File Nos. 811-5270
33-16338
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 57 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 57 [ X ]
(Check appropriate box or boxes.)
THE DREYFUS/LAUREL FUNDS, INC.
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(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
John E. Pelletier
Secretary
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
____ immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
__X_ on January 16, 1998 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.
<PAGE>
DREYFUS PREMIER MIDCAP STOCK FUND
DREYFUS PREMIER LARGE COMPANY STOCK FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
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The following post-effective amendment to the Registrant's Registration
Statement on Form N-1A relates only to Dreyfus Disciplined Midcap Stock Fund
(renamed Dreyfus Premier Midcap Stock Fund effective January 16, 1998)
(hereinafter "Dreyfus Premier Midcap Stock Fund") and Dreyfus Disciplined Equity
Income Fund (renamed Dreyfus Premier Large Company Stock Fund effective January
16, 1998) (hereinafter "Dreyfus Premier Large Company Stock Fund"), and does not
affect the Registration Statements of the following Series of the Registrant:
DREYFUS BOND MARKET INDEX FUND
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
DREYFUS MONEY MARKET RESERVES
DREYFUS MUNICIPAL RESERVES
DREYFUS U.S. TREASURY RESERVES
DREYFUS DISCIPLINED STOCK FUND
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
DREYFUS INSTITUTIONAL S&P 500 STOCK INDEX FUND
DREYFUS PREMIER LIMITED TERM INCOME FUND
DREYFUS PREMIER BALANCED FUND
DREYFUS PREMIER SMALL COMPANY STOCK FUND
DREYFUS PREMIER LARGE COMPANY GROWTH FUND
DREYFUS PREMIER TAX MANAGED GROWTH FUND
Items in
Part A of Prospectus
Form N-1A Caption Caption
- --------- ------- ----------
1 Cover Page Cover Page
2 Synopsis Expense Summary
3 Condensed Financial Not Applicable
Information
4 General Description of Investment Objective
Registrant Management Policies;
Investment Techniques;
Certain Portfolio
Securities; General
Information
5 Management of the Fund Management of the Fund;
General information
5A Management's Discussion Management's Discussion
of Fund's Performance of Fund's Performance
6 Capital Stock and Alternative Purchase
Other Securities Methods; How to Buy
Shares; How to Redeem
Shares; Dividends Other
Distributions and Taxes;
General Information
ii
<PAGE>
DREYFUS PREMIER MIDCAP STOCK FUND
DREYFUS PREMIER LARGE COMPANY STOCK FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
---------------------------------------------------------
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
- --------- ------- -----------------------
7 Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; How to Buy
Shares; Shareholder
Services; Distribution
Plans; How to Redeem
Shares
8 Redemption or How to Redeem Shares
Repurchase
9 Pending Legal Not Applicable
Proceedings
10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information Management of the Fund
and History
13 Investment Objectives Investment Objective
and Policies and Management Policies
14 Management of the Fund Management of the Fund;
Management Agreement
15 Control Persons and Management of the Fund
Principal Holders of
Securities
16 Investment Advisory Management of the Fund;
and Other Services Management Agreement;
Shareholder Services
17 Investment Allocation Investment Objectives
and Other Services and Management Policies;
Portfolio Transactions
18 Capital Stock and Description of the Fund;
Other Securities See Prospectus -- "Cover
Page" and "How to Redeem
Fund Shares"
19 Purchase, Redemption Purchase of Shares;
and Pricing of Distribution and Service
Securities Being Offered Plans; Redemption of
Shares; Determination
of Net Asset Value
20 Tax Status Dividends, Other
Distributions and
Taxes
iii
<PAGE>
DREYFUS PREMIER MIDCAP STOCK FUND
DREYFUS PREMIER LARGE COMPANY STOCK FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
Items in
Part B of Statement of Additional
Form N-1A Caption Information Caption
- --------- ------- -----------------------
21 Underwriters Purchase of Shares;
Distribution and Service
Plans
22 Calculation of Performance Information
Performance Data
23 Financial Statements To Be Filed By Amendment
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-4
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-4
30 Location of Accounts and Records C-10
31 Management Services C-10
32 Undertakings C-10
iv
<PAGE>
DREYFUS PREMIER LARGE COMPANY STOCK FUND
PROSPECTUS JANUARY 16, 1998
Dreyfus Premier Large Company Stock Fund (the "Fund"), formerly called
Dreyfus Disciplined Equity Income 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 seeks investment returns (including
capital appreciation and income) consistently superior to the Standard & Poor's
500 Composite Stock Price Index by investing in a broadly diversified list of
equity securities generated by the application of quantitative security
selection and risk control techniques.
By this Prospectus, the Fund is offering four Classes of shares -- Class A,
Class B, Class C and Class R -- which are described herein. See "Alternative
Purchase Methods."
Each Class of shares may be purchased or redeemed by telephone using the
TELETRANSFER Privilege.
The Dreyfus Corporation serves as the Fund's investment manager. The
Dreyfus Corporation is referred to as "Dreyfus."
------------------------------
This Prospectus sets forth concisely information about the Fund that you
should know before investing. It should be read carefully before you invest and
retained for future reference.
The Statement of Additional Information, dated January 16, 1998, which may
be revised from time to time ("SAI"), 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 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611. 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. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS 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. (THE "DISTRIBUTOR").
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<PAGE>
TABLE OF CONTENTS
Expense Summary.............................................................. 3
Financial Highlights......................................................... 4
Alternative Purchase Methods................................................. 4
Description of the Fund...................................................... 5
Management of the Fund....................................................... 8
How to Buy Shares............................................................ 9
Shareholder Services......................................................... 14
How to Redeem Shares......................................................... 18
Additional Information About Purchases, Exchanges and Redemptions............ 21
Distribution Plans (Class A Plan and Class B and C Plans).................... 22
Dividends, Other Distributions and Taxes.................................... 23
Performance Information...................................................... 24
General Information.......................................................... 25
<PAGE>
<TABLE>
EXPENSE SUMMARY
<S> <C> <C> <C> <C>
CLASS A CLASS B CLASS C CLASS R
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering 5.75% None None None
price)...................................
Maximum Deferred Sales Charge Imposed
on Redemptions None* 4.00% 1.00% None
(as a percentage of the amount subject
to charge)...............................
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net
assets) .90% .90% .90% .90%
Management Fees ......................... .25% 1.00% 1.00% None
12b-1 Fees(1)............................ .00% .00% .00% .00%
---- ---- ---- ---
Other Expenses(2)........................ 1.15% 1.90% 1.90% .90%
Total Fund Operating Expenses............
EXAMPLE
You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and
(2) except where noted, redemption
at the end of each time period:
CLASS A CLASS B CLASS C CLASS R
1 YEAR.................................... $ $ /** $ / $
3 YEARS................................... $ $ / $ $
5 YEARS................................... $ $ / $ $
10 YEARS.................................. $ $ *** $ $
- ----------
* A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more. See "How to Buy Shares Class A
Shares."
** Assuming no redemption of shares.
*** Asumes conversion of Class B shares to Class A shares approximately six
years after the date of purchase and, therefore, reflects Class A expenses
for years seven through ten.
(1) See "Distribution Plans (Class A Plan and Class B and C Plans)" for a
description of the Fund's Distribution Plans and Service Plan for Class A,
Class B and Class C shares.
(2) Does not include fees and expenses of the non-interested Directors. The
investment adviser is contractually required to reduce its management fee in
an amount equal to the Fund's allocable portion of such fees and expenses,
which are estimated to be less than .01% of the Fund's net assets. (See
"Management of the Fund.")
</TABLE>
- --------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR 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
costs and expenses that investors will bear, directly or indirectly, the payment
of which will reduce investors' return on an annual basis. Other Expenses for
Class B and Class C shares are based on applicable amounts for Class A and Class
R shares for the Fund's last fiscal year. The information in the foregoing table
does not reflect any fee waivers or expense reimbursement arrangements that may
be in effect. Long-term investors in Class A, Class B or Class C shares could
pay more in 12b-1 fees than the economic equivalent of paying the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). Certain banks,
securities dealers and brokers ("Selected Dealers") or other financial
institutions (including Mellon Bank and its affiliates) (collectively, "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 Shares," "How to Redeem Shares" and "Distribution Plans
(Class A Plan and Class B and C Plans)."
3
<PAGE>
The Company understands that Agents may charge fees to their clients who
are owners of the Fund's Class A, Class B, or Class C shares for various
services provided in connection with a client's account. These fees would be in
addition to any amounts received by an Agent under its Selling Agreement
("Agreement") with 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.
FINANCIAL HIGHLIGHTS
[Financial Highlights to be filed by amendment.]
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares; you may choose
the Class of shares that best suits your needs, given the amount of your
purchase, the length of time you expect to hold your shares and any other
relevant circumstances. Each Fund share represents an identical pro rata
interest in the Fund's investment portfolio. All Fund shares are sold on a
continuous basis.
Class A, Class B and Class C shares are sold primarily to clients of Agents
that have entered into Agreements with the Distributor. Class A shares of the
Fund were formerly called Investor shares.
Class A shares are sold at net asset value per share plus a maximum initial
sales charge of 5.75% of the public offering price imposed at the time of
purchase. The initial sales charge may be reduced or waived for certain
purchases. See "How to Buy Shares - Class A Shares." These shares are subject to
an annual 12b-1 fee at the rate of .25 of 1% of the value of the average daily
net assets of Class A. See "Distribution Plans - Distribution Plan -- Class A
Shares."
Class B shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class B shares are subject to a maximum 4%
contingent deferred sales charge ("CDSC"), which is assessed only if you redeem
Class B shares within the first six years of their purchase. See "How to Buy
Shares - Class B Shares" and "How to Redeem Shares -- Contingent Deferred Sales
Charge -- Class B Shares." These shares also are subject to an annual
distribution fee at the rate of .75 of 1%, and an annual service fee at the rate
of .25 of 1%, of the value of the average daily net assets of Class B. See
"Distribution Plans - Distribution and Service Plans -- Class B and C Shares."
The distribution and service fees paid by Class B will cause such Class to have
a higher expense ratio and to pay lower dividends than Class A. Approximately
six years after the date of purchase (or, in the case of Class B shares of the
Fund acquired through exchange of Class B shares of another fund advised by
Dreyfus, the date of purchase of the original Class B shares of the fund
exchanged), Class B shares will automatically convert to Class A shares, based
on the relative net asset values for shares of each such Class. The converted
shares will no longer be subject to the service plan fee for Class B shares and
will be subject to the lower distribution fee of Class A shares. (Such
conversion is subject to suspension by the Board of Directors if adverse tax
consequences might result.) Class B shares that have been acquired through the
reinvestment of dividends and other distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class C shares are subject to a 1% CDSC, which
is assessed only if you redeem Class C shares within one year of their purchase.
See "How to Redeem Shares -- Contingent Deferred Sales Charge -- Class C
Shares." These shares also are subject to an annual distribution fee at the rate
of .75 of 1%, and an annual service fee at the rate of .25 of 1%, of the value
of the average daily net assets of Class C. See "Distribution Plans --
Distribution and Service Plans -- Class B and C Shares." The distribution and
service fees paid by Class C will cause such Class to have a higher expense
ratio and to pay lower dividends than Class A.
Class R shares may be purchased only by those shareholders who have held
shares of Class R or its predecessor class of the Fund since November 30, 1997.
Class R shares of the Fund were formerly called Restricted shares and are sold
at net asset value per share.
4
<PAGE>
The decision as to which Class of shares is most beneficial to you depends
on the amount and the intended length of your investment. You should consider
whether, during the anticipated life of your investment in the Fund, the
accumulated distribution fee, service fee and CDSC, if any, on Class B or Class
C shares would be less than the accumulated distribution fee and initial sales
charge on Class A shares purchased at the same time, and to what extent, if any,
such differential would be offset by the return on Class A shares. Additionally,
investors qualifying for reduced initial sales charges who expect to maintain
their investment for an extended period of time might consider purchasing Class
A shares because the accumulated continuing distribution and service fees on
Class B or Class C shares may exceed the accumulated distribution fee and
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any conversion
rights of the Classes in the context of your own investment time frame. For
example, while Class C shares have a shorter CDSC period than Class B shares,
Class C shares do not have a conversion feature and, therefore, are subject to
ongoing distribution and service fees. Thus, Class B shares may be more
attractive than Class C shares to investors with longer term investment
outlooks. Generally, Class A shares may be more appropriate for investors who
invest $1,000,000 or more in Fund shares, but will not be appropriate for
investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund seeks investment returns (including capital appreciation and
income) consistently superior to the Standard and Poor's 500 Composite Stock
Price Index ("S&P 500") by investing in a broadly diversified list of equity
securities generated by the application of quantitative security selection and
risk control techniques. There can be no assurance that the Fund will meet its
stated investment objective.
MANAGEMENT POLICIES
Individual security selection is the foundation of the Fund's investment
approach. Consistency of returns which exceed the S&P 500 and stability of the
Fund's asset value relative to the S&P 500 are primary goals of the investment
process. Information from diverse sources is collected and used to construct
valuation models which are combined to form a comprehensive computerized
valuation ranking system identifying common stocks which appear to be over or
under valued. These models include measures of actual and estimated earnings
changes and relative value based on dividend discount calculations, price to
book, price to earnings and return on equity ratios. The computerized ranking
system incorporates information from the most recent time period available to
the system and categorizes individual securities within each industry according
to relative attractiveness. Dreyfus then applies fundamental analysis to select
the most attractive of the top-rated securities and those issues that should be
sold.
This investment process utilizes disciplined control of fund risk and a
process of rigorous security selection. Risk is managed by controlling the
structure of the Fund so that characteristics of the Fund's portfolio securities
such as economic sector, industry exposure, growth, size, volatility and quality
are maintained similar to those of the S&P 500 at all times. Common stocks held
in the Fund, most but not all of which pay dividends, typically include a broad
range of investment characteristics. The Fund is not an index fund and its
investments are not limited to securities of issuers in the S&P 500.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities. The Fund also invests in high quality money
market instruments to meet liquidity needs in amounts not generally expected to
exceed 20%. Beyond that, Dreyfus will not attempt to time movements in the
market by raising substantial amounts of short-term reserves for subsequent
reinvestment. The Fund may also invest in futures contracts and options to a
limited extent but does not currently intend to invest more than 5% of its
assets in such instruments.
The S&P 500 is composed of 500 common stocks, most of which are traded on
the New York Stock Exchange, chosen to reflect the industries of the U.S.
economy. The inclusion of a stock in the S&P 500 does not imply that Standard
and Poor's believes the stock to be an attractive or appropriate investment, nor
5
<PAGE>
is Standard & Poor's affiliated with the Company or the Fund. "S&P 500" is a
trademark of Standard & Poor's.
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.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of Fund securities
is deemed by Dreyfus to be disadvantageous. Under a reverse repurchase
agreement, the Fund: (i) transfers possession of Fund securities to a bank or
broker-dealer in return for cash in an amount equal to a percentage of the
securities' market value; and (ii) agrees to repurchase the securities at a
future date by repaying the cash with interest. Cash or liquid high-grade debt
securities held by the Fund equal in value to the repurchase price including any
accrued interest will be maintained in a segregated account while a reverse
repurchase agreement is in effect.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTION. To secure
advantageous prices or yields, the Fund may purchase U.S. Government Securities
(as described below) 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.
CERTAIN PORTFOLIO SECURITIES
AMERICAN DEPOSITORY RECEIPTS AND NEW YORK SHARES. The Fund may invest in
U.S. dollar-denominated American Depository Receipts ("ADRs") and New York
Shares. ADRs typically are issued by an American bank or trust company and
evidence ownership of underlying securities issued by foreign companies. New
York Shares are securities of foreign companies that are issued for trading in
the United States. ADRs and New York Shares are traded in the United States on
national securities exchanges or in the over-the-counter market. Investment in
securities of foreign issuers presents certain risks. See "Foreign 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 Investor
Services, Inc., F-1 by Fitch Investors Service LLP or Duff 1 by Duff & Phelps,
Inc., or A1 by IBCA, Inc.
ECD'S, ETDS, YANKEE CDS AND EURODOLLAR BONDS AND NOTES. The Fund may
invest in ECDs, ETDs, Yankee CDs, and Eurodollar bonds and notes. ECDs are U.S.
dollar-denominated certificates of deposit issued by foreign branches of
6
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domestic banks. ETDs are U.S. dollar-denominated time deposits in a foreign
branch of a U.S. bank or a foreign bank. Yankee CDs are certificates of deposit
issued by a U.S. branch of a foreign bank denominated in U.S. dollars and held
in the United States. Eurodollar bonds and notes are obligations which pay
principal and interest in U.S. dollars held in banks outside the United States,
primarily in Europe. All of these obligations are subject to somewhat different
risks than are the obligations of domestic banks or issuers in the United
States. See "Foreign Securities."
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers and
may invest in obligations of foreign branches of domestic banks and domestic
branches of foreign banks. Investment in foreign securities presents certain
risks, including those resulting from fluctuations in currency exchange rates,
revaluation of currencies, 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 return on such
securities.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including time deposits and
repurchase agreements having maturities longer than seven days. Securities that
have readily available market quotations are not deemed illiquid for purposes of
this limitation (irrespective of any legal or contractual restrictions on
resale). The Fund may invest in commercial obligations issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund
may also purchase securities that are not registered under the Securities Act of
1933, as amended, but that can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities"). Liquidity
determinations with respect to Section 4(2) paper and Rule 144A securities will
be made by the Board of Directors or by Dreyfus pursuant to guidelines
established by the Board of Directors. The Board or Dreyfus will consider
availability of reliable price information and other relevant information in
making such determinations. Section 4(2) paper is restricted as to disposition
under the federal securities laws, and generally is sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be pursuant to registration or an exemption therefrom. Section
4(2) paper normally is resold to other institutional investors like the Fund
through or with the assistance of the issuer or investment dealers who make a
market in the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the percentage limitation on
investment in illiquid securities. The ability to sell Rule 144A securities to
qualified institutional buyers is a recent development and it is not possible to
predict how this market will mature. Investing in Rule 144A securities could
have the effect of increasing the level of Fund illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
these securities from the Fund or other holders.
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
7
<PAGE>
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 "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 Fannie Mae, Freddie Mac, or other instrumentalities.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and income, and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio turnover
rate of 100% would occur, for example, if all the securities held by the Fund
were replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses that
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of short-term capital gains that, when distributed to the Fund's
shareholders, are taxable to them as ordinary income. Nevertheless, securities
transactions for the Fund will be based only upon investment considerations and
will not be limited by any other considerations when Dreyfus deems it
appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may not
be changed without the affirmative vote of the holders of a majority of the
Fund's outstanding shares. The SAI describes all of the Fund's fundamental and
non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without shareholder
approval. If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains an
appropriate investment in light of the shareholder's then-current position and
needs.
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 October 31, 1997, Dreyfus managed or administered approximately $93
billion in assets for approximately 1.7 million investor accounts nationwide.
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 Company, subject to the overall authority of the Company's
Board of Directors in accordance with Maryland law. Pursuant to the Investment
Management Agreement, Dreyfus provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. As the Fund's investment
manager, Dreyfus manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions.
The Fund is managed by Bert Mullins. Mr. Mullins has managed the Fund since
its inception and has been employed by Dreyfus as a portfolio manager of the
Fund since October 17, 1994. Mr. Mullins has been employed by Laurel Capital
Advisors since October 1990. Mr. Mullins also is a Vice President, portfolio
manager and Senior Securities Analyst for Mellon Bank, where he has been
employed since 1966.
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Federal 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,
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<PAGE>
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed more than $299 billion in assets as of September 30, 1997,
including approximately $102 billion in proprietary mutual fund assets. As of
September 30, 1997, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for more
than $1.488 trillion in assets, including approximately $60 billion in mutual
fund assets.
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of .90 of 1% of the value of the Fund's
average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of non-interested Directors
(including counsel fees), Rule 12b-1 fees (if applicable) and extraordinary
expenses. Although Dreyfus does not pay for the fees and expenses of the
non-interested Directors (including counsel fees), Dreyfus is contractually
required to reduce its investment management fee by an amount equal to the
Fund's allocable share of such fees and expenses. From time to time, Dreyfus may
voluntarily waive a portion of the investment management fees payable by the
Fund, which would have the effect of lowering the expense ratio of the Fund and
increasing return to investors. For the fiscal year ended October 31, 1997, the
Fund paid Dreyfus 0.90% of its average daily net assets in investment management
fees, less fees and expenses of the non-interested Directors (including counsel
fees).
For the fiscal year ended October 31, 1997, total operating expenses
(excluding Rule 12b-1 fees) of the Fund were 0.90% of the average daily net
assets of each of Class A and Class R shares. Class B and Class C shares had not
commenced operations as of October 31, 1997.
In addition, Class A, Class B and Class C shares are subject to certain
Rule 12b-1 distribution and shareholder servicing fees. See "Distribution Plans
(Class A Plan and Class B and C Plans)."
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, 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 Dreyfus or Mellon
Bank or that have sold shares of the Fund, if Dreyfus believes that the quality
of the transaction and the commissions are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, polices 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., located at 60 State Street, Boston, Massachusetts 02109. The Distributor's
ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent"). Mellon Bank, located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, serves as the Fund's custodian.
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<PAGE>
HOW TO BUY SHARES
GENERAL - Class A shares, Class B shares and Class C shares may be
purchased only by clients of Agents, except that 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 may
purchase Class A shares directly through the Distributor. In addition, holders
of Investor shares of the Fund as of January 15, 1998 may continue to purchase
Class A shares of the Fund at net asset value per share. Subsequent purchases
may be sent directly to the Transfer Agent or your Agent.
Class R shares are sold only to holders of Restricted shares of the Fund as
of November 30, 1997. Such shareholders were primarily Banks acting on behalf of
9A
<PAGE>
customers having a qualified trust or investment account or relationship at such
institution, customers who received and held shares of the Fund distributed to
them by virtue of such an account or relationship, or other persons acquiring
Restricted shares when they were generally available to the public.
When purchasing Fund shares, you must specify which Class is being
purchased. Share certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
Agents may receive different levels of compensation for selling different
Classes of shares. Management understands that some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory authority, may
charge their clients direct fees which would be in addition to any amounts which
might be received under the Distribution and Service Plans. Each Agent has
agreed to transmit to its clients a schedule of such fees. You should consult
your Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments must be at
least $100. The minimum initial investment is $750 for Dreyfus-sponsored Keogh
Plans, IRAs (including regular IRAs, spousal IRAs for a non working spouse, Roth
IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases. The initial investment must be accompanied by the Fund's Account
Application. The Fund reserves the right to offer Fund shares without regard to
minimum purchase requirements to IRAs and employees participating in certain
qualified or non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to the Fund. The Fund reserves the right to vary further the initial
and subsequent investment minimum requirements at any time.
The Internal Revenue Code of 1986, as amended ("Code") imposes various
limitations on the amount that may be contributed to certain qualified or
non-qualified employee benefit plans or other programs, including pension,
profit-sharing and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entities or state and local government
("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 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 which are mailed should be sent to Dreyfus Premier
Large Company Stock Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. If
you are opening a new account, please enclose 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. For Dreyfus retirement plan accounts, payments which are
mailed 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.
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
Fund's DDA #______/Dreyfus Premier Large Company Stock Fund and applicable
Class, for purchase of Fund shares in your name. 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, and must indicate the Class of shares being purchased. If your
initial purchase of Fund shares is by wire, please call 1-800-554-4611 after
completing your wire payment to obtain your Fund account number. Please include
your Fund account number on the 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.
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<PAGE>
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
Builder(REGISTERED), Dreyfus Payroll Savings Plan and the Government Direct
Deposit Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
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 your Fund
account number PRECEDED BY THE DIGITS "[XXXX]" for Class A shares, "[XXXX]" for
Class B shares, "[XXXX]" for Class C shares, and "[XXXX]" for Class R shares.
The Distributor may pay dealers a fee of up to 0.5% of the amount invested
through such dealers in Fund shares by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs or (ii) such
plan's or program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds in the
Dreyfus Family of Funds then held by Eligible Benefit Plans will be aggregated
to determine the fee payable. 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 shares of each Class of the Fund is
computed by adding, with respect to such Class of shares, the value of the
Fund's investments, cash, and other assets attributable to that Class, deducting
liabilities of the Class and dividing the result by the 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:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no sale is
reported, the mean of the latest bid and asked prices is used. Securities traded
over-the-counter are priced at the mean of the latest bid and asked prices but
will be valued at the last sale price if required by regulations of the SEC.
When market quotations are not readily available, securities and other assets
are valued at a fair value as determined in good faith in accordance with
procedures established by the Board of Directors.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Directors.
NAV is determined on each day that the New York Stock Exchange ("NYSE") is
open (a "business day"), as of the close of trading on the floor of the NYSE
(usually 4 p.m. New York time). For purposes of determining NAV, options and
futures contracts will be valued 15 minutes after the close of trading on the
floor of the NYSE. Orders received by the Transfer Agent or other agent in
proper form before the close of trading on the floor of the NYSE are effective
on, and will receive the public offering price determined on, that day (except
investments made by electronic funds transfer, which are effective two business
days after your call). Except in the case of certain orders transmitted by
dealers as described in the following paragraph, orders received after such
close of trading are effective on, and receive the public offering 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 a business day and transmitted to the
Distributor or its designee by the close of its business day (normally 5:15
p.m., New York time) will be based on the public offering price per share
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<PAGE>
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 dealers' responsibility to transmit orders so that they will be
received by the Distributor or its designee before the close of its business
day. For certain institutions that have entered into Agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be cancelled and the institution could
be held liable for resulting fees and/or losses.
CLASS A SHARES -- The public offering price for Class A shares is the NAV
of that Class, plus, except for shareholders beneficially owning Investor shares
of the Fund on January 15, 1998, a sales load as shown below:
<TABLE>
<CAPTION>
TOTAL SALES LOAD
--------------------------------
<S> <C> <C> <C>
DEALERS'
AS A % OF AS A % OF REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
- --------------------- -------------- --------------- --------------
Less than $50,000.................. 5.75 6.10 5.00
$50,000 to less than $100,000...... 4.50 4.70 3.75
$100,000 to less than $250,000..... 3.50 3.60 2.75
$250,000 to less than $500,000..... 2.50 2.60 2.25
$500,000 to less than $1,000,000... 2.00 2.00 1.75
$1,000,000 or more................. -0- -0- -0-
</TABLE>
Holders of Investor shares of the Fund as of January 15, 1998 may continue
to purchase Class A shares of the Fund at NAV. However, investments by such
holders in OTHER funds advised by Dreyfus will be subject to any applicable
front-end sales load.
There is no initial sale charge on purchases of $1,000,000 or more of Class
A shares. However, if you purchase Class A shares without an initial sales
charge as part of an investment of at least $1,000,000 and redeem all or a
portion of those shares within one year of purchase, a CDSC of 1.00% will be
assessed at the time of redemption. The Distributor may pay Agents an amount up
to 1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained in the section of the Prospectus entitled "How to
Redeem Shares--Contingent Deferred Sales Charge--Class B Shares" (other than the
amount of the CDSC and time periods) and "How to Redeem Shares--Waiver of CDSC"
are applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to sales of Fund shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children at NAV, provided that they have
furnished the Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at NAV. In addition, Class A shares are offered at NAV to full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of the
Company's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
12
<PAGE>
distribution, such qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan
(a) met the requirements of an Eligible Benefit Plan and all or a portion of
such plan's assets were invested in funds in the Dreyfus Premier Family of Funds
or the Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain funds in
the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds or certain
other products made available by the Distributor to such plans.
Class A shares may be purchased at NAV through certain broker-dealers and
other financial institutions which have entered into an agreement with the
Distributor, which includes a requirement that such shares be sold for the
benefit of clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with the
proceeds from the redemption of shares of a registered open-end management
investment company not managed by Dreyfus or its affiliates. The purchase of
Class A shares of the Fund must be made within 60 days of such redemption and
the shareholder must have either (i) paid an initial sales charge or a CDSC or
(ii) been obligated to pay at any time during the holding period, but did not
actually pay on redemption, a deferred sales charge with respect to such
redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or instrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000 or
more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but will remain the
same for all dealers. The Distributor, at its own expense, may provide
additional promotional incentives to dealers that sell shares of funds advised
by Dreyfus which are sold with a sales load, such as Class A shares. In some
instances, these incentives may be offered only to certain dealers who have sold
or may sell significant amounts of such shares. Dealers receive a larger
percentage of the sales load from the Distributor than they receive for selling
most other funds.
CLASS B SHARES -- The public offering price for Class B shares is the NAV
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares as described
under "How to Redeem Shares." The Distributor compensates certain Agents for
selling Class B and Class C shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution fee, in
part, are used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C shares is the NAV
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on redemptions of Class C shares made within the first
year of purchase. See "Class B Shares" above and "How to Redeem Shares."
CLASS R SHARES - The public offering price for Class R shares is the NAV of
that Class.
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<PAGE>
RIGHT OF ACCUMULATION - CLASS A SHARES -- Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Dreyfus Premier Family
of Funds, shares of certain other funds advised by Dreyfus which are sold with a
sales load and shares acquired by a previous exchange of such shares
(hereinafter referred to as "Eligible Funds"), by you and any related
"purchaser" as defined in the SAI, where the aggregate investment, including
such purchase, is $50,000 or more. If, for example, you have previously
purchased and still hold Class A shares of the Fund, or shares of any other
Eligible Fund or combination thereof, with an aggregate current market value of
$40,000 and subsequently purchase Class A shares of the Fund or shares of an
Eligible Fund having a current value of $20,000, the sales load applicable to
the subsequent purchase would be reduced to 4.50% of the offering price. All
present holdings of Eligible Funds may be combined to determine the current
offering price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify the Distributor if orders are made by wire, or the Transfer
Agent if orders are made by mail. The reduced sales load is subject to
confirmation of your holdings through a check of appropriate records.
TELETRANSFER PRIVILEGE -- 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 Account Application or have filed
a Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
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<PAGE>
your Fund account. Only a bank account maintained in a domestic financial
institution that is an ACH member may be so designated. The Fund may modify or
terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER purchase of shares by calling 1-800-554-4611 or, if you are calling
from overseas, call 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
Clients of certain Agents may purchase, in exchange for shares of a Class,
shares of the same Class of certain other funds managed 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. You also
may exchange your Fund shares that are subject to a CDSC for shares of Dreyfus
Worldwide Dollar Money Market Fund, Inc. The shares so purchased will be held in
a special account created solely for this purpose ("Exchange Account").
Exchanges of shares from an Exchange Account only can be made into certain other
funds managed or administered by Dreyfus. No CDSC is charged when an investor
exchanges into an Exchange Account; however, the applicable CDSC will be imposed
when shares are redeemed from an Exchange Account or other applicable Fund
account. Upon redemption, the applicable CDSC will be calculated without regard
to the time such shares were held in an Exchange Account. See "How to Redeem
Shares." Redemption proceeds for Exchange Account shares are paid by Federal
wire or check only. Exchange Account shares also are eligible for the
Auto-Exchange Privilege, Dividend Sweep and the Automatic Withdrawal Plan. To
use this service, you should consult your Agent or call 1-800-554-4611 to
determine if it is available and whether any conditions are imposed on its use.
WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE
ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf must give
exchange instructions to the Transfer Agent in writing or by telephone. Before
any exchange, you must obtain and should review a copy of the current prospectus
of the fund into which the exchange is being made. Prospectuses may be obtained
by calling 1-800-554-4611. 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 applicable "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 1-800-554-4611, or by oral request from any of the
authorized signatories on the account, by calling 1-800-554-4611. If you
previously have established the Telephone Exchange Privilege, you may telephone
exchange instructions (including over The Dreyfus Touch(REGISTERED) automated
telephone system) by calling 1-800-554-4611. If you are calling from overseas,
call 516-794-5452. See "How to Redeem Shares Procedures." Upon an exchange into
a new account, the following shareholder services and privileges, as applicable
and where available, will be automatically carried over to the fund into which
the exchange is made: Telephone Exchange Privilege, Wire Redemption Privilege,
Telephone Redemption Privilege, TELETRANSFER Privilege and the dividend and
distributions payment option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined NAV; however, a sales load
may be charged with respect to exchanges of Class A shares into funds sold with
a sales load. No CDSC will be imposed on Class B or Class C shares at the time
of an exchange; however, Class B or Class C shares acquired through an exchange
will be subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase of the
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Class B or Class C shares exchanged. If you are exchanging Class A shares into a
fund that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares 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 distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your Agent must
notify the Distributor. Any such qualification is subject to confirmation of
your holdings through a check of appropriate records. See "Shareholder Services"
in the SAI. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance with
the rules promulgated by the SEC. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may be
modified or terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result in, a
taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a semi-monthly,
monthly, quarterly or annual basis), in exchange for shares of the Fund, in
shares of the same Class of other funds in the Dreyfus Premier Family of Funds
or certain other funds in the Dreyfus Family of Funds of which you are a
shareholder. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES
PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ANOTHER FUND. The amount you designate, which can be expressed either
in terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however, a sales load may be charged with respect to exchanges of Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or Class C
shares at the time of an exchange; however, Class B or Class C shares acquired
through an exchange will be subject on redemption to the higher CDSC applicable
to the exchanged or acquired shares. The CDSC applicable on redemption of the
acquired Class B or Class C shares will be calculated from the date of the
initial purchase of the Class B or Class C shares exchanged. See "Shareholder
Services" in the SAI. The right to exercise this Privilege may be modified or
canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to
Dreyfus Premier Large Company Stock Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. The exchange of shares of one
fund for shares of another is treated for Federal income tax purposes as a sale
of the shares given in exchange by the shareholder, and therefore, an exchanging
shareholder may realize, or an exchange on behalf of a Retirement Plan which is
not tax exempt may result in, a taxable gain or loss. For more information
concerning this Privilege and the funds in the Dreyfus Premier Family of Funds
or the Dreyfus Family of Funds eligible to participate in this Privilege, or to
obtain an Auto-Exchange Authorization Form, please call toll free
1-800-554-4611.
DREYFUS-AUTOMATIC ASSET BUILDER(REGISTERED)
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the bank
account designated by you. At your option, the bank account designated by you
will be debited in the specified amount, and Fund shares will be purchased, once
a month, on either the first or fifteenth day, or twice a month, on both days.
Only an account maintained at a domestic financial institution which is an ACH
member may be so designated. To establish a Dreyfus-AUTOMATIC Asset Builder
account, you must file an authorization form with the Transfer Agent. You may
obtain the necessary authorization form by calling 1-800-554-4611. You may
cancel your participation in this Privilege or change the amount of purchase at
any time by mailing written notification to Dreyfus Premier Large Company Stock
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, and the notification
will be effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
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DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends or dividends
and capital gain distributions, if any, paid by the Fund in shares of the same
Class of another fund in the Dreyfus Premier Family of Funds or certain other
funds in the Dreyfus Family of Funds of which you are a shareholder. 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. If you are investing in a fund that charges a CDSC, the shares
purchased will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the SAI. Dividend ACH permits
you to transfer electronically dividends or dividends and capital gain
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an ACH member
may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to request a Dividend
Options Form, please call toll free 1-800-554-4611. You may cancel these
privileges by mailing written notification to Dreyfus Premier Large Company
Stock Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a new
fund after cancellation, you must submit a new Dividend Options Form. Enrollment
in or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts and
may not be used to open new accounts. Minimum subsequent investments do not
apply for Dividend Sweep. The Fund may modify or terminate these privileges at
any time or charge a service fee. No such fee currently is contemplated. Shares
held under Keogh Plans, IRAs or other retirement plans are not eligible for
Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase Fund shares
(minimum of $100 and maximum of $50,000 per transaction) by having Federal
salary, Social Security, or certain veterans', military or other payments from
the Federal government automatically deposited into your Fund account. You may
deposit as much of such payments as you elect. You should consider whether
Direct Deposit of your entire payment into a fund with fluctuating NAV, such as
the Fund, may be appropriate for you. To enroll in Government Direct Deposit,
you must file with the Transfer Agent a completed Direct Deposit Sign-Up Form
for each type of payment that you desire to include in this Privilege. The
appropriate form may be obtained from your Agent or by calling 1-800-554-4611.
Death or legal incapacity will terminate your participation in this Privilege.
You may elect at any time to terminate your participation by notifying in
writing the appropriate Federal agency. Further, the Fund may terminate your
participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares (minimum
of $100 per transaction) automatically on a regular basis. Depending upon the
direct deposit program of your employer, you may have part or all of your
paycheck transferred to your existing Dreyfus account electronically through the
ACH system at each pay period. To establish a Dreyfus Payroll Savings Plan
account, you must file an authorization form with your employer's payroll
department. Your employer must complete the reverse side of the form and return
it to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671. You may obtain the necessary authorization form by calling
1-800-554-4611. 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, your Agent, Dreyfus, the
Fund, the Transfer Agent or any other person, to arrange for transactions under
the Dreyfus Payroll Savings Plan. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans are
not eligible for this Privilege.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly basis
if you have a $5,000 minimum account. An Automatic Withdrawal Plan may be
established by filing an Automatic Withdrawal Plan application with the Transfer
Agent or by oral request from any of the authorized signatories on the account
by calling 1-800-554-4611.
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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. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed on an annual basis 12% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 12% of the initial account
value. Class C shares, and Class A shares to which a CDSC applies, that are
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC. Purchases of additional Class A shares where the sales load is
imposed concurrently with withdrawals of Class A shares generally are
undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans, including
Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-working
spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs), 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 1-800-554-4611; for SEP-IRAs, 401(k) Salary
Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, available by calling 1-800-554-4611,
you become eligible for the reduced sales load applicable to the total number of
Eligible Fund shares purchased in a 13-month period pursuant to the terms and
conditions set forth in the Letter of Intent. A minimum initial purchase of
$5,000 is required. To compute the applicable sales load, the offering price of
shares you hold (on the date of submission of the Letter of Intent) in any
Eligible Fund that may be used toward "Right of Accumulation" benefits described
above may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares held in escrow to realize the difference.
Signing a Letter of Intent does not bind you to purchase, or the Fund to sell,
the full amount indicated at the sales load in effect at the time of signing,
but you must complete the intended purchase to obtain the reduced sales load. At
the time you purchase Class A shares, you must indicate your intention to do so
under a Letter of Intent. Purchases pursuant to a Letter of Intent will be made
at the then-current NAV plus the applicable sales load in effect at the time
such Letter of Intent was executed.
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HOW TO REDEEM SHARES
GENERAL -- You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined NAV as described below. If you hold Fund shares of
more than one Class, any request for redemption must specify the Class of shares
being redeemed. If you fail to specify the Class of shares to be redeemed or if
you own fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further instructions
from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
NAV.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE PURCHASED FUND
SHARES BY CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC
ASSET BUILDER(REGISTERED) AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST
TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR
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 TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
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 your account's net asset value is $500 or
less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES. A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current NAV of your Class B shares to an amount which is lower than the dollar
amount of all payments by you for the purchase of Class B shares of the Fund
held by you at the time of redemption. No CDSC will be imposed to the extent
that the NAV of the Class B shares redeemed does not exceed (i) the current NAV
of Class B shares acquired through reinvestment of dividends or other
distributions, plus (ii) increases in the NAV of Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the Fund held
by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be applied
to the then-current NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
The following table sets forth the rates of the CDSC for Class B shares:
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
- ------------------------- ----------------------
First.............................................. 4.00
Second............................................. 4.00
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Third.............................................. 3.00
Fourth............................................. 3.00
Fifth.............................................. 2.00
Sixth.............................................. 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV of Class B shares above the
total amount of payments for the purchase of Class B shares made during the
preceding six years; then of amounts representing the cost of shares purchased
six years prior to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 per share for a
cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of his or her investment. Assuming at the time
of the redemption the NAV has appreciated to $12 per share, the value of the
investor's shares would be $1,260 (105 shares at $12 per share). The CDSC would
not be applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the applicable rate
in the second year after purchase) for a total CDSC of $9.60.
For purposes of determining the applicable CDSC payable with respect to
redemption of Class B shares of the Fund where such shares were acquired through
exchange of Class B shares of another fund advised by Dreyfus, the year since
purchase payment was made is based on the date of purchase of the original Class
B shares of the fund exchanged.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C SHARES. A CDSC of 1% payable to
the Distributor is imposed on any redemption of Class C shares within one year
of the date of purchase. The basis for calculating the payment of any such CDSC
will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC. The CDSC will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70(OMEGA) in the case of an
IRA or Keogh plan or custodial account pursuant to Section 403(b) of the Code,
and (e) redemptions pursuant to the Automatic Withdrawal Plan, as described
under "Shareholder Services--Automatic Withdrawal Plan" above. If the Company's
Board determines to discontinue the waiver of the CDSC, the disclosure in the
Prospectus will be revised appropriately. Any Fund shares subject to a CDSC
which were purchased prior to the termination of such waiver will have the CDSC
waived as provided in the Prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your entitlement.
PROCEDURES -- You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611. You also may redeem shares
through the Wire Redemption Privilege or the Dreyfus TELETRANSFER PRIVILEGE if
you have checked the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. If you are a client of a Selected Dealer, you may redeem shares
through the Selected Dealer. 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. 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
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Fund may modify or terminate any redemption privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs, or other retirement plans, and shares for
which certificates have been issued, are not eligible for the Wire Redemption,
Telephone Redemption or TELETRANSFER Privilege.
The Telephone Redemption Privilege or telephone exchange privilege
authorizes the Transfer Agent to act on telephone instructions (including over
The Dreyfus Touch(REGISTERED) automated telephone system) 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 exchange of Fund shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other redemption procedures
may result in your redemption request being processed at a later time than it
would have been if telephone redemption had been used. During the delay, the
Fund's NAV may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Dreyfus Premier Large Company Stock
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption requests
must be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally will
be accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. If you have any
questions with respect to signature-guarantees, please contact your Agent or
call the telephone number listed on the cover of this Prospectus.
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, telephone or letter
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. 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 1-800-554-4611 or, if calling
from overseas, 516-794-5452. The Fund's SAI sets forth instructions for
transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE. You may request by telephone that
redemption proceeds (maximum $ 150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-554-4611 or, if calling from overseas, 516-794-5452. The Telephone
Redemption Privilege is granted automatically unless you refuse it.
TELETRANSFER PRIVILEGE - You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. 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. Holders of jointly registered Fund or
bank accounts may redeem through the TELETRANSFER Privilege for transfer to
their bank account only up to $250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of shares by calling 1-800-554-4611 or, if calling from
overseas, 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by the
Transfer Agent prior to the close of trading on the floor of the NYSE (currently
4:00 p.m., New York time), the redemption request will be effective on that day.
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If a redemption request is received by the Transfer Agent after the close of
trading on the floor of the NYSE, the redemption request will be effective on
the next business day. It is the responsibility of the Selected Dealer to
transmit a request so that it is received in a timely manner. The proceeds of
the redemption are credited to your account with the Selected Dealer. See "How
to Buy Shares" for a discussion of additional conditions or fees that may be
imposed upon redemption.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by the
dealer by the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is the
responsibility of the Selected Dealer to transmit orders on a timely basis. The
Selected Dealer may charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at any time.
REINVESTMENT PRIVILEGE -- Upon written request, you may reinvest up to the
number of Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing NAV without a sales load, or reinstate your
account for the purpose of exercising Fund Exchanges. Upon reinvestment, with
respect to Class B shares, or Class A shares if such shares were subject to a
CDSC, the shareholder's account will be credited with an amount equal to the
CDSC previously paid upon redemption of the Class A or Class B shares
reinvested. The Reinvestment Privilege may be exercised only once.
ADDITIONAL INFORMATION ABOUT PURCHASES, EXCHANGES AND REDEMPTIONS
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is engaged in excessive trading, the Fund, with or
without prior notice, may temporarily or permanently terminate the availability
of Fund Exchanges, or reject in whole or part any purchase or exchange request,
with respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year (for
calendar year 1998, beginning on January 15th) or who makes exchanges that
appear to coincide with a market-timing strategy may be deemed to be engaged in
excessive trading. Accounts under common ownership or control will be considered
as one account for purposes of determining a pattern of excessive trading. In
addition, the Fund may refuse or restrict purchase or exchange requests by any
person or group if, in the judgment of the Fund's management, the Fund would be
unable to invest the money effectively in accordance with its investment
objective and policies or could otherwise be adversely affected or if the Fund
receives or anticipates receiving simultaneous orders that may significantly
affect the Fund (E.G., amounts equal to 1% or more of the Fund's total assets).
If an exchange request is refused, the Fund will take no other action with
respect to the shares until it receives further instructions from the investor.
The Fund may delay forwarding redemption proceeds for up to seven days if the
investor redeeming shares is engaged in excessive trading or if the amount of
the redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on excessive
trading applies to investors who invest in the Fund directly or through
financial intermediaries, but does not apply to the Auto-Exchange Privilege, to
any automatic investment or withdrawal privilege described herein, or to non-IRA
retirement plan accounts.
During times of drastic economic or market conditions, the Fund may suspend
the Exchange Privilege temporarily without notice and treat exchange requests
based on their separate components - redemption orders with a simultaneous
request to purchase the other fund's shares. In such case, the redemption
request would be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.
21
<PAGE>
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLANS)
Class A shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1"). Class B and Class C shares are subject
to a Distribution Plan and a Service Plan, each adopted pursuant to Rule 12b-1.
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. Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. The fees payable under the
Distribution and Service Plans are payable without regard to actual expenses
incurred. The Fund and the Distributor may suspend or reduce payments under the
Distribution and Service Plans at any time, and payments are subject to the
continuation of the Fund's Plan and the Agreements described above. From time to
time, the Agents, the Distributor and the Fund may voluntarily agree to reduce
the maximum fees payable under the Plans. See the SAI for more details on the
Distribution and Service Plans.
DISTRIBUTION PLAN - CLASS A SHARES - The Class A shares of the Fund bear
some of the cost of selling those shares under the Distribution Plan (the
"Plan"). The Plan allows the Fund to spend annually up to 0.25% of its average
daily net assets attributable to Class A shares to compensate Dreyfus Service
Corporation, an affiliate of Dreyfus, for shareholder servicing activities and
the Distributor for shareholder servicing activities and expenses primarily
intended to result in the sale of Class A shares of the Fund. The Plan allows
the Distributor to make payments from the Rule 12b-1 fees it collects from the
Fund to compensate Agents that have entered into Agreements with the
Distributor. Under the Agreements, the Agents are obligated to provide
distribution related services with regard to the Fund and/or shareholder
services to the Agent's clients that own Class A shares of the Fund.
DISTRIBUTION AND SERVICE PLANS--CLASS B AND C SHARES-- Under a Distribution
Plan adopted pursuant to Rule 12b-1, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an aggregate annual rate
of .75 of 1% of the value of the average daily net assets of Class B and Class
C. Under a Service Plan adopted pursuant to Rule 12b-1, the Fund pays Dreyfus
Service Corporation or the Distributor for the provision of certain services to
the holders of Class B and Class C shares a fee at the annual rate of .25 of 1%
of the value of the average daily net assets of Class B and Class C. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and providing services related to the
maintenance of such shareholder accounts. With regard to such services, each
Agent is required to disclose to its clients any compensation payable to it by
the Fund and any other compensation payable by its clients in connection with
the investment of their assets in Class B and Class C shares. The Distributor
may pay one or more Agents in respect of services for these Classes of shares.
The Distributor determines the amounts, if any, to be paid to Agents under the
Service Plan and the basis on which such payments are made.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment income, if
any, four times yearly, and distributes its net realized capital 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 capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are accrued
daily and deducted before declaration of dividends to investors. Dividends and
other distributions paid by each Class are 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 are borne exclusively by that Class.
Class B and Class C shares will receive lower per share dividends than Class A
shares, which will in turn receive lower per share dividends than Class R
shares, because of the higher expenses borne by the relevant Classes. See
"Expense Summary."
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 at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
22
<PAGE>
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment as a
"regulated investment company" under the Code so long as such qualification is
in the best interests of its shareholders. Such qualification will relieve the
Fund of any liability for Federal income tax to the extent its earnings and
realized gains 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 to the extent of the Fund's earnings and profits, whether received in
cash or reinvested in additional Fund shares. Distributions from net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
are taxable to such shareholders as long-term capital gains regardless of how
long the shareholders have held their Fund shares and whether such distributions
are received in cash or reinvested in additional Fund shares. 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 are subject to U.S. withholding tax at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax treaty.
Distributions from net capital gain paid by the Fund to a non-resident foreign
investor, as well as the proceeds of any redemptions by such an investor,
regardless of the extent to which gain or loss may be realized, generally are
not subject to U.S. withholding tax. However, such distributions may be subject
to backup withholding, as described below, unless the foreign investor certifies
his or her non-U.S. residency status.
Notice as to the tax status of your dividends and other distributions will
be mailed to you annually. You also will receive periodic summaries of your
account that will include information as to dividends and distributions from net
capital gain, if any, paid during the year. The annual tax notice and periodic
account summaries you receive designate the portions of capital gain
distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act of
1997 ("Tax Act"), which applies to non-corporate taxpayers' net capital gain on
securities and other capital assets held for more than 18 months, and (2) the
28% maximum tax rate, applicable to such gain on capital assets held for more
than one year and up to 18 months (which, prior to enactment of the Tax Act,
applied to all such gain on capital assets held for more than one year).
The Code provides for the "carryover" of some or all of the sales load
imposed on Class A shares if (1) a shareholder redeems those shares or exchanges
those shares for shares of another fund advised or administered by Dreyfus
within 90 days of purchase and (2) in the case of a redemption, acquires other
Fund Class A shares through exercise of the Reinvestment Privilege or, in the
case of an exchange, such other fund reduces or eliminates its otherwise
applicable sales load for the purpose of the exchange. In these cases, the
amount of the sales load charged on the purchase of the original Class A shares,
up to the amount of the reduction of the sales load pursuant to the Reinvestment
Privilege or on the exchange, as the case may be, is not included in the basis
of such shares for purposes of computing gain or loss on the redemption or the
exchange and instead is added to the basis of the shares acquired pursuant to
the Reinvestment Privilege or the exchange.
Dividends and other distributions paid by the Fund to qualified retirement
plans ordinarily will not be subject to taxation until the proceeds are
distributed from the retirement plans. The Fund will not report to the IRS
distributions paid to such plans. Generally, distributions from qualified
retirement plans, except those representing returns of non-deductible
contributions thereto, will be taxable as ordinary income and, if made prior to
the time the participant reaches age 59-1/2, generally will be subject to an
additional tax equal to 10% of the taxable portion of the distribution. If the
distribution from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the participant
reaches age 70-1/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be imposed by the
IRS. The administrator, trustee or custodian of such a retirement plan will be
responsible for reporting distributions from such plans to the IRS. Moreover,
certain contributions to a qualified retirement plan in excess of the amounts
permitted by law may be subject to an excise tax. If a distributee of an
"eligible rollover distribution" from a qualified retirement plan does not elect
23
<PAGE>
to have the eligible rollover distribution paid directly from the plan to an
eligible retirement plan in a "direct rollover," the eligible rollover
distribution is subject to a 20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized, paid
to an individual or certain other non-corporate shareholders if such shareholder
fails to certify that the TIN furnished to the Fund is correct. Backup
withholding at that rate also is required from dividends and capital gain
distributions payable to such a shareholder if (1) that shareholder fails to
certify that he or she has not received notice from the IRS of being subject to
backup withholding as a result of a failure properly to report taxable dividend
or interest income on a Federal income tax return or (2) the IRS notifies the
Fund to institute backup withholding because the IRS determines that the
shareholder's TIN is incorrect or that the shareholder has failed properly to
report such income.
A TIN is either the Social Security number, IRS individual taxpayer
identification 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 is 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 adviser 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 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. Class A total
return figures include the maximum initial sales charge and Class B and Class C
total return figures include any applicable CDSC. These figures also take into
account any applicable distribution and servicing fees. As a result, at any
given time, the performance of Class B and Class C should be expected to be
lower than that of Class A and the performance of Classes A, B and C should be
expected to be lower than that of Class R. Performance for each Class will be
calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial payment
of $1,000 and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and distributions
during the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable value of
the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, or for shorter periods depending upon the length of time
during which the Fund has operated.
Total return is computed on a per share basis and assumes the reinvestment
of dividends and 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 (or maximum offering
price for Class A) at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return. Total return may also be calculated using the
NAV at the beginning of the period instead of the maximum offering price for
Class A shares or without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. Calculations based on NAV do not reflect
the deduction of the applicable sales charge on Class A shares which, if
reflected, would reduce the performance quoted.
The Fund may also advertise the yield on a Class of shares. The Fund's
yield is calculated by dividing a Class of shares' annualized net investment
income per share during a recent 30-day (or one month) period by the maximum
public offering price per share 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 provides an agreed-upon or
guaranteed fixed yield for a stated period of time.
24
<PAGE>
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
The Fund may compare the performance of its shares with various industry
standards of performance including Lipper Analytical Services, Inc. ratings, the
Russell 1000, S&P 500, the Consumer Price Index, the Dow Jones Industrial
Average, Lehman Brothers indexes, and CDA Technologies indexes. 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 as an open-end
management investment company, commonly known as a mutual fund. The Company has
an authorized capitalization of 25 billion shares of $0.001 par value stock with
equal voting rights. The Fund's shares are classified into four Classes--Class
A, Class B, Class C and Class R. The Company's Articles of Incorporation permits
the Board of Directors to create an unlimited number of investment portfolios
(each a "fund") without shareholder approval. 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.
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 Class A,
Class B or Class C shares, as the case may be, will be entitled to vote on
matters submitted to shareholders pertaining to the Distribution and/or Service
Plan relating to that Class.
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 purpose. Company shareholders may remove a Director by the affirmative
vote of a majority of the Company's outstanding 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 sends you
confirmations and statements of account.
Shareholder inquiries may be made to your Agent or by writing to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
25
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CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
26
<PAGE>
- ------------------------------------------------------------------------------
DREYFUS PREMIER LARGE COMPANY STOCK FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 16, 1998
- ------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Dreyfus Premier Large Company Stock Fund (formerly the Dreyfus Disciplined
Equity Income Fund) (the "Fund"), dated January 16, 1998, as it may be revised
from time to time. The Fund is a separate diversified portfolio of The
Dreyfus/Laurel Funds, Inc. (formerly The 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 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
PAGE
----
Investment Objective and Management Policies............................B-2
Management of the Fund..................................................B-13
Management Arrangements.................................................B-19
Purchase of Shares......................................................B-20
Distribution and Service Plans..........................................B-21
Redemption of Shares....................................................B-23
Shareholder Services....................................................B-24
Determination of Net Asset Value........................................B-28
Dividends, Other Distributions and Taxes................................B-28
Portfolio Transactions..................................................B-32
Performance Information.................................................B-34
Information About the Fund..............................................B-36
Transfer and Dividend Disbursing Agent, Custodian, Counsel
and Independent Auditors..............................................B-36
Financial Statements....................................................B-37
Appendix................................................................B-38
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF THE Fund."
PORTFOLIO SECURITIES
GOVERNMENT OBLIGATIONS. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates, maturities
and times of issuance: (a) U.S. Treasury bills have a maturity of one year or
less, (b) U.S. Treasury notes have maturities of one to ten years, and (c)
U.S. Treasury bonds generally have maturities of greater than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow an
amount limited to a specific line of credit from the U.S. Treasury, (c) the
discretionary authority of the U.S. Government agency or instrumentality, or (d)
the credit of the instrumentality. (Examples of agencies and instrumentalities
are: Federal Land Banks, Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks,
General Services Administration, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Inter-American Development Bank,
Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development and Fannie Mae. No
assurance can be given that the U.S. Government will provide financial support
to such U.S. Government agencies or instrumentalities described in (b), (c) and
(d) in the future, other than as set forth above, since it is not obligated to
do so by law.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
U.S. Government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System, or with such other brokers or
dealers that meet the credit guidelines of the Board of Directors. In a
repurchase agreement, the Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. The
Fund's resale price will be in excess of the purchase price, reflecting an
agreed upon interest rate. This interest rate is effective for the period of
time the Fund is invested in the agreement and is not related to the coupon rate
on the underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will the Fund invest in repurchase agreements for more than one year.
The Fund will always receive as collateral securities whose market value
including accrued interest is, and during the entire term of the agreement
remains, at least equal to 100% of the dollar amount invested by the Fund in
each agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of the
custodian. If the seller defaults, the Fund might incur a loss if the value of
the collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of a security
which is the subject of a repurchase agreement, realization upon the collateral
by the Fund may be delayed or limited. The Fund seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligors under repurchase agreements, in accordance with the credit guidelines
of the Company's Board of Directors.
WHEN-ISSUED SECURITIES. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that delivery
and payment for the securities normally will take place approximately 7 to 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
B-2
<PAGE>
when-issued basis are each fixed at the time the buyer enters into the
commitment. The Fund will make commitments to purchase such securities only with
the intention of actually acquiring the securities, but the Fund may sell these
securities or dispose of the commitment before the settlement date if it is
deemed advisable as a matter of investment strategy. Cash or marketable
high-grade debt securities equal to the amount of the above commitments will be
segregated on the Fund's records. For the purpose of determining the adequacy of
these securities the segregated securities will be valued at market. If the
market value of such securities declines, additional cash or securities will be
segregated on the Fund's records on a daily basis so that the market value of
the account will equal the amount of such commitments by the Fund.
Securities purchased on a when-issued basis and the securities held by the
Fund are subject to changes in market value based upon the public's perception
of changes in the level of interest rates. Generally, the value of such
securities will fluctuate inversely to changes in interest rates -- i.e., they
will appreciate in value when interest rates decline and decrease in value when
interest rates rise. Therefore, if in order to achieve higher interest income
the Fund remains substantially fully invested at the same time that it has
purchased securities on a "when-issued" basis, there will be a greater
possibility of fluctuation in the Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated securities,
the sale of other securities and/or, although it would not normally expect to do
so, from the sale of the when-issued securities themselves (which may have a
market value greater or less than the Fund's payment obligation). The sale of
securities to meet such obligations carries with it a greater potential for the
realization of capital gains, which are subject to federal income taxes.
COMMERCIAL PAPER. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the federal securities
laws and generally is sold to investors who agree that they are purchasing the
paper for an investment and not with a view to public distribution. Any resale
by the purchaser must be pursuant to registration or exemption therefrom.
Section 4(2) paper is normally resold to other investors through or with the
assistance of the issuer or investment dealers who make a market in Section 4(2)
paper, thus providing liquidity. Pursuant to guidelines established by the
Company's Board of Directors, Dreyfus may determine that Section 4(2) paper is
liquid for the purposes of complying with the Fund's investment restriction
relating to investments in illiquid securities.
MANAGEMENT POLICIES
The Fund may engage in the following practices in furtherance of its
investment objective.
LOANS OF FUND SECURITIES. The Fund has authority to lend its portfolio
securities provided (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or cash equivalents adjusted
daily to make a market value at least equal to the current market value of these
securities loaned; (2) the Fund may at any time call the loan and regain the
securities loaned; (3) the Fund will receive any interest or dividends paid on
the loaned securities; and (4) the aggregate market value of securities loaned
will not at any time exceed one-third of the total assets of the Fund. In
addition, it is anticipated that the Fund may share with the borrower some of
the income received on the collateral for the loan or that it will be paid a
premium for the loan. In determining whether to lend securities, the Fund
considers all relevant factors and circumstances including the creditworthiness
of the borrower.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of portfolio
B-3
<PAGE>
securities is deemed by the Fund to be inconvenient or disadvantageous. A
reverse repurchase agreement is a transaction whereby the Fund transfers
possession of a portfolio security to a bank or broker-dealer in return for a
percentage of the portfolio security's market value. The Fund retains record
ownership of the security involved including the right to receive interest and
principal payments. At an agreed upon future date, the Fund repurchases the
security by paying an agreed upon purchase price plus interest. Cash or liquid
high-grade debt obligations of the Fund equal in value to the repurchase price
including any accrued interest will be maintained in a segregated account while
a reverse repurchase agreement is in effect.
DERIVATIVE INSTRUMENTS. The Fund may purchase and sell various financial
instruments ("Derivative Instruments"), such as financial futures contracts
(such as index futures contracts), options (such as options on U.S. and foreign
securities or indices of such securities). The index Derivative Instruments the
Fund may use may be based on indices of U.S. or foreign equity securities. These
Derivative Instruments may be used, for example, to preserve a return or spread
or to facilitate or substitute for the sale or purchase of securities.
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.
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.
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(1) Successful use of most Derivative Instruments depends upon Dreyfus'
ability to predict movements of the overall securities and interest rate
markets, which requires different skills than predicting changes in the prices
of individual securities. There can be no assurance that any particular strategy
will succeed.
(2) There might be imperfect correlation, or even no correlation, between
price movements of a Derivative Instrument and price movements of the
investments being hedged. For example, if the value of a Derivative Instrument
used in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of correlation
might occur due to factors unrelated to the value of the investments being
hedged, such as speculative or other pressures on the markets in which
Derivative Instruments are traded. The effectiveness of hedges using Derivative
Instruments on indices will depend on the degree of correlation between price
movements in the index and price movements in the securities being hedged.
Because there are a limited number of types of exchange-traded options and
futures contracts, it is likely that the standardized contracts available will
not match the Fund's current or anticipated investments exactly. The Fund may
invest in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in which it
typically invests, which involves a risk that the options or futures position
will not track the performance of the Fund's other investments.
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
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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 or options, 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 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.
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
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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."
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.
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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
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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.
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 Company's 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.
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).
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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 amount 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 or Directors of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such issuer,
together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof), including their predecessors, that have been in operation
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for less than three years, if by reason thereof, the value of the Fund's
investment in securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners, guarantors and
originators of underlying assets may be treated as the issuer of a security.
6. The Fund will invest no more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements with remaining maturities
in excess of seven days, time deposits with maturities in excess of seven days
and other securities which are not readily marketable. For purposes of this
limitation, illiquid securities shall not include Section 4(2) paper and
securities which may be resold under Rule 144A under the Securities Act of 1933,
provided that the Board of Directors, or its delegate, determines that such
securities are liquid based upon the trading markets for the specific security.
7. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or acquisition
of assets and except to the extent otherwise permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings representing
more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York or American Stock
Exchange (for purposes of this limitation, warrants acquired by the Fund in
units or attached to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate investment
in such classes of securities would exceed 5% of its total assets except that:
(a) this limitation shall not apply to standby commitments, and (b) this
limitation shall not apply to the Fund's transactions in futures contracts and
related options.
As an operating policy, the Fund will not invest more than 25% of the
value of its total assets, at the time of such purchase in domestic banks,
including U.S. branches of foreign banks and foreign branches of U.S. banks. The
Company's Board of Directors may change this policy without shareholder
approval. Notice will be given to shareholders if this policy is changed by the
Board of Directors.
MANAGEMENT OF THE FUND
PRINCIPAL SHAREHOLDERS
[There were no shareholder(s) who owned 5% or more of the outstanding
Class A, Class B, Class C or Class R shares of the Fund at January __, 1998.
/The following shareholder(s) owned of record 5% or more of Class A or Class R
shares of the Fund at January __, 1998.]
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging in
the business of underwriting, selling or distributing securities and prohibits a
member bank of the Federal Reserve System from having certain affiliations with
an entity engaged principally in that business. The activities of Mellon Bank,
N.A. ("Mellon Bank") in informing its customers of, and performing, investment
and redemption services in connection with the Fund, and in providing services
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to the Fund as custodian, as well as Dreyfus' investment advisory activities,
may raise issues under these provisions. Mellon Bank has been advised by counsel
that the activities contemplated under these arrangements are consistent with
its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of such
future statutes and regulations, could prevent Mellon Bank or Dreyfus from
continuing to perform all or a part of the above services for its customers
and/or the Fund. If Mellon Bank or Dreyfus were prohibited from serving the Fund
in any of its present capacities, the Board of Directors would seek an
alternative provider(s) of such services.
DIRECTORS AND OFFICERS
The Company has a Board composed of eleven Directors which supervises the
Fund's investment activities and reviews contractual arrangements with companies
that provide the Fund with services. The following lists the Directors and
officers and their positions with the Company and their present and principal
occupations during the past five years. Each Director who is an "interested
person" of the Company (as defined in the 1940 Act) is indicated by an
asterisk(*). Each of the Directors also serves as a Trustee of The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(collectively, with the Company, the "Dreyfus/Laurel Funds").
DIRECTORS OF THE COMPANY
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; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 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.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 80 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO, Director of the Company. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. He is also Chairman of the Board of Noel Group,
Inc., a venture capital company, and Staffing Resources, Inc., a temporary
placement agency. Mr. DiMartino also serves as a Director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and other
benefit programs; Carlyle Industries, Inc. (formerly Belding Heminway
Company, Inc.), a button packager and distributor; and Curtis Industries,
Inc., a national distributor of security products, chemicals, and
automotive and other hardware. Mr. DiMartino is also a Board member of 152
other funds in the Dreyfus Family of Funds. From November 1995 to January
1997, Director, Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio and Bank Portfolio. For more than five
years prior to January 1995, he was President, a director and, until
August 24, 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus. From August 1994 to December 31, 1994, he was a
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director of Mellon Bank Corporation. Age: 54 years old. His address is 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.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio. Age: 63 years old. Address: 40 Norfolk
Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 69 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of the Company; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; Director, National Picture
Frame Corporation; former Chairman of the Board and Director, Rexene
Corporation; Chairman of the Board and Director, Tetra Corporation
1991-1993; Director, Medalist Corporation 1992-1993. From November
1995 to January 1997, Director, Access Capital Strategic Community
Investment Fund, Inc. - Institutional Investment Portfolio. Age: 76
years old. Address: Way Hallow Road and Woodland Road, Sewickley,
Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of the Company; Former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio.
Age: 51 years old. Address: Himmel and Company, Inc., 399 Boylston
Street, 11th Floor, Massachusetts 02116.
o*ARCH S. JEFFERY. Director of the Company; Financial Consultant. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 80 years old. Address: 1817 Foxcroft Lane, Unit 306, Allison
Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc.; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 50 years old. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
o+JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 66 years old. Address: 321
Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Director of the Company; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director,
Harvard/Pilgrim Community Health Plan, Inc.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio; Director, Massachusetts Electric Company;
Director, the Hymans Foundation, Inc., prior to February, 1993; Real
B-13
<PAGE>
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 48 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
- --------------------------------
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
OFFICERS OF THE COMPANY
#MARIEE. CONNOLLY, President and Treasurer of the Company. President, Chief
Executive Officer, Chief Compliance Officer and a director of the
Distributor and Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. She is 40 years old.
#JOHN E. PELLETIER, Vice President and Secretary of the Company. Senior Vice
President, General Counsel, Secretary and Clerk of the Distributor and
Funds Distributor, Inc. From February 1992 to July 1994, he served as
Counsel for The Boston Company Advisors, Inc. He is 33 years old.
#RICHARD W. INGRAM, Vice President and Assistant Treasurer of the Company.
Executive Vice President of the Distributor and Funds Distributor,
Inc. From March 1994 to November 1995, he was Vice President and
Division Manager for First Data Investor Services Group. From 1989 to
1994, he was Vice President, Assistant Treasurer and Tax Director -
Mutual Funds of TBC. He is 42 years old.
#MARY A. NELSON, Vice President and Assistant Treasurer of the Company. Vice
President of the Distributor and Funds Distributor, Inc.. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for TBC. She is 33 years old.
#MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer of the Company.
Senior Vice President of Funds Distributor, Inc. From December 1989
through November 1996, he was employed by GE Investments where he held
various financial, business development and compliance positions. He also
served as Treasurer of the GE Funds and as Director of GE Investment
Services. He is 36 years old.
#JOSEPH F. TOWER, III, Vice President and Assistant Treasurer of the Company.
Senior Vice President, Treasurer and Chief Financial Officer of the
Distributor and Funds Distributor, Inc. From July 1988 to August 1994, he
was employed by TBC where he held various management positions in the
Corporate Finance and Treasury areas. He is 35 years old.
#DOUGLAS C. CONROY, Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. From December 1991 to March 1993, he was employed as a
Fund Accountant at TBC. He is 28 years old.
#ELIZABETH A. KEELEY, Vice President and Assistant Secretary of the Company.
Vice President of the Distributor and Funds Distributor, Inc. She has
been employed by the Distributor since September 1995. She is 28 years
old.
- --------------------------------
# Officer also serves as an officer for other investment companies advised by
Dreyfus, including The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel
Tax-Free Municipal Funds.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
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<PAGE>
The officers and Directors of the Company as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of January _, 1998.
No officer or employee of the Distributor (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 Trustee/Director
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
Trustees/Directors of the Dreyfus/Laurel Funds). In addition, the Dreyfus/Laurel
Funds pay each Trustee/Director 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 reimburse each Trustee/Director 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, 1997, 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:
B-15
<PAGE>
Total Compensation
From the Company
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From The Company# Member****
- ------------- ----------------- ------------------
Ruth Marie Adams $______ $______
Francis P. Brennan* $______ $______
Joseph S. DiMartino** None $517,075***
James M. Fitzgibbons $______ $______
J. Tomlinson Fort** None $______
Arthur L. Goeschel $______ $______
Kenneth A. Himmel $______ $______
Arch S. Jeffery** None $______
Stephen J. Lockwood $______ $______
John J. Sciullo $______ $______
Roslyn M. Watson $______ $______
# 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 $__________ for the Company.
* Compensation of Francis P. Brennan includes $25,000 paid by the Dreyfus/Laurel
Funds to be the Chairman of the Board.
** For the fiscal year ended October 31, 1997, Joseph S. DiMartino, J. Tomlinson
Fort and Arch S. Jeffery were 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, 1997, the aggregate amount of fees and expenses received
by Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery from Dreyfus for
serving as a Board member of the Company were $_________, _______ and
$__________, respectively, and for serving as a Board member of all funds in the
Dreyfus/Laurel Funds (including the Company) were $_______, $________ and
$_______, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino, Fort
and Jeffery a total of $________ for expenses attributable to the Company's
Board meetings which is not included in the $__________ amount in note # above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the year ended December 31, 1996.
****The Dreyfus Family of Funds consists of ___ mutual funds.
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, transferred to Dreyfus as of October 17, 1994 (the "Management
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<PAGE>
Agreement"). Pursuant to the Management Agreement, Dreyfus provides, or arranges
for one or more third parties to provide, investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. As investment
manager, Dreyfus manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions. The Management Agreement
is subject to review and approval at least annually by the Board of Directors.
The Management Agreement will continue from year to year provided that a
majority of the Directors who are not interested persons (as defined in the 1940
Act) of the Company or Dreyfus and either a majority of all Directors or a
majority (as defined in the 1940 Act) of the shareholders of the Fund approve
its continuance. The Management Agreement was last approved by the Board of
Directors on January 31, 1997 to continue until April 4, 1998. The Company may
terminate the Management Agreement 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 sixty days' written notice to Dreyfus. Dreyfus may terminate the
Management Agreement upon sixty days' written notice to the Company. The
Management Agreement will terminate immediately and automatically upon its
assignment.
The following persons are officers and/or directors of Dreyfus: W. Keith
Smith, Chairman of the Board; Christopher M. Condron, President, Chief Executive
Officer, 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; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Paul Kadin, 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; William V.
Healey; Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Frank V.
Cahouet and Richard F. Syron, directors.
For the last three years, the Fund had the following expenses:
For the Fiscal Year Ended October 31,
1997 1996 1995
---- ---- ----
Management fees $ $94,844 $47,974
PURCHASE OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY 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 Premier Family of Funds, funds in
the Dreyfus Family of Funds, and for certain other investment companies.
SALES LOADS -- CLASS A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code")) although more than one beneficiary is involved; or a group
of accounts established by or on behalf of the employees of an employer or
B-17
<PAGE>
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k) and 457 of
the Code); or an organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Holders of Investor shares of the Fund as of January 15, 1998 may continue
to purchase Class A shares of the Fund at NAV.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Fund's Prospectus at a price based upon the
offering price of the Fund's Class A (Investor) shares at the close of business
on October 31, 1997:
Net Asset Value per share $______
Per Share Sales Charge - 5.75% of offering price
(6.10% of net asset value per share) $ ____
------
Per Share Offering Price to Public $______
DREYFUS STEP PROGRAM. Holders of the Fund's Investor shares prior to
January 16, 1998 who had enrolled in Dreyfus Step Program may continue to
purchase shares of the same class (currently designated Class A shares) without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder(R), Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan. Participation in this Program may be terminated
by the shareholder at any time by discontinuing 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. The Dreyfus Step Program is not available to
open new accounts in any Class of the Fund.
TELETRANSFER PRIVILEGE. TELETRANSFER purchase orders may be made at any
time. Purchase orders received by 4:00 p.m., New York time, on any business day
Dreyfus Transfer, Inc., the Fund's transfer and dividend disbursing agent (the
"Transfer Agent"), and the New York Stock Exchange ("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. To
qualify to use the TELETRANSFER Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares - TELETRANSFER Privilege."
REOPENING AN ACCOUNT. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
B-18
<PAGE>
year 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 net asset value of
the shares purchased and securities exchanged. Securities accepted by the Fund
will be valued in the same manner as the Fund values its assets. Any interest
earned on the securities following their delivery to the Fund and prior to the
exchange will be considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property of
the Fund, along with the securities. For further information about "in-kind"
purchases, call 1-800-554-4611.
DISTRIBUTION AND SERVICE PLANS
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DISTRIBUTION PLANS (CLASS A
PLAN AND CLASS B AND C PLANS)."
Class A, Class B and Class C shares are subject to annual fees for
distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "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.
DISTRIBUTION PLAN--CLASS A SHARES. The Company has adopted a Distribution
Plan pursuant to the Rule with respect to the Class A shares of the Fund ("Class
A Plan"), whereby Class A shares of the Fund may spend annually up to 0.25% of
the average of its net assets for costs and expenses incurred in connection with
the distribution of, and shareholder servicing with respect to, Class A shares.
The Class A Plan provides that a report of the amounts expended under the
Class A 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 Class A Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to the
Class A Plan without approval of the Fund's shareholders, and that other
material amendments of the Class A Plan must be approved by the vote of a
majority of the Directors and of the Directors who are not "interested persons"
(as defined in the 1940 Act) of the Company or the Distributor and who do not
have any direct or indirect financial interest in the operation of the Class A
Plan, cast in person at a meeting called for the purpose of considering such
amendments. The Class A 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 Class A Plan,
by vote cast in person at a meeting called for the purpose of voting on the
Class A Plan. The Class A Plan was so approved by the Directors at a meeting
held on January 31, 1997. The Class A Plan is terminable, as to the Fund's Class
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<PAGE>
A 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 Class A Plan or by vote of the holders of a majority of the
outstanding shares of such class of the Fund.
DISTRIBUTION AND SERVICE PLANS -- CLASS B AND CLASS C SHARES. In addition
to the above described current Class A Plan for Class A shares, the Board of
Directors has adopted a Service Plan (the "Service Plan") under the Rule for
Class B and Class C shares, pursuant to which the Fund pays the Distributor and
Dreyfus Service Corporation for the provision of certain services to the holders
of Class B and Class C shares. The Company's Board of Directors has also adopted
a Distribution Plan pursuant to the Rule with respect to Class B and Class C
shares (the "Distribution Plan"). The Company's Board of Directors believes that
there is a reasonable likelihood that the Distribution and Service Plans (the
"Plans") will benefit the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, each Plan provides that it may not be
amended to increase materially the cost which holders of Class B or Class C
shares may bear pursuant to the Plan without the approval of the holders of such
Classes and that other material amendments of the Plan must be approved by the
Board of Directors and by the Directors who are not interested persons of the
Fund and have no direct or indirect financial interest in the operation of the
Plan or in any agreements entered into in connection with the Plan, by vote cast
in person at a meeting called for the purpose of considering such amendments.
Each Plan is subject to annual approval by such vote of the Directors cast in
person at a meeting called for the purpose of voting on the Plan. Each Plan was
so approved by the Directors at a meeting held on January 31, 1997, and the
applicability of each Plan to the Fund was approved on November 20, 1997. Each
Plan may be terminated at any time by vote of a majority of the Directors who
are not interested persons and have no direct or indirect financial interest in
the operation of the Plan or in any agreements entered into in connection with
the Plan or by vote of the holders of a majority of Class B and Class C shares.
For the fiscal year ended October 31, 1997, the Fund paid the Distributor
and Dreyfus Service Corporation $___ and $_____, respectively, pursuant to the
Plan with respect to Class A shares (formerly called Investor shares).
REDEMPTION OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO REDEEM SHARES."
WIRE REDEMPTION PRIVILEGE. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone, or letter 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
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<PAGE>
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. Investors should advise the operator that the above transmittal code must
be used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as a
described below under "Stock Certificates; Signatures."
STOCK CERTIFICATES; SIGNATURES. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification.
TELETRANSFER PRIVILEGE. Investors should be aware that if they have
selected the TELETRANSFER Privilege, any request for a TELETRANSFER transaction
will be effected through the Automated Clearing House ("ACH") system unless more
prompt transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two business
days after receipt of the redemption request. See "Purchase of
Shares--TELETRANSFER Privilege."
REDEMPTION COMMITMENT. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the SEC. In the case of requests for redemptions in excess
of such amount, the Company's Board 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
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<PAGE>
existing shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such securities,
brokerage charges might be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the NYSE is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund ordinarily utilizes is restricted, or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the SEC by order may permit to protect the Fund's
shareholders.
SHAREHOLDER SERVICES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "SHAREHOLDER SERVICES."
FUND EXCHANGES. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or administered by
Dreyfus. Shares of the same Class of such funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges into shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales
load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or other distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein as
"Offered Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load that could have
been imposed in connection with the Purchased Shares (at the time
the Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods, if any,
will be deemed to have been held since the date the shares being
exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Agent must
notify the Transfer Agent of the investor's prior ownership of shares with a
sales load and the investor's account number.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
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<PAGE>
To request an exchange, an investor or an investor's Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by telephone
is given to all Fund shareholders automatically unless the investor checks the
applicable "No" box on the Account Application, indicating that the investor
specifically refuses this privilege. By using the Telephone Exchange Privilege,
the investor authorizes the Transfer Agent to act on telephonic exchange
instructions (including over the Dreyfus Touch[REGISTERED] automated telephone
system) 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. Telephone exchanges may be subject to limitations as to the
amount involved or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
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 self-employed individual retirement plans (so-called "Keogh
Plans") and individual retirement accounts ("IRAs"), including IRAs set up under
a Simplified Employee Pension Plan ("SEP-IRAs") with only one participant, the
minimum initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among shares of the
same Class of the funds in the Dreyfus Premier Family of Funds or the Dreyfus
Family of Funds. To exchange shares held in personal retirement plans, the
shares exchanged must have a current value of at least $100.
AUTO-EXCHANGE PRIVILEGE. The Auto-Exchange Privilege permits an investor
to purchase, in exchange for shares of the Fund, shares of the same Class of
certain other funds in the Dreyfus Premier Family of Funds or the Dreyfus Family
of Funds. This Privilege is available only for existing accounts. With respect
to Class R shares held by a Retirement Plan, exchanges may be made only between
the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund. Shares will be exchanged on the basis
of relative net asset value as described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. An investor will be
notified if 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 Auto-Exchange transaction. Shares held under IRAs and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but not
from IRA accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund Exchange service or the
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
AUTOMATIC WITHDRAWAL PLAN. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the investor,
the Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan. Class C shares, Class
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<PAGE>
A shares to which a CDSC applies, and, unless certain conditions described in
the Prospectus are satisfied, Class B shares withdrawn pursuant to the Automatic
Withdrawal Plan, will be subject to any applicable CDSC.
DIVIDEND SWEEP. Dividend Sweep allows investors to invest automatically
their dividends or dividends and other distributions, if any, from the Fund in
shares of the same Class of certain other funds in the Dreyfus Premier Family of
Funds or the Dreyfus Family of Funds of which the investor is a shareholder.
Shares of the same Class of other funds purchased pursuant to this Privilege
will be purchased on the basis of relative net asset value per share as follows:
A. Dividends and other distributions paid by a fund may be
invested without imposition of a sales load in shares of other funds
that are offered without a sales load.
B. Dividends and other distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds sold
with a sales load, and the applicable sales load will be deducted.
C. Dividends and other distributions paid by a fund which charges
a sales load may be invested in shares of other funds sold with a
sales load (Offered Shares), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or other distributions are
being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and other distributions paid by a fund may be
invested in shares of other funds that impose a CDSC and the
applicable CDSC, if any, will be imposed upon redemption of such
shares.
CORPORATE PENSION/PROFIT-SHARING AND RETIREMENT PLANS. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund makes
available Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover Accounts," and
403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a 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, 401(k) Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum for subsequent purchases. The minimum initial investment
for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only
one participant, is ordinarily $750, with no minimum for subsequent purchases.
Individuals who open an IRA also may open a non-working spousal IRA with a
minimum investment of $250.
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<PAGE>
Each 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 recent market quotations are not readily available or, in the case of
fixed-income securities (excluding short-term investments), which are not valued
by the independent pricing service utilized by the Fund, are valued at fair
value as determined in good faith by the Board. The Board will review the method
of valuation on a current basis. In making their good faith valuation of
restricted securities, the Board members generally will take the following
factors into consideration: restricted securities which are, or are convertible
into, 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 if
it believes that the discount 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.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which
the NYSE is currently scheduled to be closed are: New Year's Day, Dr. Martin
Luther King, Jr. 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 under
the Code, the Fund -- which is treated as a separate corporation for federal tax
purposes -- (1) must distribute to its shareholders each year at least 90% of
its investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign currency
transactions) ("Distribution Requirement"), (2) must derive at least 90% of its
annual gross income from specified sources ("Income Requirement"), and (3) must
meet certain asset diversification and other requirements.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the net asset value of the
shares below the cost of his or her investment. Such a dividend or other
distribution would be a return on investment in an economic sense, although
taxable as stated in the Fund's Prospectus. In addition, if a shareholder sells
shares of the Fund held for six months or less and receives a capital gain
distribution with respect to those shares, any loss incurred on the sale of
those shares will be treated as a long-term capital loss to the extent of the
capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to share-holders of record on a
B-25
<PAGE>
date in any of those months are deemed to have been paid by the Fund and
received by the share-holders on December 31 of that year if the distributions
are paid by the Fund during the fol-lowing January. Accordingly, those
distributions will be taxed to shareholders for the year in which that December
31 falls.
A portion of the dividends paid by the Fund, whether received in cash or
reinvested in additional Fund shares, may be eligible for the dividends-received
deduction allowed to corporations. The eligible portion may not exceed the
aggregate dividends received by the Fund from U.S. corporations. However,
dividends received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the alternative mini-mum
tax.
FOREIGN TAXES. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the yield and/or return 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.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly, or constructively, by "U.S.
share-holders," defined as U.S. persons that individually own, directly,
indirectly, or constructively, at least 10% of that voting power) as to which
the Fund is a U.S. shareholder -- that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock of a PFIC or of any gain on disposition of the stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a dividend to its shareholders. The balance of the PFIC income will be included
in the Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the fore-going tax and interest
obligation, the Fund would be required to in-clude in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the 4% excise tax mentioned in the
Prospectus under "Dividends, Other Distributions and Taxes" -- even if those
earnings and gain were not received by the Fund from the QEF. In most instances
it will be very difficult, if not impossible, to make this election because of
certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of a PFIC's stock over
the Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. Regulations proposed in
1992 would provide a similar election with respect to the stock of certain
PFICs.
B-26
<PAGE>
FOREIGN CURRENCY AND HEDGING TRANSACTIONS. Gains from the sale or other
disposition of foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and gains from 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.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain and loss. However, a portion of the gains and losses
from the disposition of foreign currencies and certain
foreign-currency-denominated instruments (including debt instruments and
financial forward and futures contracts and options) may be treated as ordinary
income or loss under Section 988 of the Code. In addition, all or a portion of
any gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that would otherwise be treated as capital
gain may be treated as ordinary income. "Conversion transactions" are defined to
include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund on
the exercise or lapse of, or closing transactions respecting, certain options,
futures and forward contracts ("Section 1256 Contracts") may be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. In
addition, any Section 1256 Contracts remaining unexercised at the end of the
Fund's taxable year will be treated as sold for their then fair market value (a
process known as "marking-to-market"), resulting in additional gain or loss to
the Fund characterized in the manner described above. It is not entirely clear,
as of the date of this SAI, whether the 60% portion of that is treated as
long-term capital gain will qualify for the reduced maximum tax rates on net
capital gain enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for
taxpayers in the 15% marginal tax bracket) on capital assets held for more than
18 months -- instead of the 28% maximum rate in effect before that legislation,
which now applies to gain on capital assets held for more than one year but not
more than 18 months, although technical corrections legislation passed by the
House of Representatives would treat such 60% portion as qualifying therefor.
Offsetting positions held by the Fund involving certain options, futures
or forward contracts may constitute "straddles", which are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of straddles is governed by Sections 1092 and to the extent noted above, 1258 of
the Code, which in certain circumstances override or modify Sections 1256 and
988. As a result, all or a portion of any capital gain from certain straddle
transactions may be recharacterized as ordinary income. If the Fund were treated
as entering into straddles by reason of its engaging in certain options, futures
or forward contract transactions, such straddles would be characterized as
"mixed straddles" if the transactions comprising a part of such straddles were
governed by Section 1256. The Fund may make one or more elections with respect
to mixed straddles; depending on which election is made, if any, the results to
the Fund may differ. If no election is made, then to the extent the straddle and
conversion transactions rules apply to positions established by the Fund, losses
realized by the Fund will be deferred to the extent of unrealized gain in the
offsetting position. Moreover, as a result of the straddle rules, short-term
capital loss on straddle positions may be recharacterized as long-term capital
loss, and long-term capital gains may be treated as short-term capital gains or
ordinary income.
Investment by the Fund in securities issued or acquired at a discount (for
example, zero coupon securities) could, under special tax rules, affect the
amount and timing of distributions to shareholders by causing the Fund to
recognize income prior to the receipt of cash payments. For example, the Fund
could be required to take into gross income annually a portion of the discount
(or deemed discount) at which the securities were issued and could need to
distribute such income to satisfy the Distribution Requirement and to avoid the
excise tax (the "Excise Tax"). In such case, the Fund may have to dispose of
securities it might otherwise have continued to hold in order to generate cash
to satisfy these requirements.
B-27
<PAGE>
STATE AND LOCAL TAXES. Depending upon the extent of the Fund's activities
in states and localities in which it is deemed to be conducting business, the
Fund may be subject to the tax laws thereof. Shareholders are also advised to
consult their tax advisers concerning the application of state and local taxes
to them.
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. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the foreign
shareholder 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 generally will not
be subject to U.S. federal income tax unless the foreign shareholder is a
non-resident alien individual and is physically present in the United States for
more than 182 days during the taxable year. In the case of certain foreign
shareholders, the Fund may be required to withhold U.S. federal income tax at a
rate of 31% of capital gain distributions and of the gross proceeds from a
redemption of Fund shares unless the shareholder furnishes the Fund with a
certificate regarding the shareholder's foreign status.
FOREIGN SHAREHOLDERS - EFFECTIVELY CONNECTED INCOME. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all distributions
to that shareholder and any gains realized by that shareholder on the
disposition of the Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as the
case may be. Foreign shareholders also may be subject to the branch profits tax.
FOREIGN SHAREHOLDERS - ESTATE TAX. Foreign individuals generally are
subject to 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.
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.
B-28
<PAGE>
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 under 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.
Dreyfus may use research services of and place brokerage transactions with
broker-dealers affiliated with it or Mellon Bank if the commissions are
reasonable, fair and comparable to commissions charged by non-affiliated
brokerage firms for similar services. During the fiscal years ended October 31,
1997 and 1996, the Fund paid brokerage commissions of $______ and $7,643,
respectively, to affiliates of Dreyfus or Mellon Bank. The amount paid to
affiliated brokerage firms during the fiscal years ended October 31, 1997 and
1996, was approximately __% and 42%, respectively, of the aggregate brokerage
commissions paid by the Fund, for transactions involving approximately ____% and
48%, respectively, of the aggregate dollar volume of transactions for which the
Fund paid brokerage commissions. The difference in these percentages was due to
the lower commissions paid to affiliates of Dreyfus. There were no commissions
charged by affiliated brokerage firms for the fiscal year ended October 31,
1995.
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 manager,
particularly when the same investment instrument is suitable for the investment
objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated in
accordance with a formula considered by Dreyfus to be equitable to each account.
In some cases this system could have a detrimental effect on the price or volume
of the investment instrument as far as the Fund is concerned. In other cases,
B-29
<PAGE>
however, the ability of the Fund to participate in volume transactions will
produce better executions for the Fund. While the Directors will continue to
review simultaneous transactions, it is their present opinion that the
desirability of retaining Dreyfus as investment manager to the Fund outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
The brokerage commissions paid by the Fund for the fiscal years ended
October 31, 1997 1996, and 1995 were $______, $18,186, and $4,730, respectively.
The brokerage concessions paid by the Fund for the fiscal years ended October
31, 1997, 1996 and 1995 were $____, $420, and $___, respectively.
PORTFOLIO TURNOVER. The portfolio turnover rate for the Fund is calculated
by dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases and sales of securities whose maturities at
the time of acquisition were one year or less) by the monthly average value of
securities in the Fund during the year. The portfolio turnover rates for the
fiscal years ended October 31, 1997 and 1996 were ______% and 44.33%,
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 returns (expressed as a percentage) for Class A
shares of the Fund for the periods noted were:
Average Annual Total Return For The
Periods Ended October 31, 1997
-----------------------------------
1 Year 5 Years 10 Years Inception
------ ------- -------- ---------
Class A Shares ____% -- -- ______%
(9/14/94)
Inception date appears in parentheses following the average annual total return
since inception. The foregoing chart assumes deduction of the maximum sales load
from the hypothetical initial investment at the time of purchase although no
sales load was applicable to Class A shares of its predecessor class until
January 16, 1998.
Average annual total returns (expressed as a percentage) for Class R
shares of the Fund for the periods noted were:
Average Annual Total Return For The
Periods Ended October 31, 1997
-----------------------------------
1 Year 5 Years 10 Years Inception
------ ------- -------- ---------
Class R Shares _____% -- -- _______%
9/02/94)
Inception date appears in parentheses following the average annual total return
since inception.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum offering
price in the case of Class A) per share with a hypothetical $1,000 payment made
B-30
<PAGE>
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 average annual total return figures for a
Class calculated in accordance with such formula assume that, in the case of
Class A, the maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or, in the case of Class B or Class C, the
maximum applicable CDSC has been paid upon redemption at the end of the period.
The Fund's total return for Class A shares (formerly called Investor
shares) for the period September 14, 1994 to October 31, 1997 was ___% (assuming
deduction of the maximum sales load from the hypothetical initial investment at
the time of purchase, although no sales load was applicable to Class A shares or
its predecessor class until January 16, 1998). Without giving effect to the
applicable front-end sales load, the total return for Class A was ___% for this
period. The Fund's total return for Class R shares (formerly called Restricted
shares) for the period September 2, 1994 to October 31, 1997 was ____%. Total
return is calculated by subtracting the amount of the Fund's net asset value
(maximum offering price in the case of Class A) per share at the beginning of a
stated period from the net asset value (maximum offering price in the case of
Class A) per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period and any
applicable CDSC), and dividing the result by the net asset value (maximum
offering price in the case of Class A) per share at the beginning of the period.
Total return also may be calculated based on the net asset value per share at
the beginning of the period instead of the maximum offering price per share at
the beginning of the period for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B or Class C shares. In such
cases, the calculation would not reflect the deduction of the sales load with
respect to Class A shares or any applicable CDSC with respect to Class B or C
shares, which, if reflected would reduce the performance quoted.
No performance information is provided for the Fund's Class B and Class C
shares which were offered beginning on January 16, 1998.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) 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; (ii) other groups of mutual
funds tracked by Lipper Analytical Services, Inc., 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; (iii)
the Consumer Price Index (a measure of inflation) to assess the real rate of
return from an investment in the Fund, or the Fund's performance against
inflation to the performance of other instruments against inflation; and (iv)
products managed by a universe of money managers with similar 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: (i)
biographical information relating to its portfolio manager, including honors and
awards received, and may refer to, or include commentary by the Fund's 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; (ii) statistical data or general discussions about the
growth and development of Dreyfus Retirement Services (in terms of new
customers, assets under management, market share, etc.) and its presence in the
defined contribution plan market; (iii) the approximate number of then current
Fund shareholders; (iv) references to the Fund's quantitative, disciplined
approach to stock market investing and the number of stocks analyzed by Dreyfus;
and (v) Lipper or Morningstar ratings and related analysis supporting the
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<PAGE>
ratings. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions or administrative and management costs and
expenses.
INFORMATION ABOUT THE FUND
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "GENERAL INFORMATION."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. The Fund is
currently one of eighteen portfolios of the Company. Fund shares have no
preemptive, or subscription or conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Company,
Dreyfus Transfer, Inc. 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, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month, and is reimbursed for certain
out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's investments.
Under a custody agreement with the Company, Mellon Bank holds the Fund's
portfolio securities and keeps all necessary accounts and records.
Dreyfus Transfer, Inc. and Mellon Bank, as custodian, have no part in
determining the investment policies of the Fund or which securities are to be
purchased or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second Floor,
Washington, D.C. 20036-1800, has passed upon the legality of the shares offered
by the Prospectus and this SAI.
__________________, 345 Park Avenue, New York, New York 10154 was
appointed by the Directors to serve as the Fund's independent auditors for the
year ending October 31, 1998, providing audit services including (1) examination
of the annual financial statements, (2) assistance, review and consultation in
connection with SEC filings 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, 1997,
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 accompanies this SAI. The financial
statements included in the Annual Report, and the Independent Auditors' Report
thereon contained therein, and related notes, are incorporated herein by
reference.
B-32
<PAGE>
APPENDIX
DESCRIPTION OF STANDARD & POOR'S, MOODY'S, FITCH AND DUFF RATINGS
STANDARD & POOR'S (S&P)
BOND RATINGS
- ------------
AAA An obligation rated `AAA' has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated
issues only in small degree. The obligors capacity to meet its
financial commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than obligations in higher rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
BBB An obligation rated `BBB' exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within the
major rating categories, except in the AAA (Prime Grade) category.
COMMERCIAL PAPER RATINGS
- ------------------------
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
Issues assigned an A rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the numbers 1, 2 and
3 to indicate the relative degree of safety.
A-1 This designation indicates that the degree of safety regarding timely
payment is strong.
Those issues determined to possess extremely strong safety characteristics
are denoted with a plus sign (+) designation.
MOODY'S
BOND RATINGS
- ------------
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
generally are referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
B-33
<PAGE>
generally are known as high-grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a ranking for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
COMMERCIAL PAPER RATINGS
- ------------------------
The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
FITCH INVESTORS SERVICES, L.P. ("FITCH")
SHORT-TERM RATINGS
- ------------------
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the existence
of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+ EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this
rating are regarded as having the strongest degree of assurance
for timely payment.
F-1 VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated `F-1+'.
B-34
<PAGE>
DUFF & PHELPS INC. ("DUFF")
COMMERCIAL PAPER RATINGS
- ------------------------
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor.
IBCA LIMITED/IBCA INC. ("IBCA")
COMMERCIAL PAPER RATINGS
- ------------------------
Short-term obligations, including commercial paper, rated A-1+ by
IBCA are obligations supported by the highest capacity for timely
repayment. Obligations rated A-1 have a strong capacity for timely
repayment.
B-35
<PAGE>
DREYFUS PREMIER MIDCAP STOCK FUND
PROSPECTUS JANUARY 16, 1998
Dreyfus Premier Midcap Stock Fund (the "Fund"), formerly called Dreyfus
Midcap Stock 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 seeks total investment returns (including capital
appreciation and income) which consistently outperform the Standard & Poor's 400
MidCap Index.
By this Prospectus, the Fund is offering four Classes of shares -- Class A,
Class B, Class C and Class R -- which are described herein. See "Alternative
Purchase Methods."
Each Class of shares may be purchased or redeemed by telephone using the
TELETRANSFER Privilege.
The Dreyfus Corporation serves as the Fund's investment manager. The
Dreyfus Corporation is referred to as "Dreyfus."
------------------------------
This Prospectus sets forth concisely information about the Fund that you
should know before investing. It should be read carefully before you invest and
retained for future reference.
The Statement of Additional Information, dated January 16, 1998, which may
be revised from time to time ("SAI"), 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 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611. 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. MUTUAL
FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS 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. (THE "DISTRIBUTOR").
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Expense Summary ............................................................. 3
Financial Highlights......................................................... 4
Alternative Purchase Methods................................................. 4
Description of the Fund...................................................... 5
Management of the Fund....................................................... 9
How to Buy Shares............................................................ 10
Shareholder Services......................................................... 15
How to Redeem Shares......................................................... 18
Additional Information About Purchases, Exchanges and Redemptions............ 22
Distribution Plans (Class A Plan and Class B and C Plans).................... 22
Dividends, Other Distributions and Taxes.................................... 23
Performance Information...................................................... 25
General Information.......................................................... 26
2
<PAGE>
<TABLE>
<CAPTION>
EXPENSE SUMMARY
<S> <C> <C> <C> <C>
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).... 5.75% None None None
Maximum Deferred Sales Charge Imposed
on Redemptions (as a percentage
of the amount subject to charge).......... None* 4.00% 1.00% None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net
assets)
Management Fees........................... 1.10% 1.10% 1.10% 1.10%
12b-1 Fees(1)............................. .25% 1.00% 1.00% None
Other Expenses(2)......................... .00% .00% .00% .00%
---- ---- ---- ----
Total Fund Operating Expenses............. 1.35% 2.10% 2.10% .00%
EXAMPLE
You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and
(2) except where noted, redemption
at the end of each time period:
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
1 YEAR..................................... $ $ / ** $ / $
3 YEARS.................................... $ $ / $ $
5 YEARS.................................... $ $ / $ $
10 YEARS................................... $ $ *** $ $
- ----------
* A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more. See "How to Buy Shares Class A
Shares."
** Assuming no redemption of shares.
*** Assumes conversion of Class B shares to Class A shares approximately six
years after the date of purchase and, therefore, reflects Class A expenses
for years seven through ten.
(1) See "Distribution Plans (Class A Plan and Class B and C Plans)" for a
description of the Fund's Distribution Plans and Service Plan for Class A,
Class B and Class C shares.
(2) Does not include fees and expenses of the non-interested Directors. The
investment adviser is contractually required to reduce its management fee in
an amount equal to the Fund's allocable portion of such fees and expenses,
which are estimated to be less than .01% of the Fund's net assets. (See
"Management of the Fund.")
</TABLE>
- --------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR 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
costs and expenses that investors will bear, directly or indirectly, the payment
of which will reduce investors' return on an annual basis. Other Expenses for
Class B and Class C shares are based on applicable amounts for Class A and Class
R shares for the Fund's last fiscal year. The information in the foregoing table
does not reflect any fee waivers or expense reimbursement arrangements that may
be in effect. Long-term investors in Class A, Class B or Class C shares could
pay more in 12b-1 fees than the economic equivalent of paying the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). Certain banks,
securities dealers and brokers ("Selected Dealers") or other financial
institutions (including Mellon Bank and its affiliates) (collectively, "Agents")
may charge their clients direct fees for effecting transactions in Fund shares;
3
<PAGE>
such fees are not reflected in the foregoing table. See "Management of the
Fund," "How to Buy Shares," "How to Redeem Shares" and "Distribution Plans
(Class A Plan and Class B and C Plans)."
The Company understands that Agents may charge fees to their clients who
are owners of the Fund's Class A, Class B, or Class C shares for various
services provided in connection with a client's account. These fees would be in
addition to any amounts received by an Agent under its Selling Agreement
("Agreement") with 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.
FINANCIAL HIGHLIGHTS
[Financial Highlights to be filed by amendment.]
ALTERNATIVE PURCHASE METHODS
The Fund offers you four methods of purchasing Fund shares; you may choose
the Class of shares that best suits your needs, given the amount of your
purchase, the length of time you expect to hold your shares and any other
relevant circumstances. Each Fund share represents an identical pro rata
interest in the Fund's investment portfolio. All Fund shares are sold on a
continuous basis.
Class A, Class B and Class C shares are sold primarily to clients of Agents
that have entered into Agreements with the Distributor. Class A shares of the
Fund were formerly called investor shares.
Class A shares are sold at net asset value per share plus a maximum initial
sales charge of 5.75% of the public offering price imposed at the time of
purchase. The initial sales charge may be reduced or waived for certain
purchases. See "How to Buy Shares - Class A Shares." These shares are subject to
an annual 12b-1 fee at the rate of .25 of 1% of the value of the average daily
net assets of Class A. See "Distribution Plans - Distribution Plan -- Class A
Shares."
Class B shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class B shares are subject to a maximum 4%
contingent deferred sales charge ("CDSC"), which is assessed only if you redeem
Class B shares within the first six years of their purchase. See "How to Buy
Shares - Class B Shares" and "How to Redeem Shares -- Contingent Deferred Sales
Charge -- Class B Shares." These shares also are subject to an annual
distribution fee at the rate of .75 of 1%, and an annual service fee at the rate
of .25 of 1%, of the value of the average daily net assets of Class B. See
"Distribution Plans - Distribution and Service Plans -- Class B and C Shares."
The distribution and service fees paid by Class B will cause such Class to have
a higher expense ratio and to pay lower dividends than Class A. Approximately
six years after the date of purchase (or, in the case of Class B shares of the
Fund acquired through exchange of Class B shares of another fund advised by
Dreyfus, the date of purchase of the original Class B shares of the fund
exchanged), Class B shares will automatically convert to Class A shares, based
on the relative net asset values for shares of each such Class. The converted
shares will no longer be subject to the service plan fee for Class B shares and
will be subject to the lower distribution fee of Class A shares. (Such
conversion is subject to suspension by the Board of Directors if adverse tax
consequences might result.) Class B shares that have been acquired through the
reinvestment of dividends and other distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class C shares are subject to a 1% CDSC, which
is assessed only if you redeem Class C shares within one year of their purchase.
See "How to Redeem Shares -- Contingent Deferred Sales Charge -- Class C
Shares." These shares also are subject to an annual distribution fee at the rate
of .75 of 1%, and an annual service fee at the rate of .25 of 1%, of the value
of the average daily net assets of Class C. See "Distribution Plans --
Distribution and Service Plans -- Class B and C Shares." The distribution and
service fees paid by Class C will cause such Class to have a higher expense
ratio and to pay lower dividends than Class A.
4
<PAGE>
Class R shares generally may not be purchased directly by individuals,
although eligible institutions may purchase Class R shares for accounts
maintained by individuals. Class R shares are sold at net asset value per share
primarily to bank trust departments and other financial service providers
(including Mellon Bank and its affiliates) ("Banks") acting on behalf of
customers having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. Class R shares
of the Fund were formerly called Restricted shares.
The decision as to which Class of shares is most beneficial to you depends
on the amount and the intended length of your investment. You should consider
whether, during the anticipated life of your investment in the Fund, the
accumulated distribution fee, service fee and CDSC, if any, on Class B or Class
C shares would be less than the accumulated distribution fee and initial sales
charge on Class A shares purchased at the same time, and to what extent, if any,
such differential would be offset by the return on Class A shares. Additionally,
investors qualifying for reduced initial sales charges who expect to maintain
their investment for an extended period of time might consider purchasing Class
A shares because the accumulated continuing distribution and service fees on
Class B or Class C shares may exceed the accumulated distribution fee and
initial sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any conversion
rights of the Classes in the context of your own investment time frame. For
example, while Class C shares have a shorter CDSC period than Class B shares,
Class C shares do not have a conversion feature and, therefore, are subject to
ongoing distribution and service fees. Thus, Class B shares may be more
attractive than Class C shares to investors with longer term investment
outlooks. Generally, Class A shares may be more appropriate for investors who
invest $1,000,000 or more in Fund shares, but will not be appropriate for
investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund seeks total investment returns (including capital appreciation and
income) which consistently outperform the Standard & Poor's 400 MidCap Index
("S&P MidCap"). The objective is not fundamental. There can be no assurance that
the Fund will meet its stated investment objective.
MANAGEMENT POLICIES
The Fund attempts to maintain a diversified holding in common stocks of
medium capitalization companies, firms with a market value between $200 million
and $5 billion. In the view of Dreyfus, many medium-sized companies are in
fast-growing industries, offer superior earnings growth potential, and are
characterized by strong balance sheets and high returns on equity. However,
because the companies in this market are smaller, prices of their stocks tend to
be more volatile than stocks of companies with large capitalizations. The Fund
may also hold investments in large and small capitalization companies, including
emerging and cyclical growth companies. Emerging and cyclical growth companies
are firms which, while they may not have a history of stable long-term growth,
are nonetheless expected to represent attractive investments.
Common stocks are selected for the Fund so that, in the aggregate, the
investment characteristics and risk profile of the Fund are similar to the S&P
MidCap. While it may maintain aggregate investment characteristics similar to
the S&P MidCap, however, the Fund seeks to invest in common stocks of companies
which in the aggregate will provide a higher total return than the S&P MidCap.
The Fund is not an index fund and its investments are not limited to securities
of issuers included in the S&P MidCap.
Dreyfus utilizes computer techniques to track, and, if possible, outperform
the S&P MidCap. To construct the Fund, Dreyfus employs valuation models designed
to identify common stocks of companies that are undervalued and should be
purchased and retained by the Fund. Undervalued securities are normally
characterized by a relatively low price to earnings ratio (using normalized
earnings), a low ratio of market price to book value, or underlying asset values
that Dreyfus feels are not fully reflected in the current market price. Once
undervalued common stocks are identified, Dreyfus' experienced investment
analysts construct a fund, using the valuation models, that in the aggregate
resembles the S&P MidCap, but is weighted toward the most attractive stocks. The
computerized ranking system incorporates information about the relevant criteria
5
<PAGE>
as of the most recent period for which data are available to the system. Once
ranked, the securities are categorized by the system under the headings "buy,"
"sell" or "hold." Dreyfus decides whether to buy, sell, or hold the security
based principally on the system's categorization, subject to modification based
on subsequently available or other specific relevant information about the
security.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in common stocks. The Fund may also invest in: (1) obligations issued
or guaranteed as to interest and principal by the U.S. Government, its agencies
and instrumentalities; (2) instruments of U.S. and foreign banks, including
certificates of deposit, banker's acceptances and time deposits, and may include
Eurodollar Certificates of Deposit ("ECDs"),Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"); (3) corporate obligations
rated at least Baa by Moody's Investors Service, Inc. ("Moody's"), or BBB by
Standard & Poor's rating services, or if unrated, of comparable quality as
determined by Dreyfus; (4) Eurodollar bonds and notes; (5) securities of foreign
companies evidenced by American Depository Receipts ("ADRs"); (6) repurchase
agreements; (7) when-issued transactions; and (8) commercial paper. The Fund may
also utilize securities lending and reverse repurchase agreements, and may enter
into options and futures contracts for hedging purposes, subject to certain
limitations.
Securities rated BBB by Standard & Poor's or Baa by Moody's are considered
by those rating agencies to be "investment grade" securities, although Moody's
considers securities rated Baa to have speculative characteristics. Further,
while bonds rated BBB by Standard & Poor's exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and principal for debt in
this category than debt in higher rated categories. The Fund will dispose in a
prudent and orderly fashion of bonds whose ratings drop below these minimum
ratings.
The S&P MidCap is composed of 400 domestic common stocks chosen by Standard
& Poor's for market size, liquidity and industry group representation. It is a
market-weighted index (stock price times shares outstanding), with each stock
affecting the S&P MidCap in proportion to its market value. The inclusion of a
stock in the S&P MidCap does not imply that Standard & Poor's believes the stock
to be an attractive or appropriate investment, nor is Standard & Poor's in any
way affiliated with the Fund. The S&P MidCap was created by Standard & Poor's to
capture the performance of the stocks that fall in the medium capitalization
range. The medium capitalization range of stocks was defined, at the original
time of screening, as between $200 million and $5 billion in market value. Any
middle-capitalization stocks already included in the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") were excluded from candidacy for the S&P
MidCap. After removal of the 500 stocks, the S&P MidCap candidate population was
reduced to 1,200 stocks. Standard & Poor's then subjected this smaller
population to a variety of screens and eventually the sample size was reduced to
the final 400 stocks. Standard & Poor's l screened the candidate population
using the following criteria: level of trading activity, or liquidity; market
value; industry group representation; and the level of controlling interest. A
limited percentage of the S&P MidCap may include Canadian securities. No other
foreign securities are eligible for inclusion.
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.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of Fund securities
is deemed by Dreyfus to be disadvantageous. Under a reverse repurchase
agreement, the Fund: (i) transfers possession of Fund securities to a bank or
6
<PAGE>
broker-dealer in return for cash in an amount equal to a percentage of the
securities' market value; and (ii) agrees to repurchase the securities at a
future date by repaying the cash with interest. Cash or liquid high-grade debt
securities held by the Fund equal in value to the repurchase price including any
accrued interest will be maintained in a segregated account while a reverse
repurchase agreement is in effect.
WHEN-ISSUED SECURITIES AND 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.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Fund may purchase
and sell various financial instruments, including financial futures contracts
(such as index futures contracts) and options (such as options on U.S. or
foreign securities or indices of such securities). These instruments may be
used, for example, to preserve a return or spread or to facilitate or substitute
for the sale or purchase of securities. 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.
The use of futures and options 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 instruments involved in the transaction; (2) possible
lack of a liquid secondary market for any particular 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 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 futures and options for hedging purposes (to adjust the
risk characteristics of the Fund's portfolio) and may use these instruments to
adjust the return characteristics of the Fund's portfolio of investments. This
can increase investment risk. If Dreyfus judges market conditions incorrectly or
employs a strategy that does not correlate well with the Fund's investments,
these techniques could result in a loss, regardless of whether the intent was to
reduce risk or increase 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.
CERTAIN PORTFOLIO SECURITIES
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in U.S.
dollar-denominated ADRs. ADRs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by foreign
companies. ADRs are traded in the United States on national securities exchanges
or in the over-the-counter market. Investment in securities of foreign issuers
presents certain risks. See "Foreign Securities."
7
<PAGE>
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, F-1 by
Fitch Investors Service LLP, Duff 1 by Duff & Phelps, Inc., or A1 by IBCA, Inc.
ECDS, ETDS, YANKEE CDS AND EURODOLLAR BONDS AND NOTES. The Fund may invest
in ECDs, ETDs, Yankee CDs, and Eurodollar bonds and notes. ECDs are U.S.
dollar-denominated certificates of deposit issued by foreign branches of
domestic banks. ETDs are U.S. dollar-denominated time deposits in a foreign
branch of a U.S. bank or a foreign bank. Yankee CDs are certificates of deposit
issued by a U.S. branch of a foreign bank denominated in U.S. dollars and held
in the United States. Eurodollar bonds and notes are obligations which pay
principal and interest in U.S. dollars held in banks outside the United States,
primarily in Europe. All of these obligations are subject to somewhat different
risks than are the obligations of domestic banks or issuers in the United
States. See "Foreign Securities."
FOREIGN SECURITIES. The Fund may purchase securities of foreign issuers and
may invest in obligations of foreign branches of domestic banks and domestic
branches of foreign banks. Investment in foreign securities presents certain
risks, including those resulting from fluctuations in currency exchange rates,
revaluation of currencies, 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.
ILLIQUID SECURITIES. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including time deposits and
repurchase agreements having maturities longer than seven days. Securities that
have readily available market quotations are not deemed illiquid for purposes of
this limitation (irrespective of any legal or contractual restrictions on
resale.) The Fund may invest in commercial obligations issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund
may also purchase securities that are not registered under the Securities Act of
1933, as amended, but that can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities"). Liquidity
determinations with respect to Section 4(2) paper and Rule 144A securities will
be made by the Board of Directors or by Dreyfus pursuant to guidelines
established by the Board of Directors. The Board or Dreyfus will consider
availability of reliable price information and other relevant information in
making such determinations. Section 4(2) paper is restricted as to disposition
under the federal securities laws, and generally is sold to institutional
investors, such as the Fund, that agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the
purchaser must be pursuant to registration or an exemption therefrom. Section
4(2) paper normally is resold to other institutional investors like the Fund
through or with the assistance of the issuer or investment dealers who make a
market in the Section 4(2) paper, thus providing liquidity. Rule 144A securities
generally must be sold to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the percentage limitation on
investment in illiquid securities. The ability to sell Rule 144A securities to
qualified institutional buyers is a recent development and it is not possible to
predict how this market will mature. Investing in Rule 144A securities could
have the effect of increasing the level of Fund illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
these securities from the Fund or other holder.
8
<PAGE>
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 "Illiquid
Securities."
US 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 Fannie Mae, Freddie Mac, or other instrumentalities.
PORTFOLIO TURNOVER. While securities are purchased for the Fund on the
basis of potential for capital appreciation and income, and not for short-term
trading profits, the Fund's turnover rate may exceed 100%. A portfolio turnover
rate of 100% would occur, for example, if all the securities held by the Fund
were replaced once in a period of one year. A higher rate of portfolio turnover
involves correspondingly greater brokerage commissions and other expenses that
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of short-term capital gains that, when distributed to the Fund's
shareholders, are taxable to them as ordinary income. Nevertheless, securities
transactions for the Fund will be based only upon investment considerations and
will not be limited by any other considerations when Dreyfus deems it
appropriate to make changes in the Fund's assets.
LIMITING INVESTMENT RISKS. The Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may not
be changed without the affirmative vote of the holders of a majority of the
Fund's outstanding shares. The SAI describes all of the Fund's fundamental and
non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures
of the Fund, unless otherwise specified, may be changed without shareholder
approval. If the Fund's investment objective, policies, restrictions, practices
or procedures change, shareholders should consider whether the Fund remains an
appropriate investment in light of the shareholder's then-current position and
needs.
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 October 31, 1997, Dreyfus managed or administered approximately $93
billion in assets for approximately 1.7 million investor accounts nationwide.
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 Company, 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
9
<PAGE>
accounting and transfer agency services to the Fund. As the Fund's investment
manager, Dreyfus manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions.
The Fund is managed by John O'Toole. Mr. O'Toole has managed the Fund since
its commencement of operations in November, 1993, and has been employed by
Dreyfus as portfolio manager of the Fund since October 17, 1994. Mr. O'Toole is
a Senior Vice President and a Portfolio Manager for Mellon Equity Associates. He
has been with Mellon Bank since 1979.
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Federal Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon is
among the twenty-five largest bank holding companies in the United States based
on total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed more than $299 billion in assets as of September 30, 1997,
including approximately $102 billion in proprietary mutual fund assets. As of
September 30, 1997, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for more
than $1.488 trillion in assets, including approximately $60 billion in mutual
fund assets.
Under the Investment Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 1.10% of the value of the Fund's
average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of non-interested Directors
(including counsel fees), Rule 12b-1 fees (if applicable) and extraordinary
expenses. Although Dreyfus does not pay for the fees and expenses of the
non-interested Directors (including counsel fees), Dreyfus is contractually
required to reduce its investment management fee by an amount equal to the
Fund's allocable share of such fees and expenses. From time to time, Dreyfus may
voluntarily waive a portion of the investment management fees payable by the
Fund, which would have the effect of lowering the expense ratio of the Fund and
increasing return to investors. For the fiscal year ended October 31, 1997, the
Fund paid Dreyfus 1.10% of its average daily net assets in investment management
fees, less fees and expenses of the non-interested Directors (including counsel
fees).
For the fiscal year ended October 31, 1997, total operating expenses
(excluding Rule 12b-1 fees) of the Fund were 1.10% of the average daily net
assets of each of Class A and Class R shares. Class B and Class C shares had not
commenced operations as of October 31, 1997.
In addition, Class A, Class B and Class C shares are subject to certain
Rule 12b-1 distribution and shareholder servicing fees. See "Distribution Plans
(Class A Plan and Class B and C Plans)."
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, 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.
10
<PAGE>
Dreyfus is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions that are affiliated with Dreyfus or Mellon
Bank or that have sold shares of the Fund, if Dreyfus believes that the quality
of the transaction and the commissions are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, polices 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., located at 60 State Street, Boston, Massachusetts 02109. The Distributor's
ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent"). Mellon Bank, located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, serves as the Fund's custodian.
HOW TO BUY SHARES
GENERAL - Class A shares, Class B shares and Class C shares may be
purchased only by clients of Agents, except that 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 may
purchase Class A shares directly through the Distributor. In addition, holders
of Investor shares of the Fund as of January 15, 1998 may continue to purchase
Class A shares of the Fund at net asset value per share. Subsequent purchases
may be sent directly to the Transfer Agent or your Agent.
Class R shares are sold primarily to Banks acting on behalf of customers
having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. In addition,
holders of Restricted shares of the Fund as of January 15, 1998 may continue to
purchase Class R shares of the Fund whether or not they would otherwise be
eligible to do so. Class R shares may be purchased for a retirement plan only by
a custodian, trustee, investment manager or other entity authorized to act on
behalf of such a plan. Institutions effecting transactions in Class R shares for
the accounts of their clients may charge their clients direct fees in connection
with such transactions.
When purchasing Fund shares, you must specify which Class is being
purchased. Share certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
Agents may receive different levels of compensation for selling different
Classes of shares. Management understands that some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory authority, may
charge their clients direct fees which would be in addition to any amounts which
might be received under the Distribution and Service Plans. Each Agent has
agreed to transmit to its clients a schedule of such fees. You should consult
your Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments must be at
least $100. The minimum initial investment is $750 for Dreyfus-sponsored Keogh
Plans, IRAs (including regular IRAs, spousal IRAs for a non working spouse, Roth
IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum on subsequent
purchases. The initial investment must be accompanied by the Fund's Account
Application. The Fund reserves the right to offer Fund shares without regard to
minimum purchase requirements to IRAs and 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.
11
<PAGE>
The Internal Revenue Code of 1986, as amended (the "Code") imposes various
limitations on the amount that may be contributed to certain qualified or
non-qualified employee benefit plans or other programs, including pension,
profit-sharing and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entities or state and local government
("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 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 which are mailed should be sent to Dreyfus Premier
Midcap Stock Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. If you
are opening a new account, please enclose 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. For Dreyfus retirement plan accounts, payments which are mailed 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.
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
Fund's DDA #______/Dreyfus Premier Midcap Stock Fund and applicable Class, for
purchase of Fund shares in your name. 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, and
must indicate the Class of shares being purchased. If your initial purchase of
Fund shares is by wire, please call 1-800-554-4611 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the 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.
Fund shares also may be purchased through Dreyfus-AUTOMATIC Asset
Builder(REGISTERED), Dreyfus Payroll Savings Plan and the Government Direct
Deposit Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
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 your Fund
account number PRECEDED BY THE DIGITS "[XXXX]" for Class A shares, "[XXXX]" for
Class B shares, "[XXXX]" for Class C shares, and "[XXXX]" for Class R shares.
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<PAGE>
The Distributor may pay dealers a fee of up to 0.5% of the amount invested
through such dealers in Fund shares by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs or (ii) such
plan's or program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds in the
Dreyfus Family of Funds then held by Eligible Benefit Plans will be aggregated
to determine the fee payable. 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 shares of each Class of the Fund is
computed by adding, with respect to such Class of shares, the value of the
Fund's investments, cash, and other assets attributable to that Class, deducting
liabilities of the Class and dividing the result by the 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:
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a stock exchange, are valued at the latest sale price. If no sale is
reported, the mean of the latest bid and asked prices is used. Securities traded
over-the-counter are priced at the mean of the latest bid and asked prices but
will be valued at the last sale price if required by regulations of the SEC.
When market quotations are not readily available, securities and other assets
are valued at a fair value as determined in good faith in accordance with
procedures established by the Board of Directors.
Bonds are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Directors.
NAV is determined on each day that the New York Stock Exchange ("NYSE") is
open (a "business day"), as of the close of trading on the floor of the NYSE
(usually 4 p.m. New York time). For purposes of determining NAV, options and
futures contracts will be valued 15 minutes after the close of trading on the
floor of the NYSE. Orders received by the Transfer Agent or other agent in
proper form before the close of trading on the floor of the NYSE are effective
on, and will receive the public offering price determined on, that day (except
investments made by electronic funds transfer, which are effective two business
days after your call). Except in the case of certain orders transmitted by
dealers as described in the following paragraph, orders received after such
close of trading are effective on, and receive the public offering 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 a business day and transmitted to the
Distributor or its designee by the close of its business day (normally 5:15
p.m., New York time) will be based on the public offering price per share
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, the orders will be based on the next determined public offering
price. It is the dealers' responsibility to transmit orders so that they will be
received by the Distributor or its designee before the close of its business
day. For certain institutions that have entered into Agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be cancelled and the institution could
be held liable for resulting fees and/or losses.
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<PAGE>
CLASS A SHARES -- The public offering price for Class A shares is the NAV
of that Class, plus, except for shareholders beneficially owning Investor shares
of the Fund on January 15, 1998, a sales load as shown below:
<TABLE>
<CAPTION>
TOTAL SALES LOAD
-------------------------------
<S> <C> <C> <C>
DEALERS'
AS A % OF AS A % OF REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
- --------------------- -------------- --------------- --------------
Less than $50,000................. 5.75 6.10 5.00
$50,000 to less than $100,000..... 4.50 4.70 3.75
$100,000 to less than $250,000.... 3.50 3.60 2.75
$250,000 to less than $500,000.... 2.50 2.60 2.25
$500,000 to less than $1,000,000.. 2.00 2.00 1.75
$1,000,000 or more................ -0- -0- -0-
</TABLE>
Holders of Investor shares of the Fund as of January 15, 1998 may continue
to purchase Class A shares of the Fund at NAV. However, investments by such
holders in OTHER funds advised by Dreyfus will be subject to any applicable
front-end sales load.
There is no initial sale charge on purchases of $1,000,000 or more of Class
A shares. However, if you purchase Class A shares without an initial sales
charge as part of an investment of at least $1,000,000 and redeem all or a
portion of those shares within one year of purchase, a CDSC of 1.00% will be
assessed at the time of redemption. The Distributor may pay Agents an amount up
to 1% of the NAV of Class A shares purchased by their clients that are subject
to a CDSC. The terms contained in the section of the Prospectus entitled "How to
Redeem Shares--Contingent Deferred Sales Charge--Class B Shares" (other than the
amount of the CDSC and time periods) and "How to Redeem Shares--Waiver of CDSC"
are applicable to the Class A shares subject to a CDSC. Letter of Intent and
Right of Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to sales of Fund shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children at NAV, provided that they have
furnished the Distributor with such information as it may request from time to
time in order to verify eligibility for this privilege. This privilege also
applies to full-time employees of financial institutions affiliated with NASD
member firms whose full-time employees are eligible to purchase Class A shares
at NAV. In addition, Class A shares are offered at NAV to full-time or part-time
employees of Dreyfus or any of its affiliates or subsidiaries, directors of
Dreyfus, Board members of a fund advised by Dreyfus, including members of the
Company's Board, or the spouse or minor child of any of the foregoing.
Class A shares are offered at NAV without a sales load to employees
participating in Eligible Benefit Plans. Class A shares also may be purchased
(including by exchange) at NAV without a sales load for Dreyfus-sponsored IRA
"Rollover Accounts" with the distribution proceeds from a qualified retirement
plan or a Dreyfus-sponsored 403(b)(7) plan, provided that, at the time of such
distribution, such qualified retirement plan or Dreyfus-sponsored 403(b)(7) plan
(a) met the requirements of an Eligible Benefit Plan and all or a portion of
such plan's assets were invested in funds in the Dreyfus Premier Family of Funds
or the Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans, or (b) invested all of its assets in certain funds in
the Dreyfus Premier Family of Funds or the Dreyfus Family of Funds or certain
other products made available by the Distributor to such plans.
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<PAGE>
Class A shares may be purchased at NAV through certain broker-dealers and
other financial institutions which have entered into an agreement with the
Distributor, which includes a requirement that such shares be sold for the
benefit of clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, through a broker-dealer or other financial institution with the
proceeds from the redemption of shares of a registered open-end management
investment company not managed by Dreyfus or its affiliates. The purchase of
Class A shares of the Fund must be made within 60 days of such redemption and
the shareholder must have either (i) paid an initial sales charge or a CDSC or
(ii) been obligated to pay at any time during the holding period, but did not
actually pay on redemption, a deferred sales charge with respect to such
redeemed shares.
Class A shares also may be purchased at NAV, subject to appropriate
documentation, by (i) qualified separate accounts maintained by an insurance
company pursuant to the laws of any State or territory of the United States,
(ii) a State, county or city or instrumentality thereof, (iii) a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $50,000 or
more in Fund shares, and (iv) a charitable remainder trust (as defined in
Section 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but will remain the
same for all dealers. The Distributor, at its own expense, may provide
additional promotional incentives to dealers that sell shares of funds advised
by Dreyfus which are sold with a sales load, such as Class A shares. In some
instances, these incentives may be offered only to certain dealers who have sold
or may sell significant amounts of such shares. Dealers receive a larger
percentage of the sales load from the Distributor than they receive for selling
most other funds.
CLASS B SHARES -- The public offering price for Class B shares is the NAV
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares as described
under "How to Redeem Shares." The Distributor compensates certain Agents for
selling Class B and Class C shares at the time of purchase from the
Distributor's own assets. The proceeds of the CDSC and the distribution fee, in
part, are used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C shares is the NAV
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on redemptions of Class C shares made within the first
year of purchase. See "Class B Shares" above and "How to Redeem Shares."
CLASS R SHARES - The public offering price for Class R shares is the NAV of
that Class.
RIGHT OF ACCUMULATION - CLASS A SHARES -- Reduced sales loads apply to any
purchase of Class A shares, shares of other funds in the Dreyfus Premier Family
of Funds, shares of certain other funds advised by Dreyfus which are sold with a
sales load and shares acquired by a previous exchange of such shares
(hereinafter referred to as "Eligible Funds"), by you and any related
"purchaser" as defined in the SAI, where the aggregate investment, including
such purchase, is $50,000 or more. If, for example, you have previously
purchased and still hold Class A shares of the Fund, or shares of any other
Eligible Fund or combination thereof, with an aggregate current market value of
$40,000 and subsequently purchase Class A shares of the Fund or shares of an
Eligible Fund having a current value of $20,000, the sales load applicable to
the subsequent purchase would be reduced to 4.50% of the offering price. All
present holdings of Eligible Funds may be combined to determine the current
offering price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase.
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To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify the Distributor if orders are made by wire, or the Transfer
Agent if orders are made by mail. The reduced sales load is subject to
confirmation of your holdings through a check of appropriate records.
TELETRANSFER PRIVILEGE -- 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 Account Application or have filed
a Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
your Fund account. Only a bank account maintained in a domestic financial
institution that is an ACH member may be so designated. The Fund may modify or
terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER purchase of shares by calling 1-800-554-4611 or, if you are calling
from overseas, call 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
Clients of certain Agents may purchase, in exchange for shares of a Class,
shares of the same Class of certain other funds managed 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. You also
may exchange your Fund shares that are subject to a CDSC for shares of Dreyfus
Worldwide Dollar Money Market Fund, Inc. The shares so purchased will be held in
a special account created solely for this purpose ("Exchange Account").
Exchanges of shares from an Exchange Account only can be made into certain other
funds managed or administered by Dreyfus. No CDSC is charged when an investor
exchanges into an Exchange Account; however, the applicable CDSC will be imposed
when shares are redeemed from an Exchange Account or other applicable Fund
account. Upon redemption, the applicable CDSC will be calculated without regard
to the time such shares were held in an Exchange Account. See "How to Redeem
Shares." Redemption proceeds for Exchange Account shares are paid by Federal
wire or check only. Exchange Account shares also are eligible for the
Auto-Exchange Privilege, Dividend Sweep and the Automatic Withdrawal Plan. To
use this service, you should consult your Agent or call 1-800-554-4611 to
determine if it is available and whether any conditions are imposed on its use.
WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES MAY BE MADE
ONLY BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND.
To request an exchange, you or your Agent acting on your behalf must give
exchange instructions to the Transfer Agent in writing or by telephone. Before
any exchange, you must obtain and should review a copy of the current prospectus
of the fund into which the exchange is being made. Prospectuses may be obtained
by calling 1-800-554-4611. 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 applicable "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 1-800-554-4611, or by oral request from any of the
authorized signatories on the account, by calling 1-800-554-4611. If you
previously have established the Telephone Exchange Privilege, you may telephone
exchange instructions (including over The Dreyfus Touch(REGISTERED) automated
telephone system) by calling 1-800-554-4611. If you are calling from overseas,
call 516-794-5452. See "How to Redeem Shares - Procedures." Upon an exchange
16
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into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the fund
into which the exchange is made: Telephone Exchange Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, TELETRANSFER Privilege and the
dividend and distributions payment option (except for Dividend Sweep) selected
by the investor.
Shares will be exchanged at the next determined NAV; however, a sales load
may be charged with respect to exchanges of Class A shares into funds sold with
a sales load. No CDSC will be imposed on Class B or Class C shares at the time
of an exchange; however, Class B or Class C shares acquired through an exchange
will be subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase of the
Class B or Class C shares exchanged. If you are exchanging Class A shares into a
fund that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the shares 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 distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your Agent must
notify the Distributor. Any such qualification is subject to confirmation of
your holdings through a check of appropriate records. See "Shareholder Services"
in the SAI. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance with
the rules promulgated by the SEC. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may be
modified or terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result in, a
taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a semi-monthly,
monthly, quarterly or annual basis), in exchange for shares of the Fund, in
shares of the same Class of other funds in the Dreyfus Premier Family of Funds
or certain other funds in the Dreyfus Family of Funds of which you are a
shareholder. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS, EXCHANGES
PURSUANT TO THE AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S
RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN
ACCOUNT IN ANOTHER FUND. The amount you designate, which can be expressed either
in terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current NAV;
however, a sales load may be charged with respect to exchanges of Class A shares
into funds sold with a sales load. No CDSC will be imposed on Class B or Class C
shares at the time of an exchange; however, Class B or Class C shares acquired
through an exchange will be subject on redemption to the higher CDSC applicable
to the exchanged or acquired shares. The CDSC applicable on redemption of the
acquired Class B or Class C shares will be calculated from the date of the
initial purchase of the Class B or Class C shares exchanged. See "Shareholder
Services" in the SAI. The right to exercise this Privilege may be modified or
canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to
Dreyfus Premier Midcap Stock Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. The Fund may charge a service fee for the use of this Privilege. No
such fee currently is contemplated. The exchange of shares of one fund for
shares of another is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder, and therefore, an exchanging
shareholder may realize, or an exchange on behalf of a Retirement Plan which is
not tax exempt may result in, a taxable gain or loss. For more information
concerning this Privilege and the funds in the Dreyfus Premier Family of Funds
or the Dreyfus Family of Funds eligible to participate in this Privilege, or to
obtain an Auto-Exchange Authorization Form, please call toll free
1-800-554-4611.
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DREYFUS-AUTOMATIC ASSET BUILDER(REGISTERED)
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the bank
account designated by you. At your option, the bank account designated by you
will be debited in the specified amount, and Fund shares will be purchased, once
a month, on either the first or fifteenth day, or twice a month, on both days.
Only an account maintained at a domestic financial institution which is an ACH
member may be so designated. To establish a Dreyfus-AUTOMATIC Asset Builder
account, you must file an authorization form with the Transfer Agent. You may
obtain the necessary authorization form by calling 1-800-554-4611. You may
cancel your participation in this Privilege or change the amount of purchase at
any time by mailing written notification to Dreyfus Premier Midcap Stock Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends or dividends
and capital gain distributions, if any, paid by the Fund in shares of the same
Class of another fund in the Dreyfus Premier Family of Funds or certain other
funds in the Dreyfus Family of Funds of which you are a shareholder. 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. If you are investing in a fund that charges a CDSC, the shares
purchased will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the SAI. Dividend ACH permits
you to transfer electronically dividends or dividends and capital gain
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an ACH member
may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to request a Dividend
Options Form, please call toll free 1-800-554-4611. You may cancel these
privileges by mailing written notification to Dreyfus Premier Midcap Stock Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a new fund after
cancellation, you must submit a new Dividend Options Form. Enrollment in or
cancellation of these privileges is effective three business days following
receipt. These privileges are available only for existing accounts and may not
be used to open new accounts. Minimum subsequent investments do not apply for
Dividend Sweep. The Fund may modify or terminate these privileges at any time or
charge a service fee. No such fee currently is contemplated. Shares held under
Keogh Plans, IRAs or other retirement plans are not eligible for Dividend Sweep.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase Fund shares
(minimum of $100 and maximum of $50,000 per transaction) by having Federal
salary, Social Security, or certain veterans', military or other payments from
the Federal government automatically deposited into your Fund account. You may
deposit as much of such payments as you elect. You should consider whether
Direct Deposit of your entire payment into a fund with fluctuating NAV, such as
the Fund, may be appropriate for you. To enroll in Government Direct Deposit,
you must file with the Transfer Agent a completed Direct Deposit Sign-Up Form
for each type of payment that you desire to include in this Privilege. The
appropriate form may be obtained from your Agent or by calling 1-800-554-4611.
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
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account, you must file an authorization form with your employer's payroll
department. Your employer must complete the reverse side of the form and return
it to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island
02940-9671. You may obtain the necessary authorization form by calling
1-800-554-4611. 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, your Agent, Dreyfus, the
Fund, the Transfer Agent or any other person, to arrange for transactions under
the Dreyfus Payroll Savings Plan. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans are
not eligible for this Privilege.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly basis
if you have a $5,000 minimum account. An Automatic Withdrawal Plan may be
established by filing an Automatic Withdrawal Plan application with the Transfer
Agent or by oral request from any of the authorized signatories on the account
by calling 1-800-554-4611.
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. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed on an annual basis 12% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 12% of the initial account
value. Class C shares, and Class A shares to which a CDSC applies, that are
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to any
applicable CDSC. Purchases of additional Class A shares where the sales load is
imposed concurrently with withdrawals of Class A shares generally are
undesirable.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans, including
Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-working
spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs), 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 1-800-554-4611; for SEP-IRAs, 401(k) Salary
Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, available by calling 1-800-554-4611,
you become eligible for the reduced sales load applicable to the total number of
Eligible Fund shares purchased in a 13-month period pursuant to the terms and
conditions set forth in the Letter of Intent. A minimum initial purchase of
$5,000 is required. To compute the applicable sales load, the offering price of
shares you hold (on the date of submission of the Letter of Intent) in any
Eligible Fund that may be used toward "Right of Accumulation" benefits described
above may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
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load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares held in escrow to realize the difference.
Signing a Letter of Intent does not bind you to purchase, or the Fund to sell,
the full amount indicated at the sales load in effect at the time of signing,
but you must complete the intended purchase to obtain the reduced sales load. At
the time you purchase Class A shares, you must indicate your intention to do so
under a Letter of Intent. Purchases pursuant to a Letter of Intent will be made
at the then-current NAV plus the applicable sales load in effect at the time
such Letter of Intent was executed.
HOW TO REDEEM SHARES
GENERAL -- You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When a
request is received in proper form, the Fund will redeem the shares at the next
determined NAV as described below. If you hold Fund shares of more than one
Class, any request for redemption must specify the Class of shares being
redeemed. If you fail to specify the Class of shares to be redeemed or if you
own fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further instructions
from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
NAV.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE PURCHASED FUND
SHARES BY CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC
ASSET BUILDER(REGISTERED) AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST
TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR
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 TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
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 your account's net asset value is $500 or
less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES. A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current NAV of your Class B shares to an amount which is lower than the dollar
amount of all payments by you for the purchase of Class B shares of the Fund
held by you at the time of redemption. No CDSC will be imposed to the extent
that the NAV of the Class B shares redeemed does not exceed (i) the current NAV
of Class B shares acquired through reinvestment of dividends or other
distributions, plus (ii) increases in the NAV of Class B shares above the dollar
amount of all your payments for the purchase of Class B shares of the Fund held
by you at the time of redemption.
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If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Fund's performance, a CDSC may be applied
to the then-current NAV rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
The following table sets forth the rates of the CDSC for Class B shares:
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
- ---------------- ----------------------
First.............................................. 4.00
Second............................................. 4.00
Third.............................................. 3.00
Fourth............................................. 3.00
Fifth.............................................. 2.00
Sixth.............................................. 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV of Class B shares above the
total amount of payments for the purchase of Class B shares made during the
preceding six years; then of amounts representing the cost of shares purchased
six years prior to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the applicable six-year
period.
For example, assume an investor purchased 100 shares at $10 per share for a
cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of his or her investment. Assuming at the time
of the redemption the NAV has appreciated to $12 per share, the value of the
investor's shares would be $1,260 (105 shares at $12 per share). The CDSC would
not be applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4% (the applicable rate
in the second year after purchase) for a total CDSC of $9.60.
For purposes of determining the applicable CDSC payable with respect to
redemption of Class B shares of the Fund where such shares were acquired through
exchange of Class B shares of another fund advised by Dreyfus, the year since
purchase payment was made is based on the date of purchase of the original Class
B shares of the fund exchanged.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C SHARES. A CDSC of 1% payable to
the Distributor is imposed on any redemption of Class C shares within one year
of the date of purchase. The basis for calculating the payment of any such CDSC
will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC. The CDSC will be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
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tax-deferred retirement plan or upon attaining age 70-1/2 in the case of an IRA
or Keogh plan or custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions pursuant to the Automatic Withdrawal Plan, as described under
"Shareholder Services--Automatic Withdrawal Plan" above. If the Company's Board
determines to discontinue the waiver of the CDSC, the disclosure in the
Prospectus will be revised appropriately. Any Fund shares subject to a CDSC
which were purchased prior to the termination of such waiver will have the CDSC
waived as provided in the Prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your entitlement.
PROCEDURES -- You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611. You also may redeem shares
through the Wire Redemption Privilege or the Dreyfus TELETRANSFER PRIVILEGE if
you have checked the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. If you are a client of a Selected Dealer, you may redeem shares
through the Selected Dealer. 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. 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 any redemption privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs, or other retirement plans, and shares for
which certificates have been issued, are not eligible for the Wire Redemption,
Telephone Redemption or TELETRANSFER Privilege.
The Telephone Redemption Privilege or telephone exchange privilege
authorizes the Transfer Agent to act on telephone instructions (including over
The Dreyfus Touch(REGISTERED) automated telephone system) 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 exchange of Fund shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other redemption procedures
may result in your redemption request being processed at a later time than it
would have been if telephone redemption had been used. During the delay, the
Fund's NAV may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Dreyfus Premier Midcap Stock Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally will
be accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. If you have any
questions with respect to signature-guarantees, please contact your Agent or
call the telephone number listed on the cover of this Prospectus.
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<PAGE>
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, telephone or letter
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. 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 1-800-554-4611 or, if calling
from overseas, 516-794-5452. The Fund's SAI sets forth instructions for
transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE. You may request by telephone that
redemption proceeds (maximum $ 150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-554-4611 or, if calling from overseas, 516-794-5452. The Telephone
Redemption Privilege is granted automatically unless you refuse it.
TELETRANSFER PRIVILEGE - You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your bank account. 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. Holders of jointly registered Fund or
bank accounts may redeem through the TELETRANSFER Privilege for transfer to
their bank account only up to $250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of shares by calling 1-800-554-4611 or, if calling from
overseas, 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by the
Transfer Agent prior to the close of trading on the floor of the NYSE (currently
4:00 p.m., New York time), the redemption request will be effective on that day.
If a redemption request is received by the Transfer Agent after the close of
trading on the floor of the NYSE, the redemption request will be effective on
the next business day. It is the responsibility of the Selected Dealer to
transmit a request so that it is received in a timely manner. The proceeds of
the redemption are credited to your account with the Selected Dealer. See "How
to Buy Shares" for a discussion of additional conditions or fees that may be
imposed upon redemption.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by the
dealer by the close of trading on the floor of the NYSE on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the NYSE on that day.
Otherwise, the shares will be redeemed at the next determined NAV. It is the
responsibility of the Selected Dealer to transmit orders on a timely basis. The
Selected Dealer may charge the shareholder a fee for executing the order. This
repurchase arrangement is discretionary and may be withdrawn at any time.
REINVESTMENT PRIVILEGE -- Upon written request, you may reinvest up to the
number of Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing NAV without a sales load, or reinstate your
account for the purpose of exercising Fund Exchanges. Upon reinvestment, with
respect to Class B shares, or Class A shares if such shares were subject to a
CDSC, the shareholder's account will be credited with an amount equal to the
CDSC previously paid upon redemption of the Class A or Class B shares
reinvested. The Reinvestment Privilege may be exercised only once.
23
<PAGE>
ADDITIONAL INFORMATION ABOUT PURCHASES, EXCHANGES AND REDEMPTIONS
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is engaged in excessive trading, the Fund, with or
without prior notice, may temporarily or permanently terminate the availability
of Fund Exchanges, or reject in whole or part any purchase or exchange request,
with respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year (for
calendar year 1998, beginning on January 15th) or who makes exchanges that
appear to coincide with a market-timing strategy may be deemed to be engaged in
excessive trading. Accounts under common ownership or control will be considered
as one account for purposes of determining a pattern of excessive trading. In
addition, the Fund may refuse or restrict purchase or exchange requests by any
person or group if, in the judgment of the Fund's management, the Fund would be
unable to invest the money effectively in accordance with its investment
objective and policies or could otherwise be adversely affected or if the Fund
receives or anticipates receiving simultaneous orders that may significantly
affect the Fund (E.G., amounts equal to 1% or more of the Fund's total assets).
If an exchange request is refused, the Fund will take no other action with
respect to the shares until it receives further instructions from the investor.
The Fund may delay forwarding redemption proceeds for up to seven days if the
investor redeeming shares is engaged in excessive trading or if the amount of
the redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on excessive
trading applies to investors who invest in the Fund directly or through
financial intermediaries, but does not apply to the Auto-Exchange Privilege, to
any automatic investment or withdrawal privilege described herein, or to non-IRA
retirement plan accounts.
During times of drastic economic or market conditions, the Fund may suspend
the Exchange Privilege temporarily without notice and treat exchange requests
based on their separate components - redemption orders with a simultaneous
request to purchase the other fund's shares. In such case, the redemption
request would be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.
DISTRIBUTION PLANS
(CLASS A PLAN AND CLASS B AND C PLANS)
Class A shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1"). Class B and Class C shares are subject
to a Distribution Plan and a Service Plan, each adopted pursuant to Rule 12b-1.
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. Potential investors should read this Prospectus in light of the
terms governing Agreements with their Agents. The fees payable under the
Distribution and Service Plans are payable without regard to actual expenses
incurred. The Fund and the Distributor may suspend or reduce payments under the
Distribution and Service Plans at any time, and payments are subject to the
continuation of the Fund's Plan and the Agreements described above. From time to
time, the Agents, the Distributor and the Fund may voluntarily agree to reduce
the maximum fees payable under the Plans. See the SAI for more details on the
Distribution and Service Plans.
DISTRIBUTION PLAN - CLASS A SHARES - The Class A shares of the Fund bear
some of the cost of selling those shares under the Distribution Plan (the
"Plan"). The Plan allows the Fund to spend annually up to 0.25% of its average
daily net assets attributable to Class A shares to compensate Dreyfus Service
Corporation, an affiliate of Dreyfus, for shareholder servicing activities and
the Distributor for shareholder servicing activities and expenses primarily
intended to result in the sale of Class A shares of the Fund. The Plan allows
the Distributor to make payments from the Rule 12b-1 fees it collects from the
Fund to compensate Agents that have entered into Agreements with the
Distributor. Under the Agreements, the Agents are obligated to provide
distribution related services with regard to the Fund and/or shareholder
services to the Agent's clients that own Class A shares of the Fund.
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<PAGE>
DISTRIBUTION AND SERVICE PLANS--CLASS B AND C SHARES-- Under a Distribution
Plan adopted pursuant to Rule 12b-1, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an aggregate annual rate
of .75 of 1% of the value of the average daily net assets of Class B and Class
C. Under a Service Plan adopted pursuant to Rule 12b-1, the Fund pays Dreyfus
Service Corporation or the Distributor for the provision of certain services to
the holders of Class B and Class C shares a fee at the annual rate of .25 of 1%
of the value of the average daily net assets of Class B and Class C. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and providing services related to the
maintenance of such shareholder accounts. With regard to such services, each
Agent is required to disclose to its clients any compensation payable to it by
the Fund and any other compensation payable by its clients in connection with
the investment of their assets in Class B and Class C shares. The Distributor
may pay one or more Agents in respect of services for these Classes of shares.
The Distributor determines the amounts, if any, to be paid to Agents under the
Service Plan and the basis on which such payments are made.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares and pays dividends from its net investment income, if
any, four times yearly, and distributes its net realized capital 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 capital gains unless all capital loss
carryovers, if any, have been utilized or have expired. All expenses are accrued
daily and deducted before declaration of dividends to investors. Dividends and
other distributions paid by each Class are 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 are borne exclusively by that Class.
Class B and Class C shares will receive lower per share dividends than Class A
shares, which will in turn receive lower per share dividends than Class R
shares, because of the higher expenses borne by the relevant Classes. See
"Expense Summary."
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 at NAV, or to
reinvest both dividends and other distributions in additional Fund shares at
NAV; dividends and other distributions paid to qualified retirement plans are
reinvested automatically in additional Fund shares at NAV.
It is expected that the Fund will continue to qualify for treatment as a
"regulated investment company" under the Code so long as such qualification is
in the best interests of its shareholders. Such qualification will relieve the
Fund of any liability for Federal income tax to the extent its earnings and
realized gains 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 to the extent of the Fund's earnings and profits, whether received in
cash or reinvested in additional Fund shares. Distributions from net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
are taxable to such shareholders as long-term capital gains regardless of how
long the shareholders have held their Fund shares and whether such distributions
are received in cash or reinvested in additional Fund shares. 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 are subject to U.S. withholding tax at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax treaty.
Distributions from net capital gain paid by the Fund to a non-resident foreign
investor, as well as the proceeds of any redemptions by such an investor,
regardless of the extent to which gain or loss may be realized, generally are
not subject to U.S. withholding tax. However, such distributions may be subject
to backup withholding, as described below, unless the foreign investor certifies
his or her non-U.S. residency status.
25
<PAGE>
Notice as to the tax status of your dividends and other distributions will
be mailed to you annually. You also will receive periodic summaries of your
account that will include information as to dividends and distributions from net
capital gain, if any, paid during the year. The annual tax notice and periodic
account summaries you receive designate the portions of capital gain
distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act of
1997 ("Tax Act"), which applies to non-corporate taxpayers' net capital gain on
securities and other capital assets held for more than 18 months, and (2) the
28% maximum tax rate, applicable to such gain on capital assets held for more
than one year and up to 18 months (which, prior to enactment of the Tax Act,
applied to all such gain on capital assets held for more than one year).
The Code provides for the "carryover" of some or all of the sales load
imposed on Class A shares if (1) a shareholder redeems those shares or exchanges
those shares for shares of another fund advised or administered by Dreyfus
within 90 days of purchase and (2) in the case of a redemption, acquires other
Fund Class A shares through exercise of the Reinvestment Privilege or, in the
case of an exchange, such other fund reduces or eliminates its otherwise
applicable sales load for the purpose of the exchange. In these cases, the
amount of the sales load charged on the purchase of the original Class A shares,
up to the amount of the reduction of the sales load pursuant to the Reinvestment
Privilege or on the exchange, as the case may be, is not included in the basis
of such shares for purposes of computing gain or loss on the redemption or the
exchange and instead is added to the basis of the shares acquired pursuant to
the Reinvestment Privilege or the exchange.
Dividends and other distributions paid by the Fund to qualified retirement
plans ordinarily will not be subject to taxation until the proceeds are
distributed from the retirement plans. The Fund will not report to the IRS
distributions paid to such plans. Generally, distributions from qualified
retirement plans, except those representing returns of non-deductible
contributions thereto, will be taxable as ordinary income and, if made prior to
the time the participant reaches age 59-1/2, generally will be subject to an
additional tax equal to 10% of the taxable portion of the distribution. If the
distribution from such a retirement plan (other than certain governmental or
church plans) for any taxable year following the year in which the participant
reaches age 70-1/2 is less than the "minimum required distribution" for that
taxable year, an excise tax equal to 50% of the deficiency may be imposed by the
IRS. The administrator, trustee or custodian of such a retirement plan will be
responsible for reporting distributions from such plans to the IRS. Moreover,
certain contributions to a qualified retirement plan in excess of the amounts
permitted by law may be subject to an excise tax. If a distributee of an
"eligible rollover distribution" from a qualified retirement plan does not elect
to have the eligible rollover distribution paid directly from the plan to an
eligible retirement plan in a "direct rollover," the eligible rollover
distribution is subject to a 20% income tax withholding.
The Fund must withhold and remit to the U.S. Treasury ("backup
withholding") 31% of dividends, capital gain distributions and redemption
proceeds, regardless of the extent to which gain or loss may be realized, paid
to an individual or certain other non-corporate shareholders if such shareholder
fails to certify that the TIN furnished to the Fund is correct. Backup
withholding at that rate also is required from dividends and capital gain
distributions payable to such a shareholder if (1) that shareholder fails to
certify that he or she has not received notice from the IRS of being subject to
backup withholding as a result of a failure properly to report taxable dividend
or interest income on a Federal income tax return or (2) the IRS notifies the
Fund to institute backup withholding because the IRS determines that the
shareholder's TIN is incorrect or that the shareholder has failed properly to
report such income.
26
<PAGE>
A TIN is either the Social Security number, IRS individual taxpayer
identification 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 is 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 adviser 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 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. Class A total
return figures includ the maximum initial sales charge and Class B and Class C
total return figures include any applicable CDSC. These figures also take into
account any applicable distribution and servicing fees. As a result, at any
given time, the performance of Class B and Class C should be expected to be
lower than that of Class A and the performance of Classes A, B and C should be
expected to be lower than that of Class R. Performance for each Class will be
calculated separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial payment
of $1,000 and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and distributions
during the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable value of
the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, or for shorter periods depending upon the length of time
during which the Fund has operated.
Total return is computed on a per share basis and assumes the reinvestment
of dividends and 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 (or maximum offering
price for Class A) at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return. Total return may also be calculated using the
NAV at the beginning of the period instead of the maximum offering price for
Class A shares or without giving effect to any applicable CDSC at the end of the
period for Class B or Class C shares. Calculations based on NAV do not reflect
the deduction of the applicable sales charge on Class A shares which, if
reflected, would reduce the performance quoted.
The Fund may also advertise the yield on a Class of shares. The Fund's
yield is calculated by dividing a Class of shares' annualized net investment
income per share during a recent 30-day (or one month) period by the maximum
public offering price per share of such Class on the last day of that period.
27
<PAGE>
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 provides 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. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
The Fund may compare the performance of its shares with various industry
standards of performance including Lipper Analytical Services, Inc. ratings, the
Russell 1000, S&P 500, S&P MidCap, the Consumer Price Index, the Dow Jones
Industrial Average, Lehman Brothers indexes, and CDA Technologies indexes.
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 as an open-end
management investment company, commonly known as a mutual fund. The Company has
an authorized capitalization of 25 billion shares of $0.001 par value stock with
equal voting rights. The Fund's shares are classified into four Classes--Class
A, Class B, Class C and Class R. The Company's Articles of Incorporation permits
the Board of Directors to create an unlimited number of investment portfolios
(each a "fund") without shareholder approval. 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.
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 Class A,
Class B or Class C shares, as the case may be, will be entitled to vote on
matters submitted to shareholders pertaining to the Distribution and/or Service
Plan relating to that Class.
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 purpose. Company shareholders may remove a Director by the affirmative
vote of a majority of the Company's outstanding 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.
28
<PAGE>
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made to your Agent or by writing to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
29
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS PREMIER MIDCAP STOCK FUND
CLASS A, CLASS B, CLASS C AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 16, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Dreyfus Premier Midcap Stock Fund (formerly the Dreyfus Disciplined Midcap Stock
Fund) (the "Fund"), dated January 16, 1998, as it may be revised from time to
time. The Fund is a separate, diversified portfolio of The Dreyfus/Laurel Funds,
Inc. (formerly The 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 1-800-554-4611
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
----
Investment Objective and Management Policies...................... B-2
Management of the Fund............................................ B-14
Management Arrangements........................................... B-20
Purchase of Shares................................................ B-21
Distribution and Service Plans.................................... B-22
Redemption of Shares.............................................. B-23
Shareholder Services.............................................. B-25
Determination of Net Asset Value.................................. B-28
Dividends, Other Distributions and Taxes.......................... B-28
Portfolio Transactions............................................ B-33
Performance Information........................................... B-35
Information About the Fund........................................ B-36
Transfer and Dividend Disbursing
Agent, Custodian, Counsel and Independent Auditors.............. B-36
Financial Statements.............................................. B-37
Appendix.......................................................... B-38
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF THE Fund."
PORTFOLIO SECURITIES
- --------------------
GOVERNMENT OBLIGATIONS. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates, maturities
and times of issuance: (a) U.S. Treasury bills have a maturity of one year or
less, (b) U.S. Treasury notes have maturities of one to ten years, and (c)
U.S. Treasury bonds generally have maturities of greater than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow an
amount limited to a specific line of credit from the U.S. Treasury, (c) the
discretionary authority of the U.S. Government agency or instrumentality, or (d)
the credit of the instrumentality. (Examples of agencies and instrumentalities
are: Federal Land Banks, Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks,
General Services Administration, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Inter-American Development Bank,
Asian-American Development Bank, Student Loan Marketing Association,
International Bank for Reconstruction and Development and Fannie Mae). No
assurance can be given that the U.S. Government will provide financial support
to such U.S. Government agencies or instrumentalities described in (b), (c) and
(d) in the future, other than as set forth above, since it is not obligated to
do so by law.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
U.S. Government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System, or with such other brokers or
dealers that meet the credit guidelines of the Board of Directors. In a
repurchase agreement, the Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. The
Fund's resale price will be in excess of the purchase price, reflecting an
agreed upon interest rate. This interest rate is effective for the period of
time the Fund is invested in the agreement and is not related to the coupon rate
on the underlying security. Repurchase agreements may also be viewed as a fully
collateralized loan of money by the Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will the Fund invest in repurchase agreements for more than one year.
The Fund will always receive as collateral securities whose market value
including accrued interest is, and during the entire term of the agreement
remains, at least equal to 100% of the dollar amount invested by the Fund in
each agreement, and the Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of the
Custodian. If the seller defaults, the Fund might incur a loss if the value of
the collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of a security
which is the subject of a repurchase agreement, realization upon the collateral
by the Fund may be delayed or limited. The Fund seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
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obligors under repurchase agreements, in accordance with the credit guidelines
of the Company's Board of Directors.
ECDS, ETDS AND YANKEE CDS. The Fund may purchase Eurodollar certificates
of deposit ("ECDs"), which are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks, Eurodollar time deposits ("ETDs"),
which are U.S. dollar-denominated deposits in a foreign branch of a domestic
bank or a foreign bank, and Yankee-Dollar certificates of deposit ("Yankee CDs")
which are certificates of deposit issued by a domestic branch of a foreign bank
denominated in U.S. dollars and held in the United States. ECDs, ETDs, and
Yankee CDs are subject to somewhat different risks than domestic obligations of
domestic banks. These risks are discussed in the Prospectus.
WHEN-ISSUED SECURITIES. New issues of U.S. Treasury and Government
securities are often offered on a when-issued basis. This means that delivery
and payment for the securities normally will take place approximately 7 to 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 of interest rates. Generally, the value of such
securities will fluctuate inversely to changes in interest rates -- i.e., they
will appreciate in value when interest rates decline and decrease in value when
interest rates rise. Therefore, if in order to achieve higher interest income
the Fund remains substantially fully invested at the same time that it has
purchased securities on a "when-issued" basis, there will be a greater
possibility of fluctuation in the Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated securities,
the sale of other securities and/or, although it would not normally expect to do
so, from the sale of the when-issued securities themselves (which may have a
market value greater or less than the Fund's payment obligation). The sale of
securities to meet such obligations carries with it a greater potential for the
realization of capital gains, which are subject to federal income taxes.
COMMERCIAL PAPER. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper").
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Section 4(2) paper is restricted as to disposition under the federal securities
laws and generally is sold to investors who agree that they are purchasing the
paper for an investment and not with a view to public distribution. Any resale
by the purchaser must be pursuant to registration or exemption therefrom.
Section 4(2) paper is normally resold to other investors through or with the
assistance of the issuer or investment dealers who make a market in Section 4(2)
paper, thus providing liquidity. Pursuant to guidelines established by the
Company's Board of Directors, Dreyfus may determine that Section 4(2) paper is
liquid for the purposes of complying with the Fund's investment restriction
relating to investments in illiquid securities.
MANAGEMENT POLICIES
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The Fund may engage in the following practices in furtherance of its
investment objective.
LOANS OF FUND SECURITIES. The Fund has authority to lend its portfolio
securities provided (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or cash equivalents adjusted
daily to make a market value at least equal to the current market value of these
securities loaned; (2) the Fund may at any time call the loan and regain the
securities loaned; (3) the Fund will receive any interest or dividends paid on
the loaned securities; and (4) the aggregate market value of securities loaned
will not at any time exceed one-third of the total assets of the Fund. In
addition, it is anticipated that the Fund may share with the borrower some of
the income received on the collateral for the loan or that it will be paid a
premium for the loan. In determining whether to lend securities, the Fund
considers all relevant factors and circumstances including the creditworthiness
of the borrower.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of portfolio
securities is deemed by the Fund to be inconvenient or disadvantageous. A
reverse repurchase agreement is a transaction whereby the Fund transfers
possession of a portfolio security to a bank or broker-dealer in return for a
percentage of the portfolio security's market value. The Fund retains record
ownership of the security involved including the right to receive interest and
principal payments. At an agreed upon future date, the Fund repurchases the
security by paying an agreed upon purchase price plus interest. Cash or liquid
high-grade debt obligations of the Fund equal in value to the repurchase price
including any accrued interest will be maintained in a segregated account while
a reverse repurchase agreement is in effect.
DERIVATIVE INSTRUMENTS. The Fund may purchase and sell various financial
instruments ("Derivative Instruments"), including financial futures contracts
(such as index futures contracts) and options (such as options on U.S. and
foreign securities or indices of such securities). 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 or to facilitate or substitute for the sale or
purchase of securities.
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.
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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 Dreyfus'
ability to predict movements of the overall securities and interest rate
markets, which requires different skills than predicting changes in the prices
of individual securities. There can be no assurance that any particular strategy
will succeed.
(2) There might be imperfect correlation, or even no correlation, between
price movements of a Derivative Instrument and price movements of the
investments being hedged. For example, if the value of a Derivative Instrument
used in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of correlation
might occur due to factors unrelated to the value of the investments being
hedged, such as speculative or other pressures on the markets in which
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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
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("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 or options, 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 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.
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.
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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."
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
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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.
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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.
The Fund will not enter into futures contracts to the extent that its
outstanding obligations under these contracts would exceed 25% of the Fund's
total assets.
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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 Company's 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.
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
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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 amount 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 on futures contracts shall not constitute purchasing
securities on margin.
3. The Fund shall not purchase oil, gas or mineral leases.
4. The Fund will not purchase or retain the securities of any issuer if
the officers or Directors of the Fund, its advisers, or managers, owning
beneficially more than one half of one percent of the securities of such issuer,
together own beneficially more than 5% of such securities.
5. The Fund will not purchase securities of issuers (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof), including their predecessors, that have been in operation
for less than three years, if by reason thereof, the value of the Fund's
investment in securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners, guarantors and
originators of underlying assets may be treated as the issuer of a security.
6. The Fund will invest no more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements with remaining maturities
in excess of seven days, time deposits with maturities in excess of seven days
and other securities which are not readily marketable. For purposes of this
limitation, illiquid securities shall not include Section 4(2) paper and
securities which may be resold under Rule 144A under the Securities Act of 1933,
B-12
<PAGE>
provided that the Board of Directors, or its delegate, determines that such
securities are liquid based upon the trading markets for the specific security.
7. The Fund may not invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or acquisition
of assets and except to the extent otherwise permitted by the 1940 Act.
8. The Fund shall not purchase any security while borrowings representing
more than 5% of the Fund's total assets are outstanding.
9. The Fund will not purchase warrants if at the time of such purchase:
(a) more than 5% of the value of the Fund's assets would be invested in
warrants, or (b) more than 2% of the value of the Fund's assets would be
invested in warrants that are not listed on the New York or American Stock
Exchange (for purposes of this limitation, warrants acquired by the Fund in
units or attached to securities will be deemed to have no value).
10. The Fund will not purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate investment
in such classes of securities would exceed 5% of its total assets except that:
(a) this limitation shall not apply to standby commitments, and (b) this
limitation shall not apply to the Fund's transactions in futures contracts and
related options.
As an operating policy, the Fund will not invest more than 25% of the value of
its total assets, at the time of such purchase in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks. The Company's
Board of Directors may change this policy without shareholder approval. Notice
will be given to shareholders if this policy is changed by the Board of
Directors.
MANAGEMENT OF THE FUND
PRINCIPAL SHAREHOLDERS
[There were no shareholder(s) who owned 5% or more of the outstanding
Class A, Class B, Class C or Class R shares of the Fund at January __, 1998/The
following shareholder(s) owned of record 5% or more of the outstanding Class A
or Class R shares of the Fund at January __, 1998]:
FEDERAL LAW AFFECTING MELLON BANK
The Glass-Steagall Act of 1933 prohibits national banks from engaging in
the business of underwriting, selling or distributing securities and prohibits a
member bank of the Federal Reserve System from having certain affiliations with
an entity engaged principally in that business. The activities of Mellon Bank,
N.A. ("Mellon Bank") in informing its customers of, and performing, investment
and redemption services in connection with the Fund, and in providing services
to the Fund as custodian, as well as Dreyfus' investment advisory activities,
B-13
<PAGE>
may raise issues under these provisions. Mellon Bank has been advised by counsel
that the activities contemplated under these arrangements are consistent with
its statutory and regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of such
future statutes and regulations, could prevent Mellon Bank or Dreyfus from
continuing to perform all or a part of the above services for its customers
and/or the Fund. If Mellon Bank or Dreyfus were prohibited from serving the Fund
in any of its present capacities, the Board of Directors would seek an
alternative provider(s) of such services.
DIRECTORS AND OFFICERS
The Company has a Board composed of eleven Directors which supervises the
Fund's investment activities and reviews contractual arrangements with companies
that provide the Fund with services. The following lists the Directors and
officers and their positions with the Company and their present and principal
occupations during the past five years. Each Director who is an "interested
person" of the Company (as defined in the 1940 Act) is indicated by an
asterisk(*). Each of the Directors also serves as a Trustee of The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-Free Municipal Funds
(collectively, with the Company, the "Dreyfus/Laurel Funds").
DIRECTORS OF THE COMPANY
o+RUTHMARIE 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; from November
1995 to January 1997, Director, Access Capital Strategic Community
Investment Fund, Inc. - Institutional Investment Portfolio. Age: 83 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.; and from November 1995 to January 1997, Director, Access Capital
Strategic Community Investment Fund, Inc. - Bank Portfolio. Age: 80 years
old. Address: Massachusetts Business Development Corp., 50 Milk Street,
Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO, Director of the Company. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. He is also Chairman of the Board of Noel Group,
Inc., a venture capital company, and Staffing Resources, Inc., a temporary
placement agency. Mr. DiMartino also serves as a Director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and other
benefit programs; Carlyle Industries, Inc. (formerly Belding Heminway
Company, Inc.), a button packager and distributor; and Curtis Industries,
Inc., a national distributor of security products, chemicals, and
automotive and other hardware. Mr. DiMartino is also a Board member of 152
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<PAGE>
other funds in the Dreyfus Family of Funds. From November 1995 to January
1997, Director, Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio and Bank Portfolio. For more than five
years prior to January 1995, he was President, a director and, until
August 24, 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus. From August 1994 to December 31, 1994, he was a
director of Mellon Bank Corporation. Age: 54 years old. His address is 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.; from November 1995 to January
1997, Director, Access Capital Strategic Community Investment Fund, Inc. -
Bank Portfolio. Age: 63 years old. Address: 40 Norfolk Road, Brookline,
Massachusetts 02167.
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.; from November 1995 to January
1997, Director, Access Capital Strategic Community Investment Fund, Inc. -
Bank Portfolio. Age: 63 years old. Address: 40 Norfolk Road, Brookline,
Massachusetts 02167.
o*J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio. Age:
69 years old. Address: 204 Woodcock Drive, Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of the Company; Director, Calgon Carbon
Corporation; Director, Cerex Corporation; Director, National Picture Frame
Corporation; former Chairman of the Board and Director, Rexene
Corporation; Chairman of the Board and Director, Tetra Corporation
1991-1993; Director, Medalist Corporation 1992-1993. From November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Institutional Investment Portfolio. Age: 76 years old.
Address: Way Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of the Company; Former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company; President
and Chief Executive Officer, Himmel & Co., Inc.; Vice Chairman, Sutton
Place Gourmet, Inc.; Managing Partner, Franklin Federal Partners. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Bank Portfolio. Age: 51 years old.
Address: Himmel and Company, Inc., 399 Boylston Street, 11th Floor,
Massachusetts 02116.
o*ARCH S. JEFFERY. Director of the Company; Financial Consultant. From November
1995 to January 1997, Director, Access Capital Strategic Community
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<PAGE>
Investment Fund, Inc. - Institutional Investment Portfolio. Age: 80 years
old. Address: 1817 Foxcroft Lane, Unit 306, Allison Park, Pennsylvania
15101.
o+STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc.; from November
1995 to January 1997, Director, Access Capital Strategic Community
Investment Fund, Inc. - Institutional Investment Portfolio. Age: 50 years
old. Address: 401 Edgewater Place, Wakefield, Massachusetts 01880.
o+JOHNJ. SCIULLO. Director of the Company; Dean Emeritus and Professor of Law,
Duquesne University Law School; Director, Urban Redevelopment Authority of
Pittsburgh; from November 1995 to January 1997, Director, Access Capital
Strategic Community Investment Fund, Inc. - Institutional Investment
Portfolio. Age: 66 years old. Address: 321 Gross Street, Pittsburgh,
Pennsylvania 15224.
o+ROSLYN M. WATSON. Director of the Company; Principal, Watson Ventures, Inc.,
Director, American Express Centurion Bank; Director, Harvard/Pilgrim
Community Health Plan, Inc.; from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank Portfolio;
Director, Massachusetts Electric Company; Director, the Hymans Foundation,
Inc., prior to February, 1993; Real Estate Development Project Manager and
Vice President, The Gunwyn Company. Age: 48 years old. Address: 25
Braddock Park, Boston, Massachusetts 02116-5816.
- --------------------------------
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
OFFICERS OF THE COMPANY
- -----------------------
#MARIEE. CONNOLLY, President and Treasurer of the Company. President, Chief
Executive Officer, Chief Compliance Officer and a director of the
Distributor and Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. She is 40 years old.
#JOHN E. PELLETIER, Vice President and Secretary of the Company. Senior Vice
President, General Counsel, Secretary and Clerk of the Distributor and
Funds Distributor, Inc. From February 1992 to July 1994, he served as
Counsel for The Boston Company Advisors, Inc. He is 33 years old.
#RICHARD W. INGRAM, Vice President and Assistant Treasurer of the Company.
Executive Vice President of the Distributor and Funds Distributor, Inc.
From March 1994 to November 1995, he was Vice President and Division
Manager for First Data Investor Services Group. From 1989 to 1994, he was
Vice President, Assistant Treasurer and Tax Director - Mutual Funds of
TBC. He is 42 years old.
B-16
<PAGE>
#MARY A. NELSON, Vice President and Assistant Treasurer of the Company. Vice
President of the Distributor and Funds Distributor, Inc.. From September
1989 to July 1994, she was an Assistant Vice President and Client Manager
for TBC. She is 33 years old.
#MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer of the Company.
Senior Vice President of Funds Distributor, Inc. From December 1989
through November 1996, he was employed by GE Investments where he held
various financial, business development and compliance positions. He also
served as Treasurer of the GE Funds and as Director of GE Investment
Services. He is 36 years old.
#JOSEPH F. TOWER, III, Vice President and Assistant Treasurer of the Company.
Senior Vice President, Treasurer and Chief Financial Officer of the
Distributor and Funds Distributor, Inc. From July 1988 to August 1994, he
was employed by TBC where he held various management positions in the
Corporate Finance and Treasury areas. He is 35 years old.
#DOUGLAS C. CONROY, Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank & Trust
Company. From December 1991 to March 1993, he was employed as a Fund
Accountant at TBC. He is 28 years old.
#ELIZABETH A. KEELEY, Vice President and Assistant Secretary of the Company.
Vice President of the Distributor and Funds Distributor, Inc. She has been
employed by the Distributor since September 1995. She is 28 years old.
- --------------------------------
# Officer also serves as an officer for other investment companies advised by
Dreyfus, including The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel
Tax-Free Municipal Funds.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
The officers and Directors of the Company as a group owned beneficially
less than 1% of the Fund's total shares outstanding as of January __, 1998.
No officer or employee of the Distributor (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 Trustee/Director
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
Trustees/Directors of the Dreyfus/Laurel Funds). In addition, the Dreyfus/Laurel
Funds pay each Trustee/Director 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 reimburse each Trustee/Director who is not an "interested person"
of the Company (as defined in the 1940 Act) for travel and out-of-pocket
expenses.
B-17
<PAGE>
For the fiscal year ended October 31, 1997, 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:
B-18
<PAGE>
Total Compensation
From the Company
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From The Company# Member****
- ------------- ----------------- -------------------
Ruth Marie Adams $______ $______
Francis P. Brennan* $______ $______
Joseph S. DiMartino** None $517,075***
James M. Fitzgibbons $______ $______
J. Tomlinson Fort** None $______
Arthur L. Goeschel $______ $______
Kenneth A. Himmel $______ $______
Arch S. Jeffery** None $______
Stephen J. Lockwood $______ $______
John J. Sciullo $______ $______
Roslyn M. Watson $______ $______
# 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 $_______ for the Company.
* Compensation of Francis P. Brennan includes $25,000 paid by the
Dreyfus/Laurel Funds to be the Chairman of the Board.
** For the fiscal year ended October 31, 1997, Joseph S. DiMartino, J.
Tomlinson Fort and Arch S. Jeffery were 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, 1997, the aggregate amount of
fees and expenses received by Joseph S. DiMartino, J. Tomlinson Fort and
Arch S. Jeffery from Dreyfus for serving as a Board member of the Company
were $______, $______ and $_______, respectively, and for serving as a
Board member of all funds in the Dreyfus/Laurel Funds (including the
Company) were $_____, $______ and $______, respectively. In addition,
Dreyfus reimbursed Messrs. DiMartino, Fort and Jeffery a total of $_______
for expenses attributable to the Company's Board meetings which is not
included in the $______ amount in note # above.
*** Amount paid to Joseph S. DiMartino from the funds in the Fund Complex for
the year ended December 31, 1996.
**** The Dreyfus Family of Funds consists of ___ mutual funds.
B-19
<PAGE>
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, transferred to Dreyfus as of October 17, 1994 (the "Management
Agreement"). Pursuant to the Management Agreement, Dreyfus provides, or arranges
for one or more third parties to provide, investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. As investment
manager, Dreyfus manages the Fund by making investment decisions based on the
Fund's investment objective, policies and restrictions. The Management Agreement
is subject to review and approval at least annually by the Board of Directors.
The Management Agreement will continue from year to year provided that a
majority of the Directors who are not interested persons (as defined in the 1940
Act) of the Company or Dreyfus and either a majority of all Directors or a
majority (as defined in the 1940 Act) of the shareholders of the Fund approve
its continuance. The Management Agreement was last approved by the Board of
Directors on January 31, 1997 to continue until April 4, 1998. The Company may
terminate the Agreement 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 sixty (60) days' written notice to the Company. The Management
Agreement will terminate immediately and automatically upon its assignment.
The following persons are officers and/or directors of Dreyfus: W. Keith
Smith, Chairman of the Board; Christopher M. Condron, President, Chief Executive
Officer, 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; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Paul Kadin, 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; William V. Healey, Assistant Secretary; and Mandell L. Berman, Burton
C. Borgelt, Frank V. Cahouet and Richard F. Syron, directors.
For the last three years, the Fund had the following expenses:
For the Fiscal Year Ended October 31,
1997 1996 1995
---- ---- ----
Management fees $____ $159,095 $175,864
B-20
<PAGE>
PURCHASE OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO BUY 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 Premier Family of Funds, funds in
the Dreyfus Family of Funds, and for certain other investment companies.
SALES LOADS -- CLASS A. The scale of sales loads applies to purchases of
Class A shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children, or a trustee or other fiduciary purchasing
securities for a single trust estate or a single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code")) although more than one beneficiary is involved; or a group
of accounts established by or on behalf of the employees of an employer or
affiliated employers pursuant to an employee benefit plan or other program
(including accounts established pursuant to Sections 403(b), 408(k) and 457 of
the Code); or an organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Holders of Investor shares of the Fund as of January 15, 1998 may continue
to purchase Class A shares of the Fund at NAV.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Fund's Prospectus at a price based upon the
offering price of the Fund's Class A (Investor) shares at the close of business
on October 31, 1997:
Net Asset Value per share $_____
Per Share Sales Charge - 5.75% of offering price
(6.10% of net asset value per share) $_____
Per Share Offering Price to Public $_____
DREYFUS STEP PROGRAM. Holders of the Fund's Investor shares prior to
January 16, 1998 who had enrolled in Dreyfus Step Program may continue to
purchase shares of the same class (currently designated Class A shares) without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder(REGISTERED), Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. Participation in this Program may be
terminated by the shareholder at any time by discontinuing 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
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<PAGE>
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. The Dreyfus Step Program is not available to
open new accounts in any Class of the Fund.
TELETRANSFER PRIVILEGE. TELETRANSFER purchase orders may be made at any
time. Purchase orders received by 4:00 p.m., New York time, on any business day
Dreyfus Transfer, Inc., the Fund's transfer and dividend disbursing agent (the
"Transfer Agent"), and the New York Stock Exchange ("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. To
qualify to use the TELETRANSFER Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares - TELETRANSFER Privilege."
REOPENING AN ACCOUNT. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
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 net asset values
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 1-800-554-4611.
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<PAGE>
DISTRIBUTION AND SERVICE PLANS
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DISTRIBUTION PLANS (CLASS A
PLAN AND CLASS B AND C PLANS)."
Class A, Class B and Class C shares are subject to annual fees for
distribution and shareholder services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "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.
DISTRIBUTION PLAN--CLASS A SHARES. The Company has adopted a Distribution
Plan pursuant to the Rule with respect to the Class A shares of the Fund ("Class
A Plan"), whereby Class A shares of the Fund may spend annually up to 0.25% of
the average of its net assets for costs and expenses incurred in connection with
the distribution of, and shareholder servicing with respect to, Class A shares.
The Class A Plan provides that a report of the amounts expended under the
Class A 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 Class A Plan provides that it may not be amended to increase
materially the costs which the Fund may bear for distribution pursuant to the
Class A Plan without approval of the Fund's shareholders, and that other
material amendments of the Class A Plan must be approved by the vote of a
majority of the Directors and of the Directors who are not "interested persons"
(as defined in the 1940 Act) of the Company or the Distributor and who do not
have any direct or indirect financial interest in the operation of the Class A
Plan, cast in person at a meeting called for the purpose of considering such
amendments. The Class A 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 Class A Plan,
by vote cast in person at a meeting called for the purpose of voting on the
Class A Plan. The Class A Plan was so approved by the Directors at a meeting
held on January 31, 1997. The Class A Plan is terminable, as to the Fund's Class
A 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 Class A Plan or by vote of the holders of a majority of the
outstanding shares of such class of the Fund.
DISTRIBUTION AND SERVICE PLANS -- CLASS B AND CLASS C SHARES. In addition
to the above described current Class A Plan for Class A shares, the Board of
Directors has adopted a Service Plan (the "Service Plan") under the Rule for
Class B and Class C shares, pursuant to which the Fund pays the Distributor and
Dreyfus Service Corporation for the provision of certain services to the holders
of Class B and Class C shares. The Company's Board of Directors has also adopted
a Distribution Plan pursuant to the Rule with respect to Class B and Class C
shares (the "Distribution Plan"). The Company's Board of Directors believes that
B-23
<PAGE>
there is a reasonable likelihood that the Distribution and Service Plans (the
"Plans") will benefit the Fund and the holders of Class B and Class C shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, each Plan provides that it may not be
amended to increase materially the cost which holders of Class B or Class C
shares may bear pursuant to the Plan without the approval of the holders of such
Classes and that other material amendments of the Plan must be approved by the
Board of Directors and by the Directors who are not interested persons of the
Fund and have no direct or indirect financial interest in the operation of the
Plan or in any agreements entered into in connection with the Plan, by vote cast
in person at a meeting called for the purpose of considering such amendments.
Each Plan is subject to annual approval by such vote of the Directors cast in
person at a meeting called for the purpose of voting on the Plan. Each Plan was
so approved by the Directors at a meeting held on January 31, 1997, and the
applicability of each Plan to the Fund was approved on November 20, 1997. Each
Plan may be terminated at any time by vote of a majority of the Directors who
are not interested persons and have no direct or indirect financial interest in
the operation of the Plan or in any agreements entered into in connection with
the Plan or by vote of the holders of a majority of Class B and Class C shares.
For the fiscal year ended October 31, 1997, the Fund paid the Distributor
and Dreyfus Service Corporation $____ and $______, respectively, pursuant to the
Plan with respect to Class A shares (formerly called Investor shares).
REDEMPTION OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "HOW TO REDEEM SHARES."
WIRE REDEMPTION PRIVILEGE. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone, or letter 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:
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Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. Investors should advise the operator that the above transmittal code must
be used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as a
described below under "Stock Certificates; Signatures."
STOCK CERTIFICATES; SIGNATURES. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification.
TELETRANSFER PRIVILEGE. Investors should be aware that if they have
selected the TELETRANSFER Privilege, any request for a TELETRANSFER transaction
will be effected through the Automated Clearing House ("ACH") system unless more
prompt transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two business
days after receipt of the redemption request. See "Purchase of
Shares--TELETRANSFER Privilege."
REDEMPTION COMMITMENT. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the SEC. In the case of requests for redemptions in excess
of such amount, the Company's Board 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 such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such securities,
brokerage charges might be incurred.
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SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the NYSE is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund ordinarily utilizes is restricted, or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the SEC by order may permit to protect the Fund's
shareholders
SHAREHOLDER SERVICES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "SHAREHOLDER SERVICES."
FUND EXCHANGES. Shares of any Class of the Fund may be exchanged for shares of
the respective Class of certain other funds advised or administered by Dreyfus.
Shares of the same Class of such funds purchased by exchange will be purchased
on the basis of relative net asset value per share as follows:
A. Exchanges into shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or other distributions of any such funds
(collectively referred to herein as "Purchased Shares") may be
exchanged for shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares exceeds the maximum
sales load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were
acquired), without giving effect to any reduced loads, the
difference will be deducted.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods, if
any, will be deemed to have been held since the date the shares
being exchanged were initially purchased.
To accomplish an exchange under item D above, an investor's Agent must
notify the Transfer Agent of the investor's prior ownership of shares with a
sales load and the investor's account number.
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<PAGE>
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
To request an exchange, an investor or an investor's Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by telephone
is given to all Fund shareholders automatically unless the investor checks the
applicable "No" box on the Account Application, indicating that the investor
specifically refuses this privilege. By using the Telephone Exchange Privilege,
the investor authorizes the Transfer Agent to act on telephonic exchange
instructions (including over the Dreyfus Touch[REGISTERED] automated telephone
system) 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. Telephone exchanges may be subject to limitations as to the
amount involved or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
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 self-employed individual retirement plans (so-called "Keogh
Plans") and individual retirement accounts ("IRAs"), including IRAs set up under
a Simplified Employee Pension Plan ("SEP-IRAs") with only one participant, the
minimum initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among shares of the
same Class of the funds in the Dreyfus Premier Family of Funds or the Dreyfus
Family of Funds. To exchange shares held in personal retirement plans, the
shares exchanged must have a current value of at least $100.
AUTO-EXCHANGE PRIVILEGE. The Auto-Exchange Privilege permits an investor
to purchase, in exchange for shares of the Fund, shares of the same Class of
certain other funds in the Dreyfus Premier Family of Funds or the Dreyfus Family
of Funds. This Privilege is available only for existing accounts. With respect
to Class R shares held by a Retirement Plan, exchanges may be made only between
the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund. Shares will be exchanged on the basis
of relative net asset value as described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. An investor will be
notified if 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 Auto-Exchange transaction. Shares held under IRAs and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but not
from IRA accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
B-27
<PAGE>
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund Exchange service or the
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
AUTOMATIC WITHDRAWAL PLAN. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the investor,
the Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan. Class C shares, Class
A shares to which a CDSC applies, and, unless certain conditions described in
the Prospectus are satisfied, Class B shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC.
DIVIDEND SWEEP. Dividend Sweep allows investors to invest automatically
their dividends or dividends and other distributions, if any, from the Fund in
shares of the same Class of certain other funds in the Dreyfus Premier Family of
Funds or the Dreyfus Family of Funds of which the investor is a shareholder.
Shares of the same Class of other funds purchased pursuant to this Privilege
will be purchased on the basis of relative net asset value per share as follows:
A. Dividends and other distributions paid by a fund may be
invested without imposition of a sales load in shares of other
funds that are offered without a sales load.
B. Dividends and other distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will be
deducted.
C. Dividends and other distributions paid by a fund which charges
a sales load may be invested in shares of other funds sold with
a sales load (Offered Shares), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or other distributions
are being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and other distributions paid by a fund may be
invested in shares of other funds that impose a CDSC and the
applicable CDSC, if any, will be imposed upon redemption of
such shares.
CORPORATE PENSION/PROFIT-SHARING AND RETIREMENT PLANS. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund makes
available Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover Accounts," and
403(b)(7) Plans. Plan support services also are available.
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<PAGE>
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a 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, 401(k) Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum for subsequent purchases. The minimum initial investment
for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only
one participant, is ordinarily $750, with no minimum for subsequent purchases.
Individuals who open an IRA also may open a non-working spousal IRA with a
minimum investment of $250.
Each 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
recent market quotations are not readily available or, in the case of
fixed-income securities (excluding short-term investments), which are not valued
by the independent pricing service utilized by the Fund, are valued at fair
value as determined in good faith by the Board. The Board will review the method
of valuation on a current basis. In making their good faith valuation of
restricted securities, the Board members generally will take the following
factors into consideration: restricted securities which are, or are convertible
into, 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 if
it believes that the discount 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.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which the
NYSE is currently scheduled to be closed are: New Year's Day, Dr. Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
B-29
<PAGE>
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 under
the Code, the Fund -- which is treated as a separate corporation for federal tax
purposes -- (1) must distribute to its shareholders each year at least 90% of
its investment company taxable income (generally consisting of net investment
income, net short-term capital gains and net gains from certain foreign currency
transactions) ("Distribution Requirement"), (2) must derive at least 90% of its
annual gross income from specified sources ("Income Requirement"), and (3) must
meet certain asset diversification and other requirements.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the net asset value of the
shares below the cost of his or her investment. Such a dividend or other
distribution would be a return on investment in an economic sense, although
taxable as stated in the Fund's Prospectus. In addition, if a shareholder sells
shares of the Fund held for six months or less and receives a capital gain
distribution with respect to those shares, any loss incurred on the sale of
those shares will be treated as a long-term capital loss to the extent of the
capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a date
in any of those months are deemed to have been paid by the Fund and received by
the shareholders on December 31 of that year if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash or
reinvested in additional Fund shares, may be eligible for the dividends-received
deduction allowed to corporations. The eligible portion may not exceed the
aggregate dividends received by the Fund from U.S. corporations. However,
dividends received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the alternative minimum
tax.
FOREIGN TAXES. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the yield and/or return 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 would enable its
shareholders, in effect, to receive the benefit of the foreign tax credit with
respect to any foreign income taxes paid by it. Pursuant to the Election, the
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<PAGE>
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 portion of the shareholder's federal income tax attributable to his total
foreign source taxable income; however, pursuant to the Taxpayer Relief Act of
1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Forms 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the extremely complicated foreign tax credit limitation
and will be able to claim a foreign tax credit without having to file the
detailed Form 1116 that otherwise is required.. The Fund will report to its
shareholders shortly after each taxable year their respective shares of its
income from sources within foreign countries and U.S. possessions and foreign
taxes it paid if it makes the Election.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (I.E., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly, or constructively, by "U.S.
shareholders," defined as U.S. persons that individually own, directly,
indirectly, or constructively, at least 10% of that voting power) as to which
the Fund is a U.S. shareholder -- that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock of a PFIC or of any gain on disposition of the stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a dividend to its shareholders. The balance of the PFIC income will be included
in the Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its PRO
RATA share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the 4% excise tax mentioned in the
Prospectus under "Dividends, Other Distributions and Taxes" -- even if those
earnings and gain were not received by the Fund from the QEF. In most instances
it will be very difficult, if not impossible, to make this election because of
certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of a PFIC's stock over
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<PAGE>
the Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. Regulations proposed in
1992 would provide a similar election with respect to the stock of certain
PFICs.
FOREIGN CURRENCY AND HEDGING TRANSACTIONS. Gains from the sale or other
disposition of foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and gains from 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.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain and loss. However, a portion of the gains and losses
from the disposition of foreign currencies and certain
foreign-currency-denominated instruments (including debt instruments and
financial forward and futures contracts and options) may be treated as ordinary
income or loss under Section 988 of the Code. In addition, all or a portion of
any gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that would otherwise be treated as capital
gain may be treated as ordinary income. "Conversion transactions" are defined to
include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund on
the exercise or lapse of, or closing transactions respecting, certain options,
futures and forward contracts ("Section 1256 Contracts") may be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. In
addition, any Section 1256 Contracts remaining unexercised at the end of the
Fund's taxable year will be treated as sold for their then fair market value (a
process known as "marking-to-market"), resulting in additional gain or loss to
the Fund characterized in the manner described above. It is not entirely clear,
as of the date of this SAI, whether the 60% portion of that is treated as
long-term capital gain will qualify for the reduced maximum tax rates on net
capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) on capital assets held for more than 18 months -- instead
of the 28% maximum rate in effect before that legislation, which now applies to
gain on capital assets held for more than one year but not more than 18 months,
although technical corrections legislation passed by the House of
Representatives would treat such 60% portion as qualifying therefor.
Offsetting positions held by the Fund involving certain options, futures
or forward contracts may constitute "straddles", which are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of straddles is governed by Sections 1092 and to the extent noted above, 1258 of
the Code, which in certain circumstances override or modify Sections 1256 and
988. As a result, all or a portion of any capital gain from certain straddle
transactions may be recharacterized as ordinary income. If the Fund were treated
as entering into straddles by reason of its engaging in certain options, futures
or forward contract transactions, such straddles would be characterized as
"mixed straddles" if the transactions comprising a part of such straddles were
governed by Section 1256. The Fund may make one or more elections with respect
to mixed straddles; depending on which election is made, if any, the results to
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<PAGE>
the Fund may differ. If no election is made, then to the extent the straddle and
conversion transactions rules apply to positions established by the Fund, losses
realized by the Fund will be deferred to the extent of unrealized gain in the
offsetting position. Moreover, as a result of the straddle rules, short-term
capital loss on straddle positions may be recharacterized as long-term capital
loss, and long-term capital gains may be treated as short-term capital gains or
ordinary income.
Investment by the Fund in securities issued or acquired at a discount (for
example, zero coupon securities) could, under special tax rules, affect the
amount and timing of distributions to shareholders by causing the Fund to
recognize income prior to the receipt of cash payments. For example, the Fund
could be required to take into gross income annually a portion of the discount
(or deemed discount) at which the securities were issued and could need to
distribute such income to satisfy the Distribution Requirement and to avoid the
excise tax (the "Excise Tax"). In such case, the Fund may have to dispose of
securities it might otherwise have continued to hold in order to generate cash
to satisfy these requirements.
STATE AND LOCAL TAXES. Depending upon the extent of the Fund's activities
in states and localities in which it is deemed to be conducting business, the
Fund may be subject to the tax laws thereof. Shareholders are also advised to
consult their tax advisers concerning the application of state and local taxes
to them.
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. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the foreign
shareholder 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 generally will not
be subject to U.S. federal income tax unless the foreign shareholder is a
non-resident alien individual and is physically present in the United States for
more than 182 days during the taxable year. In the case of certain foreign
shareholders, the Fund may be required to withhold U.S. federal income tax at a
rate of 31% of capital gain distributions and of the gross proceeds from a
redemption of Fund shares unless the shareholder furnishes the Fund with a
certificate regarding the shareholder's foreign status.
FOREIGN SHAREHOLDERS - EFFECTIVELY CONNECTED INCOME. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all distributions
to that shareholder and any gains realized by that shareholder on the
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<PAGE>
disposition of the Fund shares will be subject to U.S. federal income tax at the
graduated rates applicable to U.S. citizens and domestic corporations, as the
case may be. Foreign shareholders also may be subject to the branch profits tax.
FOREIGN SHAREHOLDERS - ESTATE TAX. Foreign individuals generally are
subject to 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.
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 under 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
B-34
<PAGE>
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.
Dreyfus may use research services of and place brokerage transactions with
broker-dealers affiliated with it or Mellon Bank if the commissions are
reasonable, fair and comparable to commissions charged by non-affiliated
brokerage firms for similar services. During the fiscal years ended October 31,
1997 and 1996, the Fund paid brokerage commissions of $______ and $_____,
respectively, to affiliates of Dreyfus or Mellon Bank. The amount paid to
affiliated brokerage firms during the fiscal years ended October 31, 1997 and
1996, was approximately __% and __%, respectively, of the aggregate brokerage
commissions paid by the Fund, for transactions involving approximately ____% and
___%, respectively, of the aggregate dollar volume of transactions for which the
Fund paid brokerage commissions. The difference in these percentages was due to
the lower commissions paid to affiliates of Dreyfus. There were no commissions
charged by affiliated brokerage firms for the fiscal year ended October 31,
1995.
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 manager,
particularly when the same investment instrument is suitable for the investment
objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated in
accordance with a formula considered by Dreyfus to be equitable to each account.
In some cases this system could have a detrimental effect on the price or volume
of the investment instrument as far as the Fund is concerned. In other cases,
however, the ability of the Fund to participate in volume transactions will
produce better executions for the Fund. While the Directors will continue to
review simultaneous transactions, it is their present opinion that the
desirability of retaining the Dreyfus as investment manager to the Fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
For the fiscal years ended October 31, 1997 and 1996, the Fund paid
brokerage commissions amounting to $______ $37,784, respectively. The Fund paid
no brokerage commissions for the fiscal year ended October 31, 1995.
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's portfolio turnover rates for
the fiscal years ended October 31, 1997 and 1996 were ____% and 90.93, %,
respectively.
B-35
<PAGE>
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 returns (expressed as a percentage) for Class A shares of
the Fund for the periods noted were:
Average Annual Total Return For The
Periods Ended October 31, 1997
-----------------------------------
Fund: 1 Year Inception
- ----- ------ ---------
Class A shares _____% _____%
4/6/94)
Inception date appears in parentheses following the average annual total return
since inception. The foregoing chart assumes deduction of the maximum sales load
from the hypothetical initial investment at the time of purchase although no
sales load was applicable to Class A shares of its predecessor class until
January 16, 1998.
Average annual total returns (expressed as a percentage) for Class R
shares of the Fund for the periods noted were:
Average Annual Total Return For The
Periods Ended October 31, 1997
-----------------------------------
Fund: 1 Year Inception
- ----- ------ ---------
Class R shares _____% ____%
11/12/93)
Inception date appears in parentheses following the average annual total return
since inception.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum offering
price in the case of Class A) per share 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 average annual total return figures for a
Class calculated in accordance with such formula assume that, in the case of
Class A, the maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or, in the case of Class B or Class C, the
maximum applicable CDSC has been paid upon redemption at the end of the period.
The Fund's total return for Class R shares (formerly called Restricted
Shares) for the period from November 12, 1993 (the Fund's inception date) to
October 31, 1997 was _____%. The Fund's total return for Class A shares
B-36
<PAGE>
(formerly called Investor shares) for the period from April 6, 1994 (inception
date of Class A shares) to October 31, 1997 was ____% (assuming deduction of the
maximum sales load from the hypothetical initial investment at the time of
purchase, although no sales load was applicable to Class A shares or its
predecessor class until January 16, 1998). Without giving effect to the
applicable front-end sales load, the total return for Class A was ___% for this
period. Total return is calculated by subtracting the amount of the Fund's net
asset value (maximum offering price in the case of Class A) per share at the
beginning of a stated period from the net asset value (maximum offering price in
the case of Class A) per share at the end of the period (after giving effect to
the reinvestment of dividends and other distributions during the period and any
applicable CDSC), and dividing the result by the net asset value (maximum
offering price in the case of Class A) per share at the beginning of the period.
Total return also may be calculated based on the net asset value per share at
the beginning of the period instead of the maximum offering price per share at
the beginning of the period for Class A shares or without giving effect to any
applicable CDSC at the end of the period for Class B or Class C shares. In such
cases, the calculation would not reflect the deduction of the sales load with
respect to Class A shares or any applicable CDSC with respect to Class B or C
shares, which, if reflected would reduce the performance quoted.
No performance information is provided for the Fund's Class B and Class C
shares which were offered beginning on January 16, 1998.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Standard & Poor's 500 Composite Stock Price Index, the Standard & Poor's 400
MidCap 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;
(ii) other groups of mutual funds tracked by Lipper Analytical Services, Inc., 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; (iii) the Consumer Price Index (a measure of inflation) to
assess the real rate of return from an investment in the Fund or the Fund's
performance against inflation to the performance of other instruments against
inflation; and (iv) 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: (i)
biographical information relating to its portfolio manager, including honors and
awards received, and may refer to, or include commentary by the Fund's 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 (ii) information concerning retirement and investing for
retirement, including statistical data or general discussions about the growth
and development of Dreyfus Retirement Services (in terms of new customers,
assets under management, market share, etc.) and its presence in the defined
contribution plan market; (iii) the approximate number of then current Fund
shareholders; (iv) references to the Fund's quantitative, disciplined approach
to stock market investing and the number of stocks analyzed by Dreyfus; and (v)
B-37
<PAGE>
Lipper or Morningstar ratings and related analysis supporting the ratings.
Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions or administrative and management costs and expenses.
INFORMATION ABOUT THE FUND
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "GENERAL INFORMATION."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. The Fund is
one of eighteen portfolios of the Company. Fund shares have no preemptive,
subscription or conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Company,
Dreyfus Transfer, Inc. 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, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month, and is reimbursed for certain
out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as the custodian of the Fund's investments.
Under a custody agreement with the Company, Mellon Bank holds the Fund's
portfolio securities and keeps all necessary accounts and records. Dreyfus
Transfer, Inc. and Mellon Bank, as custodian, have no part in determining the
investment policies of the Fund or which securities are to be purchased or sold
by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second Floor,
Washington, D.C. 20036-1800, has passed upon the legality of the shares offered
by the Prospectus and this SAI.
___________________, 345 Park Avenue, New York, New York 10154 was
appointed by the Directors to serve as the Fund's independent auditors for the
year ending October 31, 1998, providing audit services including (1) examination
of the annual financial statements, (2) assistance, review and consultation in
connection with SEC filings and (3) review of the annual federal income tax
return filed on behalf of the Fund.
B-38
<PAGE>
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended October 31, 1997,
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 accompanies this SAI. The financial
statements included in the Annual Report, and the Independent Auditors' Report
thereon contained therein, and related notes, are incorporated herein by
reference.
B-39
<PAGE>
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
BOND, NOTE AND COMMERCIAL PAPER RATINGS
STANDARD & POOR'S ("S&P")
Bond Ratings
- ------------
AAA An obligation rated `AAA' has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues only
in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
significant speculative characteristics. `BB' indicates the least degree
of speculation and `C' the highest. While such obligations will likely
have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB An obligation rated `B' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions,
which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
B An obligation rated `B' is more vulnerable to nonpayment than
obligations rated `BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated `CCC' is currently vulnerable to nonpayment and
is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the
B-40
<PAGE>
obligation. In the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the capacity to meet
its financial commitment on the obligation.
CC An obligation rated `CC' is currently highly vulnerable to
nonpayment.
C The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated `D' is in payment default. The `D' rating
category is used when payments on a obligation are not made on
the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The `D' rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
The ratings from `AA' to `CCC' may be modified by the addition of a plus
(+) or a minus (-) sign to show relative standing within the major rating
categories
NOTE RATINGS
SP-1 Strong capacity to pay principal and interest. An issue determined
to possess a very strong capacity to pay debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse finance and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
Commercial Paper Ratings
- ------------------------
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign
(+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issuers designated `A-1.'
A-3 Issues carrying this designation have an adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B-41
<PAGE>
B Issues rated `B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated `D' is in payment default. The `D' rating category is
used when interest payments of principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes such payments will be made during such grace
period.
MOODY'S
Bond Ratings
- ------------
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B-42
<PAGE>
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect
to principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked short-comings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within each generic rating classification from Aa through B. The
modifier 1 indicates a ranking for the security in the higher end of a
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of a rating category.
Notes And Other Short-term Obligations
- --------------------------------------
There are four rating categories for short-term obligations that define an
investment grade situation. These are designated Moody's Investment Grade as MIG
1 (best quality) through MIG 4 (adequate quality). Short-term obligations of
speculative quality are designated SG.
In the case of variable rate demand obligations (VRDOs), a two component
rating is assigned. The first element represents an evaluation of the degree of
risk associated with scheduled principal and interest payments, and the other
represents an evaluation of the degree of risk associated with the demand
feature. The short-term rating assigned to the demand feature of VRDOs is
designated as VMIG. When either the long- or short-term aspect of a VRDO is not
rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG 1/
VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/
VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
B-43
<PAGE>
MIG 4/
VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
Commercial Paper Rating
- -----------------------
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
. Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
. Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser agree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements and
may require relatively high financial leverage. Adequate alternative
liquidity is maintained.
FITCH INVESTOR SERVICES, INC. ("FITCH")
Bond Ratings
- ------------
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably forseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated `AAA'.
B-44
<PAGE>
Because bonds rated in the `AAA' and `AA' categories are not
significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated `F-1+'.
A Bonds considered to be investment grade and of high credit quality,
The obligor's ability to pay interest an repay principal is
considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and satisfactory credit
quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact
on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified, which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable
business and economic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics that, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, DD
and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of
their ultimate recovery value in liquidation or reorganization of
the obligor. `DDD' represents the highest potential for recovery on
these bonds, and `D' represents the lowest potential for recovery.
+/- Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the `DDD', `DD', or `D'
categories.
B-45
<PAGE>
Short-term And Commercial Paper Ratings
- ---------------------------------------
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the existence
of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+ EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely
payment.
F-1 VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated `F-1+'.
F-2 GOOD CREDIT QUALITY. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned `F-1+' and `F-1' ratings.
F-3 FAIR CREDIT QUALITY. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause
these securities to be rated below investment grade.
D DEFAULT. Issues assigned this rating are in actual or imminent
payment default.
B-46
<PAGE>
DUFF & PHELPS INC. ("DUFF & PHELPS")
Long-term Ratings
- -----------------
AAA Highest credit quality. The risks factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest
AA but may vary slightly from time to time because of economic
AA- conditions. AA-
A+ Protections factors are average but adequate. However, risk factors
A are more variable and greater in periods of economic stress.
A-
BBB+ Below-average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk during
BBB- economic cycles.
BB+ Below investments grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
B+ Below investment grade and possessing risk that obligations will not
B be met when due. Financial protection factors will fluctuate widely
B- according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.
Short-term And Commercial Paper Ratings
- ---------------------------------------
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
B-47
<PAGE>
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
D-1- High certainly of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financial requirements, access to capital markets is good.
Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify issues
as to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
D-4 Speculative investment characteristics. Liquidity is not sufficient
to insure against disruption in debt service. Operating factors and
market access may be subject to a high degree of variation.
D-5 Issuer failed to meet scheduled principal and/or interest payments.
IBCA LIMITED/IBCA INC. ("IBCA")
Commercial Paper Ratings.
- -------------------------
Short-term obligations, including commercial paper, rated A-1+ by IBCA are
obligations supported by the highest capacity for timely repayment. Obligations
rated A-1 have a very strong capacity for timely repayment. Obligations rated
A-2 have a strong capacity for repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
B-48
<PAGE>
THE DREYFUS/LAUREL FUNDS, INC.
(formerly, The Laurel Funds, Inc.)
PART C
OTHER INFORMATION
-----------------
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) FINANCIAL STATEMENTS:
--------------------
To be filed by amendment.
(b) EXHIBITS:
--------
1(a) Articles of Incorporation dated July 31, 1987.
Incorporated by reference to Post-Effective Amendment No.
41 to the Registrant's Registration Statement on Form N-1A
("Post-Effective Amendment No. 41") filed on December 29,
1995.
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. Incorporated
by reference to Post-Effective Amendment No. 41.
1(d) Articles Supplementary dated March 31, 1994 reclassifying
shares. Incorporated by reference to Post-Effective
Amendment No. 41.
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 to the
Registrant's Registration Statement on Form N-1A
("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 to the Registrant's Registration Statement on Form N-1A
("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.
<PAGE>
1(k) Articles of Amendment dated October 31, 1995 designating
and classifying shares. Incorporated by reference to
Post-Effective Amendment No. 41.
1(l) Articles of Amendment dated November 22, 1995 designating
and reclassifying shares. Incorporated by reference to
Post-Effective Amendment No. 41.
1(m) Articles of Amendment dated July 15, 1996. Incorporated by
reference to Post-Effective Amendment No. 53 to the
Registrant's Registration Statement on Form N-1A
("Post-Effective Amendment No. 53") filed on August 20, 1997.
1(n) Articles of Amendment dated February 27, 1997. Incorporated by
reference to Post-Effective Amendment No. 53.
1(o) Articles of Amendment dated August 13, 1997. Incorporated by
reference to Post-Effective Amendment No. 53.
1(p) Articles of Amendment dated October 30, 1997. Incorporated by
reference to Post-Effective Amendment No. 56 to the
Registrant's Registration Statement on Form N-1A
("Post-Effective Amendment No. 56") filed on November 4, 1997.
2 Bylaws. Incorporated by reference to Post-Effective Amendment
No. 53.
3 Not Applicable.
4 Specimen security. Incorporated by Reference to Post-Effective
Amendment No. 54 to the Registrant's Registration Statement on
Form N-1A.
5(a) Form of Investment Management Agreement between Mellon Bank,
N.A. and the Registrant. Incorporated by reference to
Post-Effective Amendment No. 41.
5(b) Amended Exhibit A to Investment Management Agreement between
Mellon Bank, N.A. and the Registrant. To be filed by
amendment.
5(c) 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.
5(d) Form of Sub-Investment Advisory Agreement between The Dreyfus
Corporation and Fayez Sarofim & Co. (relating to Dreyfus
Premier Tax Managed Fund). Incorporated by reference to
Post-Effective Amendment No. 56.
6(a) Distribution Agreement between Premier Mutual Fund Services,
Inc. and the Registrant. Incorporated by reference to
Post-Effective Amendment No. 31.
6(b) Amended Exhibit A to Distribution Agreement between Premier
Mutual Fund Services, Inc. and the Registrant. To be filed by
amendment.
7 Not Applicable.
C-2
<PAGE>
8(a) Form of Custody Agreement between the Registrant and Mellon
Bank, N.A. Incorporated by reference to Post-Effective
Amendment No. 41.
8(b) Sub-Custodian Agreement between Mellon Bank, N.A. and Boston
Safe Deposit and Trust Company. To be filed by amendment.
10 Opinion of counsel is incorporated by reference to the
Registrant's Registration Statement on Form N-1A --
Registration No. 33-16338 ("Registration Statement") filed on
August 6, 1987 and to Post-Effective Amendment No. 32 and
Post-Effective Amendment No. 56.
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). Filed herewith.
15(b) Distribution Plan (relating to Class B Shares and Class C
Shares). Filed herewith.
15(c) Amended Service Plan (relating to Class B Shares, Class C
Shares and Class T Shares). Filed herewith.
15(d) Distribution Plan (relating to Class T shares). Incorporated
by reference to Post-Effective Amendment No. 56.
16 Schedule for computation of performance calculation is
incorporated by reference to Post-Effective Amendment No. 26
to the Registrant's Registration Statement on Form N-1A filed
on March 1, 1994.
17 Not applicable.
18(a) Rule 18f-3 Plans. Incorporated by reference to Post- Effective
Amendment No. 50 to Registrant's Registration Statement on
Form N-1A filed on November 1, 1996 and Post-Effective
Amendment No. 53. Certain amended 18f-3 Plans to be filed by
amendment.
18(b) Rule 18f-3 Plan (relating to Dreyfus Premier Tax Managed
Growth Fund). Incorporated by reference to Post-Effective
Amendment No. 56.
25(a) Power of Attorney of Marie E. Connolly dated September 25,
1997. Incorporated by reference to Post-Effective Amendment
No. 56.
25(b) Powers of Attorney of the Directors dated October 24, 1996.
Incorporated by reference to Post-effective Amendment No. 53.
C-3
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
Not Applicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES
-------------------------------
To be filed by amendment.
Item 27. INDEMNIFICATION
---------------
(a) Subject to the exceptions and limitations contained in Section (b) below:
(i) every person who is, or has been a Director or officer of the
Registrant (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or
having been a Covered Person and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Registrant or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Funds; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Directors who are neither
interested persons of the Registrant nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
C-4
<PAGE>
(C) by written opinion of independent legal counsel based upon
a review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Directors, or by independent counsel.
(c) The Registrant may purchase and maintain insurance on behalf of any
Covered Person against any liability asserted against him and incurred by him in
any such capacity or arising out of his status as such, whether or not the
Registrant would have the power to indemnify him against such liability. The
Registrant may not acquire or obtain a contract for insurance that protects or
purports to protect any Covered Person against any liability to the Registrant
or its shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
(d) Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in paragraph
(a) above may be paid by the appropriate Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the applicable
Series if it is ultimately determined that he is not entitled to indemnification
hereunder; provided, however, that either (i) such Covered Person shall have
provided appropriate security for such undertaking, (ii) the Registrant is
insured against losses arising out of any such advance payments or (iii) either
a majority of the Directors who are neither interested persons of the funds nor
parties to the matter, or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that such Covered
Person will be found entitled to indemnification hereunder.
Item 28. BUSINESS AND OTHER CONNECTION OF INVESTMENT ADVISER
---------------------------------------------------
Investment Adviser -- The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise a
financial service organization whose business consists primarily of providing
investment management services as the investment adviser, manager and
distributor for sponsored investment companies registered under the Investment
Company Act of 1940 and as an investment adviser to institutional and individual
accounts. Dreyfus also serves as sub-investment adviser to and/or administrator
of other investment companies. Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus, serves primarily as a registered broker-dealer of shares
of investment companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned subsidiary,
provides investment management services to various pension plans, institutions
and individuals.
OFFICERS AND DIRECTORS OF INVESTMENT ADVISER
--------------------------------------------
Name and Position
With Dreyfus Other Businesses
- ----------------- ----------------
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
C-5
<PAGE>
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
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
W. KEITH SMITH Chairman and Chief Executive Officer:
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***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director 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 Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
C-6
<PAGE>
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:
Dreyfus America Fund
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
World Balanced Fund****;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****;
RICHARD F. SYRON Chairman of the Board and Chief
Director Executive Officer:
American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, N.W. Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Avenue
Chestnut Hill, Massachusetts 02167-3934
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 America Fund;
World Balanced Fund****;
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 Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Secretary:
Vice President, The Dreyfus Consumer Credit Corporation*;
General Counsel Dreyfus Management, Inc.*;
and Secretary Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*;
C-7
<PAGE>
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
WILLIAM V. HEALEY President:
Assistant Secretary The Truepenny Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
Secretary and Director:
Dreyfus Partnership Management Inc.*;
Director:
The Dreyfus Trust Company**;
Assistant Secretary:
Dreyfus Service Corporation*;
Dreyfus Investment Advisors, Inc.;
53 State Street
Exchange Place
Boston, MA 02109
Assistant Clerk
Dreyfus Insurance Agency of
Massachusetts, Inc.
111 State Street
Boston, Massachusetts 02109.
- --------------------------------------
* The address of the business so indicated is 200 Park Avenue, New York,
New York 10166.
** 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 69, Route `d`Esch, L-
1470 Luxembourg.
++++ The address of the business so indicated is 69, Route `d` Esch, L-
2953 Luxembourg.
C-8
<PAGE>
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 Funds, 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 Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds Trust
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus LifeTime Portfolios, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus MidCap Index Fund
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
C-9
<PAGE>
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus 100% U.S. Treasury Intermediate Term Fund
56) Dreyfus 100% U.S. Treasury Long Term Fund
57) Dreyfus 100% U.S. Treasury Money Market Fund
58) Dreyfus 100% U.S. Treasury Short Term Fund
59) Dreyfus Pennsylvania Intermediate Municipal Bond Fund,
Inc.
60) Dreyfus Pennsylvania Municipal Money Market Fund
61) Dreyfus S&P 500 Index Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) The Dreyfus Socially Responsible Growth Fund, Inc.
65) Dreyfus Stock Index Fund, Inc.
66) Dreyfus Tax Exempt Cash Management
67) The Dreyfus Third Century Fund, Inc.
68) Dreyfus Treasury Cash Management
69) Dreyfus Treasury Prime Cash Management
70) Dreyfus Variable Investment Fund
71) Dreyfus Worldwide Dollar Money Market Fund, Inc.
72) General California Municipal Bond Fund, Inc.
73) General California Municipal Money Market Fund
74) General Government Securities Money Market Fund, Inc.
75) General Money Market Fund, Inc.
76) General Municipal Bond Fund, Inc.
77) General Municipal Money Market Fund, Inc.
78) General New York Municipal Bond Fund, Inc.
79) General New York Municipal Money Market Fund
80) Dreyfus Premier Insured Municipal Bond Fund
81) Dreyfus Premier California Municipal Bond Fund
82) Dreyfus Premier Equity Funds, Inc.
83) Dreyfus Premier Global Investing, Inc.
84) Dreyfus Premier GNMA Fund
85) Dreyfus Premier Growth Fund, Inc.
86) Dreyfus Premier Municipal Bond Fund
87) Dreyfus Premier New York Municipal Bond Fund
88) Dreyfus Premier State Municipal Bond Fund
89) Dreyfus Premier Worldwide Growth Fund, Inc.
90) Dreyfus Premier Value Fund
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 Office and Treasurer
Compliance Officer
Joseph F. Tower, III+ Senior Vice President, Vice President
Treasurer and Chief and Assistant
Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, Vice President
General Counsel, Secretary and Secretary
and Clerk
C-10
<PAGE>
Richard W. Ingram+ Executive Vice President Vice President
and Secretary
Roy M. Moura+ First Vice President None
Elizabeth A. Keeley++ Vice President Vice President
and Assistant
Secretary
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
- --------------------
+ Principal business address is One Exchange Place, 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. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
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 Board member or Board members when
requested in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares 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.
C-11
<PAGE>
(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.
(3) To file a post-effective amendment using financial statements, which
need not be certified, within six months from the effective date of
Registrant's 1933 Act Registration Statement, so long as such filing
is required by the Rules promulgated by the Securities and Exchange
Commission at such time.
C-12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Amendment to its 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 13th day of November, 1997.
THE DREYFUS/LAUREL FUNDS, INC.
BY: /s/ Marie E. Connolly*
--------------------------------------
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
SIGNATURES TITLE DATE
---------- ----- ----
/s/Marie E. Connolly* President, Treasurer 11/13/97
- ------------------------
Marie E. Connolly
/s/Francis P. Brennan* Director, 11/13/97
________________________ Chairman of the Board
Francis P. Brennan
/s/Ruth Marie Adams* Director 11/13/97
- ------------------------
Ruth Marie Adams
/s/Joseph S. DiMartino* Director 11/13/97
- ------------------------
Joseph S. DiMartino
/s/James M. Fitzgibbons* Director 11/13/97
- ------------------------
James M. Fitzgibbons
/s/Kenneth A. Himmel* Director 11/13/97
- ------------------------
Kenneth A. Himmel
/s/Stephen J. Lockwood* Director 11/13/97
- ------------------------
Stephen J. Lockwood
/s/Roslyn M. Watson* Director 11/13/97
- ------------------------
Roslyn M. Watson
<PAGE>
/s/J. Tomlinson Fort* Director 11/13/97
- ------------------------
J. Tomlinson Fort
/s/Arthur L. Goeschel* Director 11/13/97
- ------------------------
Arthur L. Goeschel
/s/Arch S. Jeffery* Director 11/13/97
- ------------------------
Arch S. Jeffery
/s/John Sciullo* Director 11/13/97
- ------------------------
John Sciullo
*By: /s/ Elizabeth Keeley
------------------------
Elizabeth Keeley,
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
-----------------
15(a) Restated Distribution Plan (relating to Investor Shares and
Class A Shares)
15(b) Distribution Plan (relating to Class B Shares and Class C
Shares)
15(c) Amended Service Plan (relating to Class B Shares, Class
C Shares and Class T Shares)
THE DREYFUS/LAUREL FUNDS, INC.
RESTATED DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds, Inc.)
(the "Investment Company") is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended, (the "1940 Act")
and consists of one or more distinct portfolios of shares of common stock
(collectively, the "Funds" and individually, a "Fund"), as may be established
and designated from time to time; and
WHEREAS, the Investment Company and its Distributor, a broker-dealer
registered under the Securities Act of 1934, as amended, have entered into a
Distribution Plan pursuant to which the Distributor will act as the distributor
of certain classes of shares (the "Shares") of the Funds; and
WHEREAS, the Board of Directors of the Investment Company has adopted the
Distribution Plan in accordance with the requirements of the 1940 Act and Rule
12b-1 thereunder, and has concluded, in the exercise of its reasonable business
judgment and in light of its fiduciary duties, that there is a reasonable
likelihood that the Distribution Plan will benefit the Investment Company and
the holders of the Funds' Shares;
NOW THEREFORE, the Investment Company hereby restates the Distribution
Plan as set forth below in this Restated Distribution Plan (the "Plan"):
SECTION 1. PAYMENTS FOR DISTRIBUTION-RELATED SERVICES. The Investment
Company may pay for any activities or expenses primarily intended to result in
the sale of certain classes of Shares of the Funds, as listed on Exhibit A, as
such Exhibit may be amended from time to time. Payments by the Investment
Company under this Section of this Plan will be calculated daily and paid
monthly at a rate or rates set from time to time by the Investment Company's
Board of Directors, provided that no rate set by the Board for any Fund may
exceed, on an annual basis, 0.25% of the value of a Fund's average daily net
assets attributable to the class or classes of the Fund's Shares listed on
Exhibit A, as such Exhibit may be amended from time to time.
SECTION 2. EXPENSES COVERED BY PLAN. The fees payable under Section 1 of
this Plan may be used to compensate (i) Dreyfus Service Corporation for
shareholder servicing services provided by it, and/or (ii) the Distributor for
distribution and/or shareholder servicing services provided by it, and related
expenses incurred, including payments by the Distributor to compensate banks,
broker/dealers or other financial institutions that have entered into written
agreements with respect to shareholder services and sales support services
("Agreements") with the Distributor ("Selling and Servicing Agents"), for
shareholder servicing and sales support services provided, and related expenses
incurred, by such Selling and Servicing Agents.
<PAGE>
SECTION 3. AGREEMENTS. The Distributor may enter into written Agreements
with Selling and Servicing Agents, such Agreements to be substantially in such
forms as the Board of Directors of the Investment Company may duly approve from
time to time.
SECTION 4. LIMITATIONS ON PAYMENTS. Payment made by a particular Fund
under Section 1 must be for distribution and/or shareholder servicing rendered
for or on behalf of such Fund. However, joint distribution or sales support
financing with respect to a Fund (which financing may also involve other
investment portfolios or companies that are affiliated persons of such a person,
or affiliated persons of the Distributor) shall be permitted in accordance with
applicable regulations of the Securities and Exchange Commission as in effect
from time to time.
Except for the payments specified in Section 1, no additional payments are
to be made by the Investment Company under this Plan, provided that nothing
herein shall be deemed to preclude the payments a Fund is otherwise obligated to
make to The Dreyfus Corporation ("Dreyfus") pursuant to the Investment
Management Agreement, and for the expenses otherwise incurred by such Fund and
the Investment Company on behalf of the Shares in the normal conduct of such
Fund's business pursuant to the Investment Management Agreement. To the extent
any payments by the Investment Company on behalf of a Fund to Dreyfus, or any
affiliate thereof, or to any party pursuant to any agreement, or, generally, by
the Investment Company on behalf of a Fund to any party, are deemed to be
payments for the financing of any activity primarily intended to result in the
sale of the Shares within the context of Rule 12b-1 under the 1940 Act, then
such payments shall be deemed to have been approved pursuant to this Plan
without regard to Section 1.
Notwithstanding anything herein to the contrary, no Fund shall be
obligated to make any payments under this Plan that exceed the maximum amounts
payable under Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc.
SECTION 5. REPORTS. So long as this Plan is in effect, the Distributor
and/or Dreyfus shall provide to the Investment Company's Board of Directors, and
the Directors shall review at least quarterly, a written report of the amounts
expended by a Fund pursuant to the Plan, or by Selling and Servicing Agents
pursuant to Agreements, and the purposes for which such expenditures were made.
SECTION 6. MAJORITY VOTE. As used herein, the term "Majority Vote" of the
Shares of a class of a Fund means a vote of the holders of the lesser of (a)
more than fifty percent (50%) of the outstanding Shares of such class of such
Fund or (b) sixty-seven percent (67%) or more of the Shares of such class of
such Fund present at a shareholders' meeting in person or by proxy.
SECTION 7. APPROVAL OF PLAN. This Plan will become effective at such time
as is specified by the Board of Directors, as to any class of a Fund; provided,
however, that the Plan is approved by: (a) a Majority Vote of the Shares of such
class of such Fund if adopted after the public offering of such Shares or the
sale of such Shares to persons who are not affiliated persons of the Investment
Company, affiliated persons of such persons, promoters of the Investment
Company, or affiliated persons of such promoters (as such terms are defined in
2
<PAGE>
the 1940 Act); and (b) a majority of the Board of Directors, including a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Investment Company and who have no direct or indirect financial
interest in the operation of this Plan or in any Agreements entered into in
connection with this Plan, pursuant to a vote cast in person at a meeting called
for the purpose of voting on the approval of this Plan.
SECTION 8. CONTINUANCE OF PLAN. This Plan shall continue in effect for so
long as its continuance is specifically approved at least annually by the
Investment Company's Board of Directors in the manner described in Section 7(b)
hereof.
SECTION 9. AMENDMENTS . This Plan may be amended at any time by the Board
of Directors provided, that (a) any amendment to increase materially the costs
which a Fund's class of Shares may bear for distribution pursuant to this Plan
shall be effective only upon the Majority Vote of the outstanding Shares of such
class of the Fund, and (b) any material amendments of the terms of this Plan
shall become effective only upon approval as provided in Section 7(b) hereof.
SECTION 10. TERMINATION. This Plan is terminable, as to a Fund's class of
Shares, without penalty at any time by (a) a vote of a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act) of the Investment
Company and who have no direct or indirect financial interest in the operation
of this Plan or in any Agreements entered into in connection with this Plan, or
(b) a Majority Vote of the outstanding Shares of such class of the Fund.
SECTION 11. SELECTION/NOMINATION OF DIRECTORS. While this Plan is in
effect, the selection and nomination of those Directors who are not "interested
persons" (as defined in the 1940 Act) of the Investment Company shall be
committed to the discretion of such non-interested Directors.
SECTION L2. RECORDS. The Investment Company will preserve copies of this
Plan, and any related Agreements and any written reports regarding this Plan
presented to the Board of Directors, for a period of not less than six (6) years
from the date of this Plan, such Agreement or written report, as the case may
be, the first two (2) years of such period in an easily accessible place.
SECTION 13. MISCELLANEOUS. The captions in this Plan are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Investment Company has adopted this Restated
Distribution Plan as of this l7th day of October, l994, as revised November 20,
1997.
3
<PAGE>
EXHIBIT A
THE DREYFUS/LAUREL FUNDS, INC.
INSTITUTIONAL SHARES:
Dreyfus Disciplined Stock Fund
INVESTOR SHARES:
Dreyfus Bond Market Index Fund
Dreyfus International Equity Allocation Fund
Dreyfus Money Market Reserves
Dreyfus U.S. Treasury Reserves
Dreyfus Municipal Reserves
Dreyfus Disciplined Intermediate Bond Fund
CLASS A SHARES:
Dreyfus Premier Balanced Fund
Dreyfus Premier Small Company Stock Fund
Dreyfus Premier Limited Term Income Fund
Dreyfus Premier Large Company Growth Fund
Dreyfus Premier Tax Advantaged Growth Fund
Dreyfus Disciplined Midcap Stock Fund (renamed Dreyfus Premier Midcap
Stock Fund effective January 16, 1998)
Dreyfus Disciplined Equity Income Fund (renamed Dreyfus Premier Large
Company Stock Fund effective January 16, 1998)
THE DREYFUS/LAUREL FUNDS, INC.
DISTRIBUTION PLAN
INTRODUCTION: It has been proposed that the above-captioned investment
company (the "Company"), consisting of distinct portfolios of shares (each a
"Fund"), adopt a Distribution Plan (the "Plan") relating to its Class B shares
and Class C shares, respectively, in accordance with Rule 12b-1 promulgated
under the Investment Company Act of 1940, as amended (the "Act"). Under the
Plan, a Fund would pay the Company's distributor (the "Distributor") for
distributing the Class B shares and Class C shares, respectively, of the Fund
(each such Fund as set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time). Pursuant to the Act and said Rule 12b-1, this written plan
describing all material aspects of the proposed financing is being adopted by
the Company, on behalf of each Fund.
The Company's Board, in considering whether a Fund should implement a
written plan with respect to its Class B shares and Class C shares,
respectively, has requested and evaluated such information as it deemed
necessary to make an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use Fund assets attributable to its Class B
shares and Class C shares, respectively, for such purposes.
In voting to approve the implementation of such a plan with respect to a
Fund's Class B shares and Class C shares, respectively, the Board members have
concluded, in the exercise of their reasonable business judgment and in light of
their respective fiduciary duties, that there is a reasonable likelihood that
the plan set forth below will benefit the Fund and the holders of its Class B
shares and Class C shares, respectively.
THE PLAN: The material aspects of this Plan as it relates to a
particular Class of a Fund are as follows:
1. DISTRIBUTION FEE FOR CLASS B SHARES. A Fund shall pay to the
Distributor a distribution fee at an annual rate of either (i) 0.75 of 1% (in
the case of an equity Fund) or (ii) 0.50 of 1% (in the case of a bond Fund) of
the value of the Fund's average daily net assets attributable to its Class B
shares.
<PAGE>
DISTRIBUTION FEE FOR CLASS C SHARES. A Fund shall pay to the
Distributor a distribution fee at an annual rate of either (i) 0.75 of 1% (in
the case of an equity Fund) or (ii) 0.50 of 1% (in the case of a bond Fund) of
the value of the Fund's average daily net assets attributable to its Class C
shares.
2. For purposes of determining the fee payable under this Plan with
respect to a particular Class of a Fund to which it relates, the value of the
Fund's net assets attributable to its Class B shares and Class C shares,
respectively, shall be computed in the manner specified in the Company's charter
documents as then in effect or in the Company's then current Prospectus and
Statement of Additional Information for the computation of the value of the
Fund's net assets attributable to Class B shares and Class C shares,
respectively.
3. The Company's Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan with respect to a
particular Class of a Fund to which it relates. The report shall state the
purpose for which the amounts were expended.
4. This Plan shall become effective with respect to a particular Class of
a Fund to which it relates upon the approval by: (a) the holders of at least a
majority of the Fund's outstanding voting shares of that Class if adopted after
the public offering of such shares or the sale of such shares to persons who are
not affiliated persons of the Company, affiliated persons of such persons,
promoters of the Company, or affiliated persons of such promoters (as such terms
are defined in the Act); and (b) a majority of the Board members, including a
majority of the Board members who are not "interested persons" (as defined in
the Act) of the Company and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection with
this Plan, pursuant to a vote cast in person at a meeting called for the purpose
of voting on the approval of this Plan.
5. This Plan shall continue with respect to a particular Class of a Fund
to which it relates for a period of one year from its effective date, unless
earlier terminated in accordance with its terms, and thereafter shall continue
with respect to that Class automatically for successive annual periods, provided
such continuance is approved at least annually in the manner provided in
paragraph 4(b) hereof.
-2-
<PAGE>
6. This Plan may be amended, with respect to a particular Class of a Fund
to which it relates, at any time by the Company's Board, provided that (a) any
amendment to increase materially the costs that a particular Class of a Fund may
bear pursuant to this Plan shall be effective only upon approval by a vote of
the holders of a majority of the Fund's outstanding voting shares of that Class,
and (b) any material amendments of the terms of this Plan as it relates to a
particular Class of a Fund shall become effective only upon approval as provided
in paragraph 4(b) hereof.
7. This Plan may be terminated, with respect to a particular Class of a
Fund to which it relates, without penalty at any time by (a) a vote of a
majority of the Board members who are not "interested persons" (as defined in
the Act) of the Company and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection with
this Plan, or (b) a vote of the holders of a majority of the Fund's outstanding
voting shares of that Class. This Plan may remain in effect with respect to a
particular Class of a Fund even if the Plan has been terminated in accordance
with this paragraph 7 with respect to any other Class.
8. While this Plan is in effect, the selection and nomination of Board
members who are not "interested persons" (as defined in the Act) of the Company
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this Plan shall be
committed to the discretion of the Board members who are not "interested
persons".
9. The Company will preserve copies of this Plan, any related agreement
and any report made pursuant to paragraph 3 hereof, for a period of not less
than six (6) years from the date of this Plan, such agreement or report, as the
case may be, the first two (2) years of such period in an easily accessible
place.
IN WITNESS WHEREOF, the Company has adopted this Plan as of this 19th day
of December, 1994, as revised November 20, 1997.
-3-
<PAGE>
EXHIBIT A
Dreyfus Premier Balanced Fund (equity Fund)
Dreyfus Premier Small Company Stock Fund (equity Fund)
Dreyfus Premier Limited Term Income Fund (bond Fund)
Dreyfus Premier Large Company Growth Fund (equity Fund)
Dreyfus Premier Tax Managed Growth Fund (equity Fund)
Dreyfus Disciplined Midcap Stock Fund (renamed Dreyfus Premier Midcap Stock
Fund effective January 16, 1998) (equity Fund)
Dreyfus Disciplined Equity Income Fund (renamed Dreyfus Premier Large
Company Stock Fund effective January 16, 1998) (equity Fund)
-4-
THE DREYFUS/LAUREL FUNDS, INC.
AMENDED SERVICE PLAN
INTRODUCTION: It has been proposed that the above-captioned investment
company (the "Company"), consisting of distinct portfolios of shares (each a
"Fund"), adopt a Service Plan (the "Plan") relating to its Class B shares, Class
C shares and Class T shares, respectively, in accordance with Rule 12b-1
promulgated under the Investment Company Act of 1940, as amended (the "Act").
Under the Plan, a Fund would pay for the provision of services to shareholders
of Class B shares, Class C shares and Class T shares, respectively, of the Fund
(each such Fund as set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time). The Distributor would be permitted to pay certain financial
institutions, securities dealers and other industry professionals (collectively,
"Service Agents") in respect of these services. The fee under the Plan with
respect to a particular Class of a Fund is intended to be a "service fee" as
defined in Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc. Pursuant to the Act and said Rule 12b-1, this written
plan describing all material aspects of the proposed financing is being adopted
by the Company, on behalf of each Fund.
The Company's Board, in considering whether a Fund should implement a
written plan with respect to its Class B shares, Class C shares and Class T
shares, respectively, has requested and evaluated such information as it deemed
necessary to make an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use Fund assets attributable to its Class B
shares, Class C shares and Class T shares, respectively, for such purposes.
In voting to approve the implementation of such a plan with respect to a
Fund's Class B shares, Class C shares and Class T shares, respectively, the
Board members have concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is a
reasonable likelihood that the plan set forth below will benefit the Fund and
the holders of its Class B shares, Class C shares and Class T shares,
respectively.
<PAGE>
THE PLAN: The material aspects of this Plan as it relates to a
particular Class of a Fund are as follows:
1. A Fund shall pay an amount equal to an annual rate of 0.25 of 1% of
the value of the Fund's average daily net assets attributable to its Class B
shares, Class C shares and Class T shares, respectively, to (a) Dreyfus Service
Corporation ("DSC"), or any affiliate thereof designated by it, in respect of
shares of a particular Class held of record by DSC, and (b) the Distributor, in
respect of shares of a particular Class held of record by any other person. Such
payments shall be for the provision of personal services to shareholders of
and/or the maintenance of shareholder accounts in a particular Class of a Fund.
The Distributor shall determine the amounts to be paid to Service Agents and the
basis on which such payments will be made. Payments to a Service Agent are
subject to compliance by the Service Agent with the terms of any related Plan
agreement between the Service Agent and the Distributor.
2. For purposes of determining the fee payable under this Plan with
respect to a particular Class of a Fund to which it relates, the value of the
Fund's net assets attributable to its Class B shares, Class C shares and Class T
shares, respectively, shall be computed in the manner specified in the Company's
charter documents as then in effect or in the Company's then current Prospectus
and Statement of Additional Information for the computation of the value of the
Fund's net assets attributable to Class B shares, Class C shares and Class T
shares, respectively.
3. The Company's Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan with respect to a
particular Class of a Fund to which it relates. The report shall state the
purpose for which the amounts were expended.
4. This Plan shall become effective with respect to a particular Class
of a Fund to which it relates upon the approval by: (a) the holders of at least
a majority of the Fund's outstanding voting shares of that Class if adopted
after the public offering of such shares or the sale of such shares to persons
who are not affiliated persons of the Company, affiliated persons of such
persons, promoters of the company, or affiliated persons of such promoters (as
such terms are defined in the Act); and (b) a majority of the Board members,
including a majority of the Board members who are not "interested persons" (as
defined in the Act) of the Company and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into in
2
<PAGE>
connection with this Plan, pursuant to a vote cast in person at a meeting called
for the purpose of voting on the approval of this Plan.
5. This Plan shall continue with respect to a particular Class of a
Fund to which it relates for a period of one year from its effective date,
unless earlier terminated in accordance with its terms, and thereafter shall
continue with respect to that Class automatically for successive annual periods,
provided such continuance is approved at least annually in the manner provided
in paragraph 4(b) hereof.
6. This Plan may be amended, with respect to a particular Class of a
Fund to which it relates, at any time by the Company's Board, provided that (a)
any amendment to increase materially the costs that a particular Class of a Fund
may bear pursuant to this Plan shall be effective only upon approval by a vote
of the holders of a majority of the Fund's outstanding voting shares of that
Class, and (b) any material amendments of the terms of this Plan as it relates
to a particular Class of a Fund shall become effective only upon approval as
provided in paragraph 4(b) hereof.
7. This Plan may be terminated, with respect to a particular Class of a
Fund to which it relates, without penalty at any time by (a) a vote of a
majority of the Board members who are not "interested persons" (as defined in
the Act) of the Company and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection with
this Plan, or (b) a vote of the holders of a majority of the Fund's outstanding
voting shares of that Class. This Plan may remain in effect with respect to a
particular Class of a Fund even if the Plan has been terminated in accordance
with this paragraph 7 with respect to any other Class.
8. While this Plan is in effect, the selection and nomination of Board
members who are not "interested persons" (as defined in the Act) of the Company
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this Plan shall be
committed to the discretion of the Board members who are not "interested
persons".
9. The Company will preserve copies of this Plan, any related agreement
and any report made pursuant to paragraph 3 hereof, for a period of not less
3
<PAGE>
than six (6) years from the date of this Plan, such agreement or report, as the
case may be, the first two (2) years of such period in an easily accessible
place.
IN WITNESS WHEREOF, the Company has adopted this Plan as of this 19th day
of December, 1994, as amended October 23, 1997 and November 20, 1997.
<PAGE>
AMENDED
Exhibit A
CLASS B SHARES AND CLASS C SHARES
---------------------------------
Dreyfus Premier Balanced Fund
Dreyfus Premier Small Company Stock Fund
Dreyfus Premier Limited Term Income Fund
Dreyfus Premier Large Company Growth Fund
Dreyfus Premier Tax Advantaged Growth Fund
Dreyfus Disciplined Midcap Stock Fund (renamed Dreyfus Premier Midcap
Stock Fund effective January 16, 1998)
Dreyfus Disciplined Equity Income Fund (renamed Dreyfus Premier Large
Company Stock Fund effective January 16, 1998)
CLASS T SHARES
--------------
Dreyfus Premier Tax Managed Growth Fund
3
