THE LION ACCOUNT AGREEMENT
This is a copy of your Customer Agreement. Please keep this for your records.
By signing the Account opening form(s), You represent that You have the
requisite legal capacity and authority to open this Account and effect
transactions under this Agreement and You agree to be bound by this Agreement
and any related agreements, rules and regulations and other documents as may
be in effect from time to time. This Agreement includes the General Terms
and Provisions located on pages 12 through 16. We may amend this Agreement
at any time in any respect upon notice to You as required by law. You must
notify Us of any address changes.
I. BROKERAGE ACCOUNT
1. Brokerage Services. Your Lion Account (the "Account") with Dreyfus Service
Corporation ("DSC") is an asset management account which consists of three
parts: (a) a conventional brokerage account for the purchase and sale of
securities (the "Brokerage Account") which is either a cash or Secured Credit
Line account, or both; (b) a choice of Sweep Money Market Funds; and (c) a
Card/Check Account. Your Brokerage Account and Sweep Funds are carried by
Pershing as clearing broker pursuant to a clearing agreement with DSC.
Pershing and DSC may accept, without inquiry or investigation, (i) orders for
the purchase or sale of securities and other property on margin or otherwise,
and (ii) other instructions concerning Your account. Notices to You
concerning Secured Credit Line Account requirements or other matters related
to Your Account usually will go through DSC; however, Pershing may contact You
directly if required by market conditions, time constraints or other
circumstances.
2. Sweep Fund. Any amounts received by Us for Your Account will be invested
in the Sweep Fund of Your choice subject to prior payment by You and on Your
behalf of any outstanding margin loan balances, Card overdrafts or other
debit items arising from Checks or Card usage, or authorization payments. You
hereby acknowledge that You have received and read a copy of the Prospectus
of the Sweep Fund You selected, containing a more complete description of it
and its operation. Please note that some special tax-exempt funds are only
available to residents of one state.
Pershing will automatically redeem sufficient shares of the Sweep Fund
to pay for all securities transactions, Checking and Card transactions. If
You intend to send funds to settle securities transactions, We must receive
those funds on the business day before the settlement date to prevent an
automatic redemption. Pershing will redeem Sweep Fund shares to pay for
Checking and Card transactions on the date We post the transaction to Your
account. We will not send confirmations for Fund transactions in Your
account.
3. Payment of Indebtedness Upon Demand. You shall at all times be liable for
the payment upon demand of any debit balance or other obligations owing in
any of Your accounts with Us and You shall be liable to Us for any
deficiency remaining in any such accounts in the event of the liquidation
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thereof, in whole or in part, by Us or by You; and You shall make payments of
such obligations and indebtedness upon demand.
4. Lien. All of Your securities, commodities and other property which
Pershing may at any time be carrying for You, or which may at any time be in
Our possession or under Our control, including, but not limited to,
individual Dreyfus mutual fund accounts not held by Pershing, shall be
subject to a general lien and security interest in Our favor for the
discharge of all Your indebtedness and other obligations to Us, without
regard to Our having made any advances in connection with such securities and
other property and without regard to the number of accounts You may have with
DSC. In enforcing Our lien, We shall have the discretion to determine which
securities and property are to be sold and which contracts are to be closed.
5. Option Transactions. If at any time You shall enter into any transaction
for the purchase or sale of an option contract, You hereby agree to first
obtain from DSC the then current disclosure statements of the Options
Clearing Corporation and further agree to abide by the rules of any national
securities association, registered securities exchange or clearing
organization applicable to the trading of option contracts and acting alone
or in concert, will not violate the position or exercise limitation rules of
any such association or exchange or of the Options Clearing Corporation or
other clearing organization.
6. Applicable Rules And Regulations. All of Your transactions shall be
subject to the constitution, rules, regulations, customs and usages of the
exchange or market and its clearing house, if any, where executed by us,
including any of Our subsidiaries and affiliates.
7. Role of Pershing; No Advice. You understand that Pershing provides no
investment advice nor does Pershing give advice or offer any opinion with
respect to the suitability of any transaction or order. You acknowledge that
neither Pershing nor DSC will provide You with any legal, tax or accounting
advice, that Our employees are not authorized to give any such advice and
that You will not solicit or rely upon any such advice from Pershing or Our
employees whether in connection with transactions in or for any of Your
accounts or otherwise. In making legal, tax or accounting decisions with
respect to transactions in or for Your accounts or any other matter, You will
consult with and rely upon Your own advisors and not Pershing and Pershing
shall have no liability therefor. Pershing shall not be responsible or liable
for any acts or omissions of DSC or its employees. You authorize Pershing to
act as Your agent to purchase and redeem for Your account shares of the Sweep
Fund, as hereafter defined, and You agree that You shall not hold Pershing,
Donaldson, Lufkin & Jenrette Securities Corporation, its other Divisions,
Affiliates, Officers, Directors, or Agents liable for any trading losses
incurred. You understand that Pershing will provide services to You
including, but not limited to, furnishing necessary documents and
information, blocking MasterCardRegistration Mark Accounts when notified by
Account Holders of the unauthorized use of their Cards or Checks, and
responding to and taking requisite action regarding inquiries, complaints or
disputes concerning their Lion Account.
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8. Scope and Transferability. This Agreement shall cover individually and
collectively all accounts that You may open or reopen through DSC and shall
inure to the benefit of Our successors whether by merger, consolidation or
otherwise, and assigns, and either DSC or Pershing may transfer Your accounts
to their successors and assigns, and this Agreement shall be binding upon
Your heirs, executors, administrators, successors and assigns. DSC, Pershing
or the Banks may assign their responsibilities under this Agreement, in whole
or in part, to any subsidiary, affiliate or successor by merger or
consolidation, or to any other entity, without notice to You. We are not
required to recognize any transfer of ownership of any part of any account
until We have received written notice of the transfer in a form satisfactory
to Us.
9. Extraordinary Events. We shall not be liable for loss caused directly or
indirectly by government restrictions, exchange or market rulings, suspension
of trading, war, strikes, exchange or market fluctuations or other conditions
beyond Our control.
II. CARD/CHECK ACCOUNT
1. Card/Check Services
a. Authorization Limit. Your Authorization Limit is calculated each Business
Day and is the sum of: (1) any free credit balances in Your Brokerage
Account; (2) the net asset value of the Sweep Fund shares in the Sweep Funds;
(3) the available margin loan value of securities in the Brokerage Account
(if Your Lion Account is established as a Secured Credit Line account).
The Authorization Limit may fluctuate from day to day because it is dependent
upon changes in the debit balance in the Brokerage Account as well as the
current market value of securities. As soon as the Banks are notified of the
use of the Card/Check, the Authorization Limit is immediately reduced, not
when a sales draft or cash advance draft is paid. Sweep Fund shares are not
redeemed, however, until the item is presented to the Banks for payment. If
Your Authorization Limit is reduced or will be reduced below zero due to
Checking and Card transactions, the Check may be returned unpaid or the Card
authorization will be declined. Certain charges will apply for any Checks
that are returned unpaid, as disclosed on the Account Fee Schedule.
You promise not to incur Card purchases or advances or issue Checks that
exceed Your Authorization Limit.
b. Hold On Check Deposits. Once a check is deposited into Your Brokerage
Account, a hold may be placed on it and any increase in Your Authorization
Limit may be delayed for up to seven Business Days after the day the check is
received.
However, even if a hold is imposed, You will be entitled to sweep that amount
to the Sweep Fund the following Business Day, provided the amount meets
purchase requirements (see Prospectus). During a hold period, Checks cannot
be written, Card purchases cannot be made, and cash cannot be withdrawn
against the funds represented by the deposited check.
c. Card(s)/Check Transactions. The Banks will send You Checks and a
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Card(s) on approval of Your request. Fees may apply for the Check printing
and postage of any additional Checks that are ordered (see attached Account
Fee Schedule). The Card may be canceled at any time without prior notice and
will remain the property of the Banks.
The Card provides You with the following conveniences up to the amount of
Your Authorization Limit: (1) it allows You to make purchases of merchandise
or services at participating MasterCardRegistration Mark establishments and
(2) it allows You to obtain cash withdrawals (which may be limited to $5,000
per account per day by the bank where You are requesting the advance) as well
as from Automatic Teller Machines (ATMs) participating in the MasterCard
Registration Mark ATM Network. A fee will be imposed for ATM usage (see
attached Account Fee Schedule).
Checks may be written on the Account for U.S. dollars only. You may not use
the Checks or the Card to purchase securities.
d. MasterCardRegistration Mark Restrictions. Restrictions on the maximum
amount of cash withdrawals are allowed to be imposed by member banks. Also,
for security or other reasons, some Card transactions may be limited or not
completed.
e. Payment for Card/Check Transactions. On a daily basis, the Banks will
notify Pershing of charges (whether by use of the Card, Checks or other
means) received by the Banks. Payments will be paid to the Banks on Your
behalf on each Business Day that Pershing receives notice of the Card or Check
ing transactions. If the Banks do not receive payment from Pershing, the
Banks may return any Checks and charge back any Card transactions. All
debits to Your Lion Account will be posted in U.S. dollars.
If Your Card is used for purchases or cash advances outside the United States
of America which are denominated in a foreign currency, MasterCardRegistration
Mark will convert these transactions to U.S. dollars before We post them to
Your account.
MasterCardRegistration Mark may impose a fee for such conversions.
f. Authorization to Charge Brokerage Accounts. You authorize Us to charge
Your Brokerage Account in order to pay Your MasterCardRegistration Mark
drafts and Checks. If there is more than one account holder, You authorize
Us to pay MasterCardRegistration Mark drafts or Checks on the authority of
any Account Holder's signature.
If You permit any other person to use Your MasterCardRegistration Mark or to
write Checks against Your Card /Check Account, even if the amount of actual
use exceeds Your authorization or permission, You will be responsible for all
transactions that occur as a result.
You authorize Pershing to transfer securities held in Your cash account to
Your Secured Credit Line account, provided You have signed the appropriate
sections of The Lion Account Application for the purpose of effecting the
intent of this Agreement.
g. Request for Stop Payment Order. Stop payment orders can be placed on
Checks drawn on the Card/Check account as long as they have not yet been
paid. In order to effect a stop payment, You must notify Us of the Check
number, exact amount of the Check, payee of the Check, date of the
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Check and Your Lion Account Number.
Neither DSC nor Pershing, nor the Banks will be responsible if it is not
possible to stop payment on Checks due to the fact that the required stop
payment information is not correct, or if You fail to comply with a request
for other reasonable information about the Check.
A timely written confirmation must be returned to Us promptly.
If We fail to stop payment on a Check for whatever reason, We may, without
liability, delay recrediting Your Lion Account while the rights of the
parties involved are determined, including the Banks. Stop payment orders
become effective one Business Day after Pershing receives Your notification
and remain in effect for 180 Business Days. Certain charges apply to all stop
payment orders (see the attached Account Fee Schedule).
Even though a stop payment order has been placed on a Check, payment of a
Check can still be enforced under certain circumstances.
h. Request for Check Copies/MasterCardRegistration Mark Drafts. Your
original Checks and MasterCardRegistration Mark drafts will not be returned
to You; however, a record is retained of all Checks and drafts paid. At Your
request, a copy of a Check or draft can be provided to You for Your
convenience. A fee may be imposed for retrieval of copies (See the Account
Fee Schedule).
i. Charges. Certain fees, including an annual fee, which are subject to
change upon notice to You, will be charged to Your Lion Account for the
financial services provided to You. (See the Account Fee Schedule.)
j. Periodic Statements. You will receive periodic statements on your account.
The Lion Account statement will include the following information: (a) the
amount, location and merchant name (when available) for MasterCardRegistration
Mark transactions or cash withdrawals; (b) the Check number, amount and date
of payment of all Checks; (c) the date and amount of remittances and other
credits to Your Brokerage Account; (d) a description of all securities
transactions and other brokerage activities; (e) the amount, the yield and
the dividends earned on Sweep Fund balances; (f) the amount of any credits
resulting from reversed or charged-back MasterCardRegistration Mark
transactions; and (g) the amount of any Free Credit Balances.
2. Notice of Your Rights and Liabilities
a. Loss, Theft or Unauthorized Transfer. Immediately notify Us if Your Checks
or Card have been lost or stolen or if You believe an unauthorized use of
Your funds from Your account has occurred. You can keep Your losses at a
minimum by promptly contacting Us at 1-800-THE LION. You may contact Us by
writing Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corporation, One Pershing Plaza, 6th Floor - Asset Management Account
Services, Jersey City, NJ 07399.
The loss, theft or unauthorized use of Your Card could cause You to lose all
of the cash assets (Your Free Credit Balance and Sweep Fund shares) in Your
Brokerage Account, plus any amount up to the Available Margin Loan Value of
Your marginable securities. You will not be liable for unauthorized use of
Your Card that occurs after You tell us about the loss, theft or unauthorized
use of Your Card.
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If You tell Us within two Business Days after You learn of the loss, theft
or unauthorized use, You can lose no more than $50.00 if someone used Your
Card without Your permission.
However, You could lose as much as $500.00 if: (1) You do not tell Us within
two Business Days after You learn of the loss, theft or unauthorized use of
Your Card; and (2) We could have prevented the use of Your Card without You
r permission if You had told Us.
b. Additional Terms and Conditions Regarding Electronic Funds Transfers. Some
of Your Card transactions may be Electronic Fund Transfers (EFT), which are
described below. You understand that these additional terms and conditions
specifically apply only to EFT transactions in addition to other terms and
conditions of this Agreement except to the extent such terms are
inconsistent.
n EFT Transactions. An EFT is any transfer of funds by the use of Your
Card(s) through an electronic terminal, telephone or other electronic
means as may be made available by the Banks for the purposes of
authorizing a debit or credit to Your Lion Account.
n Limitations on Transfers. You may use Your Card to make purchases up to
the amount of Your Card Authorization Limit. You may use Your Card at
ATMs which display the MasterCardRegistration Mark service mark to obtain
cash. In addition to Your Authorization Limit, certain ATMs may impose
other limitations on the frequency and dollar amount of Your withdrawals.
n Your Right to Receive Documentation or Notice of Transactions. You will
receive a receipt at the time You make an EFT at a point of sale or
electronic terminal that accepts Your Card each time You make a
transaction.
Each month Your Lion Account statement from Pershing, will include
information regarding each EFT if such transfers occur during the month.
c. Errors or Questions About Your Card/Check Transactions. Call Us
immediately if You think Your statement or transaction record is wrong or if
You need more information about Your transaction listed on the statement or
transaction record. Call Us any Business Day between 8:30 am and 8:30 p.m.
Eastern Time at 1-800-THE LION. You may contact Us by writing Pershing
Division of Donaldson, Lufkin & Jenrette Securities Corporation, One Pershing
Plaza, 6th Floor - Asset Management Account Services, Jersey City, NJ 07399.
We must hear from You no later than 60 days after We sent the statement on
which the problem or error appeared. If You tell Us orally, We may require
You to send Us Your complaint or question in writing within 10 days. We will
need the following information:
n Your name, Your Brokerage Account number, the date and the amount of the
transaction;
n A description of the error or transaction You are unsure about,
explaining as clearly as possible why You believe it is an error or why
You need more information;
n The dollar amount of the transaction or suspected error.
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You will be advised of the results of Our investigation within 10 Business
Days (or 20 Business Days if the transaction occurred at a point of sale
location or outside the United States) after We hear from You; and, if an
error has been made, it will be corrected promptly. If it takes longer than
10 Business Days (20 Business Days if the transaction occurred at a point of
sale location or outside the United States) to research Your complaint or
problem, Your Lion Account will be provisionally recredited within such time
for the amount You think is in error so that You will have the use of the
money during the time it takes us to conclude Our investigation. If we ask
You to put Your question or complaint in writing, and We do not receive it
within 10 Business Days, Your Lion Account may not be recredited.
If, as a result of Our investigation, We conclude that there was no error, We
will send You a written explanation within 3 Business Days after arriving at
that conclusion. You may ask for copies of the documents that were used in
the investigation. In all cases, the investigation will be completed within
45 days (or 90 days if the transaction occurred at a point-of-sale location
or outside the United States.) If the problem results from unauthorized use
of Your debit card, and You do not notify Us within 60 days of Our sending
the statement, You will be liable for all funds withdrawn prior to Your
notifying Us if We could have prevented those withdrawals had You told Us
earlier.
d. Disclosure of Card/Check Account Information to Third Parties. The Banks
will not disclose information about Your Card Account or the transactions You
make, except: (1) as necessary to complete transactions; (2) to verify the
existence and condition of Your Lion Account or Card Account upon request of
a third party, such as a credit bureau of merchant; (3) to comply with
government agency or court orders; (4) in accordance with Your written
permission; and (5) in connection with any authorization message transmitted
in point-of-sale transactions.
e. Our Liability for Failure to Complete Transactions. We will not be liable
to You for failure to complete a transaction to or from Your account under
the following circumstances: (1) the Authorization Limit in Your Lion
Account is not enough to cover the transaction; (2) circumstances beyond
Pershing's control (such as fire or flood) prevent the transfer, despite
reasonable precautions that Pershing has taken; (3) An ATM or other device is
not working properly, and You know about it when You start the transaction;
(4) An ATM or other device where You are making the transaction does not have
enough cash; or (5) Your Dreyfus Lion Account is restricted (because of a
court order or similar reason), and We are not permitted to make the
transaction.
f. Nature of Obligations. The obligations of Pershing, DSC and the Banks
are set forth in The Lion Account Agreement. Neither the Banks nor Pershing
are liable for the obligations of the other.
g. Refusal to Honor MasterCardRegistration Mark or Checks. Neither Pershing,
nor DSC, nor the Banks are responsible for any person's action in refusing to
honor or accept Your Cards or Checks, or for any person's action in taking
possession of Your Card or Checks.
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III. SECURED CREDIT LINE ACCOUNT
Please note: This Section applies to Secured Credit Line accounts only.
1. Liquidation. If, in Our discretion, We consider it necessary for Our
protection to require additional collateral or in the event that a petition
in bankruptcy or for appointment of a receiver is filed by or against You, or
an attachment is levied against Your accounts, or in the event of Your
death, We shall have the right to sell any or all securities, commodities and
other property in the accounts We have established for You, whether carried
individually or jointly with others, to buy any or all securities, commodities
and other property which may be short in such accounts, to cancel any open
orders and to close any or all outstanding contracts, all without demand for
margin or additional margin, notice of sale or purchase or other notice or
advertisement. Any such sales or purchases may be made at Pershing's
discretion on any exchange or other market where such business is usually
transacted, or at public auction or private sale and Pershing may be the
purchaser for its own account. It is understood that a prior demand, or
call, or prior notice of the time and place of such sale or purchase shall
not be considered a waiver of Pershing's right to sell or buy without demand
or notice.
2. Margin Requirements, Credit Charges, and Deposits. You will at all times
maintain such securities, commodities and other property in Your accounts for
margin purposes as We shall require from time to time and the monthly debit
balances or adjusted balances in Your accounts with Pershing shall be charged,
in accordance with Our practice, with interest at a rate permitted by the
laws of the State of New York. It is understood that the interest charge
made to Your account at the close of a charge period will be added to the
opening balance for the next charge period unless paid.
3. Pledge of Securities. All securities, commodities and other property now
or hereafter held, carried or maintained by Pershing in Our possession in any
of the accounts of the Account Holder may be pledged and re-pledged by
Pershing from time to time, without notice to the Account Holder, either
separately or in common with other such securities, commodities and other
property for any amount due in the accounts of the Account Holder, or for any
greater amount and Pershing may do so without retaining in Our possession or
control for delivery a like amount of similar securities, commodities or
other property.
4. Presumption of Receipt of Communications. Communications may be sent to
You at Your current address, which is on file at Our office, or at such other
address as You may hereafter give Us in writing; and all communications so
sent, whether by mail, telegraph, messenger or otherwise, shall be deemed
given to You personally, whether actually received or not.
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DISCLOSURE OF CREDIT TERMS
1. Cash Accounts. Cash accounts may be subject, at Our discretion, to
interest on any debit balances resulting from failure to make payment in full
for securities purchased, from proceeds of sales paid prior to settlement
date or for other charges that may be made to the account.
2. Margin Accounts. Purchases of securities on credit, (the Secured Credit
Line, commonly known as margin)purchases, enable You to increase the buying
power of Your equity and thus increase the potential for profit--or loss. A
portion of the purchase price is deposited when buying securities on margin
and Pershing extends credit for the remainder. This loan appears as a debit
balance on Your monthly statement of account. Pershing charges interest on
the debit balance and requires You to maintain securities, cash or other
property to secure repayment of funds advanced and interest due.
Interest will be charged for any credit extended to You for the purpose of
buying, trading or carrying any securities, for any cash withdrawals made
against the collateral of securities, or for any other extension of credit.
When funds are paid in advance of settlement on the sale of securities,
interest will be charged on such amount from date of payment until settlement
date. In the event that any other charge is made to the account for any
reason, interest may be charged on the resulting debit balances.
3. Interest Rates. Interest charged on any debit balances in cash accounts
or credit extended in margin accounts may be up to 3.00 percentage points
above the Pershing Base Lending Rate. The Pershing Base Lending Rate will be
set with reference to commercially recognized interest rates, industry
conditions relating to the extension of credit and general credit market
conditions. The Pershing Base Lending Rate will change without prior notice.
When the Pershing Base Lending Rate changes during an interest period,
interest will be calculated according to the number of days each rate is in
effect during that period. If the rate of interest charged to You is changed
for any other reason, You will be notified at least 30 days in advance.
4. Interest Period. The Interest Period begins on the 20th of each month and
ends on the 19th of the following month. Accordingly, the interest charges
for the period as shown on Your monthly statement are based only on the daily
net debit and credit balances for the interest period.
5. Method of Interest Computation. At the close of each Interest Period
during which credit was extended to You, an interest charge is computed by
multiplying the average daily debit balance by the applicable schedule rate
and by the number of days during which a debit balance was outstanding and
then dividing by 360. If there has been a change in the Pershing Base
Lending Rate, separate computations will be made with respect to each rate of
charge for the appropriate number of days at each rate during the Interest
Period. The interest charge for credit made to Your account at the close of
the Interest Period is added to the opening debit balance for the next
Interest Period unless paid.
With the exception of credit balances in Your short account, all other credit
and debit balances in all of Your accounts will be combined daily and
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interest will be charged on the resulting average daily net debit balances
for the interest period. If there is a debit in the cash account (type 1)
and there is a Secured Credit account (type 2), interest will be calculated
on the combined debit balance and charged to the Secured Credit Line account.
Any credit balance in the short account is disregarded because such credit
collateralizes the stock borrowed for delivery against the short sale. Such
credit is disregarded even if You should be long the same position in Your
Secured Credit Line account: i.e., short against the box.
If the security which You sold short (or sold short against the box)
appreciates in market price over the selling price, interest will be charged
on the appreciation in value. Correspondingly, if the security which You
sold short depreciates in market price, the interest charged will be reduced
since Your average debit balance will decline. This practice is known as
"marking-to-market". The daily closing price is used to determine any
appreciation or depreciation of the security sold short.
If Your account is short shares of stock on the record date of a dividend or
other distribution, however such short position occurs, Your account will be
charged the amount of dividend or other distribution on the following
Business Day.
6. General Margin Policies. The amount of credit which may be extended by
Pershing and the terms of such extension are governed by rules of the Federal
Reserve Board and the New York Stock Exchange. Within the guidelines of
these rules and subject to adjustment required by changes in such rules and
Our business judgment, Pershing establishes certain policies with respect to
Secured Credit Line accounts. If the market value of securities in a
Secured Credit Line account declines, Pershing may require the deposit of
additional collateral. Margin account equity is the current market value of
securities and cash deposited as security less the amount owed Pershing for
credit extended at its discretion. It is Our general policy to require
Secured Credit Line account holders to maintain equity in their Secured Credit
Line accounts of the greater of 30% of the current market value or $3 per
share for common stock purchased on margin. Pershing applies other standards
for other types of securities. For example, securities may be ineligible for
margin credit from time to time. For information with respect to
general margin maintenance policy as to municipal bonds, corporate bonds,
listed United States Treasury notes and bonds, mutual funds and other
securities, as well as information about the eligibility of particular
securities for margin credit, please contact Dreyfus Service Corporation.
Notwithstanding the above general policies, Pershing reserves the right, at
its discretion, to require the deposit of additional collateral and to set
required margin at a higher or lower amount with respect to particular
accounts or classes of accounts as it deems necessary. In making these
determinations, Pershing may take into account various factors including the
size of the account, liquidity of a position, unusual concentrations of
securities in an account, or a decline in credit worthiness. If You fail to
meet a margin call in a timely manner, some or all of Your positions may be
liquidated.
7. Deposits of Collateral, Lien on Accounts and Liquidation. In the event
that additional collateral is requested, You may deposit cash or acceptable
securities into Your Secured Credit Line account. If satisfactory collateral
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is not promptly deposited after a request is made, Pershing may, at its
discretion, liquidate securities held in any of Your accounts. In this
connection, pursuant to Our Agreement, Pershing retains a security interest
in all securities and other property held in Your accounts, including
securities held for safekeeping, so long as any credit extended remains
outstanding.
8. Callable Securities. Securities which are held for Your account and which
are in "street name", or are being held by a securities depository, are
commingled with the same securities being held for other customers of Dreyfus
Service Corporation and for customers of Pershing's other correspondents.
Your ownership of these securities is reflected in Our records. You have the
right at any time to require delivery to You of any such securities which are
fully paid for or are in excess of margin requirements.
The terms of many bonds allow the issuer to partially redeem or "call" the
issue prior to maturity date. Certain preferred stocks are also subject to
being called by the issuer. Whenever any such security being held by Us is
partially "called", We will determine through a random selection procedure as
prescribed by the New York Stock Exchange rules, the ownership of the
securities to be submitted for redemption. In the event that such securities
owned by You are selected and redeemed, Your account will be credited with
the proceeds.
Should You not wish to be subject to this random selection process, You must
instruct Dreyfus Service Corporation to have Pershing deliver Your
securities to You. Delivery will be effected provided, of course, that Your
position is unencumbered or had not already been called by the issuer as
described, prior to receipt by Pershing of Your instructions. The
probability of one of Your securities being called is the same whether they
are held by You or by Pershing for You.
9. Options Exercise Assignments. Exercise assignment notices for options
contracts are allocated among short positions pursuant to a procedure which
randomly selects from all short options positions, including positions
established on the day of the assignment, those contracts which are subject
to exercise. A more detailed description of this random allocation procedure
is available on request. All short options positions are liable for
assignment at any time.
10. Lost Securities. If Your periodic customer statement indicates that
securities were forwarded to You and You have not received them, You should
notify Us immediately. If notification is received within 120 days after the
mailing date, as reflected on Your periodic statement, replacement will be
made free of charge. Thereafter, a fee for replacement may apply.
11. Account Insurance. You are provided with protection for securities
contained in Your Account up to a total of $50,000,000. The Securities
Investor Protection Corporation (SIPC) provides the first $500,000 of
protection, no more than $100,000 of which may be in cash awaiting
reinvestment. The $49,500,000 balance of protection on securities only is
provided by a commercial insurer. This account protection applies when member
firms fail financially and are unable to meet obligations to securities
customers, but does not protect against losses from the rise and fall in
market value of investments.
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GENERAL TERMS AND PROVISIONS
1. Definitions:
Access Card_ The Lion Account MasterCardRegistration Mark issued by the
Banks.
Agreement_ This term shall include either the Lion Account Agreement or the
Dreyfus Advice and Guidance Agreement and any related "documents," each as
amended from time to time.
Authorization Limit_ The maximum amount You may withdraw from Your Brokerage
Account using Your MasterCardRegistration Mark Access Card or Checks.
Available Secured Loan Value_ The amount of credit we may extend to You based
on the value of marginable securities held in Your Secured Credit Line
Account.
The Banks_ Boston Safe Deposit & Trust Company, Boston, Massachusetts, and
Bank One, Columbus, N.A., Columbus, Ohio.
Brokerage Account_ The cash and/or Secured Credit Line account opened in Your
name. The Cash Account is the basic brokerage account we offer. The Secured
Credit Line Account allows you to borrow funds from us, using acceptable
securities as collateral for the loan as well as to borrow securities from us
using cash as collateral for the loan.
Business Day_ Any day on which the New York Stock Exchange, Inc., is open.
Card/Cards_ One or more MasterCardsRegistration Mark issued by the Banks.
Cards/Check Account_ The account established by the Banks.
Checks_ Checks drawn on the Banks.
Debit Balance_ An account balance representing money owed to DSC.
Documents_ Any disclosure documents, the Sweep Funds' prospectus, the Lion
Account Agreement, the Lion Account Application which contain additional
terms governing the Lion Account, and the Lion Account Fee Schedule, the
Option Agreement, if applicable; and any other written agreements between You
and Us concerning your Dreyfus Lion Account, all as amended from time to
time.
DSC_ Dreyfus Service Corporation.
Free Credit Balance_ The sum of any cash balance in Your brokerage accounts.
(When a cash balance in Your Secured Credit Line Account is collateral for
Your obligations to cover short securities and/or option positions, it is not
available for Your use and is not included in Your Free Credit Balance).
Fed Funds_ Funds which are immediately available and not subject to an
availability or collection hold.
Good Delivery_ The delivery to us of freely transferable securities (that is,
properly registered, endorsed and fully negotiable stock certificates).
Pershing_ Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corporation.
The Lion Account Agreement_ The Agreement You make with Us and the Banks when
You open a Lion Account, consisting of the Lion Account
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Application; the Lion Account Agreement; the Option Agreement, if applicable;
and any other written Agreements between You and Us, all as amended from time
to time.
The Lion Account Application_ The application You submit to open a Lion
Account.
Prospectus_ A writing describing the Sweep Fund(s).
Secured Credit Line Account_ margin account
Short Sale_ The sale of a security You don't own, or that You have instructed
us not to deliver against Your sale ("short against the box").
Sweep Funds_ Any money market fund(s) DSC makes available and is selected by
You.
You, Your, Account Holder_ Each person who signs the Lion Account Agreement.
We, Us, Our_ DSC and Pershing.
2. Minimum Required To Open and Maintain An Account. Minimum balances
required to open and maintain an Account are set forth in a separate fee
schedule which has been provided to You and is incorporated herein. If, after
we have notified You that additional assets must be deposited, and the
account is not brought back up to at least the minimum in a reasonable time
period, We reserve the right to charge a fee or terminate The Lion Account.
If We terminate the account at which time You agree to return any Cards or
Checks previously issued to You.
3. Commissions and Fees. Fees and charges associated with the Account, are
set forth in a separate fee schedule which has been provided to You and is
incorporated herein. You hereby authorize us to deduct such commissions,
fees and other charges from any account in which you have an interest,
including Your Lion Account without further authorization from you. Dreyfus
reserves the right to change , modify or enact fees at any time.
4. Satisfaction of Amounts Owed. In connection with Your Lion Account, monies
that You owe Us, such as: (a) debit balances in the Brokerage Account; (b)
amounts owing in Your Card/Check Account or (c) The Lion Account deposits
made for You that are later reversed, may be satisfied by any of the
following: (1) any credit in Your brokerage account; (2) redeeming shares
from Your Sweep Funds; (3) if applicable, making loans to You from Your
Brokerage margin account; or (4) the sale of any securities or other property
held by Us for You, including, but not limited to, individual Dreyfus mutual
fund accounts not held by Pershing.
5. Liability For Costs of Collection. The reasonable costs and expense of
collection of the debit balance, recovery of securities, and any unpaid
deficiency in Your accounts with DSC, including, but not limited to,
attorney's fees incurred and payable or paid by Us, shall be payable to Us by
You.
6. Joint and Several Liability. If "You" shall consist of more than one
individual, Your obligations under this Agreement shall be joint and several.
Each of You has authority, acting individually and without notice to any
one of You, to deal with DSC as fully and completely as if any one of You
is the sole account holder. We are authorized to follow the instructions of
any one of You and to deliver funds, securities, or other assets in the
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Brokerage Account to any one of You or upon any one of Your instructions.
We are not responsible for determining the purpose or propriety of an
instruction we receive from any one of You or for the disposition of
payments or deliveries among any one of You. Any notice We send one of You
will be notice to all of You.
7. Our Right to Restrict or Terminate Account. For our protection against
credit risks and other conditions, We may, without prior notice, decline your
orders or instructions, or We may place trading restrictions on your account.
You also understand that We may cease all The Lion Account services provided
to You for any reason, in Our discretion, including but not limited to the
following: (1) if You exceed Your Authorization Limit; or (2) if We
determine that Your use of the account is inconsistent with investment
purposes; or (3) if We determine that We no longer wish to offer The Lion
Account to You. In the event that Your Lion Account is terminated, it may be
converted into an account which will remain subject to the remainder of this
Agreement.
Pershing, DSC, the Banks or You may terminate this Agreement, including the
use of Checks or Cards, if applicable, at any time. You shall remain
responsible for authorized charges which arise before or after termination.
If the Agreement is terminated, We may redeem all Sweep Fund shares. You
shall promptly return all Cards and unused Checks to Us. Failure to do so
may result in a delay in complying with Your instructions regarding the
disposition of assets.
8. Credit Investigation, Negative Credit Report Information Sharing. You
authorize Us to exchange credit information about You and Your account with
others. As required by law, You are notified that any negative credit report
reflecting on Your credit record may be submitted to a credit reporting
agency if You fail to fulfill the terms of Your credit obligations. We may
request a credit report on You and upon request, We will state the name and
address of the consumer reporting agency that furnished it. If We extend,
update, review or renew Your credit, We may request a new credit report
without notifying You.
You authorize DSC, all other Mellon companies (including Dreyfus companies),
all mutual funds advised by a Mellon company (including the Dreyfus Family of
Funds) and all distributors of those funds to share information about Your
relationships with any of these organizations or with unaffiliated third
parties. This includes all information that any of these organizations have
or get about You or Your account relationships with them. This authorization
will continue in effect for as long as You have at least one open account
with any of these organizations.
9. Representations and Amendments. You have received a copy of the Sweep
Funds' prospectus and this Agreement. You agree that We shall have the right
to amend this Agreement, by modifying or rescinding any of its existing
provisions or by adding any new provision, at any time without notice to You.
Any such amendment shall be effective as of a date established by Us. You
understand there may be additional documentation required by applicable law
or the policies and procedures of Pershing,
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DSC, or the Banks. You agree to promptly comply with any such requests for
additional documents.
10. Representation as to Capacity to Enter into Agreement. You, if an
individual, represent that You are of full age, that unless otherwise
disclosed to DSC in writing, You are not an employee of an exchange, or of
any corporation of which any exchange owns a majority of the capital stock,
or of a member firm or member corporation registered on any exchange or of a
bank, trust company, insurance company, or of any corporation, firm or
individual engaged in the business of dealing either as a broker or as
principal in securities, bills of exchange, acceptance or other forms of
commercial paper. You further represent that no one except You has an
interest in Your Account(s).
11. Separability. If any provision or condition of this Agreement shall be
held to be invalid or unenforceable by any court, or regulatory or
self-regulatory agency or body, such invalidity or unenforceability shall
attach only to such provision or condition. The validity of the remaining
provisions and conditions shall not be affected thereby and this Agreement
shall be carried out as if any such invalid or unenforceable provision or
condition were not contained herein.
12. Headings are Descriptive. The heading of each provision of this
Agreement is for descriptive purposes only and shall not be deemed to modify
or qualify any of the rights or obligations set forth in each such provision.
13. Recording Conversations. You acknowledge, understand and agree that for
Our mutual protection, We may electronically record any of Our telephone
conversations.
14. This agreement and its enforcement shall be governed by the laws of the
State of New York.
15. Arbitration Disclosures
n Arbitration is final and binding on the parties.
n The parties are waiving their right to seek remedies in court,
including the right to jury trial.
n Pre-arbitration discovery is generally more limited than and different
from court proceedings.
n The arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification
of rulings by the arbitrators is strictly limited.
n The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
16. Agreement to Arbitrate Controversies.
It is agreed that any controversy between or among the account holder,
Pershing and Dreyfus Service Corporation or any of them arising out of this
Agreement, shall be submitted to arbitration before the National Association
Of Securities Dealers, Inc., or any other national securities exchanges on
which a transaction giving rise to such claim took place (and only before
such exchange) as
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the Account Holder may elect and in accordance with the rules obtaining of the
selected organization. Arbitration must be commenced by service upon the
other party of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the
event the Account Holder does not make such election within five (5) days of
such demand or notice, then the account holder authorizes Pershing or DSC to
do so on behalf of the Account Holder.
No person shall bring a putative or certified class action to arbitration,
nor seek to enforce any pre-dispute arbitration agreement against any person
who has initiated in court a putative class action; or who is a member of a
putative class and who has not opted out of the class with respect to any
claims encompassed by the putative class action until: (i) the class
certification is denied; (ii) the class is decertified; or (iii) the customer
is excluded from the class by the court. Such forbearance to enforce an
agreement to arbitrate shall not constitute a waiver of any rights under this
agreement except to the extent stated herein.
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DREYFUS ADVICE AND GUIDANCERegistration Mark AGREEMENT
This Agreement includes the General Terms and Provisions located on pages 12
through 16.
1. Financial Planning Services. Dreyfus Investment Advisors, Inc. ("DIA") and
its agents will provide You, from time to time upon your request and subject
to such limitations as may be imposed by DIA in its discretion, services
related to the Dreyfus Advice and Guidance program which includes services
consisting of general financial planning, non-discretionary asset allocation
advice with respect to your portfolio based on a review of your financial
situation and investment objectives as represented by you to DIA, and
informational brochures on topics such as estate planning, investing, tax
planning, debt management and various life events (collectively, the
"Services"). You understand and agree that DIA is under no obligation to
monitor or update advice furnished to you from time to time under this
Agreement. You hereby warrant and represent to DIA that any information
concerning your financial situation or the investment objectives furnished by
you to DIA will be accurate and represent a reasonable summary of your
financial circumstances. You agree that DIA may rely on such information.
2. Implementation of Recommendation. It is your responsibility to implement
DIA's asset allocation recommendation and other financial planning services
if you so choose. You understand and agree that you may implement DIA's
asset allocation recommendation through your Dreyfus Lion Account by
contacting Dreyfus Service Corporation ("DSC") or through another broker of
your choosing. You hereby authorize DIA to provide DSC with its asset
allocation recommendation and other information relating to Your account for
purposes of facilitating the servicing of Your account.
3. Fees. At such time as you may elect to use the services rendered by DIA
under this Agreement, You agree to pay DIA a fee in accordance with the LION
Account Fee Schedule in effect from time to time. You hereby authorize DIA to
collect any such fees as may be applicable from your Dreyfus Lion Account for
payment to DIA.
4. Sub-Advisers, Sub-Contractors and Agents. DIA from time to time may
utilize, subject to its oversight and supervision, one or more sub-advisers,
sub-contractors or agents to assist DIA in performing Services on Your
behalf. You acknowledge that, as of the date of this Agreement, DIA is
utilizing The Ayco Company, L.P. ("Ayco"), a financial planning firm and
registered investment adviser, to assist DIA with the Services and that
Ayco's background and the role of Ayco and its employees with respect to the
Services are more fully described in DIA's Disclosure Document and the
Subadvisory Disclosure Document. You understand and agree that DIA may
terminate the services of a sub-adviser, sub-contractor or agent, including
Ayco, at any time.
5. Other Clients. DIA performs services similar to the Services for other
clients, as well as other types of investment management services for others,
including institutions and/or individuals. You recognize that DIA may give
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advice in the performance of its duties to such clients which may differ from
advice given to You pursuant to this Agreement. Nothing in this Agreement
shall be deemed to impose on DIA any obligation to recommend for purchase or
sale for You any investments which DIA may purchase or sell, or recommend for
purchase or sale, for the account of any other client.
6. Standard of Care. Neither DIA, DSC, nor The Dreyfus Corporation, nor any
of their directors, employees, agents or affiliates (collectively, the
"Entities") shall be liable for any loss incurred by You as a result of the
Services, except where such loss directly results from such party's
negligence or willful misconduct, or except as otherwise required by Federal
or state law. You understand and agree that there is no guarantee that Your
investment objectives will be achieved. None of the Entities shall be liable
for Your failure to provide DIA with a timely and accurate representation of
Your financial situation and investment objectives, or Your failure to
provide DIA with any information about Your financial circumstances which DIA
may reasonably request. The provisions of this Section 6 shall survive
termination of this Agreement.
7. Assignment. This Agreement may not be assigned by either You or DIA
without the prior written consent of the nonassigning party.
DREYFUS ADVICE AND GUIDANCERegistration Mark
Disclosure document
Offered by Dreyfus Investment Advisors, Inc.
1. What services are offered as part of the Dreyfus Advice and
GuidanceRegistration Mark program?
Dreyfus Advice and Guidance is a financial planning program pursuant to which
Dreyfus Investment Advisors, Inc. ("DIA") provides a client, from time to
time upon the client's request and subject to such limitations as may be
imposed by DIA in its discretion, with general financial planning
information, non-discretionary asset allocation advice with respect to mutual
funds, and informational brochures on topics such as estate planning,
investing, tax planning, debt management and various life events. Mutual
funds that are the subject of non-discretionary asset allocation advice
include mutual funds managed or administered by The Dreyfus Corporation, an
affiliate of DIA, or by other affiliates of DIA ("Dreyfus Mutual Funds") or
by certain third parties ("Third-Party Mutual Funds"). DIA does not
undertake any obligation to monitor, review or update any advice furnished to
a client under the program or to provide any reports to a client.
2. Who is eligible to participate in the Dreyfus Advice and Guidance
program? Is there a minimum dollar value of assets or other conditions for
participating?
An individual is eligible to participate in the Dreyfus Advice and Guidance
program only if such individual has established a Dreyfus Lion Account, a
brokerage account offering a variety of services including discount brokerage
and a mutual funds market, with Dreyfus Service Corporation, an affil-
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iate of DIA. An individual needs to make a minimum investment of $10,000 in
order to establish a Dreyfus Lion Account.
3. What fees are charged to participate in the Dreyfus Advice and
GuidanceRegistration Mark program?
In the case of an individual with $50,000 or more total assets in one or more
linked Dreyfus Lion Accounts, there currently is no fee to participate in
the Dreyfus Advice and Guidance program. In the case of an individual with
less than the $50,000 total asset level in one or more linked Dreyfus Lion
Accounts, there currently is a $100 annual fee to participate in the Dreyfus
Advice and Guidance program and to receive other services. The $100 fee also
entitles the individual to receive enhanced services under the individual's
Dreyfus Lion Account, including, when available, cost basis accounting and
Internet trading capability. The portion of the $100 fee attributable to the
Dreyfus Advice and Guidance program is billed to the client on behalf of DIA
by Dreyfus Service Corporation.
4. What types of investments are covered by the Dreyfus Advice and Guidance
program?
Non-discretionary asset allocation recommendations are limited to those
Dreyfus Mutual Funds and Third-Party Mutual Funds that are included in DIA's
Recommended List of Mutual Funds ("Recommended List"), which is described
below.
5. What sources of information and investment strategies are used in
formulating the advice offered under the Dreyfus Advice and Guidance program?
The primary sources of information used in formulating the advice offered
under the Dreyfus Advice and Guidance program include client financial data,
financial newspapers and magazines, research materials prepared by others,
annual reports, prospectuses and other SEC filings, and statistical ranking
and other informational reports and services (e.g. Lipper Analytical
Services) relating specifically to mutual funds.
The formulation of asset allocation advice is a two-step process. The first
step is DIA's non-discretionary recommendation as to how a client's assets
might be allocated among various categories of investments. The second step
is DIA's non-discretionary recommendation of Dreyfus Mutual Funds and
Third-Party Mutual Funds from its Recommended List that correspond to the
prescribed investment categories.
In formulating advice as to how a client's assets might be allocated among
various categories of investments, DIA generally will use detailed financial
and other pertinent data (e.g. time horizon, risk tolerance, investment
objectives) furnished to DIA by the client, the sources of information
described above, and proprietary computer programs and models to determine
how best to allocate the client's assets among the various categories given
the client's individual circumstances. DIA seeks to recommend percentage
allocations to each recommended investment category that are designed to
maximize returns over time for a given level of risk.
In developing and maintaining its Recommended List, DIA seeks to select funds
that (i) are available through the client's Dreyfus Lion Account on a
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no transaction fee basis, and (ii) consistently demonstrate above average
performance against similarly-styled funds. DIA has identified various core
categories of mutual funds and has had Lipper Analytical Services separate
each eligible mutual fund into these categories. Any mutual funds that do
not fit into these core categories are not considered. Performance
benchmarks, consisting of a market index and the group's average performance,
are set for each category. Consideration for possible inclusion in the
Recommended List is based on a fund achieving high relative rank in various
statistical criteria measuring both performance and risk over the previous
three years. Lipper Analytical Services ranks the results for each criteria
against all funds in a category and those eligible funds with the highest
scores are singled out for further analysis. In certain categories from time
to time, the screening criteria may have to be adjusted to reflect
differences between categories so that a sufficient number of funds pass the
quantitative screens established for the category. In certain categories
from time to time, this may result in one or more additional Dreyfus Mutual
Funds as well as one or more additional Third-Party Mutual Funds being
considered for possible inclusion on the Recommended List.
In addition to DIA's quantitative analysis, a qualitative review is performed
to ensure that funds have not experienced any changes that may affect their
future performance. Such issues include the firm's management structure, the
fund's investment parameters and investment style and manager changes. Using
this combination of quantitative analysis with a qualitative overlay, DIA
selects three to four eligible funds from each category for possible
inclusion on its Recommended List. The Recommended List is ultimately
derived by classifying the selected funds into six asset classes. The top
core funds in each of these six asset classes are included in the Recommended
List.
As noted below, implementation of any investment advice given to a client is
the client's responsibility.
6. Are there general standards of education or business experience for those
involved in giving the advice that is offered under the Dreyfus Advice and
Guidance program?
DIA requires of those persons associated with it (other than those persons
whose functions are solely clerical or ministerial) a college education or
the equivalent, or business experience in either money management or security
analysis.
All financial planners on the Dreyfus Advice and Guidance answer line are
supervised by account managers, all of whom have earned an advanced degree or
license beyond their baccalaureate. All financial planners and account
managers participate in internal training, which includes formal training
sessions focusing on tax, investment and insurance issues,
departmental/regional training meetings, and written technical and policy
memoranda. Account managers also participate in periodic teleconferences
where current financial planning ideas are reviewed.
William F. Glavin, Jr. is responsible for determining the general investment
advice given to Dreyfus Advice and Guidance clients. Mr. Glavin's educa-
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tion and business background, as well as that of DIA's President, Stephen E.
Canter, is as follows:
William F. Glavin, Jr.
Born: 1958
Education: B.A.,Economics - College of the Holy Cross, Worcester,
MA
Business
Background: Dreyfus Investment Advisors, Inc., Nov. 1996 - Present
(Executive Vice President)
The Dreyfus Corporation, Feb. 1995 - Present
(Director of Market & Product Development)
The Boston Company Advisors, Inc., April 1991 -
Feb. 1995 (SVP, Mutual Funds)
Stephen E. Canter
Born: 1945
Education: B.A., Economics - Cornell University, Ithaca, NY
M.B.A., Finance - Cornell University, Ithaca, NY
Business
Background: Dreyfus Investment Advisors, Inc., May 1995 - Present
(Director and President)
The Dreyfus Corporation, May 1995 - Present
(Director, Vice Chairman and CIO)
The Dreyfus Trust Company, June 1995 - Present
(Director)
Kleinwort Benson Investment Management,
April 1993 - Dec. 1994
(Chairman and Chief Executive Officer)
Mitchell Hutchins Institutional Investors,
April 1988 - April 1993 (President, CEO and CIO)
7. Does DIA have any arrangements with any of its affiliates that are
material to the Dreyfus Advice and Guidance program?
DIA is a wholly-owned subsidiary of The Dreyfus Corporation. The Dreyfus
Corporation is a registered investment adviser, and adviser, sub-adviser
and/or administrator of many investment companies registered under the
Investment Company Act of 1940, as amended, including the Dreyfus Mutual
Funds that are part of the Dreyfus Advice and Guidance program. From time to
time, DIA may utilize the research staff, products and/or services and
library of, and may consult with the portfolio managers employed by, The
Dreyfus Corporation.
As discussed above, the Dreyfus Advice and Guidance program is available only
to those individuals who have established a Dreyfus Lion Account brokerage
account with Dreyfus Service Corporation. Dreyfus Service Corporation is
also a wholly-owned subsidiary of The Dreyfus Corporation, is a registered
broker/dealer under the Securities Exchange Act of 1934, as amended, and is a
member of the National Association of Securities Dealers, Inc. A Dreyfus
Advice and Guidance client may choose
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to implement DIA's non-discretionary asset allocation recommendation through
such client's Dreyfus Lion Account with Dreyfus Service Corporation.
8. Who is responsible for implementing advice furnished by DIA?
DIA's client is responsible for implementing any investment advice furnished
to such client by DIA pursuant to the Dreyfus Advice and Guidance program. A
client may implement DIA's asset allocation recommendation through the
client's Dreyfus Lion Account by contacting Dreyfus Service Corporation or
through another broker of the client's choosing. If the client so chooses,
DIA will assist the client in contacting Dreyfus Service Corporation so that
the client may implement DIA's asset allocation recommendation through the
client's Dreyfus Lion Account.
9. Does DIA have any participation or interest in client transactions under
the Dreyfus Advice and Guidance program?
As noted below, affiliates of DIA receive various economic benefits with
respect to Dreyfus Mutual Funds and Third-Party Mutual Funds recommended by
DIA to Dreyfus Advice and Guidance clients. As a result, there may be a
conflict of interest, or the appearance of a conflict of interest, on the
part of DIA in formulating its asset allocation recommendations under the
Dreyfus Advice and Guidance program. For instance, DIA may have an economic
incentive to recommend asset classes that command higher management fees and
those mutual funds from which it will derive the greatest revenue. This
conflict of interest, or appearance of a conflict of interest, is addressed
in several ways. First, DIA's asset allocation advice is based on the
quantitative methodology described above, which is designed to ensure that
asset allocation recommendations are based largely on objective criteria.
Second, the formulation of advice as to how a client's assets might be
allocated among various categories of investments and the recommendation of
mutual funds from the Recommended List that correspond to the prescribed
investment categories are currently performed utilizing the services of Ayco,
which brings an additional measure of objectivity to the process since Ayco's
compensation is fixed and is not dependent on the manner in which DIA's
clients' assets are invested. Third, DIA's management and compliance
personnel will monitor the procedures and methodology utilized by DIA in
formulating its asset allocation advice in light of the conflict of interest,
or appearance of a conflict of interest, identified above to seek to ensure
that DIA's advice is based on objective criteria and is in the best interests
of DIA's clients. Finally, the revenue that is derived by DIA's affiliates
from the Dreyfus Mutual Funds and Third-Party Mutual Funds is fully disclosed
(see below) to Dreyfus Advice and Guidance clients so as to permit such
clients to consider such revenues in evaluating DIA's advice and in deciding
whether to implement such advice.
10. Does DIA or any of its affiliates receive any economic benefit from a
non-client in connection with the advice given to clients?
Affiliates of DIA receive various economic benefits from non-clients in
connection with advice given to Dreyfus Advice and Guidance clients. In this
regard, a client should note the following:
a. each Dreyfus Mutual Fund and Third-Party Mutual Fund is subject to
Page 22
the terms of its prospectus and statement of additional information and, as
described therein, each such fund pays its own fees and expenses, including
but not limited to fees for investment management services and/or
administrative services; such fees and expenses are in addition to those
paid to DIA for participation in the Dreyfus Advice and Guidance program;
b. investment management fees are paid by Dreyfus Mutual Funds to an
affiliate of DIA; an affiliate of DIA may be paid for performing other
services for such funds, including but not limited to administration
services, transfer agency services, custodial services and/or shareholder
servicing; Dreyfus Service Corporation may receive payments from Dreyfus
Mutual Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended; and
c. Dreyfus Service Corporation may receive per annum fees of up to .25% of
the value of Dreyfus Lion Account assets invested in Third-Party Mutual Funds
in consideration of the provision of a variety of shareholder services,
including, without limitation, maintaining shareholder accounts and records,
processing purchase and redemption transactions, providing periodic
statements, and providing fund reports and other materials; affiliates of DIA
provide or may provide, for a fee, a variety of services, including but not
limited to transfer agency services and custodial services, to many
unaffiliated mutual funds, which may include one or more of the Third-Party
Mutual Funds.
While DIA does not give advice with respect to individual securities, a
Dreyfus Advice and Guidance client may choose to sell individual securities
in order to implement DIA's asset allocation recommendation. To the extent
that such sales are effected through the client's Dreyfus Lion Account,
Dreyfus Service Corporation will earn commissions on such sales.
11. What types of clients does DIA offer investment advice to?
In addition to the Dreyfus Advice and Guidance Program, DIA provides
investment advice to a range of individual and institutional clients,
including pension and profit sharing plans, corporations and other business
entities, and trusts, estates and charitable organizations.
12. Does DIA utilize any sub-advisers, sub-contractors or agents in providing
Dreyfus Advice and Guidance?
From time to time, DIA may utilize, subject to DIA's oversight and
supervision, one or more sub-advisers, subcontractors or agents to assist it
in performing investment advisory services. Currently, DIA is utilizing the
services of The Ayco Company, L.P. ("Ayco"), a financial planning firm and a
registered investment adviser, to assist with the investment advisory
services, including the formulation of advice as to how a client's assets
might be allocated among various categories of investments and the
recommendation of Dreyfus Mutual Funds and Third-Party Mutual Funds from the
Recommended List that correspond to the prescribed investment categories.
Further information concerning Ayco is set forth below.
Page 23
Dreyfus Advice and GuidanceRegistration Mark
subadvisory disclosure document
Subadvisory Services provided to, and on behalf of, Dreyfus Investment
Advisors, Inc. ("DIA") by
The Ayco Company, L.P.
One Wall Street * Albany, New York 11205-3894
515-464-2000
Subadvisory Services and Fees
Ayco acts as a subadvisor to DIA and provides the following subadvisory
services to, and on behalf of, DIA with regard to the Dreyfus Advice and
Guidance program: toll-free telephone access to Ayco Financial Planners to
provide general financial planning information, non-discretionary asset
allocation advice with respect to certain mutual funds, and informational
brochures on topics such as estate planning, investing, tax planning, debt
management and various life events. As a subadvisor to DIA, all of Ayco's
fees are paid by DIA.
Types of Investments
Individual investment recommendations are based on specific asset allocation
guidelines and are limited only to those mutual funds that are included on
the DIA_Recommended List of Mutual Funds.
The DIA-Recommended List of Mutual Funds includes (i) mutual funds managed or
administered by The Dreyfus Corporation, an affiliate of DIA, or by other
affiliates of DIA, and (ii) mutual funds managed or administered by third
parties unaffiliated with DIA that correspond to prescribed investment
categories. DIA is solely responsible for the development of the
DIA-Recommended List of Mutual Funds and Ayco has no role in the development
and maintenance of such list. Ayco will not offer advice to, and on behalf
of, DIA through the Dreyfus Advice and Guidance program about any securities
other than the DIA-Recommended List of Mutual Funds.
Methods of Analysis/Sources of Information and Investment Strategies
Ayco uses both fundamental and technical methods to analyze securities. The
primary sources of information utilized by Ayco include financial newspapers
and magazines, research materials prepared by other sources, corporate-rating
services, annual reports and company press releases, and both prospectuses
and filings with the Securities & Exchange Commission.
In assisting DIA in formulating advice about how a DIA client's assets might
be allocated among various asset categories, Ayco generally will use
financial or other pertinent data (e.g., time horizon, risk tolerance and
investment objectives) furnished by the DIA client, the sources of
information and methods of analysis described above, and proprietary computer
programs and models to determine how best to allocate the DIA client's assets
among the various asset categories given the DIA client's circumstances.
Ayco seeks to recommend percentage allocations to each investment category
that are designed to maximize returns over time for a given
Page 24
level of risk. As stated above, Ayco has no role in the development and
maintenance of the DIA-Recommended List of Mutual Funds.
Implementation of any investment advice given to DIA clients through the
Dreyfus Advice and Guidance program is the responsibility of the individual
client.
Types of Clients
In addition to the subadvisory services provided to, and on behalf of, DIA,
Ayco separately provides investment advice to individuals, corporations and
other business entities as well as trust, estates and charitable
organizations.
Education and Business Standards
Each of Ayco's financial planners has earned a baccalaureate degree.
Additionally, all financial planners are supervised by account managers/
financial counselors all of whom have earned an advanced degree or license
beyond their baccalaureate (J.D., L.L.M., M.B.A., CFP, ChFC, CLU, CPA). All
financial planners and account managers participate in internal training,
which includes formal training sessions focusing on tax, investment and
insurance issues, departmental/regional training meetings, and written
technical and policy memoranda. Account managers also participate in
periodic company-wide teleconferences where current financial planning ideas
are reviewed.
The general investment advice directed to Ayco's clients, including DIA with
respect to the Dreyfus Advice and Guidance program, is determined by the
Office of the President. The two members of this office are:
John Breyo
Born: 1946
Education: B.B.A., Accounting-Siena College, Loudonville, NY
J.D. - Albany Law School, Albany, NY
Business
Background: The Ayco Corporation, Sept. 1971 - Dec. 1994
The Ayco Company, L.P., Dec. 1994 - Present
Barry Hammerling
Born: 1946
Education: B.A. - Rutgers University, New Brunswick, NJ
J.D. - Rutgers Law School, Camden, NJ
Business
Background: The Ayco Corporation, July 1970 - Dec. 1994
The Ayco Company, L.P., Dec. 1994 - Present
In addition, investment advice in specific areas may be determined by the
Chief Technical Officer:
Peter Heerwagen
Born: 1946
Education: B.A., English - Boston University, Boston, MA
J.D. - Syracuse University, Syracuse, NY
Page 25
Business
Background: The Ayco Corporation, July 1970 - Dec. 1994
The Ayco Company, L.P. , Dec. 1994 - Present
Participation or Interests in Client Transactions
Ayco provides advisory services other than as a subadvisor for DIA pursuant
to which Ayco may recommend securities or investment products offered by an
affiliate of Ayco or certain mutual funds (in which a related person1 has
some financial interest) when Ayco determines that such recommendation is in
the best interest of the client.
Ayco will not recommend to, and on behalf of, DIA that any Dreyfus Advice and
Guidance client buy securities or investment products offered by an affiliate
of Ayco.
Managing and Reviewing Accounts
Other than providing general information about asset allocation and making
nondiscretionary asset allocations limited to the DIA-Recommended List of
Mutual Funds, Ayco will not manage, or supervise the investment accounts of
Dreyfus Advice and Guidance clients. To the extent required, Ayco will
provide a general review of accounts for the purpose of providing asset
allocation advice to, and on behalf of, DIA with respect to a DIA client.
Economic Benefit From a NonClient
As noted above, Ayco receives a fixed fee from DIA for the subadvisory
services rendered to, and on behalf of, DIA by Ayco.
1 A related person is defined as: Any officer, director or partner of Ayco or
any person directly or indirectly controlling, controlled by or under common
control with the applicant, including any nonclerical, nonministerial
employee.
Page 26
Prospectus
March 1, 1997
Dreyfus Money Market Reserves
Dreyfus Municipal Reserves
Dreyfus U.S. Treasury Reserves
This Prospectus describes the three separate, diversified money market
investment portfolios listed above (each a "Fund" and collectively the
"Funds") of The Dreyfus/Laurel Funds, Inc., an open-end management investment
company known as a mutual fund (the "Company"). This Prospectus describes two
classes of shares_Investor shares and Class R shares of the Funds.
Each Fund seeks to maintain a stable net asset value of $1.00 per share.
Investments in a Fund are neither insured nor guaranteed by the U.S.
Government and there can be no assurance that any Fund will be able to
maintain a stable net asset value of $1.00 per share.
This Prospectus sets forth concisely information about the Funds that you
should know before investing. It should be read carefully before you invest
and retained for future reference.
The Statement of Additional Information ("SAI") dated March 1, 1997, which
may be revised from time to time, provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The SEC maintains a web site
(http://www.sec.gov) that contains the SAI, material incorporated by
reference, and other information regarding the Funds. For a free copy of the
SAI, write to the Funds at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call 1-800-645-6561. When telephoning, ask for Operator 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. All
money market funds involve certain investment risks, including the possible
loss of principal.
The fees to which each Fund is subject are summarized in the "Expense
Summary" section of the Funds' Prospectus. Each Fund pays 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 Funds, such
as custodian, transfer agent or fund accountant services.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
(Continued from page 1)
Dreyfus Money Market Reserves seeks a high level of current income consistent
with stability of principal by investing in high-grade money market
instruments.
Dreyfus Municipal Reserves seeks income exempt from federal income tax
consistent with stability of principal by investing in tax-exempt municipal
obligations.
Dreyfus U.S. Treasury Reserves seeks a high level of current income
consistent with stability of principal by investing in direct obligations of
the U.S. Treasury and repurchase agreements secured by such obligations.
Shares of the Funds are sold without a sales load. Investor shares of the
Funds are subject to distribution and shareholder servicing fees.
You can purchase or redeem shares by telephone using the Dreyfus TeleTransfer
Privilege.
The Dreyfus Corporation serves as the Funds' investment manager. The Dreyfus
Corporation is referred to as "Dreyfus."
By this Prospectus, the Funds are offering Investor shares and Class R
shares. (Class R shares of the Funds were formerly called Trust Shares.)
Investor shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to bank trust departments and other financial service providers
(including Mellon Bank and its affiliates) ("Banks") acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of a Fund
distributed to them by virtue of such an account or relationship. Investor
shares are sold primarily to retail investors maintaining related securities,
brokerage, commodities trading or similar accounts with banks, securities
broker/dealers ("Selected Dealers") or other financial institutions
(including Mellon Bank and its affiliates) (collectively, "Agents") that have
entered into a Selling Agreement ("Agreement") with Premier Mutual Fund
Services, Inc. (the "Distributor").
Table of Contents Page
Expense Summary 4
Financial Highlights 5
Description of the Funds 11
Management of the Funds 21
How to Buy Fund Shares 23
Shareholder Services 26
How to Redeem Fund Shares 30
Distribution Plan (Investor Shares Only) 33
Performance Information 34
Dividends, Other Distributions and Taxes 35
General Information 37
Page 2
[This Page Intentionally Left Blank]
Page 3
Expense Summary
Investor Shares Class R Shares
Shareholder Transaction Expenses
Maximum Sales Load Imposed
on Purchases none none
Maximum Sales Load Imposed
on Reinvestments none none
Deferred Sales Load none none
Redemption Fee none none
Exchange Fee none none
Estimated Annual Fund Operating Expenses
(as a percentage of net assets)
Management Fee 0.50% 0.50%
12b-1 Fees* 0.20% none
Other Expenses** 0.00% 0.00%
Total Fund Operating Expenses 0.70% 0.50%
Examples
You would pay the following expenses on a $1,000 investment, assuming (1) a
5% annual return and (2) redemption at the end of each time period:
Investor Shares Class R Shares
1 Year $ 7 $ 5
3 Years $22 $16
5 Years $39 $28
10 Years $87 $63
* See "Distribution Plan (Investor Shares Only)" for a description of each
Fund's Plan of Distribution for Investor shares.
** Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager is contractually required to
reduce its Management Fee by an amount equal to a Fund's allocable portion of
such fees and expenses, which are estimated to be less than 0.01% of a Fund's
net assets (See "Management of the Funds.")
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, each
Fund's actual performance will vary and may result in an actual return
greater or less than 5%.
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that investors will bear, directly or indirectly,
the payment of which will reduce investors' return on an annual basis. (See
"Management of the Funds.") Long-term holders of Investor shares could pay
more in Rule 12b-1 fees than the economic equivalent of the maximum front-end
sales charges applicable to mutual funds sold by members of the National
Association of Securities Dealers, Inc. Certain Agents may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table.
Page 4
The Company understands that Agents may charge fees to their clients who are
owners of Fund shares for various services provided in connection with a
client's account. These fees would be in addition to any amounts received by
an Agent under its Agreement with the Distributor. The Agreement requires
each Agent to disclose to its clients any compensation payable to such Agent
by the Distributor and any other compensation payable by the clients for
various services provided in connection with their accounts.
Financial Highlights
The following financial information has been derived from the financial
statements which have been audited by KPMG Peat Marwick LLP, the independent
auditors for the Funds, for the indicated years or period ended October 31,
whose report appears in the Fund's Annual Report dated October 31, 1996 and
that is incorporated by reference in the SAI.
Dreyfus Money Market Reserves
For an Investor share outstanding throughout each year or period.
<TABLE>
Year Ended Year Ended Period Ended
10/31/96 10/31/95 0/31/94*
<S> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.048 0.052 0.021
Less distributions:
Dividends from net investment income (0.048) (0.052) (0.021)
Net asset value, end of period $1.00 $1.00 $1.00
Total return 4.94% 5.28% 2.14%#
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $144,168 $161,819 $3,611
Ratio of operating expenses to
average net assets 0.70% 0.70% 0.71%##
Ratio of net investment income to
average net assets 4.84% 5.25% 3.31%##
* The Fund commenced selling Investor shares on April 6, 1994. Prior to
October 17, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's investment
manager.
Total return represents aggregate total return for the period indicated.
# Not Annualized.
## Annualized.
</TABLE>
Page 5
<TABLE>
Financial Highlights (continued)
Dreyfus Money Market Reserves
For a Class R share outstanding
throughout each year or period.*
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
10/31/96 10/31/95 10/31/94*## 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income 0.050 0.053 0.034 0.028 0.039 0.062 0.082 0.067 0.060
Less distributions:
Dividends from net
investment income (0.050) (0.053) (0.034) (0.028) (0.039) (0.062) (0.082) (0.067) (0.060)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return 5.16% 5.44% 3.52% 2.84% 3.92% 6.39% 8.55% 7.95% 6.18%
Ratios to average
net assets/
supplemental data:
Net assets, end of
year (in 000's) $170,409 $139,787 $124,754 $103,760 $91,848 $105,329 $93,366 $92,257 $530
Ratio of operating
expenses to average
net assets 0.50% 0.50% 0.51% 0.50%** 0.50%** 0.50%** 0.16%** 0.00%** 0.60%#**
Ratio of net investment
income to average
net assets 5.01% 5.40% 3.51% 2.80% 3.88% 6.13% 8.21% 8.97% 6.69%#
* The Fund commenced operations on
November 18, 1987. The Fund commenced selling Investor
Shares on April 6, 1994. Those shares outstanding prior to
April 4, 1994 were designated Trust Shares. Effective as
of October 17, 1994, the Fund's Trust Shares were
redesignated Class R Shares.
** For the years or period ended
October 31, 1992, 1991, 1990, 1989 and 1988, the
investment adviser waived all or a portion of its advisory
fee amounting to $0.0007, $0.0010, $0.0038, $0.0043 and
$0.0045 per share, respectively. For the years or period
ended October 31, 1993, 1992, 1991, 1990, 1989 and 1988,
the investment adviser reimbursed expenses of the Fund
amounting to $0.0036, $0.0027, $0.0018, $0.0026, $0.0062
and $0.3952 per share, respectively.
Net investment income before expenses
reimbursed by the investment adviser for the year ended
October 31, 1994 was $0.0331.
Total return represents aggregate
total return for the periods indicated.
Annualized operating expense ratio
before expenses reimbursed by the investment adviser for
the year ended October 31, 1994 was 0.64%.
# Annualized.
## Prior to October 17, 1994, Mellon
Bank served as the Fund's investment manager. Effective
October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
</TABLE>
Page 6
Financial Highlights
The following financial information has been derived from the financial
statements which have been audited by KPMGPeat Marwick LLP, the independent
auditors for the Funds, for the indicated years or period ended October 31,
whose report appears in the Fund's Annual Report dated October 31, 1996 and
that is incorporated by reference in the SAI.
<TABLE>
Dreyfus Municipal Reserves
For an Investor share outstanding throughout each year or period.*
Year Ended Year Ended Period Ended
10/31/96 10/31/95 10/31/94
<S> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.029 0.032 0.012
Less distributions:
Dividends from net investment income (0.029) (0.032) (0.012)
Net asset value, end of period $1.00 $1.00 $1.00
Total return 2.96% 3.28% 1.23%#
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $14,074 $17,764 $1,161
Ratio of operating expenses to
average net assets 0.70% 0.70% 0.70%##
Ratio of net investment income to
average net assets 2.92% 3.33% 2.11%##
*The Fund commenced selling Investor shares on April 20, 1994. Prior to
October 17, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's investment
manager.
Total return represents aggregate total return for the period indicated.
# Not Annualized.
##Annualized.
</TABLE>
Page 7
<TABLE>
Financial Highlights (continued)
Dreyfus Municipal Reserves
For a Class R share outstanding
throughout each year or period.*
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
10/31/96 10/31/95 10/31/94*## 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00$ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income 0.031 0.034 0.023 0.021 0.029 0.045 0.056 0.059 0.041
Less distributions:
Dividends from net
investment income (0.031) (0.034) (0.023) (0.021) (0.029) (0.045) (0.056) (0.059) (0.041)
Net asset value,
end of year $1.00 $1.00$ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return 3.17% 3.48% 2.29% 2.10% 2.94% 4.64% 5.79% 6.08% 4.22%
Ratios to average net
assets supplemental data:
Net assets, end of
year (in 000's) $221,178 $205,373 $205,105 $187,830 $184,719 $152,260 $88,247 $56,224 $20,472
Ratio of operating
expenses to 0.50% 0.50% 0.51% 0.50%** 0.50%** 0.50%** 0.55%** 0.70%** 0.70%**#
average net assets
Ratio of net investment
income to 3.11% 3.41% 2.30% 2.08% 2.90% 4.49% 5.66% 5.95% 4.61%#
average net assets
* The Fund commenced operations on
December 10, 1987. The Fund commenced selling Investor
shares on April 20, 1994. Those shares in existence prior
to April 4, 1994 were designated Trust Shares. Effective
as of October 17, 1994, the Fund's Trust Shares were
reclassified as Class R shares.
** For the period ended October 31,
1988, the investment adviser waived a portion of its
advisory fee amounting to $0.0040 per share. For the years
or period ended October 31, 1993, 1992, 1991, 1990, 1989
and 1988, the investment adviser reimbursed expenses of
the Fund amounting to $0.0024, $0.0029, $0.0036, $0.0052,
$0.0044 and $0.0031 per share, respectively.
Net investment income before expenses
reimbursed by the investment adviser for the year ended
October 31, 1994 was $0.0218.
Total return represents aggregate
total return for the periods indicated.
Annualized operating expense ratio
before expenses reimbursed by the investment adviser for
the year ended October 31, 1994 was 0.61%.
# Annualized.
## Prior to October 17, 1994, Mellon
Bank served as the Fund's investment manager. Effective
October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
</TABLE>
Page 8
Financial Highlights
The following financial information has been derived from the financial
statements which have been audited by KPMGPeat Marwick LLP, the independent
auditors for the Funds, for the indicated years or period ended October 31,
whose report appears in the Fund's Annual Report dated October 31, 1996 and
that is incorporated by reference in the SAI.
<TABLE>
Dreyfus U.S. Treasury Reserves
For an Investor share outstanding throughout each year or period.
Year Ended Year Ended Period Ended
10/31/96 10/31/95 10/31/94*
<S> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.046 0.049 0.020
Less distributions:
Dividends from net investment income (0.046) (0.049) (0.020)
Net asset value, end of period $1.00 $1.00 $1.00
Total return 4.74% 5.02% 1.96%#
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $21,826 $21,386 $1,324
Ratio of operating expenses to
average net assets 0.70% 0.70% 0.70%##
Ratio of net investment income to
average net assets 4.64% 4.92% 3.42%##
* The Fund commenced selling Investor Shares on April 18, 1994. Prior to
October 17, 1994, Mellon Bank served as the Fund's investment manager.
Effective October 17, 1994, Dreyfus began serving as the Fund's investment
manager.
Total return represents aggregate total return for the period indicated.
# Not Annualized.
## Annualized.
</TABLE>
Page 9
<TABLE>
Financial Highlights (continued)
Dreyfus U.S. Treasury Reserves
For a Class R share outstanding
throughout each year or period.*
Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
10/31/96 10/31/95 10/31/94*## 10/31/93 10/31/92 10/31/91
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income 0.048 0.051 0.033 0.027 0.037 0.042
Less distributions:
Dividends from net
investment income (0.048) (0.051) (0.033) (0.027) (0.037) (0.042)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4.94% 5.23% 3.37% 2.77% 3.73% 4.32%
Ratios to average net
assets/supplemental data:
Net assets, end of
year (in 000's) $464,303 $399,873 $228,797 $69,785 $69,187 $45,998
Ratio of operating
expenses to average
net assets 0.50% 0.50% 0.50% 0.50%** 0.50%** 0.34%#**
Ratio of net investment
income to average
net assets 4.79% 5.14% 3.62% 2.74% 3.63% 5.55%#
* The Fund commenced operations on
February 4, 1991. The Fund commenced selling Investor
Shares on April 18, 1994. Those shares outstanding prior
to April 4, 1994 were designated as Trust Shares.
Effective as of October 17, 1994, the Fund's Trust Shares
were redesignated as Class R shares.
** For the period ended October 31,
1991, the investment adviser waived a portion of its
advisory fee amounting to $0.0010 per share. For the years
or period ended October 31, 1993, 1992 and 1991, the
investment adviser reimbursed expenses of the Fund
amounting to $0.0040, $0.0040 and $0.0048 per share,
respectively.
Net investment income before expenses
reimbursed by the investment adviser for the year ended
October 31, 1994 was $0.0323.
Total return represents aggregate
total return for the periods indicated.
Annualized expense ratio before
expenses reimbursed by the investment adviser for the year
ended October 31, 1994 was 0.59%.
# Annualized.
## Prior to October 17, 1994, Mellon
Bank served as the Fund's investment manager. Effective
October 17, 1994, Dreyfus began serving as the Fund's
investment manager.
</TABLE>
Page 10
DESCRIPTION OF THE FUNDS
General
By this Prospectus, each Fund is offering Investor shares and Class R shares.
(Class R shares of the Funds were formerly called Trust Shares.) Investor
shares and Class R shares are identical, except as to the services offered to
and the expenses borne by each Class. Class R shares are sold primarily to
Banks acting on behalf of customers having a qualified trust or investment
account or relationship at such institution, or to customers who have
received and hold shares of a Fund distributed to them by virtue of such an
account or relationship. Investor shares are sold primarily to investors
maintaining related securities, brokerage, commodities trading or similar
accounts with Agents that have extended into Agreements with the Funds'
distributor. If shares of a Fund are held in an account at a Bank or with an
Agent, such Bank or Agent may require you to place all Fund purchase,
exchange and redemption orders through them. All Banks and Agents have agreed
to transmit transaction requests to each Fund's transfer agent or to the
Distributor. Distribution and shareholder servicing fees paid by Investor
shares will cause Investor shares to have a higher expense ratio and to pay
lower dividends than Class R shares.
Dreyfus Money Market Reserves
Investment Objective and Policies
Dreyfus Money Market Reserves seeks a high level of current income consistent
with stability of principal by investing in high-grade money market
instruments. There can be no assurance that Dreyfus Money Market Reserves
will meet its stated investment objective. See "Other Investment Policies and
Risk Factors" for a detailed description of risks and other Fund investment
policies. See "Other Investment Policies and Risk Factors _ Limiting
Investment Risks" for a discussion of the Fund's investment limitations.
The instruments in which Dreyfus Money Market Reserves may invest include (1)
U.S. Treasury bills, notes and bonds; (2) other obligations issued or
guaranteed as to interest and principal by the U.S. Government, its agencies
and instrumentalities; (3) instruments of U.S. and foreign banks, including
certificates of deposit, banker's acceptances, and time deposits, and may
include Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of
Deposit ("Yankee CDs"), and Eurodollar Time Deposits ("ETDs"); (4) commercial
paper of U.S. and foreign companies; (5) corporate obligations; (6)
mortgage-related securities backed by U.S. Government agencies or
instrumentalities; (7) variable amount master demand notes; (8) variable and
floating rate notes; and (9) repurchase agreements. Dreyfus Money Market
Reserves also may utilize reverse repurchase agreements. (See "Other
Investment Policies and Risk Factors.")
Dreyfus Municipal Reserves
Investment Objective and Policies
Dreyfus Municipal Reserves seeks income exempt from federal income tax
consistent with stability of principal by investing in tax-exempt municipal
obligations. There can be no assurance that Dreyfus Municipal
Page 11
Reserves will meet its stated investment objective. See "Other Investment
Policies and Risk Factors" for a detailed description of risks and other Fund
investment policies. See "Other Investment Policies and Risk Factors _
Limiting Investment Risks" for a discussion of the Fund's investment
limitations.
Dreyfus Municipal Reserves intends to invest 100%, and has adopted a policy
requiring that it invest at least at 80%, of its total assets in municipal
obligations.
Types of Municipal Securities. Municipal securities are obligations issued by
or on behalf of states, territories and possessions of the United States and
their political subdivisions, agencies, and instrumentalities, the interest
from which is, in the opinion of bond counsel, exempt from regular federal
income tax. The municipal securities in which Dreyfus Municipal Reserves may
invest include:
(1) municipal notes, including tax anticipation and revenue anticipation
notes, bond anticipation notes, construction loan notes and tax-exempt
commercial paper; (2) short-term municipal bonds, including general
obligation bonds, revenue bonds, industrial revenue bonds and private
activity bonds; and (3) municipal leases.
Dreyfus Municipal Reserves may purchase certain municipal securities,
including certain industrial development bonds and bonds issued after August
7, 1986 to finance "private activities," the interest on which may constitute
a "tax preference item" for purposes of the federal alternative minimum tax,
even though the interest will continue to be fully tax-exempt for federal
income tax purposes. Dreyfus Municipal Reserves may invest without limitation
in such municipal securities as long as such investment is consistent with
the Fund's investment objective.
Yield Factors and Ratings. Yields on municipal securities are dependent on a
variety of factors, including the general conditions of the money market and
of the municipal bond and municipal note markets, the size of a particular
offering, the maturity of the obligation and the rating of the issue. The
achievement of Dreyfus Municipal Reserves' investment objective is dependent
in part on the continuing ability of the issuers of the municipal securities
in which Dreyfus Municipal Reserves invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of
municipal securities are subject to the provisions of bankruptcy, insolvency
and other laws affecting the rights and remedies of creditors. The
possibility exists, therefore, that, as a result of litigation or other
conditions, the ability of any issuer to pay, when due, the principal of and
interest on its municipal securities may be materially affected.
All of Dreyfus Municipal Reserves' municipal securities, including municipal
leases, must at the time of purchase present minimal credit risks and either
be backed by the full faith and credit of the United States or be of high
quality as determined in accordance with procedures adopted by the Board of
Directors.
Additional Information. Dreyfus Municipal Reserves may invest more than 25%
of its assets in industrial development bonds, in participation
Page 12
interests therein issued by banks and in municipal securities and other
obligations guaranteed by the U.S. Government, its agencies or
instrumentalities. A participation interest gives Dreyfus Municipal Reserves
an undivided interest in a municipal bond owned by a bank and generally is
backed by the bank's irrevocable letter of credit or guarantee.
Taxable Investments. Dreyfus Municipal Reserves will attempt to invest 100%
of its assets in municipal securities, the interest on which, in the opinion
of bond counsel, is exempt from regular federal income tax. Dreyfus Municipal
Reserves may under certain circumstances, however, invest up to 20% of the
value of its total assets in certain securities the interest income on which
is subject to regular federal income tax.
Dreyfus Municipal Reserves may invest in any of the following taxable
instruments: (1) U.S. Treasury bills, notes and bonds; (2) other obligations
issued or guaranteed as to interest and principal by the U.S. Government, its
agencies and instrumentalities; (3) instruments of U.S. and foreign banks,
including certificates of deposit, banker's acceptances and time deposits,
and may include ECDs, Yankee CDs and ETDs; (4) commercial paper of U.S and
foreign companies; (5) corporate obligations; (6) mortgage-related securities
backed by U.S. Government agencies or instrumentalities; (7) variable amount
master demand notes; (8) floating rate notes; and (9) repurchase agreements.
The Fund also may utilize reverse repurchase agreements. (See "Other
Investment Policies and Risk Factors.")
Dreyfus U.S. Treasury Reserves
Investment Objective and Policies
Dreyfus U.S. Treasury Reserves seeks a high level of current income
consistent with stability of principal by investing in direct obligations of
the U.S. Treasury and repurchase agreements secured by such obligations.
There can be no assurance that Dreyfus U.S. Treasury Reserves will meet its
stated investment objective. See "Other Investment Policies and Risk Factors"
below for a detailed description of risks and other Fund investment policies.
See "Other Investment Policies and Risk Factors _ Limiting Investment Risks"
for a discussion of the Fund's investment limitations.
Dreyfus U.S. Treasury Reserves invests only in direct obligations of the U.S.
Treasury, such as Treasury bills, notes and bonds, with remaining maturities
of 397 days or less, and in repurchase agreements of duration of 397 days or
less secured by direct obligations of the U.S. Treasury.
Each Fund expects to maintain, but does not guarantee, a net asset value of
$1.00 per share. To do so, each Fund uses the amortized cost method of
valuing its securities pursuant to Rule 2a-7 under the Investment Company Act
of 1940, as amended (the "1940 Act") which Rule includes various maturity,
quality and diversification requirements, certain of which are summarized as
follows. In accordance with Rule 2a-7, each Fund must maintain a
dollar-weighted average portfolio maturity of 90 days or less and invest only
in U.S. dollar-denominated securities with remaining maturities of 397 days
or less and which are determined to be of high quality with minimal credit
risk in accordance with procedures adopted by
Page 13
the Board of Directors. In determining whether a security is of high quality
with minimal credit risk, Dreyfus must consider whether the security is rated
in one of the two highest short-term rating categories by nationally
recognized statistical rating organizations ("NRSROs") or determined to be of
comparable quality by Dreyfus in accordance with requirements of these
procedures. (See the SAI for a description of NRSROs.) These procedures are
reasonably designed to assure that the prices determined by the amortized
cost valuation will approximate the current market value of each Fund's
securities.
Other Investment Policies and Risk Factors
Borrowing. Each Fund is authorized, within specified limits, to borrow money
for temporary administrative purposes and to pledge its assets in connection
with such borrowings.
Commercial Paper. Dreyfus Money Market Reserves and Dreyfus Municipal
Reserves may invest in commercial paper. These instruments are short-term
obligations issued by banks and corporations that have maturities ranging
from 2 to 270 days. Each instrument may be backed only by the credit of the
issuer or may be backed by some form of credit enhancement, typically in the
form of a guarantee by a commercial bank. Commercial paper backed by
guarantees of foreign banks may involve additional risk due to the difficulty
of obtaining and enforcing judgments against such banks and the generally
less restrictive regulations to which such banks are subject. A Fund will
only invest in commercial paper of U.S. and foreign companies rated at the
time of purchase at least A-1 by Standard & Poor's Ratings Group, Prime-1 by
Moody's Investors Service, Inc. ("Moody's"), F-1 by Fitch's Investors
Service, Inc., Duff 1 by Duff & Phelps, Inc. or A1 by IBCA, Inc.
ECDs, ETDs and Yankee CDs. Dreyfus Money Market Reserves and Dreyfus
Municipal Reserves may invest in ECDs, ETDs and Yankee CDs. ECDs are U.S.
dollar-denominated certificates of deposit issued by foreign branches of
domestic banks. ETDs are U.S. dollar-denominated time deposits in a foreign
branch of a U.S. bank or a foreign bank. Yankee CDs are certificates of
deposit issued by a U.S. branch of a foreign bank denominated in U.S. dollars
and held in the United States. ECDs, ETDs and Yankee CDs are subject to
somewhat different risks than are the obligations of domestic banks. (See
"Foreign Securities.")
Eurodollar Bonds and Notes. Dreyfus Money Market Reserves may invest in
Eurodollar bonds and notes. Eurodollar bonds and notes are obligations which
pay principal and interest in U.S. dollars held in banks outside the United
States, primarily in Europe. Investments in Eurodollar bonds and notes
involve risks that differ from investments in securities of domestic issuers.
(See "Foreign Securities.")
Floating Rate Securities. Dreyfus Money Market Reserves and Dreyfus Municipal
Reserves may invest in floating rate securities. A floating rate security
provides for the automatic adjustment of its interest whenever a specified
interest rate changes. Interest rates on these securities are ordinarily tied
to, and are a percentage of, a widely recognized interest rate, such as the
yield on 90-day U.S. Treasury bills or the prime rate of a spec-
Page 14
ified bank. These rates may change as often as twice daily. Generally, changes
in interest rates will have a smaller effect on the market value of floating
rate securities than on the market value of comparable fixed income
obligations. Thus, investing in variable and floating rate securities
generally allows less opportunity for capital appreciation and depreciation
than investing in comparable fixed income securities.
Foreign Securities. Dreyfus Money Market Reserves and Dreyfus Municipal
Reserves may purchase securities of foreign issuers and may invest in
obligations of foreign branches of domestic banks and domestic branches of
foreign banks. Investment in foreign securities presents certain risks,
including those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future political and economic developments and the
possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers, and the fact that foreign issuers are not generally
subject to uniform accounting, auditing and financial reporting standards or
to other regulatory practices and requirements comparable to those applicable
to domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic
issuers. In addition, with respect to certain foreign countries, there is the
possibility of expropriation, confiscatory taxation and limitations on the
use or removal of funds or other assets of a Fund, including withholding of
dividends. Foreign securities may be subject to foreign government taxes that
would reduce the yield on such securities.
Illiquid Securities. No Fund will knowingly invest more than 10% of the value
of its net assets in illiquid securities, including time deposits and
repurchase agreements having maturities longer than seven days. Securities
that have readily available market quotations are not deemed illiquid for
purposes of this limitation (irrespective of any legal or contractual
restrictions on resale). A Fund may invest in commercial obligations issued
in reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). A Fund may also purchase securities that are not registered
under the Securities Act of 1933, as amended, but which can be sold to
qualified institutional buyers in accordance with Rule 144A under that Act
("Rule 144A securities"). Liquidity determinations with respect to Section
4(2) paper and Rule 144A securities will be made by the Board of Directors as
required. The Board will consider availability of reliable price information
and other relevant information in making such determinations. Section 4(2)
paper is restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors such as the Fund that agree that
they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment dealers
who make a market in the Section 4(2) paper, thus providing liquidity. Rule
144A securities generally must be sold to other qualified institutional
buyers. If a particular investment in Section 4(2) paper or Rule 144A
securities is not determined to be liquid, that invest-
Page 15
ment 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.
Municipal Leases. Dreyfus Municipal Reserves may invest in municipal leases.
Municipal leases frequently have special risks not normally associated with
general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased
asset to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed
to be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money
is appropriated for such purpose by the appropriate legislative body on a
yearly or other periodic basis. To reduce these risks, Dreyfus Municipal
Reserves will only purchase municipal leases subject to a non-appropriation
clause when the payment of principal and accrued interest is backed by an
unconditional irrevocable letter of credit or guarantee of a bank.
Dreyfus Municipal Reserves proposes to purchase municipal lease obligations
principally from banks, equipment vendors or other parties that have entered
into an agreement with Dreyfus Municipal Reserves providing that such party
will remarket the municipal lease obligations on certain conditions
(described below) within seven days after demand by Dreyfus Municipal
Reserves. (Such agreements are referred to as "remarketing agreements" and
the party that agrees to remarket or repurchase a municipal lease obligation
is referred to as a "remarketing party.") The agreement will provide for a
remarketing price equal to the principal balance on the obligation as
determined pursuant to the terms of the remarketing agreement as of the
repurchase date (plus accrued interest). The Funds' investment manager,
Dreyfus, anticipates that, in most cases, the remarketing agreement will also
provide for the seller of the municipal lease obligation or the remarketing
party to service it for a servicing fee. The conditions to Dreyfus Municipal
Reserves right to require the remarketing party to purchase or remarket the
obligation are that Dreyfus Municipal Reserves must certify at the time of
remarketing that (1) payments of principal and interest under the municipal
lease obligation are current and Dreyfus Municipal Reserves has no knowledge
of any default thereunder by the governmental issuer, (2) such remarketing is
necessary in the sole opinion of a designated officer of Dreyfus Municipal
Reserves to meet the Fund's liquidity needs, and (3) the governmental issuer
has not notified Dreyfus Municipal Reserves of termination of the underlying
lease.
The remarketing agreement described above requires the remarketing party to
purchase (or market to a third party) municipal lease obligations of
Page 16
Dreyfus Municipal Reserves under certain conditions to provide liquidity if
share redemptions of Dreyfus Municipal Reserves exceed purchases of Dreyfus
Municipal Reserves shares. Dreyfus Municipal Reserves will only enter into
remarketing agreements with banks, equipment vendors or other responsible
parties (such as insurance companies, broker-dealers and other financial
institutions) that in Dreyfus' opinion are capable of meeting their
obligations to the Fund. Dreyfus will regularly monitor the ability of
remarketing parties to meet their obligation to Dreyfus Municipal Reserves.
Dreyfus Municipal Reserves will enter into remarketing agreements covering at
least 75% in the principal amount of the municipal lease obligations in its
Fund. Dreyfus Municipal Reserves will not enter into remarketing agreements
with any one remarketing party in excess of 5% of its total assets.
Remarketing agreements with broker-dealers may require an exemptive order
under the Investment Company Act of 1940, as amended (the "1940 Act").
Dreyfus Municipal Reserves will not enter into such agreements with
broker-dealers prior to the issuance of such an order or interpretation of
the SEC that such an order is not required. There can be no assurance that
such an order or interpretation will be granted.
The "remarketing" feature of the agreement entitles the remarketing party to
attempt to resell Dreyfus Municipal Reserves municipal lease obligation
within seven days after demand from the Fund; however, the remarketing party
will be obligated to repurchase the municipal lease obligation for its own
account at the end of the seven-day period if such obligation has not been
resold. The remarketing agreement will often be entered into with the party
who has sold a municipal lease obligation to Dreyfus Municipal Reserves, but
remarketing agreements may also be entered into with a separate remarketing
party of the same type that meets the credit and other criteria listed above.
Up to 25% of Dreyfus Municipal Reserves municipal lease obligations may not be
covered by remarketing agreements. Dreyfus Municipal Reserves, however, will
not invest in municipal lease obligations that are not subject to remarketing
agreements if, as a result of such investment, more than 10% of its total
assets would be invested in illiquid securities such as (1) municipal lease
obligations not subject to remarketing agreements and not deemed by Dreyfus
at the time of purchase to be at least of comparable quality to rated
municipal debt obligations, or (2) other illiquid assets such as securities
restricted as to resale under federal or state securities laws. For purposes
of the preceding sentence, a municipal lease obligation that is backed by an
irrevocable bank letter of credit or an insurance policy, issued by a bank or
issuer deemed by Dreyfus to be of high quality and minimal credit risk, will
not be deemed to be "illiquid" solely because the underlying municipal lease
obligation is unrated, if Dreyfus determines that such municipal lease
obligation is readily marketable because it is backed by such letter of
credit or insurance policy.
As used within this section, high quality means that the municipal lease
obligation meets all of the following criteria: (1) the underlying equipment
is for an essential governmental function; (2) the municipality has a
documented history of stable financial operations and timely payments of
principal and interest on its municipal debt or lease obligation; (3) the
lease/purchase agreement contains proper terms and conditions to protect
Page 17
against non-appropriation, substitution of equipment and other more general
risks associated with the purchase of securities; (4) the equipment
underlying the lease was leased in a proper and legal manner; and (5) the
equipment underlying the lease was leased from a reputable equipment vendor.
A letter of credit or insurance policy would generally provide that the
issuer of the letter of credit or insurance policy would pay the outstanding
principal balance of the municipal lease obligations plus any accrued but
unpaid interest upon non-appropriation or default by the governmental lessee.
However, the terms of each letter of credit or insurance policy may vary
significantly and would affect the degree to which such protections increase
the liquidity of a particular municipal lease obligation.
Other Investment Companies. Each Fund may invest in securities issued by
other investment companies to the extent that such investments are consistent
with the Fund's investment objective and policies and permissible under the
1940 Act. As a shareholder of another investment company, a Fund would bear,
along with other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in
addition to the advisory and other expenses that the Fund bears directly in
connection with its own operations.
Repurchase Agreements. Each Fund may enter into repurchase agreements. A
repurchase agreement involves the purchase of a security by a Fund and a
simultaneous agreement (generally with a bank or broker-dealer) to repurchase
that security from such Fund at a specified price and date or upon demand.
This technique offers a method of earning income on idle cash. A risk
associated with repurchase agreements is the failure of the seller to
repurchase the securities as agreed, which may cause a Fund to suffer a loss
if the market value of such securities declines before they can be liquidated
on the open market. Repurchase agreements with a duration of more than seven
days are considered illiquid securities and are subject to the limit stated
above.
Reverse Repurchase Agreements. Dreyfus Money Market Reserves and Dreyfus
Municipal Reserves may enter into reverse repurchase agreements to meet
redemption requests where the liquidation of fund securities is deemed by
Dreyfus to be disadvantageous. Under a reverse repurchase agreement, a Fund:
(i) transfers possession of fund securities to a bank or broker-dealer in
return for cash in an amount equal to a percentage of the securities' market
value; and (ii) agrees to repurchase the securities at a future date by
repaying the cash with interest. Cash or liquid high-grade debt securities
held by the Fund equal in value to the repurchase price including any accrued
interest will be maintained in a segregated account while a reverse
repurchase agreement is in effect.
Securities Lending. To increase return on Fund securities, Dreyfus Money
Market Reserves and Dreyfus Municipal Reserves may lend their 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
Page 18
should the borrower of the securities fail financially. However, loans are
made only to borrowers deemed by Dreyfus to be of good standing and when, in
its judgment, the income to be earned from the loan justifies the attendant
risks.
Stand-By Commitments. Dreyfus Municipal Reserves investments may include
"stand-by commitments," which are rights to resell municipal securities at
specified periods prior to their maturity dates to the seller or to some
third party at an agreed-upon price or yield. Stand-by commitments may
involve certain expenses and risks, including the inability of the issuer of
the commitment to pay for the securities at the time the commitment is
exercised, non-marketability of the commitment, and differences between the
maturity of the commitment.
U.S. Government Securities. Dreyfus Money Market Reserves and Dreyfus
Municipal Reserves 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, General Services
Administration and Maritime Administration. Investments may also be made in
U.S. Government obligations that do not carry the full faith and credit
guarantee, such as those issued by the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation, or other instrumentalities.
Variable Amount Master Demand Notes. Dreyfus Money Market Reserves may invest
in Variable Amount Master Demand Notes. Variable amount master demand notes
are unsecured obligations that are redeemable upon demand and are typically
unrated. These instruments are issued pursuant to written agreements between
their issuers and holders. The agreements permit the holders to increase
(subject to an agreed maximum) and the holders and issuers to decrease the
principal amount of the notes, and specify that the rate of interest payable
on the principal fluctuates according to an agreed-upon formula. If an issuer
of a variable amount master demand note were to default on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of a secondary market and might, for this or other reasons, suffer a
loss to the extent of the default. The Fund will invest in variable amount
master demand notes issued only by entities that Dreyfus considers
creditworthy.
Variable Rate Obligations. Dreyfus Money Market Reserves and Dreyfus
Municipal Reserves may invest in variable rate obligations whose interest
rates are adjusted either at predesignated periodic intervals or whenever
there is a change in the market rate to which the security's interest rate is
tied. The adjustments minimize changes in the market value of the obligation
and, accordingly, enhance the ability of the Funds to maintain a stable net
asset value per share ("NAV'). Dreyfus Money Market Reserves and Dreyfus
Municipal Reserves may also purchase participation interests in variable rate
securities such as industrial development bonds.
When-Issued Securities And Delayed Delivery Transactions. To secure
advantageous prices or yields, each Fund may purchase U.S. Government
Page 19
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 a
Fund prior to the actual delivery or payment by the other party to the
transaction. The purchase of securities on a when-issued or delayed delivery
basis involves the risk that, as a result of an increase in yields available
in the market place, the value of the securities purchased will decline prior
to the settlement date. The sale of securities for delayed delivery involves
the risk that the prices available in the market on the delivery date may be
greater than those obtained in the sale transactions. Each Fund will
establish a segregated account consisting of cash, U.S. Government securities
or other high-grade debt obligations in an amount equal to the amounts of its
when-issued and delayed delivery commitments.
Credit Enhancements. Certain instruments in which Dreyfus Money Market
Reserves and Dreyfus Municipal Reserves may invest, including floating rate
securities, variable amount master demand notes and variable rate
obligations, may be backed by letters of credit or insured or guaranteed by
financial institutions, such as banks, or insurance companies, whose credit
quality ratings are judged by Dreyfus to be comparable in quality to the two
highest quality ratings of Moody's or Standard & Poor's. Changes in the
credit quality of banks and other financial institutions that provide such
credit or liquidity enhancements to a Fund's portfolio securities could cause
losses to the Fund and affect its share price.
Limiting Investment Risks. Each Fund is subject to a number of investment
limitations. Certain limitations are matters of fundamental policy and may
not be changed with respect to a Fund without the affirmative vote of the
holders of a majority of that Fund's outstanding shares. As a fundamental
policy, each Fund may not (i) borrow money in an amount exceeding 331/3% of
the Fund's total assets at the time of borrowing; (ii) make loans or lend
securities in excess of 331/3% of the Fund's total assets; (iii) purchase,
with respect to 75% of the Fund's total assets, securities of any one issuer
representing more than 5% of the Fund's total assets (other than securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities) or more than 10% of that issuer's outstanding voting
securities; and (iv) invest more than 25% of the value of the Fund's total
assets in the securities of one or more issuers conducting their principal
activities in the same industry; provided that there shall be no such
limitation on investments in obligations of the U.S. Government, state and
municipal governments and their political subdivisions or investments in
domestic banks, including U.S. branches of foreign banks and foreign branches
of U.S. banks. Furthermore, pursuant to rules promulgated by the SEC, each
Fund may not purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or securities subject to certain unconditional demand
features) representing more than 5% of the Fund's total assets. The SAI
describes each of the Fund's fundamental and non-fundamental restrictions.
The investment objective, policies, restrictions, practices and procedures of
a Fund, unless otherwise specified, may be changed without shareholder
approval. If a Fund's investment objective, policies, restrictions, practices
or
Page 20
procedures change, shareholders should consider whether the Fund remains
an appropriate investment in light of their then current position and needs.
Management of the Funds
Investment Manager -- Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of Mellon
Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of January 31, 1997, Dreyfus managed or administered
approximately $85 billion in assets for more than 1.7 million investor
accounts nationwide.
Dreyfus serves as the Funds' investment manager. Dreyfus supervises and
assists in the overall management of the Funds' affairs under an Investment
Management Agreement with the Funds, subject to the overall authority of the
Company's Board of Directors in accordance with Maryland law. Pursuant to the
Investment Management Agreement, Dreyfus provides, or arranges for one or
more third parties to provide, investment advisory, administrative, custody,
fund accounting and transfer agency services to the Funds. As the Funds'
investment manager, Dreyfus manages the Funds by making investment decisions
based on the Funds' investment objectives, policies and restrictions.
Mellon is a publicly-owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Bank Holding Company Act of
1956, as amended. Mellon provides a comprehensive range of financial products
and services in domestic and selected international markets. Mellon is among
the twenty-five largest bank holding companies in the United States based on
total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including Dreyfus,
Mellon managed approximately $233 billion in assets as of December 31, 1996,
including $86 billion in mutual fund assets. As of December 31, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1,046 billion in assets,
including approximately $57 billion in mutual fund assets.
Under the Investment Management Agreement, each Fund pays a fee computed
daily and paid monthly at the annual rate of 0.50% of the Fund's average
daily net assets. Dreyfus pays all of the expenses of each Fund except
brokerage fees, taxes, interest, fees and expenses of the non-interested
Directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. In order to compensate Dreyfus for paying virtually
all of a Fund's expenses, each Fund's investment management fee is higher
than the investment advisory fees paid by most investment companies. Most, if
not all, such companies also pay for additional non-investment advisory
expenses that are not paid by such companies' investment advisers. Although
Dreyfus does not pay the fees and expenses of
Page 21
the non-interested Directors (including counsel fees), Dreyfus is
contractually required to reduce its investment management fee by an amount
equal to each Fund's allocable share of such fees and expenses. From time to
time, Dreyfus may voluntarily waive additional investment management fees
payable by a Fund. For the fiscal year ended October 31, 1996, each Fund paid
Dreyfus 0.50% 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, 1996, total operating expenses
(excluding Rule 12b-1 fees) of each Fund were 0.50% of the average daily net
assets of shares for both the Investor and Class R shares.
In addition, Investor shares may be subject to certain distribution and
shareholder servicing fees. See "Distribution Plan (Investor Shares Only)."
Dreyfus may pay the Distributor for shareholder services from Dreyfus' own
assets, including past profits but not including the management fee paid by
the Funds. The Distributor may use part or all of such payments to pay Agents
in respect of these services.
In allocating brokerage transactions for the Funds, 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 Funds or other funds
managed, advised or administered by Dreyfus as factors in the selection of
broker-dealers to execute portfolio transactions for the Funds. See
"Portfolio Transactions" in the Statement of Additional Information.
Dreyfus is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of
agency transactions, financial institutions that are affiliated with Dreyfus
or Mellon Bank or that have sold shares of the Funds, if Dreyfus believes
that the quality of the transaction and the commission are comparable to what
they would be with other qualified brokerage firms. From time to time, to the
extent consistent with its investment objective, policies and restrictions, a
Fund may invest in securities of companies with which Mellon Bank has a
lending relationship.
Distributor. The Funds' distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"). The Distributor is located at 60 State Street, Boston,
Massachusetts 02109. The Distributor is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
Custodian, Transfer and Dividend Disbursing Agent, and Sub-Administrator.
Mellon Bank (One Mellon Bank Center, Pittsburgh, Pennsylvania 15258) is the
Funds' custodian. The Funds' transfer and dividend disbursing agent is
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, located at One
American Express Plaza, Providence, Rhode Island 02903. Premier Mutual Fund
Services, Inc. is the Funds' sub-administrator and, pursuant to a
Sub-Administration Agreement with Dreyfus, provides various administrative
and corporate secretarial services to the Funds.
Page 22
How to Buy Fund Shares
General. Investor shares are sold primarily to investors maintaining related
securities, brokerage, commodities trading or similar accounts with Agents
that have entered into Agreements with the Funds' distributor. Additionally,
holders of Investor shares of a Fund who have held their shares since August
31, 1995, may continue to purchase Investor shares of the Fund whether or not
they otherwise would be eligible to do so.
Class R shares are sold primarily to Banks acting on behalf of customers
having a qualified trust or investment account or relationship at such
institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. A
"Retirement Plan" is a qualified or non-qualified employee benefit plan or
other program, including pension, profit-sharing and other deferred
compensation plans, whether established by corporations, partnerships,
non-profit entities or state and local governments. Class R shares may be
purchased for a Retirement Plan only by a custodian, trustee, investment
manager or other entity authorized to act on behalf of such Plan. It is not
recommended that Dreyfus Municipal Reserves be used as a vehicle for Keogh,
IRA or other qualified plans.
Stock certificates are issued only upon your written request. No certificates
are issued for fractional shares. The Funds reserve the right to reject any
purchase order. Agents effecting transactions in Fund shares for the accounts
of their clients may charge their clients direct fees in connection with such
transactions.
The minimum initial investment is $100,000. Each Fund may waive its minimum
initial investment requirement for new Fund accounts opened through an Agent
whenever Dreyfus Institutional Services Division ("DISD") has determined for
the initial account opened through such Agent which is below the Fund's
minimum initial investment requirement that the existing accounts in the Fund
opened through that Agent have an average account size, or the Agent has
adequate intent and access to funds to result in maintenance of accounts in
the Fund opened through that Agent with an average account size, in an amount
equal to or in excess of $100,000. DISD is required to periodically review
the average size of the accounts opened through each Agent and, if necessary,
reevaluate the Agent's intent and access to funds. DISD will discontinue the
waiver as to new accounts to be opened through an Agent if DISD determines
that the average size of accounts opened through that Agent is less than
$100,000 and the Agent does not have the requisite intent and access to
funds. The Funds reserve the right to offer their shares without regard to
minimum purchase requirements to employees participating in certain qualified
and non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to the Funds. There is no minimum for subsequent purchases. The
initial investment must be accompanied by the Funds' Account Application.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes various
limitations on the amount that may be contributed to Retirement
Page 23
Plans. These limitations apply with respect to participants at the plan level
and, therefore, do not directly affect the amount that may be invested in a
Fund by a Retirement Plan. Participants and plan sponsors should consult
their tax advisers for details.
You may purchase shares of a Fund by check or wire, or through the Dreyfus
TeleTransfer Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds" or, if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." For accounts other than Dreyfus retirement
plan accounts, payments which are mailed should be sent to the Fund being
purchased, Dreyfus Money Market Reserves, Dreyfus Municipal Reserves or
Dreyfus U.S. Treasury Reserves, 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. Purchase orders may be delivered in person only to a Dreyfus Financial
Center. These orders will be forwarded to the Funds and will be processed
only upon receipt thereby. For the location of the nearest Dreyfus Financial
Center, please call the telephone number listed under "General Information."
Wire payments may be made if your bank account is in a commercial bank that
is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit and Trust Company together with
the DDA # 043435/Dreyfus Money Market Reserves, Dreyfus Municipal Reserves or
Dreyfus U.S.Treasury Reserves and applicable Class for purchase of Fund
shares in your name. The wire must indicate which Fund and Class of shares
are being purchased and it must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call 1-800-645-6561
after completing your wire payment in order to obtain your Fund account
number. Please include your Fund account number on the Funds' Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Funds make
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds from
an account maintained in a bank or other domestic financial institution that
is an Automated Clearing House ("ACH") member. You must
Page 24
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit and Trust Company with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number preceded by the digits:
"4790" Dreyfus Money Market Reserves/Investor shares;
"4800" Dreyfus Money Market Reserves/Class R shares;
"4860" Dreyfus Municipal Reserves/Investor shares;
"4850" Dreyfus Municipal Reserves/Class R shares;
"4900" Dreyfus U.S. Treasury Reserves/Investor shares;
"4890" Dreyfus U.S. Treasury Reserves/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 one million dollars ("Eligible Benefit Plans"). The
determination of the number of employees eligible for participation in a plan
or program shall be made on the date Fund shares are first purchased by or on
behalf of employees participating in such plan or program and on each
subsequent January 1st. All present holdings of shares of funds in the
Dreyfus Family of Funds by Eligible Benefit Plans will be aggregated to
determine the fee payable with respect to each purchase of Fund shares. The
Distributor reserves the right to cease paying these fees at any time. The
Distributor will pay such fees from its own funds, other than amounts
received from the Fund, including past profits or any other source available
to it.
Federal regulations require that you provide a certified TIN upon opening or
reopening an account. See "Dividends, Other Distributions and Taxes" and the
Funds' Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Funds could subject
you to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
Net Asset Value Per Share ("NAV"). The price of a Fund's shares, which are
offered on a continuous basis, is their NAV. NAV is determined on each day
that the New York Stock Exchange ("NYSE") is open (a "business day"). The NAV
of each Fund is calculated two times each business day, at 12 noon and 4
p.m., Eastern time. Investments and requests to exchange or redeem shares
received by a Fund before 4 p.m., Eastern time, are effective on, and will
receive the price next determined on, that business day (except purchase
orders made through the Dreyfus TeleTransfer Privilege, which are effective
one business day after your call). Investment, exchange or redemption
requests received after 4 p.m. Eastern time, are effective at 12 noon on, and
receive the first share price determined on, the next business day.
An investment portfolio's NAV refers to the worth of one share. The NAV for
Investor and Class R shares, both of which are offered on a continuous basis,
of a Fund is calculated on the basis of amortized cost, which involves
initially valuing a portfolio instrument at its cost and thereafter assuming
a
Page 25
constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
instrument. Each Fund intends to maintain a constant NAV of $1.00, although
there is no assurance that this can be done on a continuing basis.
Dreyfus TELETRANSFER Privilege. You may purchase shares of a Fund (minimum
$500 and maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Funds' Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an ACH member may be
so designated. The Funds may modify or terminate this Privilege at any time
or charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TeleTransfer Privilege, you may request a
Dreyfus TeleTransfer purchase of Fund shares by calling 1-800-645-6561 or, if
calling from overseas, 516-794-5452.
Shareholder Services
The services and privileges described under this heading may not be available
to clients of certain Agents and some Agents may impose certain conditions
on their clients which are different from those described in this Prospectus.
You should consult your Agent in this regard.
Fund Exchanges
You may purchase, in exchange for shares of a Class, shares of certain other
eligible funds managed or administered by Dreyfus, to the extent such shares
are offered for sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you desire to use
this service, please call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed on its use. With respect to Class R shares
held by Retirement Plans, exchanges may be made only between a shareholder's
Retirement Plan account in one fund and such shareholder's Retirement Plan
account in another fund.
To request an exchange, you or your Agent acting on your behalf must give
exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. Except in the case of personal
retirement plans, the shares being exchanged must have a current value of at
least $500; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the relevant "No" box on the
Account Application, indicating that you specifically refuse this Privilege.
The Telephone Exchange Privilege may be established for an existing account
by written request, signed by all shareholders on the account, or by a
separate Shareholder Services Form, available by
Page 26
calling 1-800-645-6561 or, by oral request from any of the authorized
signatories on the account also by calling 1-800-645-6561. If you previously
have established the Telephone Exchange Privilege, you may telephone exchange
instructions (including over The Dreyfus TouchRegistration Mark Automated
Telephone System) by calling 1-800-645-6561. If calling from overseas, call
516-794-5452. See "How to Redeem Fund Shares_Procedures." Upon an exchange,
the following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Check Redemption Privilege,
Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TeleTransfer Privilege and the dividends and distributions payment option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined NAV; however, a sales load
may be charged with respect to exchanges of Investor shares into funds sold
with a sales load. If you are exchanging Investor shares into a fund that
charges a sales load, you may qualify for share prices which do not include
the sales load or which reflect a reduced sales load, if the shares of the
fund from which you are exchanging were: (a) purchased with a sales load, (b)
acquired by a previous exchange from shares purchased with a sales load, or
(c) acquired through reinvestment of dividends or other distributions paid
with respect to the foregoing categories of shares. To qualify, at the time
of the exchange you must notify the Transfer Agent or your Agent must notify
the Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the SAI. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance with
rules promulgated by the SEC. The Funds reserve the right to reject any
exchange request in whole or in part. The availability of fund exchanges may
be modified or terminated at any time upon notice to shareholders. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize, or an
exchange on behalf of a Retirement Plan which is not tax exempt may result
in, a taxable gain or loss.
Dreyfus Auto-Exchange Privilege
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
a Fund, in shares of certain other eligible funds in the Dreyfus Family of
Funds of which you are currently an investor. With respect to Class R shares
held by Retirement Plans, exchanges pursuant to the Dreyfus Auto-Exchange
Privilege may be made only between a shareholder's Retirement Plan account in
one fund and such shareholder's Retirement Plan account in another fund. The
amount you designate, which can be expressed either in terms of a specific
dollar or share amount ($100 minimum), will be exchanged automatically on the
first and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current NAV; however a
Page 27
sales load may be charged with respect to exchanges of Investor shares into
funds sold with a sales load. The right to exercise this Privilege may be
modified or canceled by the Funds or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. The Funds may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. For more information
concerning this Privilege and the funds in the Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
Dreyfus-Automatic Asset BuilderRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase shares of a Fund
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Shares of a Fund are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and Fund
shares will be purchased, once a month, on either the first or fifteenth day,
or twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization by calling 1-800-645-6561. You may cancel your participation in
this Privilege or change the amount of purchase at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671, or, if to Dreyfus retirement plan
accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Funds may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
Dreyfus Dividend Options
Dreyfus Dividend Sweep enables you to invest automatically dividends or
dividends and other distributions, if any, paid by a Fund in shares of
certain other eligible funds in the Dreyfus Family of Funds of which you are
an investor. Shares of the other fund will be purchased at the then-current
NAV; however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund that
charges a sales load, you may qualify for share prices which do not include
the sales load or which reflect a reduced sales load. See "Shareholder
Services" in the SAI. Dreyfus Dividend ACH permits you to transfer
electronically on the payment date dividends or dividends and other
distributions, if any, from a Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an ACH member
may be so designated. Banks may charge a fee for this service.
For more information concerning these Privileges, or to request a Dreyfus
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or
cancellation of these Privileges is effective three business days following
Page 28
receipt. These Privileges are available only for existing accounts and may
not be used to open new accounts. Minimum subsequent investments do not apply
for Dreyfus Dividend Sweep. The Funds may modify or terminate these
Privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans, IRAs or other retirement plans
are not eligible for Dreyfus Dividend Sweep.
Dreyfus Government Direct Deposit Privilege
Dreyfus Government Direct Deposit Privilege enables you to purchase shares of
a Fund (minimum of $100 and maximum of $50,000 per transaction) by having
Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. To enroll in
Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained by
calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Funds may terminate your participation upon 30 days' notice to
you.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase shares of a Fund
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side
of the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Funds, the Transfer Agent or any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Funds
may modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account.
Particular Retirement Plans, including Dreyfus sponsored retirement plans,
may permit certain participants to establish an automatic withdrawal plan
from such Retirement Plans. Participants should consult their Retirement Plan
sponsor and tax adviser for details. Such a withdrawal plan is different from
the Automatic Withdrawal Plan. An application for the Automatic Withdrawal
Plan can be obtained by calling 1-800-645-6561. The Automatic Withdrawal Plan
may be ended at any time by the shareholder,
Page 29
a Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.
Retirement Plans
Dreyfus Money Market Reserves and Dreyfus U.S. Treasury Reserves offer a
variety of pension and profit-sharing plans, including Keogh Plans, IRAs,
SEP-IRAs and IRA "Rollover Accounts," 401(k) Salary Reduction Plans and
403(b)(7) Plans. Plan support services also are available. You can obtain
details on the various plans by calling the following numbers toll free: for
Keogh Plans, please call 1-800-358-5566; for IRAs and IRA "Rollover
Accounts," please call 1-800-645-6561; for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
How to Redeem Fund Shares
General _ You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, a 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 Funds impose no charges when shares are redeemed directly through the
Distributor. Agents or other institutions 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 a Fund's then-current NAV.
The Funds ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper
form, except as provided by the rules of the SEC. However, if you have
purchased Fund shares by check, by the Dreyfus TeleTransfer Privilege or
through Dreyfus-AUTOMATIC Asset Builder and subsequently submit a written
redemption request to the Transfer Agent, the redemption proceeds will be
transmitted to you promptly upon bank clearance of your purchase check,
Dreyfus TeleTransfer purchase or Dreyfus-AUTOMATIC Asset Builder order, which
may take up to eight business days or more. In addition, the Funds will not
honor Redemption Checks under the Check Redemption Privilege and will reject
requests to redeem shares by wire or telephone or pursuant to the Dreyfus
TeleTransfer Privilege for a period of eight business days after receipt by
the Transfer Agent of the purchase check, the Dreyfus TeleTransfer purchase or
the Dreyfus-Automatic Asset Builder order against which such redemption is
requested. These procedures will not apply if your shares were purchased by
wire payment, or if you otherwise have a sufficient collected balance in your
account to cover the redemption request. Prior to the time any redemption is
effective, dividends on such shares will
Page 30
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.
Each Fund reserves the right to redeem a shareholder's account at its option
upon not less than 45 days' written notice if the net asset value of such
account is $10,000 or less ($500 or less in the case of holders of shares of
a Fund since August 31, 1995) and remains at or below such amount during the
notice period.
Procedures _ You may redeem shares of a Fund by using the regular redemption
procedure through the Transfer Agent, the Check Redemption Privilege, the
Wire Redemption Privilege, the Telephone Redemption Privilege or, the Dreyfus
TeleTransfer Privilege. Other redemption procedures may be in effect for
clients of certain Agents and institutions. The Funds make available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities.
You may redeem shares of a Fund by telephone if you have checked the
appropriate box on the Funds' Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege, which is granted automatically
unless you refuse it, you authorize the Transfer Agent to act on telephone
instructions (including over The Dreyfus TouchRegistration Mark 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 Funds will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Funds or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Funds nor the
Transfer Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a
redemption or an exchange of Fund shares. In such cases, you should consider
using the other redemption procedures described herein. Use of these other
redemption procedures may result in your redemption request being processed
at a later time than it would have been if telephone redemption had been
used.
Regular Redemption. Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus retirement
plan accounts to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Redemption requests may be delivered in
person only to a Dreyfus Financial Center. These requests will be forwarded
to the Funds and will be processed only upon receipt thereby. For the
location of the nearest financial center, please call the telephone number
listed under "General Information." Redemption requests must be signed by
each shareholder, including each owner of a joint account, and each signature
must be guar-
Page 31
anteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program. For
more information with respect to signature-guarantees, please call the
telephone number listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank of
the Federal Reserve System in accordance with a written signature-guaranteed
request.
Check Redemption Privilege _ You may request on the Account Application,
Shareholder Services Form or by later written request that a Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Redemption
Checks should not be used to close your account. Redemption Checks are free,
but the Transfer Agent will impose a fee for stopping payment of a Redemption
Check upon your request or if the Transfer Agent cannot honor the Redemption
Check due to insufficient funds or other valid reason. You should date your
Redemption Checks with the current date when you write them. Please do not
postdate your Redemption Checks. If you do, the Transfer Agent will honor,
upon presentment, even if presented before the date of the check, all
postdated Redemption Checks which are dated within six months of presentment
for payment, if they are otherwise in good order. Shares for which
certificates have been issued may not be redeemed by Redemption Check. Shares
held under Keogh Plans, IRAs or other retirement plans are not eligible for
this Privilege. This Privilege may be modified or terminated at any time by
the Funds or the Transfer Agent upon notice to shareholders.
Wire Redemption Privilege. You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Funds'
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of only up to $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 1-800-645-6561 or, if
calling from overseas, 516-794-5452. The Funds reserve the right to refuse
any redemption request, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Funds. The Funds' SAI sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have
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been issued, are not
eligible for this Privilege.
Telephone Redemption Privilege. You may redeem shares of a Fund (maximum
$150,000 per day) by telephone if you checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. The Funds reserve
the right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. This Privilege may be modified or terminated at any
time by the Transfer Agent or the Funds. Shares held under Keogh Plans, IRAs
or other retirement plans, and shares for which certificates have been
issued, are not eligible for this Privilege.
Dreyfus TELETRANSFER Privilege. You may redeem shares of a Fund (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Funds' Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only a bank account maintained in a domestic financial
institution which is an ACH member may be so designated. Redemption proceeds
will be on deposit in your account at an ACH member bank ordinarily two days
after receipt of the redemption request or, at your request, paid by check
(maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus TeleTransfer
Privilege for transfer to their bank account only up to $250,000 within any
30-day period. The Funds reserve the right to refuse any request made by
telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Funds may
modify or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TeleTransfer Privilege, you may request a
Dreyfus TeleTransfer redemption of Fund shares by calling 1-800-645-6561 or,
if calling from overseas, 516-794-5452. Shares held under Keogh Plans, IRAs
or other retirement plans, and shares issued in certificate form, are not
eligible for this Privilege.
Distribution Plan (Investor Shares Only)
The Investor shares of each Fund are subject to a Distribution Plan ("Plan'')
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1''). The
Investor shares of the Funds bear some of the cost of selling those shares
under the Plan. The Plan allows each Fund to spend annually up to 0.25% of
the average daily net assets attributable to Investor shares to compensate
Dreyfus Service Corporation, an affiliate of Dreyfus, for shareholder
servicing activities and the Distributor for shareholder servicing activities
and for activities or expenses primarily intended to result in the sale of
Investor shares of the Fund. The Plan allows the Distributor to make payments
from the Rule 12b-1 fees it collects from a Fund to compensate Agents that
have entered into Agreements with the Distributor.
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Under the Agreements, the Agents are obligated to provide distribution related
services with regard to the Funds and/or shareholder services to the Agent's
clients that own Investor shares of a Fund.
The Funds and the Distributor may suspend or reduce payments under the Plan
at any time, and payments are subject to the continuation of a Fund's Plan
and the Agreements described above. From time to time, the Agents, the
Distributor and the Funds may agree to voluntarily reduce the maximum fees
payable under the Plan. See the SAI for more details on the Plan.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing a Fund's shares may receive different
compensation with respect to one Class of shares over another.
Performance Information
From time to time, each Fund may advertise the yield on a class of shares.
Dreyfus Municipal Reserves may advertise tax-equivalent yields. Yield and the
tax equivalent yield figures are based on historical earnings and are not
intended to indicate future performance.
The "yield'' of a Class of shares of a Fund refers to the income generated by
an investment in such Class over a seven-day period identified in the
advertisement. This income is then "annualized.'' That is, the amount of
income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield'' is calculated similarly, but, when
annualized, the income earned by an investment in a Class of shares of a Fund
is assumed to be reinvested. The "effective yield'' will be slightly higher
than the "yield'' because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield of Dreyfus Municipal Reserves shows
the level of taxable yield needed to produce an after-tax equivalent to such
Fund's tax-free yield. This is done by increasing a Class's yield by the
amount necessary to reflect the payment of federal income tax (and state
income tax, if applicable) at a stated tax rate. Because yields fluctuate,
yield data cannot necessarily be used to compare an investment in a Class of
shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed-upon or guaranteed fixed yield for
a stated period of time.
Yield quotations will be computed separately for each Class of a Fund's
shares. Because of the difference in the fees and expenses borne by Class R
and Investor shares of each Fund, the yield on Class R shares will generally
be higher than the yield on Investor shares. Any fees charged by a Bank or
Agent directly to its customers' account in connection with investments in
the Fund will not be included in calculations of yield. Each Fund's annual
report contains additional performance information and is available upon
request without charge from the Fund's Distributor or your Bank or Agent.
A Fund may compare the performance of its Investor and Class R shares with
various industry standards of performance including Lipper Analytical
Services, Inc. ratings, and the Consumer Price Index. Performance rankings as
reported in Changing Times, Business Week, Institutional Investor, The Wall
Street Journal, IBC/Donoghue's Money Fund Report, Mutual Fund
Page 34
Forecaster, No Load Investor, Money Magazine, Morningstar Mutual Fund Values,
U.S. News and World Report, Forbes, Fortune, Barron's, Financial Planning,
Financial Planning on Wall Street, Certified Financial Planner Today,
Investment Advisor, Kiplinger's, Smart Money, and similar publications may
also be used in comparing the Fund's performance. Furthermore, a Fund may
quote its Investor and Class R shares' yields in advertisements or in
shareholder reports. A Fund may advertise a quotation of yield or other
similar quotation demonstrating the income earned or distributions made by
the Fund.
Dividends, Other Distributions
and Taxes
Each Fund declares daily and pays monthly (on the 20th day of the month or
the next business day if the 20th day falls on a Saturday, Sunday or national
holiday) dividends from its net investment income, if any. Each Fund does not
expect to realize any long-term capital gains or losses, and does not
anticipate payment of any capital gain distribution.
Unless you choose to receive dividends and/or capital gain distributions, if
any, in cash, your distributions will be automatically reinvested in
additional shares of the distributing Fund at the then current NAV. You may
change the method of receiving distributions at any time by writing to the
Funds. Checks which are sent to shareholders who have requested distributions
to be paid in cash and which are subsequently returned by the United States
Postal Service as not deliverable or which remain uncashed for six months or
more will be reinvested in additional Fund shares at NAV in the shareholder's
account at the then current NAV. Subsequent Fund distributions will be
automatically reinvested in additional Fund shares in the shareholder's
account.
Distributions paid by a Fund with respect to one Class of shares may be
greater or less per share than those paid with respect to another Class of
shares due to the different expenses of the different Classes. Shares
purchased on a day on which a Fund calculates its NAV will not begin to
accrue dividends until the following day. Except as provided below, redemption
orders effected on any particular day will receive all dividends declared
through the day of redemption. However, if immediately available funds are
received by the Transfer Agent prior to 12:00 noon, Eastern time, you
may receive the dividend declared on the day of purchase. You will not
receive the dividends declared on the day of redemption if the redemption
order is placed prior to 12:00 noon, Eastern time.
You may elect to have distributions on shares held in IRAs and 403(b)
accounts paid in cash only if you are at least 591/2 years old or are
permanently and totally disabled. Distribution checks normally are mailed
within seven days after the record date.
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of taxable net investment income and net short-term capital gain)
and net capital gain (the excess of net long-term capital gain over
Page 35
net short-term capital loss) that is distributed to its shareholders. In
addition, Dreyfus Municipal Reserves intends to continue to qualify to pay
"exempt-interest'' dividends, which requires, among other things, that at the
close of each quarter of its taxable year at least 50% of the value of its
total assets must consist of municipal securities.
Dividends from a Fund's investment company taxable income are taxable to you
as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by Dreyfus Municipal Reserves that are designated by it as
"exempt-interest dividends'' generally may be excluded by you from your gross
income. Distributions by a Fund (including Dreyfus Municipal Reserves) of net
capital gain, when designated as such, are taxable to you as long-term
capital gains, regardless of the length of time you have owned your Shares.
The Funds are not expected to realize long-term capital gains.
Interest on indebtedness incurred or continued to purchase or carry shares of
Dreyfus Municipal Reserves will not be deductible for federal income tax
purposes to the extent that Fund's distributions consist of exempt-interest
dividends. Dreyfus Municipal Reserves may invest in "private activity
bonds,'' the interest on which is treated as a tax preference item for
shareholders in determining their liability for the alternative minimum tax.
Proposals have been and may be introduced before Congress that would
restrict or eliminate the federal income tax exemption for interest on
municipal securities. If such a proposal were enacted, the availability of
such securities for investment by Dreyfus Municipal Reserves and the value of
its portfolio would be affected. In such event, that Fund would reevaluate
its investment objective and policies.
Dividends and other distributions are taxable to you regardless of whether
they are received in cash or reinvested in additional Fund shares, even if
the value of your shares is below your cost. If you purchase shares shortly
before a taxable distribution (i.e., any distribution other than an
exempt-interest dividend paid by Dreyfus Municipal Reserves) you must pay
income taxes on the distribution, even though the value of your investment
(plus cash received, if any) remains the same. In addition, the share price
at the time you purchase shares may include unrealized gains in the
securities held in the Fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by
capital losses, be paid to you as a capital gain distribution and will be
taxable to you.
Dividends and other distributions paid by a Fund to qualified Retirement
Plans ordinarily will not be subject to taxation until the proceeds are
distributed from the Retirement Plans. A 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 591/2, generally will be subject to
an additional tax equal to 10% of the taxable portion of the distribution. If
the distribution from such a retirement plan (other than certain governmental
or church plans) for any taxable year following the year in which the
participant reaches age 701/2 is less than the "minimum required
distribution'' for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian
of such a retirement plan
Page 36
will be responsible for reporting such distributions from such plans to the
IRS. Moreover, certain contributions to a qualified retirement plan in excess
of the amounts permitted by law may be subject to an excise tax. 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 withholding tax.
In January of each year, the Funds will send you a Form 1099-DIV notifying
you of the status for federal income tax purposes of your distributions for
the preceding year. The Funds also will advise shareholders of the
percentage, if any, of the dividends paid by Dreyfus Municipal Reserves that
are exempt from federal income tax and the portion, if any, of those
dividends that is a tax preference item for purposes of the alternative
minimum tax.
You must furnish the Funds with your taxpayer identification number ("TIN'')
and state whether you are subject to withholding for prior under-reporting,
certified under penalties of perjury as prescribed by the Code and the
regulations thereunder. Unless previously furnished, investments received
without such a certification will be returned. Each Fund is required to
withhold a portion of all dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain non-corporate
shareholders who do not provide the Fund with a correct TIN; withholding from
dividends and capital gain distributions also is required for such
shareholders who otherwise are subject to backup withholding.
Each Fund may be subject to a 4% nondeductible excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
taxable ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other
amounts. Each Fund expects to make such distributions as are necessary to
avoid the imposition of this tax.
The foregoing is only a summary of some of the important tax considerations
generally affecting each Fund and its shareholders; see the SAI for a further
discussion. There may be other federal, state or local tax considerations
applicable to a particular investor; for example, Dreyfus Municipal Reserves'
dividends may be wholly or partly taxable under state and/or local laws. You
therefore are urged to consult your own tax adviser.
General Information
The Company was incorporated in Maryland on August 6, 1987 under the name The
Laurel Funds, Inc., and changed its name to The Dreyfus/Laurel Funds, Inc. on
October 17, 1994. The Company is registered with the SEC under the 1940 Act
as an open-end management investment company. The Company has an authorized
capitalization of 25 billion shares of $0.001 par value stock with equal
voting rights. The Funds are three of sixteen investment portfolios
authorized by the Company's Board of Directors. Each of the Funds offered by
this Prospectus currently issues two Classes of shares, designated
"Investor'' and "Class R'' shares. The Articles of Incorporation permit the
Board of Directors to create an unlimited number of investment portfolios
(each a "fund'') without shareholder
Page 37
approval. At your written request, the Funds will issue negotiable stock
certificates. The Company may in the future seek to achieve a 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 a 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
Investor shares will be entitled to vote on matters submitted to shareholders
pertaining to the Distribution Plan relating to that Class.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Funds to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office and
for any other proper purpose. Company shareholders may remove a Director by
the affirmative vote of a majority of the Company's voting shares. In
addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and will send you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Funds at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the
Funds' official sales literature in connection with the offer of the Funds'
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Funds. This Prospectus
does not constitute an offer in any state in which, or to any person to whom,
such offering may not lawfully be made.
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