960
Net realized gain (loss) on investments.............................. 414,513 (16,876)
Net unrealized appreciation on investments for the year.............. 60,242 38,721
----------- -----------
Net Increase In Net Assets Resulting From Operations............... 551,206 65,805
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Investor Shares.................................................... (180) --
Class R Shares..................................................... (26,993) --
----------- -----------
Total Dividends.................................................. (27,173) --
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares.................................................... 671,731 69,682
Class R Shares..................................................... 7,539,619 11,819,150
Issued in exchange for shares of Dreyfus/Laurel International Fund;
Investor Shares.................................................... 6,499,140 --
Dividends reinvested:
Investor Shares.................................................... 70 --
Class R Shares..................................................... 12,651 --
Cost of shares redeemed:
Investor Shares.................................................... (3,340,391) (100)
Class R Shares..................................................... (6,559,623) (39,780)
----------- -----------
Increase In Net Assets From Capital Stock Transactions........... 4,823,197 11,848,952
----------- -----------
Total Increase In Net Assets................................... 5,347,230 11,914,757
NET ASSETS:
Beginning of year.................................................... 11,914,757 --
----------- -----------
End of year (including undistributed investment income--net of
$76,362 in 1995 and $27,084 in 1994)............................... $17,261,987 $11,914,757
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Investor Shares Class R Shares
------------------------ -------------------------
Year Ended October 31, Year Ended October 31,
------------------------ -------------------------
1995 1994* 1995 1994*
-------- -------- ------- --------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold..................................... 266,245 7,045 773,150 1,181,714
Shares issued in connection with the acquisition
of Dreyfus/Laurel International Fund 470,442 -- -- --
Shares issued for dividends reinvested 7 -- 1,314 --
Shares redeemed................................. (339,264) (10) (650,043) (4,002)
-------- ------ -------- ---------
Net Increase In Shares Outstanding............ 397,430 7,035 124,421 1,177,712
-------- ------ -------- ---------
-------- ------ -------- ---------
<FN>
- --------------
* The Fund commenced operations on August 12, 1994.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus International Equity Allocation Fund
- -------------------------------------------------------------------------------
Financial Highlights
Reference is made to pages 5 and 6 of the Fund's Prospectus dated
August 5, 1996.
See notes to financial statments.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under
the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company and operates as a series company currently
offering sixteen Series including the Dreyfus International Equity Allocation
Fund (the "Fund"). The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
The Fund is currently authorized to issue two classes of shares:
Investor shares and Class R shares. Investor shares are sold primarily to
retail investors and bear a distribution fee. Class R shares are sold
primarily to bank trust departments and other financial service providers
(including Mellon Bank, N.A. and its affiliates) acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, and bear no distribution fee. Each class of shares has
identical rights and privileges, except with respect to the distribution fee
and voting rights on matters affecting a single class. The Company has the
authority to issue 25 billion shares of capital stock with a par value of
$.001.
Investment income, net of expenses (other than class specific
expenses) and realized and unrealized gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets of each
class.
(a) Portfolio Valuation: Investments in securities (including
options and financial futures) are valued at the last sales price on the
securities exchange on which such securities are primarily traded or at the
last sales price on the national securities market. Securities not listed on
an exchange or the national securities market, or securities for which there
were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked priced is used
for valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the offsetting rate.
(b) Securities Transactions and Investment Income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(c) Foreign Currency Transactions: The Fund does not isolate that
portion of the results of the operations resulting from changes in foreign
exchange rates on investment from the fluctuations arising from changes in
the market prices of securities held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amount of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(d) Forward Currency Exchange Contracts: The Fund enters into
forward currency exchange contracts in order to hedge its exposure to changes
in foreign currency exchange rates on its foreign portfolio holdings. When
executing forward currency exchange contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the
future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency
exchange contracts which is typically limited to the unrealized gains on such
contracts that are recognized in the statement of assets and liabilities. At
October 31, 1995, the following summarizes open forward currency exchange
contracts:
<TABLE>
<CAPTION>
Foreign U.S. Dollar Unrealized
Currency Value at Appreciation
Forward Currency Sale Contracts, Amount Proceeds 10/31/95 (Depreciation)
________________________________ ___________ __________ ___________ _____________
<S> <C> <C> <C> <C>
Danish Krone, expiring 11/1/95............. 18,480 $ 3,378 $ 3,383 $ (5)
German Deutschmarks, expiring 11/24/95..... 1,000,000 709,522 710,985 (1,463)
Japanese Yen, expiring 11/21/95............ 120,000,000 1,240,695 1,178,088 62,607
-------
$61,139
-------
-------
</TABLE>
(e) Distributions to Shareholders: Dividends are recorded on the
ex-dividend date. Dividends from investment income-net and dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the distributio
n requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(f) Federal Income Taxes: It is the policy of the Fund to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
The Fund has an unused capital loss carryover of approximately
$1,563,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to October 31,
1995. The amount of this loss which can be utilized in subsequent years is
subject to an annual limitation due to the Fund's merger with Dreyfus Laurel
International Funds. If not applied, $1,536,000 of the carryover expires in
fiscal 2000 and $27,000 expires in fiscal 2002.
NOTE 2 -- Investment Management Fee and Other Transactions with Affiliates:
(a) Investment Management Fee: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of 1.50% of the value of the Fund's average daily net assets. Out
of its fee, the Manager pays all of the expenses of the Fund except brokerage
fees, taxes, interest, Rule 12b-1 distribution fees and expenses, fees and
expenses of non-interested Directors (including counsel fees) and
extraordinary expenses. In addition, the Manager is required to reduce its
fee in an amount equal to the Fund's allocable portion of fees and expenses
of the non-interested Directors (including counsel).
(b) Sub-Advisory Agreement: S.A.M. Finance, S.A. (the
"Sub-Advisor"), a wholly-owned subsidiary of Credit Commercial de France,
serves as the Fund's Sub-Advisor pursuant to a sub-advisory agreement among
the Fund, the Sub-Advisor and the Manager. For its services, the Sub-Advisor
is paid an annual fee of .25% of the value of the Fund's average daily net
assets and is paid by the Manager out of its fee.
(c) Distribution Plan: The Fund has adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
Investor shares. Under the Plan, the Fund may pay annually up to .25% of the
value of the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the year ended October 31, 1995,
the distribution fee for the Investor shares was $5,612.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Directors who are not "interested persons" of the Investment Company and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan.
(d) Directors' Fees: Each director who is not an "interested
person" as defined in the Act receives $27,000 per year, $1,000 for each
Board meeting attended and $750 for each Audit Committee attended and is
reimbursed for travel and out-of-pocket expenses. These expenses are paid in
total by the following funds: the Dreyfus/Laurel Funds, Inc., the
Dreyfus/Laurel Tax-Free Municipal Funds, and the Dreyfus/Laurel Funds Trust.
In addition the Chairman of the Board receives an annual fee of $75,000 per
year. These fees and expenses are charged and allocated to each series based
on net assets.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3 -- Securities Transactions:
The aggregate amount of purchases and sales of investment
securities, excluding short-term securities and forward currency exchange
contracts, during the year ended October 31, 1995 amounted to $11,310,006 and
$10,440,123, respectively.
At October 31, 1995, accumulated net unrealized depreciation on
investments and foreign currency contracts was $95,964, consisting of
$1,368,906 gross unrealized appreciation and $1,272,942 gross unrealized
depreciation, excluding foreign currency transactions.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4 -- Reorganization:
On April 19, 1995, the Dreyfus/Laurel International Equity
Allocation Fund, acquired the assets and certain liabilities of the Dreyfus
Laurel International Fund, in exchange for shares of the Dreyfus/Laurel
International Equity Allocation Fund, pursuant to a plan of reorganization
approved by Dreyfus/Laurel International Fund shareholders on May 1, 1995.
Total shares issued by Dreyfus/Laurel International Equity Allocation Fund
and the total net asets of Dreyfus International Fund acquired are set forth
in the Statement of changes in net assets.
<PAGE>
Dreyfus International Equity Allocation Fund
- -----------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of
the Dreyfus International Equity Allocation Fund of The Dreyfus/Laurel Funds,
Inc., including the statement of investments, as of October 31, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for the year ended October 31, 1995 and for the period
from August 12, 1994 (commencement of operations) to October 31, 1994, and
the financial highlights for each of the periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc., as of October 31, 1995, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 15, 1995
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:
Financial Highlights for each of the periods indicated.
Included in Part B:
The following are incorporated by reference to the Registrant's
Annual Reports to Shareholders for the period ended October 31,
1995 filed on January 10, 1996.
- Report of Independent Auditors
- Portfolio of Investments
- Statements of Assets and Liabilities
- Statements of Operations
- Statements of Changes in Net Assets
- Notes to Financial Statements
(b) Exhibits:
1(a) Articles of Incorporation dated July 31, 1987. Filed
herewith.
1(b) Articles Supplementary dated October 15, 1993 increasing
authorized capital stock. Incorporated by reference to Post-
Effective Amendment No. 39 to the Registrant's
Registration Statement on Form N-1A ("Post-Effective
Amendment No. 39") filed on September 22, 1995.
1(c) Articles of Amendment dated March 31, 1994. Filed
herewith.
1(d) Articles Supplementary dated March 31, 1994 reclassifying
shares. Filed herewith.
1(e) Articles Supplementary dated May 24, 1994 designating and
classifying shares. Incorporated by reference to Post-
Effective Amendment No. 39.
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.
1(h) Articles of Amendment dated June 9, 1995. Incorporated by
reference to Post-Effective Amendment No. 39.
1(i) Articles of Amendment dated August 30, 1995. Incorporated
by reference to Post-Effective Amendment No. 39.
1(j) Articles Supplementary dated August 31, 1995 reclassifying
shares. Incorporated by reference to Post-Effective
Amendment No. 39.
1(k) Articles of Amendment dated October 31, 1995 designating and
classifying shares. Filed herewith.
1(1) Articles of Amendment dated November 22, 1995 designating
and reclassifying shares filed herewith.
2 Bylaws. 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").
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. Filed herewith.
5(c) Investment Sub-Advisory Agreement among Mellon Bank, N.A.,
S.A.M. Finance S.A. and the Registrant for the International
Equity Allocation Fund. Incorporated by reference to Post-
Effective Amendment No. 31 filed on December 13, 1994.
5(d) Assignment and Assumption Agreement among Mellon Bank, N.A.,
The Dreyfus Corporation and the Registrant (relating to
Investment Management Agreement). Incorporated by reference
to Post-Effective Amendment No. 31 filed on December 13,
1994.
5(e) Assignment Agreement among Mellon Bank, N.A., The Dreyfus
Corporation, S.A.M. Finance S.A. and the Registrant
(relating to Investment Sub-Advisory Agreement for the
European Fund). To be filed by amendment.
5(f) Assignment Agreement among Mellon Bank, N.A., The Dreyfus
Corporation, S.A.M. Finance S.A. and the Registrant
(relating to Investment Sub-Advisory Agreement for the
International Equity Allocation Fund). To be filed by
amendment.
6 Distribution Agreement between Premier Mutual Fund Services,
Inc. and the Registrant. Incorporated by reference to Post-
Effective Amendment No. 31 filed on December 13, 1994.
7 Not Applicable.
8(a) Custody Agreement with Boston Safe Deposit and Trust Company
with respect to the European Fund. Incorporated by
reference to Post-Effective Amendment No. 23 filed on
December 30, 1993.
8(b) Custody Agreement between the Registrant and Mellon Bank,
N.A. Filed herewith.
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
filed on May 19, 1994.
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. Filed herewith.
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.
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 for
Dreyfus Disciplined Intermediate Bond Fund. Schedule for
Computation of Performance Calculation for other funds is
also 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 July 5, 1996:
Number of Record Holders
Institutional Retail
Title of Class Class Class
Dreyfus International Equity Allocation Fund 586 114
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, as amended, 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.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
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****;
Mellon Bank, N.A.****
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
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit
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 Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Operating Officer The Boston Company*****;
and a Director Deputy Director:
Mellon Trust****;
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
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*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
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
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
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++
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
+ 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 Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) The Dreyfus Fund Incorporated
21) Dreyfus Global Bond Fund, Inc.
22) Dreyfus Global Growth Fund
23) Dreyfus GNMA Fund, Inc.
24) Dreyfus Government Cash Management
25) Dreyfus Growth and Income Fund, Inc.
26) Dreyfus Growth and Value Funds, Inc.
27) Dreyfus Growth Opportunity Fund, Inc.
28) Dreyfus Income Funds
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus Stock Index Fund, Inc.
38) Dreyfus LifeTime Portfolios, Inc.
39) Dreyfus Liquid Assets, Inc.
40) Dreyfus Massachusetts Intermediate Municipal Bond Fund
41) Dreyfus Massachusetts Municipal Money Market Fund
42) Dreyfus Massachusetts Tax Exempt Bond Fund
43) Dreyfus Michigan Municipal Money Market Fund, Inc.
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Investment Grade Bond Funds, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Tax Exempt Cash Management
70) The Dreyfus Third Century Fund, Inc.
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) General California Municipal Bond Fund, Inc.
76) General California Municipal Money Market Fund
77) General Government Securities Money Market Fund, Inc.
78) General Money Market Fund, Inc.
79) General Municipal Bond Fund, Inc.
80) General Municipal Money Market Fund, Inc.
81) General New York Municipal Bond Fund, Inc.
82) General New York Municipal Money Market Fund
83) Dreyfus S&P 500 Index Fund
84) Premier Insured Municipal Bond Fund
85) Premier California Municipal Bond Fund
86) Premier Equity Funds, Inc.
87) Premier Global Investing, Inc.
88) Premier GNMA Fund
89) Premier Growth Fund, Inc.
90) Premier Municipal Bond Fund
91) Premier New York Municipal Bond Fund
92) Premier State Municipal Bond Fund
93) Premier Strategic Growth Fund
94) Premier Strategic Investing
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph S. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, The Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds,
Inc.) certifies that it meets all of the requirements for effectiveness of
this Amendment to the Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 2nd day of August, 1996.
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 08/02/96
Marie E. Connolly
/s/Francis P. Brennan*
_______________________ Director,
Francis P. Brennan Chairman of the Board 08/02/96
/s/Ruth Marie Adams*
_______________________ Director 08/02/96
Ruth Marie Adams
/s/Joseph S. DiMartino*
_______________________ Director 08/02/96
Joseph S. DiMartino
/s/James M. Fitzgibbons*
________________________ Director 08/02/96
James M. Fitzgibbons
/s/Kenneth A. Himmel*
________________________ Director 08/02/96
Kenneth A. Himmel
/s/Stephen J. Lockwood*
________________________ Director 08/02/96
Stephen J. Lockwood
/s/Roslyn M. Watson*
________________________ Director 08/02/96
Roslyn M. Watson
/s/J. Tomlinson Fort*
________________________ Director 08/02/96
J. Tomlinson Fort
/s/Arthur L. Goeschel*
________________________ Director 08/02/96
Arthur L. Goeschel
/s/Arch S. Jeffery*
________________________ Director 08/02/96
Arch S. Jeffery
/s/Robert D. McBride*
________________________ Director 08/02/96
Robert D. McBride
/s/John J. Sciullo*
________________________ Director 08/02/96
John J. Sciullo
*By:
Elizabeth Bachman
Elizabeth Bachman,
Attorney-in-Fact
Independent Auditors' Consent
To the Shareholders and Board of Directors
Dreyfus/Laurel Funds, Inc.-
Dreyfus International Equity Allocation Fund:
We consent to the use of our report dated December 15, 1995 incorporated
by reference herein and to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Independent Auditors" in
the Statement of Additional Information.
KPMG Peat Marwick LLP
New York, New York
August 2, 1996
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