File No. 811-5270
33-16338
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 67 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 67 [ X ]
(Check appropriate box or boxes.)
THE DREYFUS/LAUREL FUNDS, INC.
___________________________________________________
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
on September 30, 1998 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
The following post-effective amendment to the Registrant's Registration
Statement on Form N-1A relates only to Dreyfus Tax-Smart Growth Fund and Dreyfus
Disciplined Smallcap Stock Fund and does not affect the Registration Statement
of the following series of the Registrant:
DREYFUS BOND MARKET INDEX FUND
DREYFUS INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
DREYFUS INSTITUTIONAL PRIME MONEY MARKET FUND
DREYFUS INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
DREYFUS MONEY MARKET RESERVES
DREYFUS MUNICIPAL RESERVES
DREYFUS BASIC S&P 500 STOCK INDEX FUND
DREYFUS U.S. TREASURY RESERVES
DREYFUS DISCIPLINED STOCK FUND
DREYFUS DISCIPLINED INTERMEDIATE BOND FUND
DREYFUS PREMIER BALANCED FUND
DREYFUS PREMIER LIMITED TERM INCOME FUND
DREYFUS PREMIER SMALL COMPANY STOCK FUND
DREYFUS PREMIER MIDCAP STOCK FUND
DREYFUS PREMIER LARGE COMPANY STOCK FUND
DREYFUS PREMIER SMALL CAP VALUE FUND
DREYFUS PREMIER TAX MANAGED GROWTH FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
DREYFUS TAX-SMART GROWTH FUND
Items in
Part A of
Form N-1A Caption Page
________ _______ __________
1 Front and Back Cover Pages Cover
2 Risk/Return Summary: 2
Investment, Risks, and
Performance
3 Risk/Return Summary: 5
Fee Table
4 Investment Objectives, 2
Principal Investment
Strategies, and Related
Risks
5 Management's Discussion 4
of Fund Performance
6 Management, Organization, 6
and Capital Structure
7 Shareholder Information 8
8 Distribution Arrangements 15
9 Financial Highlights 7
Information
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
DREYFUS DISCIPLINED SMALLCAP STOCK FUND
Items in
Part A of
Form N-1A Caption Page
________ _______ __________
1 Front and Back Cover Pages Cover
2 Risk/Return Summary: 2
Investment, Risks, and
Performance
3 Risk/Return Summary: 5
Fee Table
4 Investment Objectives, 2
Principal Investment
Strategies, and Related
Risks
5 Management's Discussion 4
of Fund Performance
6 Management, Organization, 6
and Capital Structure
7 Shareholder Information 8
8 Distribution Arrangements 15
9 Financial Highlights 7
Information
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
DREYFUS TAX-SMART GROWTH FUND
Items in
Part B of Statement of Additional
Form Information Caption
- ---------
10 Cover Page, Table of Cover
Contents
11 Fund History B-2
12 Description of the Fund B-2
and its Investments and
Risks
13 Management of the Fund B-16
14 Control Persons and B-23
Principal Holders of
Securities
15 Investment Advisory B-23
and Other Shareholder
Services
16 Brokerage Allocation B-41
and Other Practices
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
DREYFUS TAX-SMART GROWTH FUND
Items in
Part B of Statement of Additional
Form N-1A Information Caption
- ---------
17 Capital Stock and B-45
Other Securities
18 Purchase, Redemption B-25, B-29, B-36
and Pricing of
Securities Being Offered
19 Tax Status B-37
20 Underwriters B-23
21 Calculation of B-44
Performance Data
22 Financial Statements B-47
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
DREYFUS DISCIPLINED SMALL CAP STOCK FUND
Items in
Part B of Statement of Additional
Form Information Caption
- ---------
10 Cover Page, Table of Cover
Contents
11 Fund History B-2
12 Description of the Fund B-2
and its Investments and
Risks
13 Management of the Fund B-16
14 Control Persons and B-23
Principal Holders of
Securities
15 Investment Advisory B-23
and Other Shareholder
Services
16 Brokerage Allocation B-41
and Other Practices
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
DREYFUS DISCIPLINED SMALLCAP STOCK FUND
Items in
Part B of Statement of Additional
Form N-1A Information Caption
- ---------
17 Capital Stock and B-45
Other Securities
18 Purchase, Redemption B-25, B-29, B-36
and Pricing of
Securities Being Offered
19 Tax Status B-37
20 Underwriters B-23
21 Calculation of B-44
Performance Data
22 Financial Statements B-47
Items in
Part C of
Form N-1A
- ---------
23 Exhibits C-1
24 Persons Controlled by C-3
or Under Common
Control with Registrant
25 Indemnification C-3
26 Business and Other C-4
Connections of
Investment Adviser
27 Principal Underwriters C-9
28 Location of Accounts and C-11
Records
29 Management Services C-12
30 Undertakings C-12
Dreyfus
Tax-Smart
Growth Fund
Investing in common stocks for long-term capital appreciation while minimizing
taxable gains and income
PROSPECTUS September 30, 1998
As with all mutual funds, the Securities and Exchange Commission doesn't
guarantee that the information in this prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
state otherwise.
<PAGE>
Contents
THE FUND
- ----------------------------------------------------
2 Goal/Approach
3 Main Risks
4 Past Performance
5 Expenses
6 Management
7 Financial Highlights
YOUR INVESTMENT
- --------------------------------------------------------------------
8 Account Policies
11 Distributions and Taxes
12 Services for Fund Investors
14 Instructions for Regular Accounts
16 Instructions for IRAs
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
Back Cover
What every investor should know about the fund
Information for managing your fund account
Where to learn more about this and other Dreyfus funds
<PAGE>
The Fund
Dreyfus Tax-Smart Growth Fund
GOAL/APPROACH
The fund seeks long-term capital appreciation consistent with minimizing
realized capital gains and taxable current income. This objective may be changed
without shareholder approval. The fund invests at least 65% of total assets in a
diversified portfolio of common stocks, including stocks with warrants attached.
The fund's stock investments may be from U.S. and foreign issuers and are
generally large companies with market capitalizations exceeding $5 billion.
The fund seeks stocks that appear to offer above-average potential for
appreciation in market value and strong earnings growth. By diversifying across
companies and industries, it limits the potential adverse impact from any one
stock or industry. The fund will also invest in issuers that it considers
undervalued in terms of current earnings, assets or growth prospects.
To minimize adverse tax impacts, the fund employs a long-term,
low-portfolio-turnover investment approach and emphasizes investments in
equities of high-quality companies, generally with relatively low yields. High
portfolio turnover may result in increased realization of short-term capital
gains that, when distributed to the fund's shareholders, are taxable to them as
ordinary income. Greater transaction costs for the fund could also result.
Consequently, the fund's annual portfolio turnover rate generally will not
exceed 15%, and will exceed 25% only in extraordinary market conditions. The
fund may sell underperforming securities to realize capital losses to offset
capital gains realized in other transactions. It also invests in companies that
use share repurchase programs to return excess cash to shareholders.
Concepts to understand
TAX-MANAGED STRATEGY: an approach to managing a fund that seeks to reduce
current tax liabilities. The fund seeks to minimize taxable distributions,
particularly short-term capital gains and current income, which are taxed at a
higher rate than long-term capital gains.
For example, when selling securities, the fund generally will select those
shares bought at the highest price to minimize capital gains. When this would
produce short-term capital gains, however, the fund may sell those highest cost
shares with a long-term holding period.
<PAGE 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of your investment in the fund will go up
and down, which means that you could lose money.
The fund invests primarily in growth stocks. Because the stock prices of growth
companies are based in part on future expectations, these stocks may fall
sharply if investors believe the prospects for a stock, industry or the economy
in general are weak. In addition, growth stocks typically lack the dividend
yield that could cushion stock prices in market downturns.
With value stocks, there is the risk that they may never reach what the manager
believes is their full market value, or that their intrinsic values may go down
in price.
The fund may invest in securities of foreign issuers which carry additional
risks such as less liquidity, changes in currency exchange rates, a lack of
adequate company information and political instability.
Under adverse market conditions, the fund could invest some or all of its assets
in money market securities. Although the fund would do this only in seeking to
avoid losses, it could reduce the benefit from any upswing in the market.
Other potential risks
The fund may write (i.e. sell) covered call option contracts. This practice can
be used to hedge the fund's portfolio and also to increase returns. It may
sometimes reduce returns or increase volatility.
The Fund
<PAGE 3>
PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in this fund, but you also have the potential to make money.
<PAGE 4>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out of fund assets,
so their effect is included in the share price. The fund has no sales charge
(load).
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Fee table
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee
1.00%
FOR REDEMPTIONS OR EXCHANGES OF SHARES
MADE WITHIN SIX MONTHS OF THEIR ISSUANCE
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fee 1.10%
12b-1 fee 0.25%
Other expenses 0.00%
BASED ON ESTIMATED AMOUNTS
FOR THE CURRENT FISCAL YEAR
- ---------------------------------------------------------------------------
TOTAL 1.35%
Expense example
1 Year 3 Years
- -------------------------------------------------------
$137 $428
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most funds and their investment advisers,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
12B-1 FEE: the fee paid to Mellon Bank, N.A. and its affiliates for shareholder
service and to the fund's distributor for shareholder service and promotional
expenses. Because this fee is paid out of the fund's assets on an ongoing basis,
over time it will increase the cost of your investment and may cost you more
than paying other types of sales charges.
The Fund
<PAGE 5>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $110 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has engaged Fayez Sarofim & Co., located at Two Houston Center, Suite
2907, Houston, Texas 77010, to serve as the fund's sub-investment adviser.
Sarofim, subject to Dreyfus' supervision and approval, provides investment
advisory assistance and research and the day-to-day management of the fund's
investments. As of June 30, 1998, Sarofim managed approximately $4.3 billion in
assets for 4 other registered investment companies and provided investment
advisory services to discretionary accounts having aggregate assets of
approximately $45.7 billion.
Fayez Sarofim, president and chairman of Sarofim, is the fund's primary
portfolio manager.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus, Sarofim and the fund's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
fund, Dreyfus and Sarofim are working to avoid such problems and to obtain
assurances from service providers that they are taking similar steps.
<PAGE 6>
FINANCIAL HIGHLIGHTS
As a new fund, financial highlights information is not available for the fund as
of the date of this prospectus.
The Fund
<PAGE 7>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in this fund. Your price for fund shares is
the fund's net asset value per share (NAV), which is generally calculated as of
the close of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund. The fund's investments are
valued based on market value, or where market quotations are not readily
available, based on fair value as determined in good faith by the fund's board.
--------------------------------------------------------
Minimum investments
Initial Additional
--------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER
INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST
YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
FOR MORE COMPLETE IRA INFORMATION, CONSULT YOUR TAX PROFESSIONAL.
Because the fund may provide only a relatively low level of taxable income, it
is not designed for investors needing investment income. Also, it may not be
suitable for investors such as qualified pension, profit-sharing and other
tax-deferred retirement plans, or individual retirement accounts (IRAs), whose
income is not subject to current federal income tax. At the same time, the fund
is not a tax-exempt fund and may earn and distribute taxable income and realize
and distribute capital gains from time to time.
<PAGE 8>
Selling shares
YOU MAY SELL SHARES AT ANY TIME. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent. Any
certificates representing fund shares being sold must be returned with your
redemption request. Your order will be processed promptly and you will generally
receive the proceeds within a week.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that:
* if the fund has not yet collected payment for the shares you are selling, it
may delay sending the proceeds until it has collected payment, which may take
up to eight business days
* If you are selling or exchanging shares within six months of their issuance,
the fund may deduct a 1% redemption fee (not charged on shares sold through
the Automatic Withdrawal Plan or Dreyfus Auto-Exchange Privilege, or on
shares acquired through reinvestment)
--------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
--------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
Written sell orders
Some circumstances require that written sell orders be signature guaranteed.
These include:
* amounts of $100,000 or more
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
General policies
IF YOUR ACCOUNT FALLS BELOW $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could
adversely affect the fund or its operations, including those from any individual
or group who, in the fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the fund within a calendar
year)
* refuse any purchase or exchange request in excess of
1% of the fund's total assets
* change or discontinue its exchange privilege, or
temporarily suspend this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very large redemptions, excessive
trading or during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Third-party investments
If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial supermarkets may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. Consult a representative of your plan or financial
institution if in doubt.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND PAYS ITS SHAREHOLDERS dividends from its net investment income, and
distributes any net capital gains that it has realized. Each of these
distributions is generally paid once a year. Your distributions will be
reinvested in the fund unless you instruct the fund otherwise. There are no fees
or sales charges on reinvestments.
FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most investors (unless your
investment is in an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the fund and
whether you reinvest your distributions or take them as cash. In general,
distributions are taxable as follows:
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Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
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INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of the distributions for each calendar year will be detailed in
your annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of fund shares may generate a tax liability. Tax-deferred
accounts do not generate a tax liability unless you are taking a distribution or
making a withdrawal.
The table at right can provide a guide for your potential tax liability when
selling or exchanging fund shares. "Short-term capital gains" applies to fund
shares sold up to 12 months after buying them. "Long-term capital gains" applies
to shares sold after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application or by
calling 1-800-645-6561.
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
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For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
--------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
Dreyfus Financial Centers
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
Our experienced financial consultants can help you make informed choices and
provide you with personalized attention in handling account transactions. The
Financial Centers also offer informative seminars and events. To find the
Financial Center nearest you, call 1-800-499-3327.
<PAGE 12>
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). Other than the redemption
fee described under "Account Policies -- Selling Shares," there is currently no
fee for exchanges, although you may be charged a sales load when exchanging into
any fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer Privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
Account statements
EVERY DREYFUS INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
Dreyfus offers a variety of retirement plans, including traditional, Roth and
Education IRAs. Here's where you call for information:
* for traditional, rollover, Roth and Education IRAs, call 1-800-645-656
* for SEP-IRAs, 401(k) and 403(b) accounts, call 1-800-322-7880
* for Keogh accounts, call 1-800-358-5566
Your Investment
<PAGE 13>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
By Telephone
WIRE Have your bank send your
investment to Boston Safe Deposit and Trust Company with these instructions:
* DDA# 044210
* the fund name
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust
Company with these instructions:
* DDA# 044210
* the fund name
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "4990" before your account number and
add ABA# 011001234
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
WITHOUT ANY INITIAL INVESTMENT Check the Dreyfus Step Program option on your
application. Return your application, then complete the additional materials
when they are sent to you.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 14>
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 15>
INSTRUCTIONS FOR IRAS
The fund is not designed, and may not be suitable, for IRAs.
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check (see "To Open an Account" at left).
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust
Company with these instructions:
* DDA# 044210
* the fund name
* your account number
* name of investor
* the contribution year
ELECTRONIC CHECK Same as wire, but insert "4990" before your account number and
add ABA# 011001234
TELEPHONE CONTRIBUTION Call to request us to move money from a regular Dreyfus
account to an IRA (both accounts must be held in the same shareholder name).
Automatically
WITHOUT ANY INITIAL INVESTMENT Call us
to request a Dreyfus Step Program form. Complete and return the form along with
your application.
ALL SERVICES Call us to request a form to add an automatic investing service
(see "Services for Fund Investors"). Complete and return the form along with any
other required materials.
All contributions will count as current year.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 16>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required.
Mail in your request (see "To Open an Account" at left).
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request instructions to establish
the plan.
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS TRUST CO., CUSTODIAN
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 17>
For More Information
Dreyfus Tax-Smart Growth Fund
A Series of The Dreyfus/Laurel Funds, Inc.
-----------------------------
SEC file number: 811-5270
More information on this fund is available free upon
request, including the following:
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A
current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1998, Dreyfus Service Corporation 047P0998
<PAGE 18>
Dreyfus
Disciplined Smallcap
Stock Fund
Investing in small-cap stocks for investment returns that exceed the Standard &
Poor's SmallCap 600((reg.tm)) Index
PROSPECTUS September 30, 1998
As with all mutual funds, the Securities and Exchange Commission doesn't
guarantee that the information in this prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
state otherwise.
<PAGE>
Contents
THE FUND
- ----------------------------------------------------
2 Goal/Approach
3 Main Risks
4 Past Performance
5 Expenses
6 Management
7 Financial Highlights
YOUR INVESTMENT
- --------------------------------------------------------------------
8 Account Policies
11 Distributions and Taxes
12 Services for Fund Investors
14 Instructions for Regular Accounts
16 Instructions for IRAs
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
Back Cover
What every investor should know about the fund
Information for managing your fund account
Where to learn more about this and other Dreyfus funds
<PAGE>
The Fund
Dreyfus Disciplined Smallcap Stock Fund
GOAL/APPROACH
The fund seeks total investment returns (consisting of capital appreciation and
income) that surpass the Standard & Poor's SmallCap 600((reg.tm)) Index. This
objective may be changed without shareholder approval. To pursue its goal, the
fund invests in a blended portfolio of growth and value stocks of
small-capitalization companies chosen through a disciplined process that
combines computer modeling techniques, fundamental analysis and risk management
In selecting securities, Dreyfus uses a computer model to identify and rank
stocks within an industry, based on:
* VALUE, or how a stock is priced relative to its
perceived intrinsic worth
* GROWTH, in this case the sustainability or growth of
earnings
* FINANCIAL PROFILE, which measures the financial
health of the company
Dreyfus then uses fundamental analysis to select the most attractive of the
top-ranked securities and to determine those issues that should be sold. Dreyfus
uses information technology as well as Wall Street sources and company
management to stay abreast of current developments.
Dreyfus manages risk by diversifying across companies and industries, limiting
the potential adverse impact from any one stock or industry. The fund is
structured so that its sector weightings and risk characteristics are similar to
those of the S&P SmallCap 600.
Concepts to understand
SMALL-CAPITALIZATION COMPANIES: new and often entrepreneurial companies.
Small-cap companies tend to grow faster than larger-cap companies and typically
use any profits for expansion rather than for paying dividends. They are also
more volatile than larger companies and fail more often. The fund generally
invests in companies having market capitalizations from $100 million to $2
billion.
S&P SMALLCAP 600: an unmanaged index consisting of the stocks of 600 publicly
traded U.S. companies chosen for market size, liquidity and industry-group
representation. The stocks comprising the S&P SmallCap 600 have market
capitalizations ranging from $50 million to $2 billion.
<PAGE 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of your investment in the fund will go up
and down, which means that you could lose money. Small and midcap companies
carry additional risks because their earnings are less predictable, their share
prices more volatile and their securities less liquid than those of large,
established companies. Some of the fund's investments will rise and fall based
on investor perception rather than economics.
By investing in a mix of growth and value companies, the fund assumes the risks
of both and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if investors believe the prospects
for a stock, industry or the economy in general are weak. Growth stocks also
typically lack the dividend yield that could cushion stock prices in market
downturns. With value stocks, there is the risk that they may never reach what
the manager believes is their full market value, or that their intrinsic values
may fall in price. While investments in value stocks may limit downside risk
over time, they may produce smaller gains than riskier stocks.
At times, the fund may engage in short-term trading, which could produce higher
brokerage costs and taxable distributions.
Under adverse market conditions, the fund could invest some or all of its assets
in money market securities. Although the fund would do this only in seeking to
avoid losses, it could reduce the benefit from any upswing in the market.
Other potential risks
The fund may invest in options, futures and foreign currencies primarily to
hedge the fund's portfolio but also to increase returns. There is the risk that
such practices may reduce returns or increase volatility.
The fund may invest in securities of foreign issuers, which carry additional
risks such as less liquidity, changes in currency exchange rates, a lack of
adequate company information and political instability.
The fund is not an index fund. The fund may hold securities not listed in the S&
P SmallCap 600 and may hold fewer securities than the index, either of which
could cause the fund to underperform the index.
The Fund
<PAGE 3>
PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in this fund, but you also have the potential to make money.
<PAGE 4>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out of fund assets,
so their effect is included in the share price. The fund has no sales charge
(load).
Fee table
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee 1.00%
FOR REDEMPTIONS OR EXCHANGES OF SHARES
MADE WITHIN SIX MONTHS OF THEIR ISSUANCE
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fee 1.25%
12b-1 fee 0.25%
Other expenses 0.00%
BASED ON ESTIMATED AMOUNTS
FOR THE CURRENT FISCAL YEAR
-------------------------------------------------------
TOTAL 1.50%
Expense example
1 Year 3 Years
-------------------------------------------------------
$153 $474
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most funds and their investment advisers,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent directors, Rule 12b-1 fees and extraordinary
expenses.
12B-1 FEE: the fee paid to Mellon Bank, N.A. and its affiliates for shareholder
service and to the fund's distributor for shareholder service and promotional
expenses. Because this fee is paid out of the fund's assets on an ongoing basis,
over time it will increase the cost of your investment and may cost you more
than paying other types of sales charges.
The Fund
<PAGE 5>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $110 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Gene F. Cervi, CFA, has been employed by Dreyfus as the fund's portfolio manager
since its inception. Mr. Cervi is also Director of Investment Research for
Laurel Capital Advisors and a Vice President of Mellon Bank, which he joined in
1982.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
fund, Dreyfus is working to avoid such problems and to obtain assurances from
service providers that they are taking similar steps.
<PAGE 6>
FINANCIAL HIGHLIGHTS
As a new fund, financial highlights information is not available for the fund as
of the date of this prospectus.
The Fund
<PAGE 7>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in this fund. Your price for fund shares is
the fund's net asset value per share (NAV), which is generally calculated as of
the close of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern
time) every day the exchange is open. Your order will be priced at the next NAV
calculated after your order is accepted by the fund. The fund's investments are
valued based on market value, or where market quotations are not readily
available, based on fair value as determined in good faith by the fund's board.
Minimum investments
Initial Additional
--------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER
INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST
YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
TRADITIONAL IRA: an individual retirement account. Your contributions may or may
not be deductible depending on your circumstances. Assets grow tax-deferred;
withdrawals and distributions are taxable in the year made.
SPOUSAL IRA: an IRA funded by a working spouse in the name of a nonworking
spouse.
ROTH IRA: an IRA with non-deductible contributions, and tax-free growth of
assets and distributions, if assets are held for five years and certain other
conditions are met.
EDUCATION IRA: an IRA with nondeductible contributions, and tax-free growth of
assets and distributions, if used to pay qualified educational expenses.
FOR MORE COMPLETE IRA INFORMATION, CONSULT DREYFUS OR YOUR TAX PROFESSIONAL.
<PAGE 8>
Selling shares
YOU MAY SELL SHARES AT ANY TIME. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent. Any
certificates representing fund shares being sold must be returned with your
redemption request. Your order will be processed promptly and you will generally
receive the proceeds within a week.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that:
* if the fund has not yet collected payment
for the shares you are selling, it may delay sending the proceeds until it
has collected payment, which may take up to eight business days
* if you are selling or exchanging shares within six
months of their issuance, the fund may deduct a 1% redemption fee (not
charged on shares sold through the Automatic Withdrawal Plan or Dreyfus
Auto-Exchange Privilege, or on shares acquired through reinvestment)
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
--------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
Written sell orders
Some circumstances require that written sell orders be signature guaranteed.
These include:
* amounts of $100,000 or more
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
General policies
IF YOUR ACCOUNT FALLS BELOW $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could
adversely affect the fund or its operations, including those from any individual
or group who, in the fund's view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the fund within a calendar
year)
* refuse any purchase or exchange request in excess of
1% of the fund's total assets
* change or discontinue its exchange privilege, or
temporarily suspend this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very large redemptions, excessive
trading or during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Third-party investments
If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial supermarkets may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. Consult a representative of your plan or financial
institution if in doubt.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND PAYS ITS SHAREHOLDERS dividends from its net investment income, and
distributes any net capital gains that it has realized. Each of these
distributions is generally paid once a year. Your distributions will be
reinvested in the fund unless you instruct the fund otherwise. There are no fees
or sales charges on reinvestments.
FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most investors (unless your
investment is in an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the fund and
whether you reinvest your distributions or take them as cash. In general,
distributions are taxable as follows:
--------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
--------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of the distributions for each calendar year will be detailed in
your annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of fund shares may generate a tax liability. Tax-deferred
accounts do not generate a tax liability unless you are taking a distribution or
making a withdrawal.
The table at right can provide a guide for your potential tax liability when
selling or exchanging fund shares. "Short-term capital gains" applies to fund
shares sold up to 12 months after buying them. "Long-term capital gains" applies
to shares sold after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application or by
calling 1-800-645-6561.
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
--------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
--------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
Dreyfus Financial Centers
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
Our experienced financial consultants can help you make informed choices and
provide you with personalized attention in handling account transactions. The
Financial Centers also offer informative seminars and events. To find the
Financial Center nearest you, call 1-800-499-3327.
<PAGE 12>
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). Other than the redemption
fee described under "Account Policies -- Selling Shares," there is currently no
fee for exchanges, although you may be charged a sales load when exchanging into
any fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer Privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
Account statements
EVERY DREYFUS INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
Dreyfus offers a variety of retirement plans, including traditional, Roth and
Education IRAs. Here's where you call for information:
* for traditional, rollover, Roth and Education IRAs, call 1-800-645-656
* for SEP-IRAs, 401(k) and 403(b) accounts, call 1-800-322-7880
* for Keogh accounts, call 1-800-358-5566
Your Investment
<PAGE 13>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust
Company, with these instructions:
* DDA# 044210
* the fund name
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
WIRE Have your bank send your investment to Boston Safe Deposit and Trust
Company, with these instructions:
DDA# 044210
* the fund name
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "4000" before your account number and
add ABA# 011001234
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
WITHOUT ANY INITIAL INVESTMENT Check the Dreyfus Step Program option on your
application. Return your application, then complete the additional materials
when they are sent to you.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 14>
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 15>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check (see "To Open an Account" at left).
By Telephone
WIRE Have your bank send your investment to Boston Safe Deposit and Trust
Company, with these instructions:
* DDA# 044210
* the fund name
* your account number
* name of investor
* the contribution year
ELECTRONIC CHECK Same as wire, but insert "4000" before your account number and
add ABA# 011001234
TELEPHONE CONTRIBUTION Call to request us to move money from a regular Dreyfus
account to an IRA (both accounts must be held in the same shareholder name).
Automatically
WITHOUT ANY INITIAL INVESTMENT Call us
to request a Dreyfus Step Program form. Complete and return the form along with
your application.
ALL SERVICES Call us to request a form to add an automatic investing service
(see "Services for Fund Investors"). Complete and return the form along with any
other required materials.
All contributions will count as current year.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 16>
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required.
Mail in your request (see "To Open an Account" at left).
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request instructions to establish
the plan.
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS TRUST CO., CUSTODIAN
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 17>
For More Information
Dreyfus Disciplined Smallcap Stock Fund
A Series of The Dreyfus/Laurel Funds, Inc.
-----------------------------
SEC file number: 811-5270
More information on this fund is available free upon
request, including the following:
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A
current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1998, Dreyfus Service Corporation 041P0998
<PAGE 18>
DREYFUS TAX-SMART GROWTH FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
SEPTEMBER 30, 1998
This Statement of Additional Information ("SAI"), which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of Dreyfus Tax-Smart Growth Fund (the "Fund"), dated September
30, 1998, as it may be revised from time to time. The Fund is a separate,
diversified portfolio of The Dreyfus/Laurel Funds, Inc. (the "Company"), an
open-end management investment company, known as a mutual fund. To obtain a
copy of the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call one of the following
numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of the Fund B-2
Management of the Fund B-10
Management Arrangements B-16
Purchase of Shares B-19
Distribution Plan B-21
Redemption of Shares B-23
Shareholder Services B-25
Determination of Net Asset Value B-30
Dividends, Other Distributions and Taxes B-31
Portfolio Transactions B-34
Performance Information B-36
Information About the Fund B-37
Transfer and Dividend Disbursing Agent, Custodian, Counsel and
Independent Auditors B-38
Financial Statements B-40
Appendix B-41
DESCRIPTION OF THE FUND
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Company is a Maryland corporation formed on August 6, 1987. Before
October 17, 1994, the Company's name was The Laurel Funds, Inc. The Company
is an open-end management investment company comprised of separate
portfolios, including the Fund, each of which is treated as a separate fund.
The Fund is diversified, which means that, with respect to 75% of its total
assets, the Fund will not invest more than 5% of its assets in the
securities of any single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager. Dreyfus has engaged Fayez Sarofim & Co. ("Sarofim") to serve as
the Fund's sub-investment adviser and to provide day-to-day management of
the Fund's investments, subject to the supervision of Dreyfus. Dreyfus and
Sarofim are referred to collectively as the "Advisers."
Certain Portfolio Securities
The Fund may purchase the portfolio securities described below.
Equity Securities. Equity securities fluctuate in value, often based
on factors unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of its shares and thus the
Fund's total return to investors.
Bank Obligations. The Fund may purchase bankers' acceptances,
certificates of deposit, time deposits, and other short-term obligations
issued by domestic banks, foreign subsidiaries or foreign branches of
domestic banks, domestic and foreign branches or foreign banks, domestic
savings and loan associations and other banking institutions. Included
among such obligations are Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time Deposits
("ETDs").
Commercial Paper and Corporate Debt Obligations. The Fund may invest
in commercial paper issued in reliance on the so-called "private placement"
exemption from registration afforded by Section 4(2) of the Securities Act
of 1933, as amended ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the federal securities laws and generally
is sold to investors, such as the Fund, who agree that they are purchasing
the paper for an investment and not with a view to public distribution. Any
resale by the purchaser must be in an exempt transaction. Section 4(2)
paper is normally resold to other investors through or with the assistance
of the issuer or investment dealers who make a market in Section 4(2) paper,
thus providing liquidity. Pursuant to guidelines established by the
Company's Board of Directors, the Advisers may determine that Section 4(2)
paper is liquid for the purposes of complying with the Fund's investment
restriction relating to investments in illiquid securities. The Fund may
also invest in short-term corporate debt obligations rated at least Baa by
Moody's Investors Service, Inc., or BBB by Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc., or, if unrated, of
comparable quality as determined by the Advisers.
Convertible Securities. The Fund may purchase convertible securities,
which are fixed-income securities such as bonds or preferred stock that may
be converted into or exchanged for a specified number of shares of common
stock of the same or a different issuer within a specified period of time
and at a specified price or formula. Convertible securities are senior to
common stock in a corporation's capital structure, but may be subordinated
to non-convertible debt securities. Before conversion, convertible
securities ordinarily provide a stable stream of income with yields
generally higher than those on common stock, but lower than those on non-
convertible debt securities of similar quality. In general, the market
value of a convertible security is the higher of its "investment value"
(i.e., its value as a fixed-income security) or its "conversion value"
(i.e., the value of the underlying shares of common stock if the security is
converted). As a fixed-income security, the market value of a convertible
security generally increases when interest rates decline and generally
decreases when interest rates rise. However, the price of a convertible
security also is influenced by the market value of the security's underlying
common stock. Thus, the price of a convertible security generally increases
as the market value of the underlying stock rises, and generally decreases
as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the
common stock of the same issuer.
Government Obligations. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates, maturities
and times of issuance: (a) U.S. Treasury bills have a maturity of one year
or less, (b) U.S. Treasury notes have maturities of one to ten years, and
(c) U.S. Treasury bonds generally have maturities of greater than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow
an amount limited to a specific line of credit from the U.S. Treasury, (c)
the discretionary authority of the U.S. Government agency or
instrumentality, or (d) the credit of the instrumentality. (Examples of
agencies and instrumentalities are: Federal Land Banks, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the
United States, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, Federal Home Loan Banks, General Services Administration, Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory
Board, Inter-American Development Bank, Asian-American Development Bank,
Student Loan Marketing Association, International Bank for Reconstruction
and Development and Fannie Mae). No assurance can be given that the U.S.
Government will provide financial support to the agencies or
instrumentalities described in (b), (c) and (d) in the future, other than as
set forth above, since it is not obligated to do so by law.
Foreign Securities. The Fund may purchase securities of foreign
issuers and may invest in obligations of foreign branches of domestic banks
and domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with
respect to certain foreign countries, there is the possibility of
expropriation, confiscatory taxation and limitations on the use or removal
of funds or other assets of the Fund, including withholding of dividends.
Foreign securities may be subject to foreign government taxes that would
reduce the yield on such securities.
American Depository Receipts ("ADRs") and New York Shares. The Fund
may invest in U.S. dollar-denominated ADRs and "New York Shares." ADRs
typically are issued by an American bank or trust company and evidence
ownership of underlying securities issued by foreign companies. New York
Shares are securities of foreign companies that are issued for trading in
the United States. ADRs and New York Shares are traded in the United States
on national securities exchanges or in the over-the-counter market.
Investment in securities of foreign issuers presents certain risks,
including those resulting from adverse political and economic developments
and the imposition of foreign governmental laws or restrictions. See
"Foreign Securities."
ECDs, ETDs, Yankee CDs and Eurodollar Bonds and Notes. The Fund may
invest in ECDs, ETDs, Yankee CDs, and Eurodollar bonds and notes. ECDs are
U.S. dollar-denominated certificates of deposit issued by foreign branches
of domestic banks. ETDs are U.S. dollar-denominated time deposits in a
foreign branch of a U.S. bank or a foreign bank. Yankee CDs are
certificates of deposit issued by a U.S. branch of a foreign bank
denominated in U.S. dollars and held in the United States. Eurodollar bonds
and notes are obligations which pay principal and interest in U.S. dollars
held in banks outside the United States, primarily in Europe. All of these
obligations are subject to somewhat different risks than are the obligations
of domestic banks or issuers in the United States. See "Foreign
Securities."
Illiquid Securities. The Fund will not knowingly invest more than 15%
of the value of its net assets in illiquid securities such as time deposits
with maturities in excess of seven days. Securities that have readily
available market quotations are not deemed illiquid for purposes of this
limitation (irrespective of any legal or contractual restrictions on
resale). The Fund may purchase securities that are not registered under the
Securities Act of 1933, as amended, but that can be sold to qualified
institutional buyers in accordance with Rule 144A under that Act ("Rule 144A
securities"). Rule 144A securities generally must be sold to other
qualified institutional buyers. Liquidity determinations with respect to
Section 4(2) paper and Rule 144A securities will be made by the Board of
Directors or by the Advisers pursuant to guidelines established by the Board
of Directors. The Board or the Advisers will consider availability of
reliable price information and other relevant information in making such
determinations. If a particular investment in Section 4(2) paper or Rule
144A securities is not determined to be liquid, that investment will be
included within the percentage limitation on investment in illiquid
securities. The ability to sell Rule 144A securities to qualified
institutional buyers is a recent development, and it is not possible to
predict how this market will mature. Investing in Rule 144A securities
could have the effect of increasing the level of Fund illiquidity to the
extent that qualified institutional buyers become, for a time, uninterested
in purchasing these securities from the Fund or other holders.
Municipal Obligations. Municipal obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Industrial development bonds, in most cases,
are revenue bonds that generally do not carry the pledge of the credit of
the issuing municipality, but generally are guaranteed by the corporate
entity on whose behalf they are issued. Notes are short-term instruments
which are obligations of the issuing municipalities or agencies and are sold
in anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or
equipment issued by municipalities.
Warrants. A warrant is an instrument issued by a corporation which
gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.
The Fund may invest up to 5% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Fund that are sold in
units with, or attached to, other securities.
Other Investment Companies. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Management Policies
The Fund may engage in the following practices in furtherance of its
investment objective:
Borrowing. The Fund is permitted to borrow to the extent permitted
under the 1940 Act, which permits an investment company to borrow in an
amount up to 33-1/3% of the value of its total assets. The Fund currently
intends to borrow money only for temporary or emergency (not leveraging)
purposes, in an amount up to 15% of the value of its total assets (including
the money borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the Fund's total assets, the Fund will not
make any additional investments.
Derivative Instruments. The Fund may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Fund may invest in Derivatives for a
variety of reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to increase
potential return. Derivatives may provide a cheaper, quicker or more
specifically focused way for the Fund to invest than "traditional"
securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives can decrease the liquidity of the Fund's portfolio and make
more difficult the accurate pricing of the Fund's portfolio. Derivatives
may entail investment exposures that are greater than their cost would
suggest, meaning that a small investment in Derivatives could have a large
potential impact on the fund's performance. If the Fund invests in
Derivatives at inappropriate times or judges market conditions incorrectly,
such investments may lower the Fund's return or result in a loss. The Fund
also could experience losses if it were unable to liquidate its position
because of an illiquid secondary market. The market for many Derivatives
is, or suddenly can become, illiquid. Changes in liquidity may result in
significant, rapid and unpredictable changes in the prices for Derivatives.
When required by the Securities and Exchange Commission ("SEC"), the
Fund will set aside permissible liquid assets in a segregated account to
cover its obligations relating to its transactions in Derivatives. To
maintain this required cover, the Fund may have to sell portfolio securities
at disadvantageous prices at times since it may not be possible to liquidate
a Derivative position at a reasonable price. Derivatives may be purchased
on established exchanges or through privately negotiated transactions
referred to as over-the-counter Derivatives. Exchange-traded Derivatives
generally are guaranteed by the clearing agency which is the issuer or
counterparty to such Derivatives. This guarantee usually is supported by a
daily payment system (i.e., variation margin requirements) operated by the
clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each
party to an over-the-counter Derivative bears the risk that the counterparty
will default. Accordingly, the Advisers will consider the creditworthiness
of counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested in
bidding for it.
Options--In General. The Fund may write (i.e., sell) call options with
respect to specific securities. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, the underlying
security or securities at the exercise price at any time during the option
period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. The Fund may write
covered call option contracts to the extent of 20% of the value of its net
assets at the time such option contracts are written. A covered call option
sold by the Fund exposes the Fund during the term of the option to possible
loss of opportunity to realize appreciation in the market price of the
underlying security or to possible continued holding of a security which
might otherwise have been sold to protect against depreciation in the market
price of the security. The principal reason for writing covered call
options is to realize through the receipt of premiums, a greater return than
would be realized on the underlying securities alone. The Fund receives a
premium from writing covered call options which it retains whether or not
the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of order or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered call
option writer, the Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
Successful use by the Fund of options will be subject to the Advisers'
ability to predict correctly movements in the prices of individual stocks or
the stock market generally. To the extent the Advisers' predictions are
incorrect the Fund may incur losses.
Master/Feeder Option. The Company may in the future seek to achieve
the Fund's investment objective by investing all of the Fund's net
investable assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Company's Board of Directors determines it to be in the
best interest of the Fund and its shareholders. In making that
determination, the Company's Board of Directors will consider, among other
things, the benefits to shareholders and/or the opportunity to reduce costs
and achieve operational efficiency. Although the Fund believes that the
Company's Board of Directors will not approve an arrangement that is likely
to result in higher costs, no assurance is given that risks will be
materially reduced if this option is implemented.
Investment Restrictions
Fundamental. The following fundamental limitations have been adopted
by the Fund. The Fund may not change any of these fundamental investment
limitations without the consent of: (a) 67% or more of the shares present at
a meeting of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less. The
Fund may not:
1. Purchase any securities which would cause 25% or more of the value
of the Fund's total assets at the time of such purchase to be invested in
the securities of one or more issuers conducting their principal activities
in the same industry. (For purposes of this limitation, U.S. Government
securities and state or municipal governments and their political
subdivisions are not considered members of any industry.)
2. Borrow money or issue senior securities as defined in the 1940
Act, except that (a) the Fund may borrow money in an amount not exceeding
one-third of the Fund's total assets at the time of such borrowing, and (b)
the Fund may issue multiple classes of shares. The purchase or sale of
options, forward contacts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not be considered
to involve the borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and securities of other
investment companies) if, as a result, (a) more than 5% of the Fund's total
assets would be invested in the securities of that issuer, or (b) the Fund
would hold more than 10% of the outstanding voting securities of that
issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements shall
not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
the real estate business or invest or deal in real estate or interests
therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities, except that the Fund may enter into
options, forward contracts, and futures contracts, including those related
to indices, and options on futures contracts or indices.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a
single, open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the Fund.
Non-fundamental. The Fund has adopted the following additional
non-fundamental investment restrictions. These non-fundamental restrictions
may be changed without shareholder approval, in compliance with applicable
law and regulatory policy.
1. The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with maturities
in excess of seven days, and other securities which are not readily
marketable. For purposes of this limitation, illiquid securities shall not
include commercial paper issued pursuant to Section 4(2) of the Securities
Act of 1933 and securities which may be resold under Rule 144A under the
Securities Act of 1933, provided that the Board of Directors, or its
delegate, determines that such securities are liquid, based upon the trading
markets for the specific security.
2. The Fund will not invest in securities of other investment
companies, except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
3. The Fund will not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearances
of transactions, and provided that margin payments in connection with
futures contracts and options shall not constitute purchasing securities on
margin.
4. The Fund will not sell securities short, or purchase, sell or
write puts, calls or combinations thereof, except as described in the Fund's
Prospectus and this SAI.
5. The Fund will not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
If a percentage restriction is adhered to at the time of an investment,
a later increase or decrease in such percentage resulting from a change in
the values of assets will not constitute a violation of such restriction,
except as otherwise required by the 1940 Act.
MANAGEMENT OF THE FUND
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, and in providing services to the Fund as custodian, as well as
Dreyfus's investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that the activities
contemplated under these arrangements are consistent with statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of
such future statutes and regulations, could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services for its
customers and/or the Fund. If Mellon Bank or Dreyfus were prohibited from
serving the Fund in any of its present capacities, the Board of Directors
would seek an alternative provider(s) of such services.
Directors of the Company
The Company's Board is responsible for the management and supervision
of the Fund. The Board approves all significant agreements between the
Company, on behalf of the Fund, and those companies that furnish services to
the Fund. These companies are as follows:
The Dreyfus Corporation...........................Investment Adviser
Fayez Sarofim & Co................................Sub-Investment Adviser
Premier Mutual Fund Services, Inc.................Distributor
Dreyfus Transfer, Inc. ...........................Transfer Agent
Mellon Bank.......................................Custodian for the Fund
The Company has a Board composed of twelve Directors. The following
lists the Directors and officers and their positions with the Company and
their present and principal occupations during the past five years. Each
Director who is an "interested person" of the Company (as defined in the
1940 Act) is indicated by an asterisk(*). Each of the Directors also serves
as a Trustee of The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-
Free Municipal Funds (collectively, with the Company, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
o+RUTH MARIE ADAMS. Director of the Company; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 years old. Address: 80 Lyme Road, Hanover, New Hampshire
03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 81 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO. Director of the Company. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. Mr. DiMartino also serves as a director of The
Noel Group, Inc., a venture capital company for which from February
1995 until November 1997, he was Chairman of the Board, The Muscular
Dystrophy Association, HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and
other benefit programs, Carlyle Industries, Inc. (formerly Belding
Heminway Company, Inc.), a button packager and distributor, Century
Business Services, Inc., a provider of various outsourcing functions
for small and medium sized corporations and Career Blazers, Inc.
(formerly, Staffing Resources, Inc.), a temporary placement agency, Mr.
DiMartino is also a Board member of 152 other funds in the Dreyfus
Family of Funds. From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Institutional
Investment Portfolio and Bank Portfolio. For more than five years prior
to January 1995, he was President, a director and, until August 24,
1994, Chief Operating Officer of Dreyfus and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus. From August 1994 to December 31, 1994, he was a
director of Mellon Bank Corporation. Age: 54 years old. Address: 200
Park Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Director of the Company; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc.; from November
1995 to January 1997, Director, Access Capital Strategic Community
Investment Fund, Inc. - Bank Portfolio. Age: 63 years old. Address:
40 Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 70 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of the Company; Director, Calgon Carbon
Corporation; Director, Cerex Corporation 1995-1997, Chairman of the
Board and Director, Rexene Corporation 1995-1997; Chairman of the Board
and Director, Tetra Technology Corporation 1991-1993; Director,
Medalist Corporation 1992-1993. From November 1995 to January 1997,
Director, Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 76 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of the Company; former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio.
Age: 52 years old. Address: 625 Madison Avenue, New York, New York
10022.
o*ARCH S. JEFFERY. Director of the Company; Financial Consultant. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 81 years old. Address: 1817 Foxcroft Lane, Unit 306, Allison
Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc.; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 51 years old. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
o+JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania; from November 1995 to January 1997,
Director, Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 66 years old. Address: 321
Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Director of the Company; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director,
Harvard/Pilgrim Community Health Plan, Inc.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio; Director, Massachusetts Electric Company;
Director, the Hyams Foundation, Inc., prior to February, 1993; Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 48 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
o+BENAREE PRATT WILEY. Director of the Company; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 52 years old. Address: 334 Boylston
Street, Suite 400, Boston, Massachusetts.
______________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Company
#MARGARET W. CHAMBERS. Vice President and Secretary of the Company. Senior
Vice President and General Counsel of Funds Distributor, Inc. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. Age: 38
years old.
#MARIE E. CONNOLLY. President and Treasurer of the Company. President,
Chief Executive Officer, Chief Compliance Officer and a director of the
Premier Mutual Fund Services, Inc. (the "Distributor) and Funds
Distributor, Inc., the ultimate parent of which is Boston Institutional
Group, Inc. Age: 40 years old.
#DOUGLAS C. CONROY. Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. Age: 28 years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Company. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. Age: 33 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the
Company. Manager of Treasury Service of Funds Distributor, Inc. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust Company. Age: 25 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Company.
Vice President of the Distributor and Funds Distributor, Inc.. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for TBC. Age: 33 years old.
#MICHAEL S. PETRUCELLI. Vice President, Assistant Treasurer and Assistant
Secretary of the Company. Senior Vice President of Funds Distributor,
Inc. From December 1989 through November 1996, he was employed by GE
Investments where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and
as Director of GE Investment Services. Age: 36 years old.
#STEPHANIE PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Company. Vice President and Client Development
Manager of Funds Distributor, Inc. From April 1997 to March 1998, she
was employed as a Relationship Manager with Citibank, N.A. Age: 29
years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Company.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. From September 1983 to May 1994, he was Senior
Vice President & Manager of Client Services and Director of Internal
Audit at TBC. Age: 43 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the
Company. Senior Vice President, Treasurer, Chief Financial Officer and
a Director of the Distributor and Funds Distributor, Inc. From 1988 to
August 1994, he was employed by TBC where he held various management
positions in the Corporate Finance and Treasury areas. Age: 35 years
old.
#ELBA VASQUEZ. Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From March 1990 to
May 1996, she was employed by U.S. Trust Company of New York, where she
held various sales and marketing positions. Age: 36 years old.
___________________________
# Officer also serves as an officer for other investment companies advised
by Dreyfus, including The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-
Free Municipal Funds and the Dreyfus High Yield Strategies Fund.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Company for serving
as an officer or Director of the Company. In addition, no officer or
employee of Dreyfus (or of any parent, subsidiary or affiliate thereof)
serves as an officer or Director of the Company. Effective July 1, 1998,
the Dreyfus/Laurel Funds pay each Director/Trustee who is not an "interested
person" of the Company (as defined in the 1940 Act) $40,000 per annum plus
$5,000 per joint Dreyfus/Laurel Funds Board meeting attended, $2,000 for
separate committee meetings attended which are not held in conjunction with
a regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone. The
Dreyfus/Laurel Funds also reimburse each Director/Trustee who is not an
"interested person" of the Company (as defined in the 1940 Act), for travel
and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable
amounts). In the event that there is a joint committee meeting of the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000
fee will be allocated between the Dreyfus/Laurel Funds and the Dreyfus High
Yield Strategies Fund.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was not an "interested person" of the Company (as
defined in the 1940 Act), $27,000 per annum (and an additional $25,000 for
the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Funds)
and $1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750
per joint Dreyfus/Laurel Funds Audit Committee meeting attended, and
reimbursed each such Director/Trustee for travel and out-of-pocket expenses
(the "Former Compensation Structure").
For the fiscal year ended October 31, 1997, the aggregate amount of
fees and expenses received by each current Director (with the exception of
Ms. Wiley, who was not a Director of the Company as of October 31, 1997)
from the Company and all other funds in the Dreyfus Family of Funds for
which such person is a Board member pursuant to the Former Compensation
Structure were as follows:
Total Compensation
From the Company
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From the Company# Member****
Ruth Marie Adams $10,000 $31,500
Francis P. Brennan* $19,833 $63,750
Joseph S. DiMartino** none $517,075***
James M. Fitzgibbons $10,583 $31,500
J. Tomlinson Fort** none none
Arthur L. Goeschel $11,500 $34,500
Kenneth A. Himmel $10,167 $32,500
Arch S. Jeffery** none none
Stephen J. Lockwood $11,167 $33,250
John J. Sciullo $11,167 $32,500
Roslyn M. Watson $11,167 $32,500
____________________________
# Amounts required to be paid by the Company directly to the non-interested
Directors, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-
interested Directors. Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $14,973 for the Company.
* Compensation of Francis P. Brennan reflects the $25,000 paid by the
Dreyfus/Laurel Funds to Mr. Brennan to be the Chairman of the Board
pursuant to the Former Compensation Structure.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid
directly by Dreyfus for serving as Board members of the Company and the
funds in the Dreyfus/Laurel Funds. For the fiscal year ended October 31,
1997, the aggregate amount of fees and expenses received by Joseph S.
DiMartino, J. Tomlinson Fort and Arch S. Jeffery from Dreyfus for serving
as a Board member of the Company were $11,833, $11,833 and $11,500,
respectively, and for serving as a Board member of all funds in the
Dreyfus/Laurel Funds (including the Company) were $33,500, $33,500 and
$34,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $4,494 for expenses attributable to the
Company's Board meetings which is not included in the $14,973 amount in
note # above.
*** Actual amount paid for the year ended December 31, 1997.
****The Dreyfus Family of Funds consists of 160 mutual funds.
The officers and Directors of the Company as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of September 15,
1998.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets.
Management Agreement. Dreyfus serves as investment manager for the
Fund pursuant to an Investment Management Agreement with the Company dated
April 4, 1994, transferred to Dreyfus as of October 17, 1994 (the
"Management Agreement"). Pursuant to the Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As investment manager, Dreyfus supervises and monitors
the performance of Sarofim in making investment decisions for the Fund based
on the Fund's investment objective, policies and restrictions.
The Management Agreement was approved by the Board of Directors with
respect to the Fund on July 30, 1998 to continue until April 4, 2000.
Thereafter, the Management Agreement will be subject to review and approval
at least annually by the Board of Directors. The Management Agreement will
continue from year to year provided that a majority of the Directors who are
not interested persons (as defined in the 1940 Act) of the Company or
Dreyfus and either a majority of all Directors or a majority (as defined in
the 1940 Act) of the shareholders of the Fund approve its continuance. The
Company may terminate the Management Agreement upon the vote of a majority
of the Board of Directors or upon the vote of a majority of the Fund's
outstanding voting securities on sixty (60) days' written notice to Dreyfus.
Dreyfus may terminate the Management Agreement upon sixty (60) days' written
notice to the Company. The Management Agreement will terminate immediately
and automatically upon its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of Dreyfus: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; J. David Officer, Vice
Chairman and a director; Ronald P. O'Hanley III, Vice Chairman; William T.
Sandalls, Jr., Senior Vice President and Chief Financial Officer; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Patrice M. Kozlowski,
Vice President-Corporate Communications; Mary Beth Leibig, Vice President-
Human Resources; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting;
Andrew S. Wasser, Vice President-Information services; James Bitetto,
Assistant Secretary; Steven F. Newman, Assistant Secretary; and Mandell L.
Berman, Burton C. Borgelt, Frank V. Cahouet and Richard F. Syron, directors.
Sub-Investment Advisory Agreement. Sarofim provides investment
advisory assistance and day-to-day management of the Fund's investments
pursuant to the Sub-Investment Advisory Agreement (the "Sub-Advisory
Agreement") dated July 30, 1998 between Dreyfus and Sarofim. The Sub-
Advisory Agreement was approved by the Company's Board, including a
majority of the Board members who are not "interested persons" of any party
to the Sub-Advisory Agreement, at a meeting held on July 30, 1998, and will
continue in effect until April 4, 2000. Thereafter, the Sub-Advisory
Agreement will be subject to review and approval at least annually by the
Board of Directors. The Sub-Advisory Agreement will continue from year to
year provided that a majority of the Directors who are not interested
persons (as defined in the 1940 Act) of the Company, Dreyfus, or Sarofim and
either a majority of all Directors or a majority (as defined in the 1940
Act) of the shareholders of the Fund approve its continuance. The Sub-
Advisory Agreement is terminable without penalty (i) by Dreyfus on sixty
(60) days' notice, (ii) by the Company's Board or by vote of the holders of
a majority of the Fund's shares on sixty (60) days' notice, or (iii) by
Sarofim on not less than ninety (90) days' notice. The Sub-Advisory
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act) or upon the termination of the Management Agreement
for any reason.
The following persons are officers and/or directors of Sarofim: Fayez
S. Sarofim, Chairman of the Board and President: Raye G. White, Executive
Vice President, Secretary, Treasurer and a director; Russell M. Frankel,
Russell B. Hawkins, William K. McGee, Jr., Charles E. Sheedy and Ralph
Thomas, Senior Vice Presidents; and James A. Reynolds, III, Vice President.
Sarofim provides day-to-day management of the Fund's investments in
accordance with the stated policies of the Fund, subject to the supervision
of Dreyfus and the approval of the Company's Board. Dreyfus and Sarofim
provide the Fund with portfolio managers who are authorized by the Company's
Board to execute purchases and sales of securities. The Fund's principal
portfolio manager is Fayez S. Sarofim, who is assisted by Russell B. Hawkins
and Christopher Sarofim. Dreyfus and Sarofim also maintain research
departments with professional staffs of portfolio managers and securities
analysts who provide research services for the Fund and other funds advised
by Dreyfus and Sarofim.
Under the Sub-Advisory Agreement, Dreyfus has agreed to pay Sarofim a
monthly fee at the annual rate of .30 of 1% of the value of the Fund's
average daily net assets.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 1.10% of the value of the Fund's
average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and
expenses of the non-interested Directors (including counsel fees), Dreyfus
is contractually required to reduce its investment management fee by an
amount equal to the Fund's allocable share of such fees and expenses. From
time to time, Dreyfus may voluntarily waive a portion of the investment
management fees payable by the Fund, which would have the effect of lowering
the expense ratio of the Fund and increasing return to investors. In
addition, the Fund is subject to a distribution plan under which the Fund
spends annually up to .25% of its average daily net assets for distribution
and shareholder servicing activities. See "Distribution Plan." Expenses
attributable to the Fund are charged against the Fund's assets; other
expenses of the Company are allocated among its funds on the basis
determined by the Board, including, but not limited to, proportionately in
relation to the net assets of each fund.
The Distributor. Premier Mutual Fund Services, Inc. (the
"Distributor"), located at 60 State Street, Boston, Massachusetts 02109,
serves as the Fund's distributor on a best efforts basis pursuant to an
agreement which is renewable annually. Dreyfus may pay the Distributor for
shareholder services from Dreyfus' own assets, including past profits but
not including the management fee paid by the Fund. The Distributor may use
part or all of such payments to pay certain banks, securities brokers or
dealers and other financial institutions ("Agents") for these services. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
General. The minimum initial investment is $2,500, or $1,000 if you
are a client of an Agent which maintains an omnibus account in the Fund and
has made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. However, the minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
The fund is designed for long-term investors with little or no need for
investment income. The fund is not designed for, and may not be suitable
for, investors such as qualified pension, profit-sharing and other tax-
deferred retirement plans, or IRAs, whose income is not subject to current
federal income taxation. The initial investment must be accompanied by the
Account Application. For full-time or part-time employees of Dreyfus or any
of its affiliates or subsidiaries, directors of Dreyfus, Board members of a
fund advised by Dreyfus, including members of the Company's Board, or the
spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of Dreyfus or
any of its affiliates or subsidiaries who elect to have a portion of their
pay directly deposited into their Fund accounts, the minimum initial
investment is $50. The Fund reserves the right to offer Fund shares without
regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner
and form acceptable to the Fund. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at any
time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant
to the Dreyfus Step Program described under "Shareholder Services." These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You
should be aware, however, that periodic investment plans do not guarantee a
profit and will not protect an investor against loss in a declining market.
Management understands that some Agents may impose certain conditions
on their clients which are different from those described in the Fund's
Prospectus and this SAI, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should
consult your Agent in this regard. See "Distribution Plan."
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent or other entity authorized to receive orders on behalf of the
Fund. Net asset value per share is determined as of the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York time), on
each day the New York Stock Exchange is open for business. For purposes of
determining net asset value, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the New York Stock Exchange.
Net asset value per share is computed by dividing the value of the Fund's net
assets (i.e., the value of its assets less liabilities) by the total number of
Fund shares outstanding. The Fund's investments are valued based on market
value or, where market quotations are not readily available, based on fair value
as determined in good faith by the Company's Board. Certain securities may
be valued by an independent pricing service approved by the Company's Board
and are valued at fair value as determined by the pricing service. For
further information regarding the methods employed in valuing the Fund's
investments, see "Determination of Net Asset Value."
Orders for the purchase of Fund shares received by dealers by the close
of trading on the floor of the New York Stock Exchange on any business day
and transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on net asset
value determined as of the close of trading on the floor of the New York
Stock Exchange on that day. Otherwise, the orders will be based on the next
determined net asset value. It is the dealers' responsibility to transmit
orders so that they will be received by the Distributor or its designee
before the close of its business day. For certain institutions that have
entered into agreements with the Distributor, payment for the purchase of
Fund shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is
not received within three business days after the order is placed, the order
may be canceled and the institution could be held liable for resulting fees
and/or losses.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs or (ii)
such plan's or program's aggregate investment in the Dreyfus Family of Funds
or certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds in
the Dreyfus Family of Funds then held by Eligible Benefit Plans will be
aggregated to determine the fee payable. The Distributor reserves the right
to cease paying these fees at any time. The Distributor will pay such fees
from its own funds, other than amounts received from the Fund, including
past profits or any other source available to it.
Dreyfus TeleTransfer Privilege. You may purchase shares by telephone
through the Dreyfus TeleTransfer Privilege if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. 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 Automated
Clearing House member may be so designated. Dreyfus TeleTransfer purchase
orders may be made at any time. Purchase orders received by 4:00 p.m. New
York time, on any business day that Dreyfus Transfer, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 p.m., New York time, on any
business day the Transfer Agent and the New York Stock Exchange are open for
business, or orders made on Saturday, Sunday or any Fund holiday (e.g., when
the New York Stock Exchange is not open for business), will be credited to
the shareholder's Fund account on the second bank business day following
such purchase order. To qualify to use the Dreyfus TeleTransfer Privilege,
the initial payment for purchase of Fund shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares - Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund
may, at its discretion, permit the purchase of shares through an "in-kind"
exchange of securities. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative net asset value
of the shares purchased and securities exchanged. Securities accepted by
the Fund will be valued in the same manner as the Fund values its assets.
Any interest earned on the securities following their delivery to the Fund
and prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securities
become the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call 1-800-645-6561.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Expenses."
Fund shares are subject to fees for distribution and shareholder
services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "Rule")
regulating the circumstances under which investment companies such as the
Company may, directly or indirectly, bear the expenses of distributing their
shares. The Rule defines distribution expenses to include expenditures for
"any activity which is primarily intended to result in the sale of fund
shares." The Rule, among other things, provides that an investment company
may bear such expenses only pursuant to a plan adopted in accordance with
the Rule.
Distribution Plan. Fund shares are subject to a Distribution Plan (the
"Plan") adopted pursuant to the Rule. The Plan allows the Fund to spend
annually up to 0.25% of its average daily net assets to compensate Mellon
Bank and its affiliates (including but not limited to Dreyfus and Dreyfus
Service Corporation) for shareholder servicing activities and the
Distributor for shareholder servicing activities and expenses primarily
intended to result in the sale of Fund shares. The Plan allows the
Distributor to make payments from the Rule 12b-1 fees it collects from the
Fund to compensate Agents that have entered into Agreements with the
Distributor for distribution related services and/or shareholder services.
Under the Agreements, the Agents are obligated to provide distribution
related services with regard to the Fund and/or shareholder services to the
Agent's clients that own Fund shares. The fees are payable pursuant to the
Plan without regard to expenses incurred.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. Potential investors should read
the Fund's Prospectus and this SAI in light of the terms governing
Agreements with their Agents.
The Plan provides that a report of the amounts expended under the Plan,
and the purposes for which such expenditures were incurred, must be made to
the Company's Directors for their review at least quarterly. In addition,
the Plan provides that it may not be amended to increase materially the
costs which the Fund may bear for distribution pursuant to the Plan without
approval of the Fund's shareholders, and that other material amendments of
the Plan must be approved by the vote of a majority of the Directors and of
the Directors who are not "interested persons" of the Company or Dreyfus (as
defined in the 1940 Act) and who do not have any direct or indirect
financial interest in the operation of the Plan, cast in person at a meeting
called for the purpose of considering such amendments. The Plan was
approved by the entire Board of Directors and by the Directors who are
neither "interested persons" of the Company nor Dreyfus (as defined in the
1940 Act) and who did not have any direct or indirect financial interest in
the operation of the Plan at a meeting held on July 30, 1998. The Plan is
subject to annual approval by the entire Board of Directors and by the
Directors who are neither interested persons nor have any direct or indirect
financial interest in the operation of the Plan, by vote cast in person at a
meeting called for the purpose of voting on the Plan. The Plan is
terminable at any time by vote of a majority of the Directors who are not
interested persons and have no direct or indirect financial interest in the
operation of the Plan or by vote of the holders of a majority (as defined in
the 1940 Act) of the outstanding shares of the Fund.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
Redemption Fee. The Fund will deduct a redemption fee equal to 1% of
the net asset value of Fund shares redeemed (including redemptions through
the use of the Fund Exchanges service) less than 6 months following the
issuance of such shares. The redemption fee will be deducted from the
redemption proceeds and retained by the Fund.
No redemption fee will be charged on the redemption or exchange of
shares (1) through the Fund's Automatic Withdrawal Plan or Dreyfus Auto-
Exchange Privilege, (2) through accounts that are reflected on the records
of the Transfer Agent as omnibus accounts approved by Dreyfus Service
Corporation, (3) through accounts established by Agents approved by Dreyfus
Service Corporation that utilize the National Securities Clearing
Corporation's networking system, or (4) acquired through the reinvestment of
dividends or capital gain distributions. The redemption fee may be waived,
modified or terminated at any time.
Redemption Through a Selected Dealer. Customer's of certain Agents
("Selected Dealers") may make redemption requests to their Selected Dealer.
If the Selected Dealer transmits the redemption request so that it is
received by the Transfer Agent prior to the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m., New York time), the
redemption request will be effective on the day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the New York Stock Exchange, the redemption request will be effective on the
next business day. It is the responsibility of the Selected Dealer to
transmit a request so that it is received in a timely manner. The proceeds
of the redemption are credited to your account with the Selected Dealer.
In addition, the Distributor will accept orders from Selected Dealers
with which it has sales agreements for the repurchase of Fund shares held by
shareholders. Repurchase orders received by dealers by the close of trading
on the floor of the New York Stock Exchange on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the New York Stock
Exchange on that day. Otherwise, the Fund shares will be redeemed at the
next determined net asset value. It is the responsibility of the Selected
Dealer to transmit orders on a timely basis. The Selected Dealer may charge
the shareholder a fee for executing the order. This repurchase arrangement
is discretionary and may be withdrawn at any time.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to this Privilege on the next
business day after receipt if the Transfer Agent receives the redemption
request in proper form. Redemption proceeds ($1,000 minimum), will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form, or a correspondent bank if the investor's bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such bank and
usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. You may request by telephone that
redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an Automated Clearing House member may be designated. Redemption
proceeds will be on deposit in your account at an Automated Clearing House
member bank ordinarily two days after receipt of the redemption request.
Holders of jointly registered Fund or bank accounts may redeem through the
Dreyfus TeleTransfer Privilege for transfer to their bank account not more
than $250,000 within any 30-day period. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Shares-Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Company has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. In the case of
requests for redemptions in excess of such amount, the Company's Board
reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC so that disposal of the
Fund's investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
Fund Exchanges. Fund shares may be exchanged for shares of certain
other funds advised or administered by Dreyfus. Shares of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends
or other distributions of any such funds (collectively referred to
herein as "Purchased Shares") may be exchanged for shares of other
funds sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to the Offered
Shares exceeds the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any reduced loads,
the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor, or an investor's Agent acting on
the investor's behalf, must give exchange instructions to the Transfer Agent
in writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this Privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent
to act on telephonic instructions (including over The Dreyfus Touchr
automated telephone system) from any person representing himself or herself
to be the investor, or a representative of the investor's Agent, and
reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange.
Exchanges of Fund shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
Except in the case of personal retirement plans, the shares being
exchanged must have a current value of at least $500. To establish a new
account by exchange, the shares of the fund being exchanged must have a
value of at least the minimum initial investment required for the fund into
which the exchange is being made.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is available
only for existing accounts. With respect to Fund shares held by a
Retirement Plan, exchanges may be made only between the investor's
Retirement Plan account in one fund and such investor's Retirement Plan
account in another fund. Shares will be exchanged on the basis of relative
net asset value as described above under "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified
if the investor's account falls below the amount designated to be exchanged
under this Privilege. In this case, an investor's account will fall to zero
unless additional investments are made in excess of the designated amount
prior to the next Dreyfus Auto-Exchange transaction. Shares held under IRA
and other retirement plans are eligible for this Privilege. Exchanges of
IRA shares may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of certain other funds in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
the other funds purchased pursuant to this Privilege will be purchased on
the basis of relative net asset value per share as follows:
A. Dividends and other distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and other distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds sold
with a sales load, and the applicable sales load will be deducted.
C. Dividends and other distributions paid by a fund which charges a
sales load may be invested in Offered Shares, provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Dreyfus Step Program. Dreyfus Step Program enables you to purchase
Fund shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builder, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a
Dreyfus Step Program account, you must supply the necessary information on
the Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing participation in Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund may
modify or terminate this Program at any time. Investors who wish to
purchase Fund shares through the Dreyfus Step Program in conjunction with a
Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs and IRA
"Rollover Accounts."
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund makes
available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-
working spouse, Roth IRAs, SEP-IRAs, Education IRAs, and IRA "Rollover
Accounts"), and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
The Fund is not designed for, and may not be suitable for, investors
such as qualified pension, profit-sharing and other tax-deferred retirement
plans, whose income is not subject to current Federal income taxation.
Additional Information About Purchases, Exchanges and Redemptions. The
Fund is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive
to efficient portfolio management and, consequently, can be detrimental to
the Fund's performance and its shareholders. Accordingly, if the Fund's
management determines that an investor is engaged in excessive trading, the
Fund, with or without prior notice, may temporarily or permanently terminate
the availability of Fund Exchanges, or reject in whole or part any purchase
or exchange request, with respect to such investor's account. Such
investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of the Fund during any calendar year or who makes exchanges that appear
to coincide with an active market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control
will be considered as one account for purposes of determining a pattern of
excessive trading. In addition, the Fund may refuse or restrict purchase or
exchange requests by any person or group if, in the judgment of the Fund's
management, the Fund would be unable to invest the money effectively in
accordance with its investment objective and policies or could otherwise be
adversely affected or if the Fund receives or anticipated receiving
simultaneous orders that may significantly affect the Fund (e.g., amounts
equal to 1% or more of the Fund's total assets). If an exchange request is
refused, the Fund will take no other action with respect to the shares until
it receives further instructions from the investor. The Fund may delay
forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus Auto-
Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange
requests based on their separate components - redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case,
the redemption request would be processed at the Fund's next determined net
asset value but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the proceeds
of the redemption, which may result in the purchase being delayed.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Each Fund's securities are valued
at the last sale price on the securities exchange or national securities
market on which such securities primarily are traded. Securities not listed
on an exchange or national securities market, or securities in which there
were no transactions, are valued at the average of the most recent bid and
asked prices. Bid price is used when no asked price is available. Any
assets or liabilities initially expressed in terms of foreign currency will
be translated into U.S. dollars at the midpoint of the New York interbank
market spot exchange rate as quoted on the day of such translation or, if no
such rate is quoted on such date, such other quoted market exchange rate as
may be determined to be appropriate by the Dreyfus. If the Fund has to
obtain prices as of the close of trading on various exchanges throughout the
world, the calculation of net asset value may not take place
contemporaneously with the determination of prices of certain of the Fund's
securities. Short-term investments are carried at amortized cost, which
approximates value. Expenses and fees, including the management fee and
fees pursuant to the Plan, are accrued daily and taken into account for the
purpose of determining the net asset value of the Fund's shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or which are not valued by a
pricing service approved by the Board of Directors, are valued at fair value
as determined in good faith by the Board of Directors. The Board of
Directors will review the method of valuation on a current basis. In making
their good faith valuation of restricted securities, the Board Members
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class
of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This
discount will be revised periodically by the Board if it believes that the
discount no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a public
market exists usually will be valued initially at cost. Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is currently scheduled to be closed are: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Distributions and
Taxes."
The term "regulated investment company" ("RIC") does not imply the
supervision of management or investment practices or policies by any
government agency.
General. It is expected that the Fund will continue to qualify for
treatment as a RIC under the Internal Revenue Code of 1986, as amended, (the
"Code") so long as such qualification is in the best interests of its
shareholders. To qualify for treatment as a RIC under the Code, the Fund --
which is treated as a separate corporation for federal tax purposes--
(1) must distribute to its shareholders each year at least 90% of its invest
ment company taxable income (generally consisting of net investment income,
net short-term capital gains and net gains from certain foreign currency
transactions) ("Distribution Requirement"), (2) must derive at least 90% of
its annual gross income from specified sources ("Income Requirement"), and
(3) must meet certain asset diversification and other requirements.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the net asset value of
the shares below the cost of his or her investment. Such a dividend or
other distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, if a
shareholder sells shares of the Fund held for six months or less and
received a capital gain distribution with respect to those shares, any loss
incurred on the sale of those shares will be treated as a long-term capital
loss to the extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November, or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of a year if the distributions
are paid by the Fund during the following January. Accordingly, those
distributions will be taxed to shareholders for the year in which that
December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash
or reinvested in additional Fund shares, may be eligible for the dividends-
received deduction allowed to corporations. The eligible portion may not
exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
alternative minimum tax.
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that
would reduce the yield and/or return on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate
these foreign taxes, however, and many foreign countries do not impose taxes
on capital gains in respect of investments by foreign investors.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own,
directly, indirectly, or constructively, at least 10% of that voting power)
as to which the Fund is a U.S. shareholder -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or
(2) an average of at least 50% of its assets produce, or are held for the
production of, passive income,. Under certain circumstances, the Fund will
be subject to federal income tax on a portion of any "excess distribution:
received on the stock of a PFIC or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a dividend to its shareholders. The balance
of the PFIC income will be included in the Fund's investment company taxable
income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each
year its pro rata share of the QEF's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) -- which likely would have to be distributed by the Fund to
satisfy the Distribution Requirement and avoid imposition of the 4% excise
tax mentioned in the Prospectus under "Dividends, Other Distributions and
Taxes" "Excise Tax" -- even if those earnings and gain were not received by
the Fund from the QEF. In most instances it will be very difficult, if not
impossible, to make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC. "Marking-
to-market," in this context, means including in ordinary income each taxable
year the excess, if any, of the fair market value of a PFIC's stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not
capital, loss) the excess, if any, of its adjusted basis in PFIC stock over
the fair market value thereof as of the taxable year-end, but only to the
extent of any net mark-to-market gains with respect to that stock included
by the Fund for prior taxable years. The Fund's adjusted basis in each
PFIC's stock with respect to which it makes this election would be adjusted
to reflect the amounts of income included and deductions taken under the
election.
Options Transactions. Gains from options derived by the Fund with
respect to its business of investing in securities will qualify as
permissible income under the Income Requirement.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, all or a portion of the
gain realized from engaging in "conversion transactions" that would
otherwise be treated as capital gain may be treated as ordinary income.
"Conversion transactions" are defined to include certain option and straddle
transactions.
Under Section 1256 of the Code, any gain or loss realized by the Fund
with respect to certain options ("Section 1256 Contracts") may be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.
In addition, any Section 1256 Contracts remaining unexercised at the end of
the Fund's taxable year will be treated as sold for their then fair market
value (a process known as "marking-to-market"), resulting in additional gain
or loss to the Fund characterized in the manner described above. The 60%
portion treated as long-term capital gain will qualify for the reduced
maximum tax rates on non-corporate taxpayers' net capital gain enacted by
the Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in the 15%
marginal tax bracket) on capital assets held for more than 18 months --
instead of the 28% rate in effect before that legislation, which now applies
to gain on capital assets held for more than one year but not more than 18
months. Pending legislation, the Internal Revenue Service Restructuring and
Reform Act of 1998, would reduce the 18-month holding period for 20% gain to
12 months.
Offsetting positions held by the Fund involving certain options may
constitute "straddles," which are defined to include "offsetting positions"
in actively traded personal property. All or a portion of any capital gain
from certain straddle transactions may be recharacterized as ordinary
income. If the Fund were treated as entering into straddles by reason of
its engaging in certain options transactions, such straddles would be
characterized as "mixed straddles" if the transactions comprising a part of
such straddles were governed by Section 1256. The Fund may make one or more
elections with respect to mixed straddles; depending on which election is
made, if any, the results to the Fund may differ. If no election is made,
then to the extent the straddle and conversion transactions rules apply to
positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the straddle rules, short-term capital loss on
straddle positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
If the Fund has an "appreciated financial position" - generally, an
interest (including an interest through an option or short sale) with
respect to any stock, debt instrument (other than "straight debt"), or
partnership interest the fair market value of which exceeds its adjusted
basis - and enters into a "constructive sale" of the same or substantially
similar property, the Fund will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract, or futures or forward contract entered into by the Fund
or a related person with respect to the same or substantially similar
property. In addition, if the appreciated financial position is itself a
short sale or such a contract, acquisition of the underlying property or
substantially similar property will be deemed a constructive sale.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which it is deemed to be conducting
business, it may be subject to the tax laws thereof. Shareholders are also
advised to consult their tax advisers concerning the application of state
and local taxes to them.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder") depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the Fund,
such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of
an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the
foreign shareholder generally will be subject to U.S. federal withholding
tax of 30% (or lower treaty rate). Capital gains realized by foreign
shareholders on the sale of Fund shares and distributions to them of net
capital gain generally will not be subject to U.S. federal income tax unless
the foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable year.
In the case of certain foreign shareholders, the Fund may be required to
withhold U.S. federal income tax at the rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder certifies his or her foreign status to the Fund.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that shareholder
on the disposition of the Fund shares will be subject to U.S. federal income
tax at the graduated rates applicable to U.S. citizens and domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with the Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. The Fund will
pay a spread or commissions in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus and Sarofim also place transactions for other accounts that they
provide with investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. In selecting brokers
or dealers, Dreyfus will consider various relevant factors, including, but
not limited to, the size and type of the transaction; the nature and
character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any spreads (or commissions, if
any). Dreyfus may use research services of and place brokerage transactions
with broker-dealers affiliated with it or Mellon Bank if the commissions are
reasonable, fair and comparable to commissions charged by non-affiliated
brokerage firms for similar services Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 under the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates or Sarofim exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus or Sarofim in rendering investment management services to the Fund
and/or their other clients; and, conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of other
clients of Dreyfus or Sarofim may be useful to these organizations in
carrying out their obligations to the Fund. The receipt of such research
services does not reduce these organizations' normal independent research
activities; however, it enables these organizations to avoid the additional
expenses which might otherwise be incurred if these organizations were to
attempt to develop comparable information through their own staffs.
Although the Advisers manage other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus or Sarofim.
Simultaneous transactions may occur when several accounts are managed by the
same investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated
in accordance with a formula considered by Dreyfus to be equitable to each
account. In some cases this system could have a detrimental effect on the
price or volume of the investment instrument as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. It is
the present opinion of the Directors that the desirability of retaining
Dreyfus as investment manager, and Sarofim as sub-investment adviser, to the
Fund outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases and sales of securities whose
maturities at the time of acquisition were one year or less) by the monthly
average value of securities in the Fund during the year. Portfolio turnover
may vary from year to year as well as within a year. In periods in which
extraordinary market conditions prevail, Dreyfus will not be deterred from
changing the Fund's investment strategy as rapidly as needed, in which case
higher turnover rates can be anticipated. A higher rate of portfolio
turnover involves correspondingly greater brokerage commissions and other
expenses that must be borne directly by the Fund and, thus, indirectly by
its shareholders. In addition, a high rate of portfolio turnover may result
in the realization of larger amounts of short-term capital gains that, when
distributed to the Fund's shareholders, are taxable to them as ordinary
income.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and other distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
Total return is calculated by subtracting the amount of the Fund's net
asset value per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period), and
dividing the result by the net asset value per share at the beginning of the
period.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Standard & Poor's 500 Composite Stock Price Index, (ii) the Russell 1000
Index, the Dow Jones Industrial Average, or other appropriate unmanaged
domestic or foreign indices of performance of various types of investments
so that investors may compare the Fund's results with those of indices
widely regarded by investors as representative of the securities markets in
general; (iii) other groups of mutual funds tracked by Lipper Analytical
Services, Inc., a widely used independent research firm which ranks mutual
funds by overall performance, investment objectives and assets, or tracked
by other services, companies, publications, or persons who rank mutual funds
on overall performance or other criteria; (iv) the Consumer Price Index (a
measure of inflation) to assess the real rate of return from an investment
in the Fund; and (v) products managed by a universe of money managers with
similar performance objectives. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions or
administrative and management costs and expenses.
From time to time, advertising materials for the Fund may refer to, or
include commentary by, the Fund's primary portfolio manager, Fayez Sarofim,
relating to his investment strategy, the asset growth of the Fund, current
or past business, political, economic or financial conditions and other
matters of general interest to investors. From time to time, advertising
materials for the Fund may refer to the Fund's quantitative disciplined
approach to stock market investing and the number of stocks analyzed by
Dreyfus. From time to time, Fund advertisements may include statistical
data or general discussions about the growth and development of Dreyfus
Retirement Services (in terms of new customers, assets under management,
market share, etc.) and its presence in the defined contribution plan
market.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "THE FUND".
The Company has an authorized capitalization of 25 billion shares of
$0.001 par value stock. Each Fund share has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully paid and
non-assessable. The Fund is one of nineteen portfolios of the Company. Fund
shares are of one class and have equal rights as to dividends and in
liquidation. Fund shares have no preemptive or subscription rights and are
freely transferable.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Company to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of Board
members 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 Board
member from office. Shareholders may remove a Board member by the
affirmative vote of a majority of the Company's outstanding voting shares.
In addition, the Board will call a meeting of shareholders for the purpose
of electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Board members from the separate voting requirements of the Rule.
The Fund will send annual and semi-annual financial statements to all
of its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Company, Dreyfus Transfer, Inc. arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications between
shareholders and the Fund, and the payment of dividends and distributions
payable by the Fund. For these services, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month, and is reimbursed for certain
out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's investments.
Under a custody agreement with the Company, Mellon Bank holds the Fund's
portfolio securities and keeps all necessary accounts and records.
Dreyfus Transfer, Inc. and Mellon Bank, as custodian, have no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this SAI.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, was
appointed by the Directors to serve as the Fund's independent auditors for
the period ending October 31, 1998, providing audit services including (1)
examination of the annual financial statements, (2) assistance, review and
consultation in connection with SEC filings and (3) review of the annual
federal income tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
DREYFUS TAX-SMART GROWTH FUND ( in organization)
Statement of Assets and Liabilities September 29, 1998
Value
ASSETS Cash $ 2,500,000
NET ASSETS Represented by paid-in capital $ 2,500,000
Net Asset Value Per Share
Net Assets $2,500,000
Shares Outstanding 200,000
NET ASSET VALUE PER SHARE $12.50
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company and operates as a series company currently
offering nineteen series including Dreyfus Tax-Smart Growth Fund (the
"Fund"). The Fund's investment objective is to achieve long-term capital
appreciation consistent with minimizing realized capital gains and taxable
current income. The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment manager. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
Dreyfus has engaged Fayez Sarofim & Co., to serve as the Fund's sub-
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares, which are sold to the public without a
sales charge. The Company is authorized to issue 25 billion shares of
$0.001 par value stock.
Pursuant to an Investment Management Agreement with the Company on
behalf of the Fund, Dreyfus provides or arranges for one or more third
parties and/or affiliates to provide investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. Dreyfus
also directs the investments of the Fund in accordance with its investment
objective, policies and limitations. For these services, the Fund is
contractually obligated to pay Dreyfus a fee, calculated daily and paid
monthly, at the annual rate of 1.10% of the value of the Fund's average
daily net assets. Out of its fee, Dreyfus pays all of the expenses of the
Fund except brokerage fees, taxes, interest, commitment fees, Rule 12b-1
fees, fees and expenses of non-interested Directors (including counsel fees)
and extraordinary expenses. In addition, Dreyfus is contractually required
to reduce its investment management fee by an amount equal to the Fund's
allocable portion of fees and expenses of the non-interested Directors
(including counsel). Each Director receives $40,000 per year, $5,000 for
each Board meeting attended, $2,000 for separate committee meetings attended
which are not held in conjunction with a regularly scheduled board meeting,
$500 for board meetings and separate committee meetings attended that are
conducted by telephone, and reimbursement for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). These fees
pertain to series of the following investment companies: The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The
Dreyfus/Laurel Funds Trust. These fees and expenses are charged and
allocated to each series based on net assets. Amounts required to be paid
by the Company directly to the non-interested Directors, that would be
applied to offset a portion of the management fee payable to Dreyfus,
are in fact paid directly by Dreyfus to the non-interested Directors.
Dreyfus will bear all Organizational Costs.
Under the Fund's Distribution Plan (the "Plan") adopted pursuant to
Rule 12b-1 under the Act, the Fund may pay annually up to .25% of the value
of the Fund's average daily net assets to compensate Mellon Bank, N.A., and
its affiliates (including but not limited to Dreyfus and Dreyfus Service
Corporation) for shareholder servicing activities and the Distributor for
shareholder servicing activities and expenses primarily intended to result
in the sale of Fund shares.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of the majority of
those Directors who are not "interested persons" of the Company and who have
no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan.
A 1% redemption fee is charged and retained by the Fund on certain
redemptions and exchanges of Fund shares occurring within six months of the
issuance of the shares.
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus Tax-Smart Growth Fund
We have audited the accompanying statement of assets and liabilities of Dreyfus
Tax-Smart Growth Fund of the Dreyfus/Laurel Funds, Inc. as of September 29, 1998
(in organization). This financial statement is the responsibility of the Fund's
management. Out responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit of a statement of assets and liabilities
includes examining, on a test basis, evidence supporting the amounts and
disclosures in that statement of assets and liabilities. An audit of a
statement of assets and liabilities also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit of the statement of assets and liabilities provides a reasonable basis for
our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Dreyfus
Tax-Smart Growth Fund of the Dreyfus/Laurel Funds, Inc. as of September 29,
1998, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
September 30, 1998
APPENDIX
DESCRIPTION OF STANDARD & POOR'S, MOODY'S, FITCH IBCA AND DUFF RATINGS
Standard & Poor's (S&P)
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within
the major rating categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
sign (+) designation.
Moody's
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally
are referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which suggest
a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment charac
teristics and in fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Fitch IBCA, Inc. ("Fitch IBCA")
Short-Term Ratings
Fitch IBCA's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch IBCA's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated `F-1+'.
Duff & Phelps Inc. ("Duff")
Commercial Paper Ratings
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor.
DREYFUS DISCIPLINED SMALLCAP STOCK FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
SEPTEMBER 30, 1998
This Statement of Additional Information ("SAI"), which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of Dreyfus Disciplined Smallcap Stock Fund (the "Fund"), dated
September 30, 1998, as it may be revised from time to time. The Fund is a
separate, diversified portfolio of The Dreyfus/Laurel Funds, Inc. (the
"Company"), an open-end management investment company, known as a mutual
fund. To obtain a copy of the Fund's Prospectus, please write to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call one of
the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
TABLE OF CONTENTS
Page
Description of the Fund B-2
Management of the Fund B-18
Management Arrangements B-24
Purchase of Shares B-26
Distribution Plan B-29
Redemption of Shares B-30
Shareholder Services B-33
Determination of Net Asset Value B-37
Dividends, Other Distributions and Taxes B-38
Portfolio Transactions B-42
Performance Information B-44
Information About the Fund B-45
Transfer and Dividend Disbursing Agent, Custodian, Counsel and
Independent Auditors B-46
Financial Statements B-47
Appendix B-48
DESCRIPTION OF THE FUND
The following information supplements and should be read in conjunction
with the sections of the Fund's Prospectus entitled "Goal/Approach" and
"Main Risks."
The Company is a Maryland corporation formed on August 6, 1987. Before
October 17, 1994, the Company's name was The Laurel Funds, Inc. The Company
is an open-end management investment company comprised of separate
portfolios, including the Fund, each of which is treated as a separate fund.
The Fund is diversified, which means that, with respect to 75% of its total
assets, the Fund will not invest more than 5% of its assets in the
securities of any single issuer.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Certain Portfolio Securities
The Fund may purchase the portfolio securities described below.
Government Obligations. The Fund may invest in a variety of U.S.
Treasury obligations, which differ only in their interest rates, maturities
and times of issuance: (a) U.S. Treasury bills have a maturity of one year
or less, (b) U.S. Treasury notes have maturities of one to ten years, and
(c) U.S. Treasury bonds generally have maturities of greater than ten years.
In addition to U.S. Treasury obligations, the Fund may invest in
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow
an amount limited to a specific line of credit from the U.S. Treasury, (c)
the discretionary authority of the U.S. Government agency or
instrumentality, or (d) the credit of the instrumentality. (Examples of
agencies and instrumentalities are: Federal Land Banks, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the
United States, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, Federal Home Loan Banks, General Services Administration, Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory
Board, Inter-American Development Bank, Asian-American Development Bank,
Student Loan Marketing Association, International Bank for Reconstruction
and Development and Fannie Mae). No assurance can be given that the U.S.
Government will provide financial support to the agencies or
instrumentalities described in (b), (c) and (d) in the future, other than as
set forth above, since it is not obligated to do so by law.
Commercial Paper. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended ("Section
4(2) paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws and generally is sold to investors, such as the
Fund, who agree that they are purchasing the paper for an investment and not
with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper is normally resold to other
investors through or with the assistance of the issuer or investment dealers
who make a market in Section 4(2) paper, thus providing liquidity. Pursuant
to guidelines established by the Company's Board of Directors, Dreyfus may
determine that Section 4(2) paper is liquid for the purposes of complying
with the Fund's investment restriction relating to investments in illiquid
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements
with U.S. Government securities dealers recognized by the Federal Reserve
Board, with member banks of the Federal Reserve System, or with such other
brokers or dealers that meet the Fund's credit guidelines. In a repurchase
agreement, the Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. The
Fund's resale price will be in excess of the purchase price, reflecting an
agreed upon interest rate. This interest rate is effective for the period of
time the Fund is invested in the agreement and is not related to the coupon
rate on the underlying security. Repurchase agreements may also be viewed as
a fully collateralized loan of money by the Fund to the seller. The period
of these repurchase agreements will usually be short, from overnight to one
week, and at no time will the Fund invest in repurchase agreements for more
than one year. The Fund will always receive as collateral securities whose
market value including accrued interest is, and during the entire term of
the agreement remains, at least equal to 100% of the dollar amount invested
by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or upon evidence of book entry
transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of a security which is the subject of a
repurchase agreement, realization upon the collateral by the Fund may be
delayed or limited. The Fund seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligors
under repurchase agreements, in accordance with the Fund's credit
guidelines.
When-Issued Securities and Delayed Delivery Transactions. New issues of
U.S. Treasury and Government securities are often offered on a when-issued
basis. This means that delivery and payment for the securities normally will
take place approximately 7 to 45 days after the date the buyer commits to
purchase them. The payment obligation and the interest rate that will be
received on securities purchased on a when-issued basis are each fixed at
the time the buyer enters into the commitment. The Fund will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities or dispose
of the commitment before the settlement date if it is deemed advisable as a
matter of investment strategy. Cash or marketable high-grade debt securities
equal to the amount of the above commitments will be segregated on the
Fund's records. For the purpose of determining the adequacy of these
securities the segregated securities will be valued at market. If the market
value of such securities declines, additional cash or securities will be
segregated on the Fund's records on a daily basis so that the market value
of the account will equal the amount of such commitments by the Fund.
Securities purchased on a when-issued basis and the securities held by
the Fund are subject to changes in market value based upon the public's
perception of changes in the level of interest rates. Generally, the value
of such securities will fluctuate inversely to changes in interest rates --
i.e., they will appreciate in value when interest rates decline and decrease
in value when interest rates rise. Therefore, if in order to achieve higher
interest income the Fund remains substantially fully invested at the same
time that it has purchased securities on a "when-issued" basis, there will
be a greater possibility of fluctuation in the Fund's net asset value.
When payment for when-issued securities is due, the Fund will meet its
obligations from then-available cash flow, the sale of segregated
securities, the sale of other securities and/or, although it would not
normally expect to do so, from the sale of the when-issued securities
themselves (which may have a market value greater or less than the Fund's
payment obligation). The sale of securities to meet such obligations carries
with it a greater potential for the realization of capital gains, which are
subject to federal income taxes.
To secure advantageous prices or yields, the Fund may purchase or sell
securities for delayed delivery. In such transactions, delivery of the
securities occurs beyond the normal settlement periods, but no payment or
delivery is made by the Fund prior to the actual delivery or payment by the
other party to the transaction. The purchase of securities on a delayed
delivery basis involves the risk that, as a result of an increase in yields
available in the marketplace, the value of the securities purchased will
decline prior to the settlement date. The sale of securities for delayed
delivery involves the risk that the prices available in the market on the
delivery date may be greater than those obtained in the sale transaction.
The Fund will establish a segregated account consisting of cash, U.S.
Government Securities or other high-grade debt obligations in an amount at
least equal at all times to the amounts of its delayed delivery commitments.
Foreign Securities. The Fund may purchase securities of foreign issuers
and may invest in obligations of foreign branches of domestic banks and
domestic branches of foreign banks. Investment in foreign securities
presents certain risks, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of comparable domestic issuers. In addition, with
respect to certain foreign countries, there is the possibility of
expropriation, confiscatory taxation and limitations on the use or removal
of funds or other assets of the Fund, including withholding of dividends.
Foreign securities may be subject to foreign government taxes that would
reduce the yield on such securities.
ADRs and New York Shares. The Fund may invest in U.S. dollar-denominated
ADRs and "New York Shares." ADRs typically are issued by an American bank
or trust company and evidence ownership of underlying securities issued by
foreign companies. New York Shares are securities of foreign companies that
are issued for trading in the United States. ADRs and New York Shares are
traded in the United States on national securities exchanges or in the over-
the-counter market. Investment in securities of foreign issuers presents
certain risks, including those resulting from adverse political and economic
developments and the imposition of foreign governmental laws or
restrictions. See "Foreign Securities."
Illiquid Securities. The Fund will not knowingly invest more than 15% of
the value of its net assets in illiquid securities, including time deposits
and repurchase agreements having maturities longer than seven days.
Securities that have readily available market quotations are not deemed
illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). The Fund may purchase securities that
are not registered under the Securities Act of 1933, as amended, but that
can be sold to qualified institutional buyers in accordance with Rule 144A
under that Act ("Rule 144A securities"). Liquidity determinations with
respect to Section 4(2) paper and Rule 144A securities will be made by the
Board of Directors or by Dreyfus pursuant to guidelines established by the
Board of Directors. The Board or Dreyfus will consider availability of
reliable price information and other relevant information in making such
determinations. Rule 144A securities generally must be sold to other
qualified institutional buyers. If a particular investment in Section 4(2)
paper or Rule 144A securities is not determined to be liquid, that
investment will be included within the percentage limitation on investment
in illiquid securities. The ability to sell Rule 144A securities to
qualified institutional buyers is a recent development, and it is not
possible to predict how this market will mature. Investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities from the Fund or other holders.
Initial Public Offerings ("IPOs"). The Fund may invest in an IPO, a
corporation's first offering of stock to the public. Shares are given a
market value reflecting expectations for the corporation's future growth.
Special rules of the National Association of Securities Dealers, Inc. apply
to the distribution of IPOs. Corporations offering IPOs generally have a
limited operating history and may involve greater risk.
Other Investment Companies. The Fund may invest in securities issued by
other investment companies to the extent that such investments are
consistent with the Fund's investment objective and policies and permissible
under the Investment Company Act of 1940, as amended ("1940 Act"). As a
shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Investment Techniques
In addition to the principal investment strategies discussed in the
Fund's prospectus, the Fund also may engage in the investment techniques
described below.
Borrowing. The Fund is authorized, within specified limits, to borrow
money for temporary administrative purposes and to pledge its assets in
connection with such borrowings.
Loans of Fund Securities. The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to
be entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities, which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33-
1/3% of the value of the Fund's total assets and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities.
These loans are terminable by the Fund at any time upon specified notice.
The Fund might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the
Fund. In addition, it is anticipated that the Fund may share with the
borrower some of the income received on the collateral for the loan or that
it will be paid a premium for the loan. In determining whether to lend
securities, the Fund considers all relevant factors and circumstances
including the creditworthiness of the borrower.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements to meet redemption requests where the liquidation of
Fund securities is deemed by Dreyfus to be disadvantageous. Under a reverse
repurchase agreement, the Fund: (1) 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 (2) 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.
Derivative Instruments. The Fund may purchase and sell various
financial instruments ("Derivative Instruments"), including financial
futures contracts (such as index futures contracts) and options (such as
options on U.S. and foreign securities or indices of such securities),
forward currency contracts and interest rate, equity index and currency
swaps, caps, collars and floors. The index Derivative Instruments the Fund
may use may be based on indices of U.S. or foreign equity or debt
securities. These Derivative Instruments may be used, for example, to
preserve a return or spread, to lock in unrealized market value gains or
losses, to facilitate or substitute for the sale or purchase of securities,
to manage the duration of securities, to alter the exposure of a particular
investment or portion of the Fund's portfolio to fluctuations in interest
rates or currency rates, to uncap a capped security or to convert a fixed
rate security into a variable rate security or a variable rate security into
a fixed rate security.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio. Thus, in a
short hedge the Fund takes a position in a Derivative Instrument whose price
is expected to move in the opposite direction of the price of the investment
being hedged.
Conversely, a long hedge is a purchase or sale of a Derivative
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire. Thus, in a long hedge the Fund takes a position in a Derivative
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged. A long hedge is sometimes
referred to as an anticipatory hedge. In an anticipatory hedge transaction,
the Fund does not own a corresponding security and, therefore, the
transaction does not relate to a security the Fund owns. Rather, it relates
to a security that the Fund intends to acquire. If the Fund does not
complete the hedge by purchasing the security it anticipated purchasing, the
effect on the Fund's portfolio is the same as if the transaction were
entered into for speculative purposes.
Derivative Instruments on securities generally are used to hedge
against price movements in one or more particular securities positions that
the Fund owns or intends to acquire. Derivative Instruments on indices, in
contrast, generally are used to attempt to hedge against price movements in
market sectors in which the Fund has invested or expects to invest.
Derivative Instruments on debt securities may be used to hedge either
individual securities or broad debt market sectors.
The use of Derivative Instruments is subject to applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures Trading
Commission ("CFTC") and various state regulatory authorities. In addition,
the Fund's ability to use Derivative Instruments may be limited by tax
considerations. See "Dividends, Other Distributions and Taxes."
In addition to the instruments, strategies and risks described below
and in the Prospectus, Dreyfus expects to discover additional opportunities
in connection with other Derivative Instruments. These new opportunities
may become available as Dreyfus develops new techniques, as regulatory
authorities broaden the range of permitted transactions and as new
techniques are developed. Dreyfus may utilize these opportunities to the
extent that they are consistent with the Fund's investment objective and
permitted by the Fund's investment policies and applicable regulatory
authorities.
Special Risks. The use of Derivative Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Derivative Instruments are described in the
sections that follow.
(1) Successful use of most Derivative Instruments depends upon
Dreyfus' ability to predict movements of the overall securities, currency,
and interest rate markets, which requires different skills than predicting
changes in the prices of individual securities. There can be no assurance
that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Derivative Instrument and price movements of
the investments being hedged. For example, if the value of a Derivative
Instrument used in a short hedge increased by less than the decline in value
of the hedged investment, the hedge would not be fully successful. Such a
lack of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which Derivative Instruments are traded. The effectiveness of
hedges using Derivative Instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
securities being hedged.
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts
available will not match the Fund's current or anticipated investments
exactly. The Fund may invest in options and futures contracts based on
securities with different issuers, maturities, or other characteristics from
the securities in which it typically invests, which involves a risk that the
options or futures position will not track the performance of the Fund's
other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of the
contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other investments.
(3) If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements. However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements. For
example, if the Fund entered into a short hedge because Dreyfus projected a
decline in the price of a security in the Fund's portfolio, and the price of
that security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the Derivative Instrument.
Moreover, if the price of the Derivative Instrument declined by more than
the increase in the price of the security, the Fund could suffer a loss. In
either such case, the Fund would have been in a better position had it not
attempted to hedge at all.
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Derivative Instruments involving obligations to third
parties (i.e., Derivative Instruments other than purchased options). If the
Fund were unable to close out its positions in such Derivative Instruments,
it might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. These requirements
might impair the Fund's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time.
The Fund's ability to close out a position in a Derivative Instrument prior
to expiration or maturity depends on the existence of a liquid secondary
market or, in the absence of such a market, the ability and willingness of
the other party to the transaction ("counterparty") to enter into a
transaction closing out the position. Therefore, there is no assurance that
any position can be closed out at a time and price that is favorable to the
Fund.
Cover for Derivative Instruments. Transactions using Derivative
Instruments may expose the Fund to an obligation to another party. The Fund
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, futures, options, currencies,
or forward contracts or (2) cash and short-term liquid debt securities with
a value sufficient at all times to cover its potential obligations to the
extent not covered as provided in (1) above. The Fund will comply with SEC
guidelines regarding cover for Derivative Instruments and will, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Derivative Instrument is open,
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to cover segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Options. A call option gives the purchaser the right to buy, and
obligates the writer to sell, the underlying investment at the agreed upon
exercise price during the option period. A put option gives the purchaser
the right to sell, and obligates the writer to buy, the underlying
investment at the agreed upon exercise price during the option period. A
purchaser of an option pays an amount, known as the premium, to the option
writer in exchange for rights under the option contract.
Options on indices are similar to options on securities or currencies
except that all settlements are in cash and gain or loss depends on changes
in the index in question rather than on price movements in individual
securities or currencies.
The purchase of call options can serve as a long hedge, and the
purchase of put options can serve as a short hedge. Writing put or call
options can enable the Fund to enhance income or yield by reason of the
premiums paid by the purchasers of such options. However, if the market
price of the security or other instrument underlying a put option declines
to less than the exercise price on the option, minus the premium received,
the Fund would expect to suffer a loss.
Writing call options can also serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent
of the premium received for writing the option. However, if the investment
appreciates to a price higher than the exercise price of the call option, it
can be expected that the option will be exercised and the Fund will be
obligated to sell the investment at less than its market value.
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the investment
depreciates to a price lower than the exercise price of the put option, it
can be expected that the put option will be exercised and the Fund will be
obligated to purchase the investment at more than its market value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the underlying
investment and general market conditions. Options that expire unexercised
have no value.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.
The Fund may purchase and sell both exchange-traded and over-the-
counter ("OTC") options. Exchange-traded options in the United States are
issued by a clearing organization that, in effect, guarantees completion of
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty (usually a securities dealer
or a bank) with no clearing organization guarantee. Thus, when the Fund
purchases an OTC option, it relies on the counterparty from whom it
purchased the option to make or take delivery of the underlying investment
upon exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction. The Fund will enter into only
those option contracts that are listed on a national securities or
commodities exchange or traded in the OTC market for which there appears to
be a liquid secondary market.
The Fund will not purchase or write OTC options if, as a result of such
transaction, the sum of (i) the market value of outstanding OTC options
purchased by the Fund, (ii) the market value of the underlying securities
covered by outstanding OTC call options written by the Fund, and (iii) the
market value of all other assets of the Fund that are illiquid or are not
otherwise readily marketable, would exceed 15% of the net assets of the
Fund, taken at market value. However, if an OTC option is sold by the Fund
to a primary U.S. Government securities dealer recognized by the Federal
Reserve Bank of New York and the Fund has the unconditional contractual
right to repurchase such OTC option from the dealer at a predetermined
price, then the Fund will treat as illiquid such amount of the underlying
securities as is equal to the repurchase price less the amount by which the
option is "in-the-money" (the difference between the current market value of
the underlying securities and the option's strike price). The repurchase
price with primary dealers is typically a formula price that is generally
based on a multiple of the premium received for the option plus the amount
by which the option is "in-the-money."
Generally, the OTC debt and foreign currency options used by the Fund
are European-style options. This means that the option is only exercisable
immediately prior to its expiration. This is in contrast to American-style
options, which are exercisable at any time prior to the expiration date of
the option.
The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the counterparty, or by a transaction in the secondary market
if any such market exists. Although the Fund will enter into OTC options
only with major dealers in unlisted options, there is no assurance that the
Fund will in fact be able to close out an OTC option position at a favorable
price prior to expiration. In the event of insolvency of the counterparty,
the Fund might be unable to close out an OTC option position at any time
prior to its expiration.
If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit. The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.
The Fund may write only covered call options on securities. A call
option is covered if the Fund owns the underlying security or a call option
on the same security with a lower strike price.
Futures Contracts and Options on Futures Contracts. When the Fund
purchases a futures contract, it incurs an obligation to take delivery of a
specified amount of the obligation underlying the futures contract at a
specified time in the future for a specified price. When the Fund sells a
futures contract, it incurs an obligation to deliver a specified amount of
the obligation underlying the futures contract at a specified time in the
future for an agreed upon price. With respect to index futures, no physical
transfer of the securities underlying the index is made. Rather, the
parties settle by exchanging in cash an amount based on the difference
between the contract price and the closing value of the index on the
settlement date.
When the Fund writes an option on a futures contract, it becomes
obligated, in return for the premium paid, to assume a position in a futures
contract at a specified exercise price at any time during the term of the
option. If the Fund writes a call, it assumes a short futures position. If
the Fund writes a put, it assumes a long futures position. When the Fund
purchases an option on a futures contract, it acquires the right, in return
for the premium it pays, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a
put).
The purchase of futures or call options on futures can serve as a long
hedge, and the sale of futures or the purchase of put options on futures can
serve as a short hedge. Writing call options on futures contracts can serve
as a limited short hedge, using a strategy similar to that used for writing
call options on securities or indices. Similarly, writing put options on
futures contracts can serve as a limited long hedge.
No price is paid upon entering into a futures contract. Instead, at
the inception of a futures contract the Fund is required to deposit "initial
margin" consisting of cash or U.S. Government securities in an amount
generally equal to 10% or less of the contract value. Margin must also be
deposited when writing a call or put option on a futures contract, in
accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction
if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required
by an exchange to increase the level of its initial margin payment.
Subsequent "variation margin" payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
"marking-to-market." Variation margin does not involve borrowing, but
rather represents a daily settlement of the Fund's obligations to or from a
futures broker. When the Fund purchases an option on a future, the premium
paid plus transaction costs is all that is at risk. In contrast, when the
Fund purchases or sells a futures contract or writes a call or put option
thereon, it is subject to daily variation margin calls that could be
substantial in the event of adverse price movements. If the Fund has
insufficient cash to meet daily variation margin requirements, it might need
to sell securities at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions
on options, by selling or purchasing, respectively, an instrument identical
to the instrument purchased or sold. Positions in futures and options on
futures may be closed only on an exchange or board of trade that provides a
secondary market. Although the Fund intends to enter into futures and
options on futures only on exchanges or boards of trade where there appears
to be a liquid secondary market, there can be no assurance that such a
market will exist for a particular contract at a particular time. In such
event, it may not be possible to close a futures contract or options
position.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures or an option on a futures
contract can vary from the previous day's settlement price; once that limit
is reached, no trades may be made that day at a price beyond the limit.
Daily price limits do not limit potential losses because prices could move
to the daily limit for several consecutive days with little or no trading,
thereby preventing liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures or options on futures
position due to the absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses. The Fund would continue
to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Fund would continue to be
required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain
cash or securities in a segregated account.
To the extent that the Fund enters into futures contracts, options on
futures contracts, or options on foreign currencies traded on an exchange
regulated by the CFTC, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish those positions (excluding the amount by which options
are "in-the-money" at the time of purchase) will not exceed 5% of the
liquidation value of the Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into. This policy does not limit to 5% the percentage of the Fund's
assets that are at risk in futures contracts and options on futures
contracts.
Foreign Currency Strategies - Special Considerations. The Fund may use
Derivative Instruments on foreign currencies to hedge against movements in
the values of the foreign currencies in which the Fund's securities are
denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of particular
currency when no Derivative Instruments on that currency are available or
such Derivative Instruments are more expensive than certain other Derivative
Instruments. In such cases, the Fund may hedge against price movements in
that currency by entering into transactions using Derivative Instruments on
another currency or a basket of currencies, the values of which Dreyfus
believes will have a high degree of positive correlation to the value of the
currency being hedged. The risk that movements in the price of the
Derivative Instrument will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Derivative Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might
involve substantially larger amounts than those involved in the use of
foreign currency Derivative Instruments, the Fund could be disadvantaged by
having to deal in the odd lot market (generally consisting of transactions
of less than $1 million) for the underlying foreign currencies at prices
that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large transactions
in the interbank market and thus might not reflect odd-lot transactions
where rates might be less favorable. The interbank market in foreign
currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") is a contract to purchase or sell a currency at a
future date. The two parties to the contract set the number of days and the
price. Forward contracts are used as a hedge against future movements in
foreign exchange rates. The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
other foreign currency.
Forward contracts may serve as long hedges -- for example, the Fund may
purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Fund intends to acquire. Forward
contracts may also serve as short hedges -- for example, the Fund may sell a
forward contract to lock in the U.S. dollar equivalent of the proceeds from
the anticipated sale of a security denominated in a foreign currency or from
anticipated dividend or interest payments denominated in a foreign currency.
Dreyfus may seek to hedge against changes in the value of a particular
currency by using forward contracts on another foreign currency or basket of
currencies, the value of which Dreyfus believes will bear a positive
correlation to the value of the currency being hedged.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are
usually entered into on a principal basis, no fees or commissions are
involved. When the Fund enters into a forward contract, it relies on the
counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would result
in the loss of any expected benefit of the transaction.
Buyers and sellers of forward contracts can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Secondary markets generally
do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by negotiating
directly with the counterparty. Thus, there can be no assurance that the
Fund will in fact be able to close out a forward contract at a favorable
price prior to maturity. In addition, in the event of insolvency of the
counterparty, the Fund might be unable to close out a forward contract at
any time prior to maturity. In either event, the Fund would continue to be
subject to market risk with respect to the position, and would continue to
be required to maintain a position in the securities or currencies that are
the subject of the hedge or to maintain cash or securities in a segregated
account.
The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value
of such securities measured in the foreign currency will change after the
forward contract has been established. Thus, the Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.
Swaps, Caps, Collars and Floors. Swap agreements, including interest
rate and currency swaps, caps, collars and floors, may be individually
negotiated and structured to include exposure to a variety of different
types of investments or market factors. Swaps involve two parties
exchanging a series of cash flows at specified intervals. In the case of an
interest rate swap, the parties exchange interest payments based on an
agreed upon principal amount (referred to as the "notional principal
amount"). Under the most basic scenario, Party A would pay a fixed rate on
the notional principal amount to Party B, which would pay a floating rate on
the same notional principal amount to Party A. Depending on their
structure, swap agreements may increase or decrease the Fund's exposure to
long or short-term interest rates (in the U.S. or abroad), foreign currency
values, mortgage securities, corporate borrowing rates, or other factors.
Swap agreements can take many different forms and are known by a variety of
names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
The Fund will set aside cash or appropriate liquid assets to cover its
current obligations under swap transactions. If the Fund enters into a swap
agreement on a net basis (that is, the two payment streams are netted out,
with the Fund receiving or paying, as the case may be, only the net amount
of the two payments), the Fund will maintain cash or liquid assets with a
daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If the Fund enters into a swap
agreement on other than a net basis or writes a cap, collar or floor, it
will maintain cash or liquid assets with a value equal to the full amount of
the Fund's accrued obligations under the agreement.
The most important factor in the performance of swap agreements is the
change in the specific interest rate, currency or other factor(s) that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declines, the value of a swap agreement would likely decline, potentially
resulting in losses.
The Fund will enter into swaps, caps, collars and floors only with
banks and recognized securities dealers believed by Dreyfus to present
minimal credit risks. If there is a default by the other party to such a
transaction, the Fund will have to rely on its contractual remedies (which
may be limited by bankruptcy, insolvency or similar laws) pursuant to the
agreement relating to the transaction.
The Fund understands that it is the position of the staff of the SEC
that assets involved in swap transactions are illiquid and, therefore, are
subject to the limitations on illiquid investments. See "Illiquid
Investments."
Master/Feeder Option. The Company may in the future seek to achieve
the Fund's investment objective by investing all of the Fund's net
investable assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those applicable to the Fund. Shareholders of the Fund will be given at
least 30 days' prior notice of any such investment. Such investment would
be made only if the Company's Board of Directors determines it to be in the
best interest of the Fund and its shareholders. In making that
determination, the Company's Board of Directors will consider, among other
things, the benefits to shareholders and/or the opportunity to reduce costs
and achieve operational efficiency. Although the Fund believes that the
Company's Board of Directors will not approve an arrangement that is likely
to result in higher costs, no assurance is given that risks will be
materially reduced if this option is implemented.
Investment Restrictions
Fundamental. The following fundamental limitations have been adopted
by the Fund. The Fund may not change any of these fundamental investment
limitations without the consent of: (a) 67% or more of the shares present at
a meeting of shareholders duly called if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less. The
Fund may not:
1. Purchase any securities which would cause 25% or more of the value
of the Fund's total assets at the time of such purchase to be invested in
the securities of one or more issuers conducting their principal activities
in the same industry. (For purposes of this limitation, U.S. Government
securities and state or municipal governments and their political
subdivisions are not considered members of any industry.)
2. Borrow money or issue senior securities as defined in the 1940
Act, except that (a) the Fund may borrow money in an amount not exceeding
one-third of the Fund's total assets at the time of such borrowing, and (b)
the Fund may issue multiple classes of shares. The purchase or sale of
options, forward contacts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not be considered
to involve the borrowing of money or issuance of senior securities.
3. Purchase with respect to 75% of the Fund's total assets securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
4. Make loans or lend securities, if as a result thereof more than
one-third of the Fund's total assets would be subject to all such loans.
For purposes of this limitation debt instruments and repurchase agreements
shall not be treated as loans.
5. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate, including mortgage loans, or securities of companies that engage in
the real estate business or invest or deal in real estate or interests
therein).
6. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Fund's investment program may be deemed an
underwriting.
7. Purchase or sell commodities, except that the Fund may enter into
options, forward contracts, and futures contracts, including those related
to indices, and options on futures contracts or indices.
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its investable assets in securities of a
single, open-end management investment company with substantially the same
investment objective, policies, and limitations as the Fund.
Non-fundamental. The Fund has adopted the following additional
non-fundamental investment restrictions. These non-fundamental restrictions
may be changed without shareholder approval, in compliance with applicable
law and regulatory policy.
1. The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days, time deposits with maturities
in excess of seven days, and other securities that are not readily
marketable. For purposes of this limitation, illiquid securities shall not
include commercial paper issued pursuant to Section 4(2) of the Securities
Act of 1933, as amended, and securities that may be resold under Rule 144A
under that Act, provided that the Board of Directors, or its delegate,
determines that such securities are liquid, based upon the trading markets
for the specific security.
2. The Fund will not invest in securities of other investment
companies, except as they may be acquired as part of a merger, consolidation
or acquisition of assets and except to the extent otherwise permitted by the
1940 Act.
3. The Fund will not purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options shall not constitute purchasing securities on
margin.
4. The Fund will not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities
sold short, and provided that transactions in futures contracts and options
are not deemed to constitute selling short.
5. The Fund will not purchase any security while borrowings
representing more than 5% of the Fund's total assets are outstanding.
If a percentage restriction is adhered to at the time of an investment,
a later increase or decrease in such percentage resulting from a change in
the values of assets will not constitute a violation of such restriction,
except as otherwise required by the 1940 Act.
MANAGEMENT OF THE FUND
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from engaging
in the business of underwriting, selling or distributing securities and
prohibits a member bank of the Federal Reserve System from having certain
affiliations with an entity engaged principally in that business. The
activities of Mellon Bank, N.A. ("Mellon Bank") in informing its customers
of, and performing, investment and redemption services in connection with
the Fund, and in providing services to the Fund as custodian, as well as
Dreyfus' investment advisory activities, may raise issues under these
provisions. Mellon Bank has been advised by counsel that the activities
contemplated under these arrangements are consistent with statutory and
regulatory obligations.
Changes in either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as further judicial or administrative decisions or interpretations of
such future statutes and regulations, could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services for its
customers and/or the Fund. If Mellon Bank or Dreyfus were prohibited from
serving the Fund in any of its present capacities, the Board of Directors
would seek an alternative provider(s) of such services.
Directors of the Company
The Company's Board is responsible for the management and supervision
of the Fund. The Board approves all significant agreements between the
Company, on behalf of the Fund, and those companies that furnish services to
the Fund. These companies are as follows:
The Dreyfus Corporation ..................Investment Adviser
Premier Mutual Fund Services, Inc................Distributor
Dreyfus Transfer, Inc.........................Transfer Agent
Mellon Bank...........................Custodian for the Fund
The Company has a Board composed of twelve Directors. The following
lists the Directors and officers and their positions with the Company and
their present and principal occupations during the past five years. Each
Director who is an "interested person" of the Company (as defined in the
1940 Act) is indicated by an asterisk(*). Each of the Directors also serves
as a Trustee of The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Tax-
Free Municipal Funds (collectively, with the Company, the "Dreyfus/Laurel
Funds") and the Dreyfus High Yield Strategies Fund.
o+RUTH MARIE ADAMS. Director of the Company; Professor of English +and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of Phi
Beta Kappa; Trustee, Woods Hole Oceanographic Institution; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 83 years old. Address: 80 Lyme Road, Hanover, New Hampshire
03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Directors and Assistant
Treasurer of the Company; Director and Chairman, Massachusetts Business
Development Corp.; and from November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 81 years old. Address: Massachusetts Business
Development Corp., 50 Milk Street, Boston, Massachusetts 02109.
o+JOSEPH S. DIMARTINO, Director of the Company. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. He is also a director of The Noel Group,
Inc., a venture capital company (for which, from February 1995 until
November 1997, he was Chairman of the Board), The Muscular Dystrophy
Association, HealthPlan Services Corporation, a provider of marketing,
administrative and risk management services to health and other benefit
programs, Carlyle Industries, Inc. (formerly Belding Heminway Company,
Inc.), a button packager and distributor, Century Business Services,
Inc., a provider of various outsourcing functions for small and medium
sized corporations and Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement firm. Mr. DiMartino is also a
Board member of 152 other funds in the Dreyfus Family of Funds. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio
and Bank Portfolio. For more than five years prior to January 1995, he
was President, a director and, until August 24, 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus.
From August 1994 to December 31, 1994, he was a director of Mellon Bank
Corporation. Age: 54 years old. Address: 200 Park Avenue, New York,
New York 10166.
o+JAMES M. FITZGIBBONS. Director of the Company; Director, Lumber Mutual
Insurance Company; Director, Barrett Resources, Inc.; from November
1995 to January 1997, Director, Access Capital Strategic Community
Investment Fund, Inc. - Bank Portfolio. Age: 63 years old. Address:
40 Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Director of the Company; Partner, Reed, Smith, Shaw &
McClay (law firm). From November 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. - Bank
Portfolio. Age: 70 years old. Address: 204 Woodcock Drive,
Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Director of the Company; Director, Calgon Carbon
Corporation; Chairman of the Board and Director, Rexene Corporation
1995-1997 ; Director, Cerex Corporation 1995-1997; Chairman of the
Board and Director, Tetra Technology Corporation 1991-1993; Director,
Medalist Corporation 1992-1993. From 1995 to January 1997, Director,
Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 76 years old. Address: Way
Hallow Road and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Director of the Company; former Director, The Boston
Company, Inc. ("TBC") and Boston Safe Deposit and Trust Company;
President and Chief Executive Officer, Himmel & Co., Inc.; Vice
Chairman, Sutton Place Gourmet, Inc.; Managing Partner, Franklin
Federal Partners. From November 1995 to January 1997, Director, Access
Capital Strategic Community Investment Fund, Inc. - Bank Portfolio.
Age: 52 years old. Address: 625 Madison Avenue, New York, New York
10022.
o*ARCH S. JEFFERY. Director of the Company; Financial Consultant. From
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 81 years old. Address: 1817 Foxcroft Lane, Unit 306, Allison
Park, Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Director of the Company; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc.; from
November 1995 to January 1997, Director, Access Capital Strategic
Community Investment Fund, Inc. - Institutional Investment Portfolio.
Age: 51 years old. Address: 401 Edgewater Place, Wakefield,
Massachusetts 01880.
o+JOHN J. SCIULLO. Director of the Company; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh; Member of Advisory Committee, Decedents
Estates Laws of Pennsylvania; from November 1995 to January 1997,
Director, Access Capital Strategic Community Investment Fund, Inc. -
Institutional Investment Portfolio. Age: 66 years old. Address: 321
Gross Street, Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Director of the Company; Principal, Watson Ventures,
Inc., Director, American Express Centurion Bank; Director,
Harvard/Pilgrim Community Health Plan, Inc.; from November 1995 to
January 1997, Director, Access Capital Strategic Community Investment
Fund, Inc. - Bank Portfolio; Director, Massachusetts Electric Company;
Director, the Hyams Foundation, Inc., prior to February, 1993; Real
Estate Development Project Manager and Vice President, The Gunwyn
Company. Age: 48 years old. Address: 25 Braddock Park, Boston,
Massachusetts 02116-5816.
o+BENAREE PRATT WILEY. Director of the Company; President and CEO of The
Partnership, an organization dedicated to increasing the representation
of African Americans in positions of leadership, influence and decision-
making in Boston, MA; Trustee, Boston College; Trustee, WGBH
Educational Foundation; Trustee, Children's Hospital; Director, The
Greater Boston Chamber of Commerce; Director, The First Albany
Companies, Inc.; from April 1995 to March 1998, Director, TBC, an
affiliate of Dreyfus. Age: 52 years old. Address: 334 Boylston
Street, Suite 400, Boston, Massachusetts.
________________________________
* "Interested person" of the Company, as defined in the 1940 Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
Officers of the Company
#MARGARET W. CHAMBERS. Vice President and Secretary of the Company. Senior
Vice President and General Counsel of Funds Distributor, Inc. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. Age: 38
years old.
#MARIE E. CONNOLLY. President and Treasurer of the Company. President,
Chief Executive Officer, Chief Compliance Officer and a director of the
Premier Mutual Fund Services, Inc. ( the "Distributor") and Funds
Distributor, Inc., the ultimate parent of which is Boston Institutional
Group, Inc. Age: 40 years old.
#DOUGLAS C. CONROY. Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. Age: 28 years old.
#CHRISTOPHER J. KELLEY. Vice President and Assistant Secretary of the
Company. Vice President and Senior Associate General Counsel of Funds
Distributor, Inc. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. Age: 33 years old.
#KATHLEEN K. MORRISEY. Vice President and Assistant Secretary of the
Company. Manager of Treasury Services of Funds Distributor, Inc. From
July 1994 to November 1995, she was a Fund Accountant for Investors
Bank & Trust Company. Age: 25 years old.
#MARY A. NELSON. Vice President and Assistant Treasurer of the Company.
Vice President of the Distributor and Funds Distributor, Inc. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for TBC. Age: 33 years old.
#MICHAEL S. PETRUCELLI. Vice President, Assistant Treasurer and Assistant
Secretary of the Company. Senior Vice President of Funds Distributor,
Inc. From December 1989 through November, 1996, he was employed by GE
Investments where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and
as Director of GE Investment Services. Age: 36 years old.
#STEPHANIE PIERCE. Vice President, Assistant Treasurer and Assistant
Secretary of the Company. Vice President and Client Development
Manager of Funds Distributor, Inc. From April 1997 to March 1998, she
was employed as a Relationship Manager with Citibank, N.A. Age: 29
years old.
#GEORGE A. RIO. Vice President and Assistant Treasurer of the Company.
Executive Vice President and Client Service Director of Funds
Distributor, Inc. From June 1995 to March 1998, he was Senior Vice
President and Senior Key Account Manager for Putnam Mutual Funds. From
May 1994 to June 1995, he was Director of Business Development for
First Data Corporation. From September 1983 to May 1994, he was Senior
Vice President & Manager of Client Services and Director of Internal
Audit at TBC. Age: 43 years old.
#JOSEPH F. TOWER, III. Vice President and Assistant Treasurer of the
Company. Senior Vice President, Treasurer, Chief Financial Officer and
a Director of the Distributor and Funds Distributor, Inc. From 1988 to
August 1994, he was employed by TBC where he held various management
positions in the Corporate Finance and Treasury areas. Age: 35 years
old.
#ELBA VASQUEZ. Vice President and Assistant Secretary of the Company.
Assistant Vice President of Funds Distributor, Inc. From March 1990 to
May 1996, she was employed by U.S. Trust Company of New York, where she
held various sales and marketing positions. Age: 36 years old.
___________________________
# Officer also serves as an officer for other investment companies advised
by Dreyfus, including The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-
Free Municipal Funds and the Dreyfus High Yield Strategies Fund.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
No officer or employee of the Distributor (or of any parent, subsidiary
or affiliate thereof) receives any compensation from the Company for serving
as an officer or Director of the Company. In addition, no officer or
employee of Dreyfus (or of any parent, subsidiary or affiliate thereof)
serves as an officer or Director of the Company. Effective July 1, 1998,
the Dreyfus/Laurel Funds pay each Director/Trustee who is not an "interested
person" of the Company (as defined in the 1940 Act) $40,000 per annum plus
$5,000 per joint Dreyfus/Laurel Funds Board meeting attended, $2,000 for
separate committee meetings attended which are not held in conjunction with
a regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone. The
Dreyfus/Laurel Funds also reimburse each Director/Trustee who is not an
"interested person" of the Company (as defined in the 1940 Act), for travel
and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable
amounts). In the event that there is a joint committee meeting of the
Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000
fee will be allocated between the Dreyfus/Laurel Funds and the Dreyfus High
Yield Strategies Fund.
Prior to July 1, 1998, the Dreyfus/Laurel Funds paid each
Director/Trustee who was not an "interested person" of the Company (as
defined in the 1940 Act), $27,000 per annum (and an additional $25,000 for
the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel Funds)
and $1,000 per joint Dreyfus/Laurel Funds Board meeting attended, plus $750
per joint Dreyfus/Laurel Funds Audit Committee meeting attended, and
reimbursed each such Director/Trustee for travel and out-of-pocket expenses
(the "Former Compensation Structure").
For the fiscal year ended October 31, 1997, the aggregate amount of
fees and expenses received by each current Director (with the exception of
Ms. Wiley, who was not a Director of the Company as of October 31, 1997)
from the Company and all other funds in the Dreyfus Family of Funds for
which such person is a Board member pursuant to the Former Compensation
Structure were as follows:
Total Compensation
From the Company
Aggregate and Fund Complex
Name of Board Compensation Paid to Board
Member From the Company# Member****
Ruth Marie Adams $10,000 $31,500
Francis P. Brennan* $19,833 $63,750
Joseph S. DiMartino** none $517,075***
James M. Fitzgibbons $10,583 $31,500
J. Tomlinson Fort** none none
Arthur L. Goeschel $11,500 $34,500
Kenneth A. Himmel $10,167 $32,500
Arch S. Jeffery** none none
Stephen J. Lockwood $11,167 $33,250
John J. Sciullo $11,167 $32,500
Roslyn M. Watson $11,167 $32,500
____________________________
# Amounts required to be paid by the Company directly to the non-interested
Directors, that would be applied to offset a portion of the management fee
payable to Dreyfus, are in fact paid directly by Dreyfus to the non-
interested Directors. Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $14,973 for the Company.
* Compensation of Francis P. Brennan reflects the $25,000 paid by the
Dreyfus/Laurel Funds to Mr. Brennan to be the Chairman of the Board
pursuant to the Former Compensation Structure.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch S. Jeffery are paid
directly by Dreyfus for serving as Board members of the Company and the
funds in the Dreyfus/Laurel Funds. For the fiscal year ended October 31,
1997, the aggregate amount of fees and expenses received by Joseph S.
DiMartino, J. Tomlinson Fort and Arch S. Jeffery from Dreyfus for serving
as a Board member of the Company were $11,833, $11,833 and $11,500,
respectively, and for serving as a Board member of all funds in the
Dreyfus/Laurel Funds (including the Company) were $33,500, $33,500 and
$34,500, respectively. In addition, Dreyfus reimbursed Messrs. DiMartino,
Fort and Jeffery a total of $4,494 for expenses attributable to the
Company's Board meetings which is not included in the $14,973 amount in
note # above.
*** Actual amount paid for the year ended December 31, 1997.
****The Dreyfus Family of Funds consists of 160 mutual funds.
The officers and Directors of the Company as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of September 15,
1998.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Expenses" and
"Management."
Dreyfus is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Federal
Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Management Agreement. Dreyfus serves as investment manager for the
Fund pursuant to an Investment Management Agreement with the Company dated
April 4, 1994, transferred to Dreyfus as of October 17, 1994 (the
"Management Agreement"). Pursuant to the Management Agreement, Dreyfus
provides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Fund. As investment manager, Dreyfus manages the Fund by
making investment decisions based on the Fund's investment objective,
policies and restrictions. The Management Agreement was approved with
respect to the Fund on July 30, 1998 to continue until April 4, 2000.
Thereafter, the Management Agreement will be subject to review and approval
at least annually by the Board of Directors. The Management Agreement will
continue from year to year provided that a majority of the Directors who are
not interested persons (as defined in the 1940 Act) of the Company or
Dreyfus and either a majority of all Directors or a majority (as defined in
the 1940 Act) of the shareholders of the Fund approve its continuance. The
Company may terminate the Management Agreement upon the vote of a majority
of the Board of Directors or upon the vote of a majority of the Fund's
outstanding voting securities on sixty (60) days' written notice to Dreyfus.
Dreyfus may terminate the Management Agreement upon sixty (60) days' written
notice to the Company. The Management Agreement will terminate immediately
and automatically upon its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of Dreyfus: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; J. David Officer, Vice
Chairman and a director; Ronald P. O'Hanley III, Vice Chairman; William T.
Sandalls, Jr., Senior Vice President and Chief Financial Officer; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Patrice M. Kozlowski,
Vice President-Corporate Communications; Mary Beth Leibig, Vice President-
Human Resources; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting;
Andrew S. Wasser, Vice President-Information services; James Bitetto,
Assistant Secretary; Steven F. Newman, Assistant Secretary; and Mandell L.
Berman, Burton C. Borgelt, Frank V. Cahouet and Richard F. Syron, directors.
Expenses. Under the Management Agreement, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of 1.25% of the value of the Fund's
average daily net assets. Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of the non-interested
directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses. Although Dreyfus does not pay for the fees and
expenses of the non-interested Directors (including counsel fees), Dreyfus
is contractually required to reduce its investment management fee by an
amount equal to the Fund's allocable share of such fees and expenses. From
time to time, Dreyfus may voluntarily waive a portion of the investment
management fees payable by the Fund, which would have the effect of lowering
the expense ratio of the Fund and increasing return to investors. In
addition, the Fund is subject to a distribution plan under which the Fund
spends annually up to .25% of its average daily net assets for distribution
and shareholder servicing activities. See "Distribution Plan." Expenses
attributable to the Fund are charged against the Fund's assets; other
expenses of the Company are allocated among its funds on the basis
determined by the Board, including, but not limited to, proportionately in
relation to the net assets of each fund.
The Distributor. Premier Mutual Fund Services, Inc., located at 60
State Street, Boston, Massachusetts 02109, serves as the Fund's distributor
on a best efforts basis pursuant to an agreement which is renewable
annually. Dreyfus may pay the Distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Distributor may use part or all of such payments
to pay certain banks, securities brokers or dealers and other financial
institutions ("Agents") for these services. The Distributor also acts as
distributor for the other funds in the Dreyfus Family of Funds and for
certain other investment companies.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies,"
"Services for Fund Investors," "Instructions for Regular Accounts," and
"Instructions for IRAs."
General. The minimum initial investment is $2,500, or $1,000 if you are
a client of an Agent that maintains an omnibus account in the Fund and has
made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. However, the minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
The initial investment must be accompanied by the Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, Board members of a fund advised by
Dreyfus, including members of the Company's Board, or the spouse or minor
child of any of the foregoing, the minimum initial investment is $1,000.
For full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited
into their Fund accounts, the minimum initial investment is $50. The Fund
reserves the right to offer Fund shares without regard to minimum purchase
requirements to employees participating in certain qualified or non-
qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form acceptable to
the Fund. The Fund reserves the right to vary further the initial and
subsequent investment minimum requirements at any time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builderr, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant
to the Dreyfus Step Program described under "Shareholder Services." These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You
should be aware, however, that periodic investment plans do not guarantee a
profit and will not protect an investor against loss in a declining market.
Management understands that some Agents may impose certain conditions
on their clients which are different from those described in the Fund's
Prospectus and this SAI, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should
consult your Agent in this regard. See "Distribution Plan."
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by Transfer
Agent or other entity authorized to receive orders on behalf of the Fund. Net
asset value per share is determined as of the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m., New York time), on each day
the New York Stock Exchange is open for business. For purposes of determining
net asset value, options and futures contracts will be valued 15 minutes after
the close of trading on the floor of the New York Stock Exchange. Net asset
value per share is computed by dividing the value of the Fund's net assets
(i.e., the value of its assets less liabilities) by the total number of Fund
shares outstanding. The Fund's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the Company's Board. Certain securities may be
valued by an independent pricing service approved by the Company's Board and are
valued at fair value as determined by the pricing service. For further
information regarding the methods employed in valuing the Fund's investments,
see "Determination of Net Asset Value".
Orders for the purchase of Fund shares received by dealers by the close
of trading on the floor of the New York Stock Exchange on any business day
and transmitted to the Distributor or its designee by the close of its
business day (normally 5:15 p.m., New York time) will be based on net asset
value determined as of the close of trading on the floor of the New York
Stock Exchange on that day. Otherwise, the orders will be based on the next
determined net asset value. It is the dealers' responsibility to transmit
orders so that they will be received by the Distributor or its designee
before the close of its business day. For certain institutions that have
entered into agreements with the Distributor, payment for the purchase of
Fund shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is
not received within three business days after the order is placed, the order
may be canceled and the institution could be held liable for resulting fees
and/or losses.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs or (ii)
such plan's or program's aggregate investment in the Dreyfus Family of Funds
or certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds in
the Dreyfus Family of Funds then held by Eligible Benefit Plans will be
aggregated to determine the fee payable. The Distributor reserves the right
to cease paying these fees at any time. The Distributor will pay such fees
from its own funds, other than amounts received from the Fund, including
past profits or any other source available to it.
Dreyfus TeleTransfer Privilege. You may purchase shares by telephone
through the Dreyfus TeleTransfer Privilege if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. 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 Automated
Clearing House member may be so designated. Dreyfus TeleTransfer purchase
orders may be made at any time. Purchase orders received by 4:00 p.m. New
York time, on any business day that Dreyfus Transfer, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day following such
purchase order. Purchase orders made after 4:00 p.m. New York time, on any
business day the Transfer Agent and the New York Stock Exchange are open for
business, or orders made on Saturday, Sunday or any Fund holiday (e.g., when
the New York Stock Exchange is not open for business), will be credited to
the shareholder's Fund account on the second bank business day following
such purchase order. To qualify to use the Dreyfus TeleTransfer Privilege,
the initial payment for purchase of Fund shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares - Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
In-Kind Purchases. If the following conditions are satisfied, the Fund
may at its discretion, permit the purchase of shares through an "in-kind"
exchange of securities. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus
any cash, must be at least equal to $25,000. Shares purchased in exchange
for securities generally cannot be redeemed for fifteen days following the
exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative net asset value
of the shares purchased and securities exchanged. Securities accepted by
the Fund will be valued in the same manner as the Fund values its assets.
Any interest earned on the securities following their delivery to the Fund
and prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the securities
become the property of the Fund, along with the securities. For further
information about "in-kind" purchases, call 1-800-645-6561.
Share Certificates. Share certificates are issued upon written request
only. No certificates are issued for fractional shares.
DISTRIBUTION PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Expenses."
Fund shares are subject to fees for distribution and shareholder
services.
The SEC has adopted Rule 12b-1 under the 1940 Act (the "Rule")
regulating the circumstances under which investment companies such as the
Company may, directly or indirectly, bear the expenses of distributing their
shares. The Rule defines distribution expenses to include expenditures for
"any activity which is primarily intended to result in the sale of fund
shares." The Rule, among other things, provides that an investment company
may bear such expenses only pursuant to a plan adopted in accordance with
the Rule.
Distribution Plan. Fund shares are subject to a Distribution Plan (the
"Plan") adopted pursuant to the Rule. The Plan allows the Fund to spend
annually up to 0.25% of its average daily net assets to compensate Mellon
Bank and its affiliates (including but not limited to Dreyfus and Dreyfus
Service Corporation) for shareholder servicing activities and the
Distributor for shareholder servicing activities and expenses primarily
intended to result in the sale of Fund shares. The Plan allows the
Distributor to make payments from the Rule 12b-1 fees it collects from the
Fund to compensate Agents that have entered into Agreements with the
Distributor for distribution related services and/or shareholder services.
Under the Agreements, the Agents are obligated to provide distribution
related services with regard to the Fund and/or shareholder services to the
Agent's clients that own Fund shares. The fees are payable pursuant to the
Plan without regard to expenses incurred.
The Fund and the Distributor may suspend or reduce payments under the
Plan at any time, and payments are subject to the continuation of the Fund's
Plan and the Agreements described above. Potential investors should read
the Fund's Prospectus and this SAI in light of the terms governing
Agreements with their Agents.
The Plan provides that a report of the amounts expended under the Plan,
and the purposes for which such expenditures were incurred, must be made to
the Company's Directors for their review at least quarterly. In addition,
the Plan provides that it may not be amended to increase materially the
costs which the Fund may bear for distribution pursuant to the Plan without
approval of the Fund's shareholders, and that other material amendments of
the Plan must be approved by the vote of a majority of the Directors and of
the Directors who are not "interested persons" of the Company or Dreyfus (as
defined in the 1940 Act) and who do not have any direct or indirect
financial interest in the operation of the Plan, cast in person at a meeting
called for the purpose of considering such amendments. The Plan was
approved by the entire Board of Directors and by the Directors who were
neither "interested persons" of the Company nor Dreyfus (as defined in the
1940 Act) and who did not have any direct or indirect financial interest in
the operation of the Plan at a meeting held on July 30, 1998. The Plan is
subject to annual approval by the entire Board of Directors and by the
Directors who are neither interested persons nor have any direct or indirect
financial interest in the operation of the Plan, by vote cast in person at a
meeting called for the purpose of voting on the Plan. The Plan is
terminable at any time by vote of a majority of the Directors who are not
interested persons and have no direct or indirect financial interest in the
operation of the Plan or by vote of the holders of a majority (as defined in
the 1940 Act) of the outstanding shares of the Fund.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies,"
"Services For Fund Investors," "Instructions for Regular Accounts" and
"Instructions for IRAs."
Redemption Fee. The Fund will deduct a redemption fee equal to 1% of
the net asset value of Fund shares redeemed (including redemptions through
the use of the Fund Exchanges service) less than 6 months following the
issuance of such shares. The redemption fee will be deducted from the
redemption proceeds and retained by the Fund.
No redemption fee will be charged on the redemption or exchange of
shares (1) through the Fund's Automatic Withdrawal Plan or Dreyfus Auto-
Exchange Privilege, (2) through accounts that are reflected on the records
of the Transfer Agent as omnibus accounts approved by Dreyfus Service
Corporation, (3) through accounts established by Agents approved by Dreyfus
Service Corporation that utilize the National Securities Clearing
Corporation's networking system, or (4) acquired through the reinvestment of
dividends or capital gain distributions. The redemption fee may be waived,
modified or terminated at any time.
Redemption Through a Selected Dealer. Customers of certain Agents
("Selected Dealers") may make redemption requests to their Selected Dealer.
If the Selected Dealer transmits the redemption request so that it is
received by the Transfer Agent prior to the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m., New York time), the
redemption request will be effective on the day. If a redemption request is
received by the Transfer Agent after the close of trading on the floor of
the New York Stock Exchange, the redemption request will be effective on the
next business day. It is the responsibility of the Selected Dealer to
transmit a request so that it is received in a timely manner. The proceeds
of the redemption are credited to your account with the Selected Dealer.
In addition, the Distributor will accept orders from Selected Dealers
with which it has sales agreements for the repurchase of Fund shares held by
shareholders. Repurchase orders received by dealers by the close of trading
on the floor of the New York Stock Exchange on any business day and
transmitted to the Distributor or its designee prior to the close of its
business day (normally 5:15 p.m., New York time) are effected at the price
determined as of the close of trading on the floor of the New York Stock
Exchange on that day. Otherwise, the Fund shares will be redeemed at the
next determined net asset value. It is the responsibility of the Selected
Dealer to transmit orders on a timely basis. The Selected Dealer may charge
the shareholder a fee for executing the order. This repurchase arrangement
is discretionary and may be withdrawn at any time.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to this Privilege on the next
business day after receipt if the Transfer Agent receives the redemption
request in proper form. Redemption proceeds ($1,000 minimum), will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form, or a correspondent bank if the investor's bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such bank and
usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contracting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. You may request by telephone that
redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an Automated Clearing House member may be designated. Redemption
proceeds will be on deposit in your account at an Automated Clearing House
member bank ordinarily two days after receipt of the redemption request.
Holders of jointly registered Fund or bank accounts may redeem through the
Dreyfus TeleTransfer Privilege for transfer to their bank account not more
than $250,000 within any 30-day period. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Company has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. In the case of
requests for redemptions in excess of such amount, the Company's Board
reserves the right to make payments in whole or in part in securities or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the SEC so that disposal of the
Fund's investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Account Policies" and
"Services for Fund Investors."
Fund Exchanges. Fund shares may be exchanged for shares of certain
other funds advised or administered by Dreyfus. Shares of such other funds
purchased by exchange will be purchased on the basis of relative net asset
value per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or other distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor, or an investor's Agent acting on
the investor's behalf, must give exchange instructions to the Transfer Agent
in writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this Privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent
to act on telephonic instructions (including over The Dreyfus Touchr
automated telephone system) from any person representing himself or herself
to be the investor, or a representative of the investor's Agent, and
reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange.
Exchanges of Fund shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
Except in the case of personal retirement plans, the shares being
exchanged must have a current value of at least $500. To establish a new
account by exchange the shares of the fund being exchanged must have a value
of at least the minimum initial investment required for the fund into which
the exchange is being made.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is available
only for existing accounts. With respect to Fund shares held by a
Retirement Plan, exchanges may be made only between the investor's
Retirement Plan account in one fund and such investor's Retirement Plan
account in another fund. Shares will be exchanged on the basis of relative
net asset value as described above under "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified
if the investor's account falls below the amount designated to be exchanged
under this Privilege. In this case, an investor's account will fall to zero
unless additional investments are made in excess of the designated amount
prior to the next Dreyfus Auto-Exchange transaction. Shares held under IRA
and other retirement plans are eligible for this Privilege. Exchanges of
IRA shares may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and other distributions,
if any, from the Fund in shares of certain other funds in the Dreyfus Family
of Funds of which the investor is a shareholder. Shares of the other funds
purchased pursuant to this Privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and other distributions paid by a fund may be invested
without imposition of a sales load in shares of other
funds that are offered without a sales load.
B. Dividends and other distributions paid by a fund which does
not charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will be
deducted.
C. Dividends and other distributions paid by a fund which
charges a sales load may be invested in shares of other funds sold
with a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the fund from which
dividends or distributions are being swept, without giving effect
to any reduced loads, the difference will be deducted.
D. Dividends and other distributions paid by a fund may be
invested in shares of other funds that impose a contingent
deferred sales charge ("CDSC") and the applicable CDSC, if any,
will be imposed upon redemption of such shares.
Dreyfus Step Program. Dreyfus Step Program enables you to purchase
Fund shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builderr, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a
Dreyfus Step Program account, you must supply the necessary information on
the Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing participation in Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund may
modify or terminate this Program at any time. Investors who wish to
purchase Fund shares through the Dreyfus Step Program in conjunction with a
Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs and IRA
"Rollover Accounts."
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund makes
available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-
working spouse, Roth IRAs, SEP-IRAs, Education IRAs, and IRA "Rollover
Accounts"), and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, 401(k) Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant
is $2,500 with no minimum for subsequent purchases. The minimum initial
investment is generally $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
SEP-IRAs, and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum for
subsequent purchases.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
Additional Information About Purchases, Exchanges and Redemptions. The
Fund is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculation on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive
to efficient portfolio management and, consequently, can be detrimental to
the Fund's performance and its shareholders. Accordingly, if the Fund's
management determines that an investor is engaged in excessive trading, the
Fund, with or without prior notice, may temporarily or permanently terminate
the availability of Fund Exchanges, or reject in whole or part any purchase
or exchange request, with respect to such investor's account. Such
investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges
out of the Fund during any calendar year or who makes exchanges that appear
to coincide with an active market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control
will be considered as one account for purposes of determining a pattern of
excessive trading. In addition, the Fund may refuse or restrict purchase or
exchange requests by any person or group if, in the judgment of the Fund's
management, the Fund would be unable to invest the money effectively in
accordance with its investment objective and policies or could otherwise be
adversely affected or if the Fund receives or anticipated receiving
simultaneous orders that may significantly affect the Fund (e.g., amounts
equal to 1% or more of the Fund's total assets). If an exchange request is
refused, the Fund will take no other action with respect to the shares until
it receives further instructions from the investor. The Fund may delay
forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus Auto-
Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange
requests based on their separate components - redemption orders with a
simultaneous request to purchase the other fund's shares. In such a case,
the redemption request would be processed at the Fund's next determined net
asset value but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the proceeds
of the redemption, which may result in the purchase being delayed.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Account Policies."
Valuation of Portfolio Securities. Each Fund's securities are valued
at the last sale price on the securities exchange or national securities
market on which such securities primarily are traded. Securities not listed
on an exchange or national securities market, or securities in which there
were no transactions, are valued at the average of the most recent bid and
asked prices. Bid price is used when no asked price is available. Any
assets or liabilities initially expressed in terms of foreign currency will
be translated into U.S. dollars at the midpoint of the New York interbank
market spot exchange rate as quoted on the day of such translation or, if no
such rate is quoted on such date, such other quoted market exchange rate as
may be determined to be appropriate by Dreyfus. If the Fund has to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place contemporaneously with
the determination of prices of certain of the Fund's securities. Short-term
investments are carried at amortized cost, which approximates value.
Expenses and fees, including the management fee and fees pursuant to the
Plan, are accrued daily and taken into account for the purpose of
determining the net asset value of the Fund's shares.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or which are not valued by a
pricing service approved by the Board of Directors, are valued at fair value
as determined in good faith by the Board of Directors. The Board of
Directors will review the method of valuation on a current basis. In making
their good faith valuation of restricted securities, the Board Members
generally will take the following factors into consideration: restricted
securities which are, or are convertible into, securities of the same class
of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This
discount will be revised periodically by the Board if it believes that the
discount no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a public
market exists usually will be valued initially at cost. Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is currently scheduled to be closed are: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled " Distributions and
Taxes."
The term "regulated investment company" does not imply the supervision
of management or investment practices or policies by any government agency.
General. It is expected that the Fund will qualify for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended ("Code") so long as such qualification is in the best
interests of its shareholders. To qualify for treatment as a RIC under the
Code, the Fund -- which is treated as a separate corporation for federal tax
purposes -- (1) must distribute to its shareholders each year at least 90%
of its investment company taxable income (generally consisting of net
investment income, net short-term capital gains and net gains from certain
foreign currency transactions) ("Distribution Requirement"), (2) must derive
at least 90% of its annual gross income from specified sources ("Income
Requirement") and (3) must meet certain asset diversification and other
requirements.
Any dividend or other distribution paid shortly after an investor's
purchase of shares may have the effect of reducing the net asset value of
the shares below the cost of his or her investment. Such a dividend or
other distribution would be a return on investment in an economic sense,
although taxable as stated in the Fund's Prospectus. In addition, if a
shareholder sells shares of the Fund held for six months or less and
received a capital gain distribution with respect to those shares, any loss
incurred on the sale of those shares will be treated as a long-term capital
loss to the extent of the capital gain distribution received.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a
date in any of those months are deemed to have been paid by the Fund and
received by the shareholders on December 31 of a year if the distributions
are paid by the Fund during the following January. Accordingly, those
distributions will be taxed to shareholders for the year in which that
December 31 falls.
A portion of the dividends paid by the Fund, whether received in cash
or reinvested in additional Fund shares, may be eligible for the dividends-
received deduction allowed to corporations. The eligible portion may not
exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
federal alternative minimum tax.
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that
would reduce the yield and/or return on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate
these foreign taxes, however, and many foreign countries do not impose taxes
on capital gains in respect of investments by foreign investors.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own,
directly, indirectly, or constructively, at least 10% of that voting power)
as to which the Fund is a U.S. shareholder -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or
(2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, the Fund will
be subject to federal income tax on a portion of any "excess distribution"
received on the stock of a PFIC or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a dividend to its shareholders. The balance
of the PFIC income will be included in the Fund's investment company taxable
income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each
year its pro rata share of the QEF's annual ordinary earnings and net
capital gain (i.e., the excess of net long-term capital gain over net short-
term capital loss) -- which likely would have to be distributed by the Fund
to satisfy the Distribution Requirement and avoid imposition of the 4%
excise tax mentioned in the Prospectus under "Dividends, Other Distributions
and Taxes" ("Excise Tax") -- even if those earnings and gain were not
received by the Fund from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC. "Marking-
to-market," in this context, means including in ordinary income each taxable
year the excess, if any, of the fair market value of a PFIC's stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not
capital, loss) the excess, if any, of its adjusted basis in PFIC stock over
the fair market value thereof as of the taxable year-end, but only to the
extent of any net mark-to-market gains with respect to that stock included
by the Fund for prior taxable years. The Fund's adjusted basis in each
PFIC's stock with respect to which it makes this election will be adjusted
to reflect the amounts of income included and deductions taken under the
election.
Foreign Currency, Futures, Forwards and Hedging Transactions. Gains
from the sale or other disposition of foreign currencies (except certain
gains therefrom that may be excluded by future regulations), and gains from
options, futures and forward contracts derived by the Fund with respect to
its business of investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gains and
losses from the disposition of foreign currencies and certain foreign-
currency-denominated instruments (including debt instruments and financial
forward and futures contracts and options) may be treated as ordinary income
or loss under Section 988 of the Code. In addition, all or a portion of any
gain realized from the disposition of certain market discount bonds and from
engaging in "conversion transactions" that would otherwise be treated as
capital gain may be treated as ordinary income. "Conversion transactions"
are defined to include certain option and straddle investments.
Under Section 1256 of the Code, any gain or loss realized by the Fund
with respect to certain future and forward contracts ("Section 1256
Contracts") may be treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. In addition, any Section 1256 Contracts
remaining unexercised at the end of the Fund's taxable year will be treated
as sold for their then fair market value (a process known as "marking-to-
market"), resulting in additional gain or loss to the Fund characterized in
the manner described above. The 60% portion treated as long-term capital
gain will qualify for the reduced maximum tax rates on non-corporate
taxpayers' net capital gain enacted by the Taxpayer Relief Act of 1997 --
20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on capital assets held for more than 18 months -- instead of the 28% rate in
effect before that legislation, which now applies to gain recognized on
capital assets held for more than one year but not more than 18 months.
Offsetting positions held by the Fund involving certain options, future
or forward contracts may constitute "straddles," which are defined to
include "offsetting positions" in actively traded personal property. All or
a portion of any capital gain from certain straddle transactions may be
recharacterized as ordinary income. If the Fund were treated as entering
into a straddle by reason of its engaging in certain options, future or
forward contract transactions, the straddle would be characterized as a
"mixed straddle" if at least one of the positions comprising a part of the
straddle was a Section 1256 Contract. The Fund may make one or more
elections with respect to mixed straddles; depending on which election is
made, if any, the results to the Fund may differ. If no election is made,
then to the extent the straddle and conversion transactions rules apply to
positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the straddle rules, short-term capital loss on
straddle positions may be recharacterized as long-term capital loss, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward
contract, or short sale) with respect to any stock, debt instrument (other
than "straight debt"), or partnership interest the fair market value of
which exceeds its adjusted basis -- and enters into a "constructive sale" of
the same or substantially similar property, the Fund will be treated as
having made an actual sale thereof, with the result that gain will be
recognized at that time. A constructive sale generally consists of a short
sale, an offsetting notional principal contract, or futures or forward
contract entered into by the Fund or a related person with respect to the
same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of
the underlying property or substantially similar property will be deemed a
constructive sale.
Investment by the Fund in securities issued or acquired at a discount
(for example, zero coupon securities) could, under special tax rules, affect
the amount and timing of distributions to shareholders by causing the Fund
to recognize income prior to the receipt of cash payments. For example, the
Fund could be required to take into gross income annually a portion of the
discount (or deemed discount) at which the securities were issued and could
need to distribute such income to satisfy the Distribution Requirement and
to avoid the Excise Tax. In such case, the Fund may have to dispose of
securities it might otherwise have continued to hold in order to generate
cash to satisfy these requirements.
Foreign Currency Gains and Losses. Gains and losses attributable to
fluctuations in foreign currency exchange rates that occur between the time
the Fund accrues dividends, interest or other receivables, or expenses or
other liabilities, denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on the disposition
of a debt security denominated in a foreign currency, or of an option or
forward contract on a foreign currency, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security, option or contract and the date of disposition
also are treated as ordinary income or loss. These gains or losses may
increase or decrease the amount of the Fund's investment company taxable
income to be distributed to its shareholders.
State and Local Taxes. Depending upon the extent of the Fund's
activities in states and localities in which it is deemed to be conducting
business, it may be subject to the tax laws thereof. Shareholders are also
advised to consult their tax advisers concerning the application of state
and local taxes to them.
Foreign Shareholders - U.S. Federal Income Taxation. U.S. federal
income taxation of a shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or estate, a foreign
corporation or a foreign partnership (a "foreign shareholder") depends on
whether the income from the Fund is "effectively connected" with a U.S.
trade or business carried on by the shareholder, as discussed generally
below. Special U.S. federal income tax rules that differ from those
described below may apply to certain foreign persons who invest in the Fund,
such as a foreign shareholder entitled to claim the benefits of an
applicable tax treaty. Foreign shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of
an investment in the Fund.
Foreign Shareholders - Income Not Effectively Connected. Dividends
distributed to a foreign shareholder whose ownership of Fund shares is not
effectively connected with a U.S. trade or business carried on by the
foreign shareholder generally will be subject to U.S. federal withholding
tax of 30% (or lower treaty rate). Capital gains realized by foreign
shareholders on the sale of Fund shares and distributions to them of net
capital gain generally will not be subject to U.S. federal income tax unless
the foreign shareholder is a non-resident alien individual and is physically
present in the United States for more than 182 days during the taxable year.
In the case of certain foreign shareholders, the Fund may be required to
withhold U.S. federal income tax at the rate of 31% of capital gain
distributions and of the gross proceeds from a redemption of Fund shares
unless the shareholder certifies his or her foreign status to the Fund.
Foreign Shareholders - Effectively Connected Income. If a foreign
shareholder's ownership of Fund shares is effectively connected with a U.S.
trade or business carried on by the foreign shareholder, then all
distributions to that shareholder and any gains realized by that shareholder
on the disposition of the Fund shares will be subject to U.S. federal income
tax at the graduated rates applicable to U.S. citizens and domestic
corporations, as the case may be. Foreign shareholders also may be subject
to the branch profits tax.
Foreign Shareholders - Estate Tax. Foreign individuals generally are
subject to federal estate tax on their U.S. situs property, such as shares
of the Fund, that they own at the time of their death. Certain credits
against that tax and relief under applicable tax treaties may be available.
PORTFOLIO TRANSACTIONS
All portfolio transactions of the Fund are placed on behalf of the Fund
by Dreyfus. Debt securities purchased and sold by the Fund are generally
traded on a net basis (i.e., without commission) through dealers acting for
their own account and not as brokers, or otherwise involve transactions
directly with the issuer of the instrument. This means that a dealer (the
securities firm or bank dealing with the Fund) makes a market for securities
by offering to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. Other portfolio
transactions may be executed through brokers acting as agent. The Fund will
pay a spread or commissions in connection with such transactions. Dreyfus
uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the Fund and at spreads and commission
rates, if any, which are reasonable in relation to the benefits received.
Dreyfus also places transactions for other accounts that it provides with
investment advice.
Brokers and dealers involved in the execution of portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. In selecting brokers
or dealers, Dreyfus will consider various relevant factors, including, but
not limited to, the size and type of the transaction; the nature and
character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any spreads (or commissions, if
any). Dreyfus may use research services of and place brokerage transactions
with broker-dealers affiliated with it or Mellon Bank if the commissions are
reasonable, fair and comparable to commissions charged by non-affiliated
brokerage firms for similar services. Any spread, commission, fee or other
remuneration paid to an affiliated broker-dealer is paid pursuant to the
Company's procedures adopted in accordance with Rule 17e-1 under the 1940
Act.
Brokers or dealers may be selected who provide brokerage and/or
research services to the Fund and/or other accounts over which Dreyfus or
its affiliates exercise investment discretion. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance
and settlement).
The receipt of research services from broker-dealers may be useful to
Dreyfus in rendering investment management services to the Fund and/or its
other clients; and, conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of other clients of
Dreyfus may be useful to these organizations in carrying out their
obligations to the Fund. The receipt of such research services does not
reduce these organizations' normal independent research activities; however,
it enables these organizations to avoid the additional expenses which might
otherwise be incurred if these organizations were to attempt to develop
comparable information through their own staffs.
Although Dreyfus manages other accounts in addition to the Fund,
investment decisions for the Fund are made independently from decisions made
for these other accounts. It sometimes happens that the same security is
held by more than one of the accounts managed by Dreyfus. Simultaneous
transactions may occur when several accounts are managed by the same
investment manager, particularly when the same investment instrument is
suitable for the investment objective of more than one account.
When more than one account is simultaneously engaged in the purchase or
sale of the same investment instrument, the prices and amounts are allocated
in accordance with a formula considered by Dreyfus to be equitable to each
account. In some cases this system could have a detrimental effect on the
price or volume of the investment instrument as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. It is
the present opinion of the Directors that the desirability of retaining the
Dreyfus as investment manager to the Fund outweighs any disadvantages that
may be said to exist from exposure to simultaneous transactions.
Portfolio Turnover. The portfolio turnover rate for the Fund is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases and sales of securities whose
maturities at the time of acquisition were one year or less) by the monthly
average value of securities in the Fund during the year. Portfolio turnover
may vary from year to year as well as within a year. In periods in which
extraordinary market conditions prevail, Dreyfus will not be deterred from
changing the Fund's investment strategy as rapidly as needed, in which case
higher turnover rates can be anticipated. A higher rate of portfolio
turnover involves correspondingly greater brokerage commissions and other
expenses that must be borne directly by the Fund and, thus, indirectly by
its shareholders. In addition, a high rate of portfolio turnover may result
in the realization of larger amounts of short-term capital gains that, when
distributed to the Fund's shareholders, are taxable to them as ordinary
income. Nevertheless, securities transactions for the Fund will be based
only upon investment considerations and will not be limited to any other
considerations when Dreyfus deems it appropriate to make changes in the
Fund's assets.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Past Performance."
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and other distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
Total return is calculated by subtracting the amount of the Fund's net
asset value per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and other distributions during the period), and
dividing the result by the net asset value per share at the beginning of the
period.
Performance information for the Fund may be compared, in reports and
promotional literature, to indexes including, but not limited to: (i) the
Standard & Poor's Smallcap 600 Index, the Standard & Poor's 500 Composite
Stock Price Index, the Russell 2000 Value Index, the Russell 2000 Growth
Index, or the Russell 2000 Stock Index; (ii) the Dow Jones Industrial
Average; (iii) other appropriate unmanaged domestic or foreign indices of
performance of various types of investments so that investors may compare
the Fund's results with those of indices widely regarded by investors as
representative of the securities markets in general; (iv) other groups of
mutual funds tracked by Lipper Analytical Services, Inc., a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or
other criteria; (v) the Consumer Price Index (a measure of inflation) to
assess the real rate of return from an investment in the Fund; and (vi)
products managed by a universe of money managers with similar performance
objectives. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions or administrative and management costs
and expenses.
From time to time, advertising materials for the Fund may refer to, or
include commentary by, the Fund's primary portfolio manager relating to his
or her investment strategy, the asset growth of the Fund, current or past
business, political, economic or financial conditions and other matters of
general interest to investors. From time to time, advertising materials for
the Fund may refer to the Fund's quantitative disciplined approach to stock
market investing and the number of stocks analyzed by Dreyfus.
From time to time, Fund advertisements may include statistical data or
general discussions about the growth and development of Dreyfus Retirement
Services (in terms of new customers, assets under management, market share,
etc.) and its presence in the defined contribution plan market.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "THE FUND".
The Company has an authorized capitalization of 25 billion shares of
$0.001 par value stock. Each Fund share has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully paid and non-
assessable. The Fund is one of nineteen portfolios of the Company. Fund
shares are of one class and have equal rights as to dividends and in
liquidation. Fund shares have no preemptive or subscription rights and are
freely transferable.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Company to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of Board
members 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 Board
member from office. Shareholders may remove a Board member by the
affirmative vote of a majority of the Company's outstanding voting shares.
In addition, the Board will call a meeting of shareholders for the purpose
of electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they
vote separately by portfolio.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
The Rule exempts the selection of independent accountants and the election
of Board members from the separate voting requirements of the Rule.
The Fund will send annual and semi-annual financial statements to all
of its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Company, Dreyfus Transfer, Inc. arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, Dreyfus Transfer, Inc. receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month, and is reimbursed for certain
out-of-pocket expenses.
Mellon Bank, the parent of Dreyfus, located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's investments.
Under a custody agreement with the Company, Mellon Bank holds the Fund's
portfolio securities and keeps all necessary accounts and records. Dreyfus
Transfer, Inc. and Mellon Bank, as custodian, have no part in determining
the investment policies of the Fund or which securities are to be purchased
or sold by the Fund.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C. 20036-1800, has passed upon the legality of the
shares offered by the Prospectus and this SAI.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, was
appointed by the Directors to serve as the Fund's independent auditors for
the period ending October 31, 1998, providing audit services including (1)
examination of the annual financial statements, (2) assistance, review and
consultation in connection with SEC filings and (3) review of the annual
federal income tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
DREYFUS DISCIPLINED SMALLCAP STOCK FUND ( in organization)
Statement of Assets and Liabilities September 29, 1998
Value
ASSETS Cash $ 5,000,000
NET ASSETS Represented by paid-in capital $ 5,000,000
Net Asset Value Per Share
Net Assets $5,000,000
Shares Outstanding 400,000
NET ASSET VALUE PER SHARE $12.50
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company and operates as a series company currently
offering nineteen series including Dreyfus Disciplined Smallcap Stock Fund
(the "Fund"). The Fund's investment objective is to achieve investment
returns that surpass the Standard & Poor's SmallCap 600(R) Index by investing
in a blended portfolio of growth and value stocks of small capitalization
companies. The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment adviser . Dreyfus is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares, which are sold to the public without a
sales charge. The Company is authorized to issue 25 billion shares of
$0.001 par value stock.
Pursuant to an Investment Management Agreement with the Company on
behalf of the Fund, Dreyfus provides or arranges for one or more third
parties and/or affiliates to provide investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. Dreyfus
also directs the investments of the Fund in accordance with its investment
objective, policies and limitations. For these services, the Fund is
contractually obligated to pay Dreyfus a fee, calculated daily and paid
monthly, at the annual rate of 1.25% of the value of the Fund's average
daily net assets. Out of its fee, Dreyfus pays all of the expenses of the
Fund, except brokerage fees, taxes, interest, commitment fees, Rule 12b-1
fees, fees and expenses of non-interested Directors (including counsel fees)
and extraordinary expenses. In addition, Dreyfus is contractually required
to reduce its investment management fee by an amount equal to the Fund's
allocable portion of fees and expenses of the non-interested Directors
(including counsel). Each Director receives $40,000 per year, $5,000 for
each Board meeting attended, $2,000 for separate committee meetings attended
which are not held in conjunction with a regularly scheduled board meeting,
$500 for board meetings and separate committee meetings attended that are
conducted by telephone, and reimbursement for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional 25% of such
compensation (with the exception of reimbursable amounts). These fees
pertain to series of the following investment companies: The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The
Dreyfus/Laurel Funds Trust. These fees and expenses are charged and
allocated to each series based on net assets. Amounts required to be paid
by the Company directly to the non-interested Directors, that would be
applied to offset a portion of the management fee payable to Dreyfus,
are in fact paid directly by Dreyfus to the non-interested Directors.
Dreyfus will bear all Organizational costs.
Under the Fund's Distribution Plan (the "Plan") adopted pursuant to
Rule 12b-1 under the Act, the Fund may pay annually up to .25% of the value
of the Fund's average daily net assets to compensate Mellon Bank, N.A., and
its affiliates (including but not limited to Dreyfus and Dreyfus Service
Corporation) for shareholder servicing activities and the Distributor for
shareholder servicing activities and expenses primarily intended to result
in the sale of Fund shares.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of the majority of
those Directors who are not "interested persons" of the Company and who have
no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan.
A 1% redemption fee is charged and retained by the Fund on certain
redemptions and exchanges of Fund shares occurring within six months of the
issuance of the shares.
Independent Auditors' Report
The Board of Directors and Shareholders
The Dreyfus Disciplined Smallcap Stock Fund
We have audited the accompanying statement of assets and liabilities of Dreyfus
Disciplined Smallcap Stock Fund of the Dreyfus/Laurel Funds, Inc. as of
September 29, 1998 (in organization). This financial statement is the
responsibility of the Fund's management. Out responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit of a statement of assets and liabilities
includes examining, on a test basis, evidence supporting the amounts and
disclosures in that statement of assets and liabilities. An audit of a
statement of assets and liabilities also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit of the statement of assets and liabilities provides a reasonable basis for
our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Dreyfus
Disciplined Smallcap Stock Fund of the Dreyfus/Laurel Funds, Inc. as of
September 29, 1998, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
September 30, 1998
APPENDIX
DESCRIPTION OF STANDARD & POOR'S, MOODY'S,
FITCH IBCA, AND DUFF RATINGS
Standard & Poor's (S&P)
Bond Ratings
AAA An obligation rated `AAA' has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated `AA' differs from the highest rated issues
only in small degree. The obligors capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated `A' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated `BBB' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within
the major rating categories, except in the AAA (Prime Grade) category.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
sign (+) designation.
Moody's
Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally
are referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which suggest
a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as medium grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment charac
teristics and in fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Fitch IBCA, Inc, ("Fitch IBCA")
Short-Term Ratings
Fitch IBCA's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch IBCA's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated `F-1+'.
Duff & Phelps Inc. ("Duff")
Commercial Paper Ratings
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor.
THE DREYFUS/LAUREL FUNDS, INC.
(formerly, The Laurel Funds, Inc.)
PART C
OTHER INFORMATION
Item 23. Exhibits
A(1) Articles of Incorporation dated July 31, 1987. Incorporated by reference
to Post- Effective Amendment No. 41 to the Registrant's Registration
Statement on Form N-1A ("Post-Effective Amendment No. 41").
A(2) Articles Supplementary dated October 15, 1993 increasing authorized
capital stock. Incorporated by reference to Post-Effective Amendment No.
39 to the Registrant's Registration Statement on Form N-1A ("Post
Effective Amendment No. 39").
A(3) Articles of Amendment dated March 31, 1994. Incorporated by
reference to Post-Effective Amendment No. 41.
A(4) Articles Supplementary dated March 31, 1994 reclassifying shares.
Incorporated by reference to Post-Effective Amendment No. 41.
A(5) Articles Supplementary dated May 24, 1994 designating and classifying
shares. Incorporated by reference to Post-Effective Amendment No. 39.
A(6) Articles of Amendment dated October 17, 1994. Incorporated by reference
to Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A ("Post-Effective Amendment No. 31").
A(7) Articles Supplementary dated December 19, 1994 designating classes.
Incorporated by reference to Post-Effective Amendment No. 32 to the
Registrant's Registration Statement on Form N-1A ("Post-Effective
Amendment No. 32").
A(8) Articles of Amendment dated June 9, 1995. Incorporated by reference to
Post-Effective Amendment No. 39.
A(9) Articles of Amendment dated August 30, 1995. Incorporated by reference to
Post-Effective Amendment No. 39.
A(10) Articles Supplementary dated August 31, 1995 reclassifying shares.
Incorporated by reference to Post-Effective Amendment No. 39.
A(11) Articles of Amendment dated October 31, 1995 designating and classifying
shares. Incorporated by reference to Post-Effective Amendment No. 41.
A(12) Articles of Amendment dated November 22, 1995 designating and
reclassifying shares. Incorporated by reference to Post-Effective
Amendment No. 41.
A(13) Articles of Amendment dated July 15, 1996. Incorporated by reference to
Post-Effective Amendment No. 53 to the Registrant's Registration Statement
on Form N-1A ("Post-Effective Amendment No. 53").
A(14) Articles of Amendment dated February 27, 1997. Incorporated by reference
to Post-Effective Amendment No. 53.
A(15) Articles of Amendment dated August 13, 1997. Incorporated by reference to
Post-Effective Amendment No. 53.
A(16) Articles of Amendment dated October 30, 1997. Incorporated by reference
to Post-Effective Amendment No. 56 to the Registrant's Registration
Statement on Form N-1A.
A(17) Articles of Amendment dated March 25, 1998. Incorporated by reference to
Post-Effective Amendment No. 62 to the Registrant's Registration Statement
on Form N-1A.
A(18) Articles of Amendment dated July 30, 1998. Filed herewith.
B Bylaws. Incorporated by reference to Pre-Effective Amendment No. 53
C Specimen security. Incorporated by reference to Post-Effective
Amendment No. 54 to the Registrant's Registration Statement on Form N-1A.
D(1) Form of Investment Management Agreement between Mellon Bank, N.A. and the
Registrant. Incorporated by reference to Post-Effective Amendment No. 41.
D(2) Assignment and Assumption Agreement among Mellon Bank, N.A., The Dreyfus
Corporation and the Registrant (relating to Investment Management
Agreement). Incorporated by reference to Post-Effective Amendment No. 31.
D(3) Amended Exhibit A to Investment Management Agreement between Mellon Bank,
N.A. and the Registrant. Filed herewith.
D(4) Sub-Investment Advisory Agreement between The Dreyfus Corporation and Fayez
Sarofim & Co. with respect to Dreyfus Tax-Smart Growth Fund. Filed
herewith.
E(1) Distribution Agreement between Premier Mutual Fund Services,
Inc. and the Registrant. Incorporated by reference to Post-Effective
Amendment No. 31.
E(2) Amended Exhibit A to Distribution Agreement between and Premier Mutual Fund
Services, Inc. and the Registrant. Filed herewith.
F Not Applicable.
G(1) Form of Custody Agreement between the Registrant and Mellon Bank, N.A.
Incorporated by reference to Post-Effective Amendment No. 41.
G(2) Sub-Custodian Agreement between Mellon Bank, N.A. and Boston Safe Deposit
and Trust Company. Filed herewith.
H Not Application.
I(1) Opinion of counsel. Incorporated by reference to the Registration
Statement and to Post-Effective Amendment No. 32 and Post-Effective
Amendment No. 56.
I(2) Opinion of counsel relating to the addition of Dreyfus SmallCap Stock
Fund and Dreyfus Tax-Smart Growth Fund Series. Filed herewith.
I(3) Consent of Counsel. Filed herewith.
J(1) Consent of Independent Auditors for Dreyfus Tax-Smart Growth Fund.
Filed herewith.
J(2) Consent of Independent Auditors for Dreyfus Disciplined Smallcap
Stock Fund. Filed herewith.
K Not Applicable.
L Letter of Investment Intent. Incorporated by reference to the
Registration Statement.
M(1) Restated Distribution Plan (relating to Investor Shares and Class A
Shares) for Dreyfus Bond Market Index Fund, Dreyfus International Equity
Allocation Fund, Dreyfus Institutional Government Money Market Fund,
Dreyfus Institutional Prime Money Market Fund, Dreyfus Institutional U.S.
Treasury Money Market Fund, Dreyfus Money Market Reserves, Dreyfus
Municipal Reserves, Dreyfus BASIC S&P 500 Stock Index Fund, Dreyfus U.S.
Treasury Reserves, Dreyfus Premier Balanced Fund, Dreyfus Premier Limited
Term Income Fund, Dreyfus Premier Small Company Stock Fund and Dreyfus
Disciplined Intermediate Bond Fund. Incorporated by reference to Post-
Effective Amendment No. 31.
M(2) Restated Distribution Plan for Dreyfus Disciplined Stock Fund
Incorporated by reference to Post-Effective Amendment No. 61 to the
Registrant's Registration Statement ("Post-Effective Amendment No. 61").
M(3) Form of Distribution and Service Plans (relating to Class B Shares
and Class C Shares). Incorporated by reference to Post-Effective Amendment
No. 32.
M(4) Distribution Plan for Dreyfus Tax-Smart Growth Fund and Dreyfus Disciplined
Smallcap Stock Fund. Filed herewith.
N Not Applicable
O Rule 18f-3 Plans. Incorporated by reference to Post-Effective Amendment
No. 61.
Other Exhibits
(1) Powers of Attorney of the Directors dated June 15, 1998. Incorporated
by reference to Post-Effective Amendment No. 65.
(2) Power of Attorney of Marie E. Connolly dated July 6, 1998. Incorporated
by reference to Post-Effective Amendment No. 65.
Item 24. Persons Controlled by or Under Common Control with Registrant
Not Applicable.
Item 25. Indemnification
-------------------------
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been a Director or officer of the
Registrant (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his
being or having been a Covered Person and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Registrant or
its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Funds; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Directors who are
neither interested persons of the Registrant nor are parties to
the matter based upon a review of readily available facts (as
opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Directors, or by
independent counsel.
(c) The Registrant may purchase and maintain insurance on behalf of any
Covered Person against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or
not the Registrant would have the power to indemnify him against such
liability. The Registrant may not acquire or obtain a contract for
insurance that protects or purports to protect any Covered Person against
any liability to the Registrant or its shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) above may be paid by the appropriate Series from time to
time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him
to the applicable Series if it is ultimately determined that he is not
entitled to indemnification hereunder; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Registrant is insured against losses arising out of
any such advance payments or (iii) either a majority of the Directors who
are neither interested persons of the funds nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that such Covered Person will be
found entitled to indemnification hereunder.
Item 26. Business and Other Connections of the Investment Adviser
Investment Adviser -- The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise a
financial service organization whose business consists primarily of
providing investment management services as the investment adviser, manager
and distributor for sponsored investment companies registered under the
Investment Company Act of 1940 and as an investment adviser to institutional
and individual accounts. Dreyfus also serves as sub-investment adviser to
and/or administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves primarily as a
registered broker-dealer of shares of investment companies sponsored by
Dreyfus and of other investment companies for which Dreyfus acts as
investment adviser, sub-investment adviser or administrator. Dreyfus
Investment Advisors, Inc., another wholly-owned subsidiary, provides
investment management services to various pension plans, institutions and
individuals.
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
W. KEITH SMITH Senior Vice Chairman:
Chairman of the Mellon Bank, N.A.*;
Board President and Director:
The Bridgewater Land Co., Inc.**;
Mellon Preferred Capital Corporation**;
TBC Securities Co., Inc.**;
Wellington-Medford II Properties, Inc.**;
Chairman, President and Chief Executive Officer:
Shearson Summit Euromanagement, Inc.*;
Shearson Summit EuroPartners, Inc.*;
Shearson Summit Management, Inc.*;
Shearson Summit Partners, Inc.*;
Shearson Venture Capital, Inc.*;
Chairman and Chief Executive Officer:
The Boston Company, Inc.**;
Boston Safe Deposit and Trust Company**;
Boston Group Holdings, Inc.**;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
The Boston Company Asset Management, Inc.**;
Mellon Europe Limited
London, England;
Mellon Global Investing Corp.*;
Mellon Accounting Services, Inc.*;
MGIC-UK Ltd.;
Mellon Capital Management Corporation***;
Chairman:
Mellon Financial Company*;
Buck Consultants, Inc.
1 Pennsylvania Plaza, 29th Floor
New York, New York 10019;
Director and Vice Chairman:
Mellon Financial Services Corporation*;
Mellon Bank Corporation*;
Trustee:
Laurel Capital Advisors, LLP*;
Mellon Equity Associates, LLP*;
Mellon Bond Associates, LLP*;
Past Director:
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
W. KEITH SMITH Past Trustee:
Chairman of the Board Franklin Portfolio Associates Trust
(continued) 2 International Place, 22nd Floor
Boston, MA 02110
MANDELL L. BERMAN Real estate consultant and private investor:
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
BURTON C. BORGELT Director:
Director Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880;
Mellon Bank Corporation*;
Mellon Bank, N.A.*
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation*;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Alleghany Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067;
Past Chairman, President and Chief Executive Officer:
Mellon Bank, N.A.*
STEPHEN E. CANTER Chairman and President:
Vice Chairman, Dreyfus Investment Advisors, Inc.****;
Chief Investment Director:
Officer, and a The Dreyfus Trust Company+;
Director Acting Chief Executive Officer:
Founders Asset Management, Inc.
2930 E. 3rd Avenue
Denver, CO 80206
CHRISTOPHER M. CONDRON President and Chief Operating Officer:
President, Chief Mellon Bank, N.A.*;
Executive Officer, President and Director:
Chief Operating Boston Safe Advisors, Inc.**;
Officer and a Vice-Chairman and Director:
Director Mellon Bank Corporation*;
The Boston Company, Inc.**;
Director:
Certus Asset Advisors Corporation++;
Mellon Capital Management Corporation***;
Boston Safe Deposit and Trust Company**;
CHRISTOPHER M. CONDRON Past President and Director:
President, Chief The Boston Company Financial Services, Inc.**;
Executive Officer, Boston Safe Deposit and Trust Company**;
Chief Operating Past President:
Officer and a Director The Boston Company Financial Strategies,
(continued) Inc.**;
Acting Chief Executive Officer:
Founders Asset Management, Inc.
Denver, CO
Past Director:
Mellon Preferred Capital Corporation**;
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138;
Past Chairman, President, and Chief Executive Officer:
The Boston Company Asset Management, Inc.**;
Past Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Past Trustee:
Franklin Portfolio Associates Trust
2 International Place, 22nd Floor
Boston, MA. 02710;
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
LAWRENCE S. KASH Executive Vice President:
Vice Chairman- Mellon Bank, N.A.*;
Distribution and a Chairman, President and Director:
Director The Dreyfus Consumer Credit Corporation****;
Trustee, President and Chief Executive Officer:
Laurel Capital Advisors, LLP*;
Director:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
President and Director:
Dreyfus Service Corporation+;
Dreyfus Precious Metals, Inc.+;
Dreyfus Service Organization, Inc.****;
The Boston Company, Inc.**;
Boston Group Holdings, Inc.**;
Chairman and Chief Executive Officer:
Dreyfus Brokerage Services, Inc.
401 North Maple Avenue
Beverly Hills, CA 90210;
Chairman, President and Chief Executive Officer:
The Dreyfus Trust Company+;
The Boston Company Advisors, Inc.
Wilmington, DE.
J. DAVID OFFICER Director:
Vice Chairman Dreyfus Financial Services Corporation*****;
and a Director Dreyfus Investment Services Corporation*****;
J. DAVID OFFICER Mellon Trust of Florida
Vice Chairman 2875 Northeast 191st Street
and a Director North Miami Beach, Florida 33180;
(continued) Mellon Preferred Capital Corporation**;
Boston Group Holdings, Inc.**;
Mellon Trust of New York
1301 Avenue of the Americas - 41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Dreyfus Insurance Agency of Massachusetts, Inc.
53 State Street
Boston, Massachusetts 02109;
Executive Vice President:
Dreyfus Service Corporation****;
Mellon Bank, N.A.*;
Vice Chairman and Director:
The Boston Company, Inc.**;
President and Director:
RECO, Inc.**;
The Boston Company Financial Services, Inc.**;
Boston Safe Deposit and Trust Company**;
RICHARD F. SYRON Chairman of the Board and Chief Executive Officer:
Director American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
RONALD P. O'HANLEY III Director:
Vice Chairman The Boston Company Asset Management, LLC**;
TBCAM Holding, Inc.**;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Floor
Boston, Massachusetts 02110;
Mellon Capital Management Corporation***;
Certus Asset Advisors Corporation++;
Mellon-France Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.**;
RONALD P. O'HANLEY III Partner Representative:
Vice Chairman Pareto Partners
(continued) 271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
Trustee:
Laurel Capital Advisors, LLP*;
Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.*;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Chairman and Director:
Executive Vice President Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Dreyfus-Lincoln, Inc.
4500 New Linden Hill Rd.
Wilmington, DE 19808;
Executive Vice President and Chief Financial Officer:
Dreyfus Service Corporation****;
Executive Vice President, Treasurer and Director:
Dreyfus Service Organization, Inc.****;
Director and Treasurer:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
Dreyfus Precious Metals, Inc.+;
Director, Vice President and Treasurer:
The Dreyfus Consumer Credit Corporation****;
The TruePenny Corporation****
Director, Treasurer and Chief Financial Officer:
The Dreyfus Trust Company+;
Past Director and President:
Lion Management, Inc.****;
Dreyfus Partnership Management, Inc.****;
Past Director and Executive Vice President:
Dreyfus Service Organization, Inc.****;
Past Director and Treasurer:
Dreyfus Personal Management, Inc.****
MARK N. JACOBS Director:
Vice President, Dreyfus Service Organization, Inc.****;
General Counsel The Dreyfus Trust Company+;
and Secretary Dreyfus Investment Advisors, Inc.****;
Director and President:
The TruePenny Corporation****;
Past Director, Vice President and Secretary:
Lion Management, Inc.****
Past Secretary:
The TruePenny Corporation****;
Dreyfus Investment Advisers****
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
ANDREW S. WASSER Vice President:
Vice President- Mellon Bank Corporation*
Information Services
JAMES BITETTO Secretary:
Assistant Secretary The TruePenny Corporation****;
Assistant Secretary:
Dreyfus Service Corporation****;
Dreyfus Investment Advisers, Inc.****;
Dreyfus Service Organization, Inc.****
STEVEN F. NEWMAN Vice President, Secretary and Director:
Assistant Secretary Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Secretary:
Dreyfus Service Organization, Inc.****
Wendy Strutt None
Vice President
Richard Terres None
Vice President
William H. Maresca Director:
Controller The Dreyfus Trust Company+;
Chief Financial Officer:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Assistant Treasurer:
Dreyfus Service Organization, Inc.****
______________________________________
* The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
** The address of the business so indicated is One Mellon Bank Place,
Boston, Massachusetts, 02108.
*** The address of the business so indicated is 595 Market Street, Suite
3000, San Francisco CA 94105.
**** The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
***** The address of the business so indicated is Union Trust Building,
501 Grant Street, Pittsburgh, PA 15259.
+ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York, 11556-0144.
++ The address of the business so indicated is One Bush Street, Suite
450, San Francisco, CA. 94104.
Item 27. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds Trust
37) The Dreyfus/Laurel Tax-Free Municipal Funds
38) Dreyfus LifeTime Portfolios, Inc.
39) Dreyfus Liquid Assets, Inc.
40) Dreyfus Massachusetts Intermediate Municipal Bond Fund
41) Dreyfus Massachusetts Municipal Money Market Fund
42) Dreyfus Massachusetts Tax Exempt Bond Fund
43) Dreyfus MidCap Index Fund
44) Dreyfus Money Market Instruments, Inc.
45) Dreyfus Municipal Bond Fund, Inc.
46) Dreyfus Municipal Cash Management Plus
47) Dreyfus Municipal Money Market Fund, Inc.
48) Dreyfus New Jersey Intermediate Municipal Bond Fund
49) Dreyfus New Jersey Municipal Bond Fund, Inc.
50) Dreyfus New Jersey Municipal Money Market Fund, Inc.
51) Dreyfus New Leaders Fund, Inc.
52) Dreyfus New York Insured Tax Exempt Bond Fund
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Intermediate Bond Fund
56) Dreyfus New York Tax Exempt Money Market Fund
57) Dreyfus U.S. Treasury Intermediate Term Fund
58) Dreyfus U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Premier California Municipal Bond Fund
64) Dreyfus Premier Equity Funds, Inc.
65) Dreyfus Premier International Growth Fund, Inc.
66) Dreyfus Premier GNMA Fund
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Insured Municipal Bond Fund
69) Dreyfus Premier Municipal Bond Fund
70) Dreyfus Premier New York Municipal Bond Fund
71) Dreyfus Premier State Municipal Bond Fund
72) Dreyfus Premier Value Fund
73) Dreyfus Index Funds, Inc.
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) General California Municipal Bond Fund, Inc.
85) General California Municipal Money Market Fund
86) General Government Securities Money Market Fund, Inc.
87) General Money Market Fund, Inc.
88) General Municipal Bond Fund, Inc.
89) General Municipal Money Market Fund, Inc.
90) General New York Municipal Bond Fund, Inc.
91) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ ___________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial Assistant
Officer and Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 28. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
________ ____________
Not Applicable
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectivess of this Registration Statement under Rule
485(b) under the Securities Act and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York on the 30th day
of September, 1998.
The Dreyfus/Laurel Funds, Inc.
BY: /s/Marie E. Connolly*
------------------------------
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
__________________________ ___________________ __________
/s/Marie E. Connolly* President, Treasurer 9/30/98
__________________________
Marie E. Connolly
/s/Francis P. Brennan* Director 9/30/98
__________________________ Chairman of the Board
Francis P. Brennan
/s/Ruth Marie Adams* Director 9/30/98
__________________________
Ruth Marie Adams
/s/Joseph S. DiMartino* Director 9/30/98
__________________________
Joseph S. DiMartino
/s/James M. Fitzgibbons* Director 9/30/98
__________________________
James M. Fitzgibbons
/s/Kenneth A. Himmel* Director 9/30/98
__________________________
Kenneth A. Himmel
/s/Stephen J. Lockwood* Director 9/30/98
- --------------------------
Stephen J. Lockwood
/s/Roslyn M. Watson* Director 9/30/98
- --------------------------
Roslyn M. Watson
/s/J. Tomlinson Fort* Director 9/30/98
__________________________
J. Tomlinson Fort
/s/Arthur L. Goeschel* Director 9/30/98
__________________________
Arthur L. Goeschel
/s/Arch S. Jeffery* Director 9/30/98
__________________________
Arch S. Jeffery
/s/John Sciullo* Director 9/30/98
__________________________
John Sciullo
/s/Benaree Pratt Wiley* Director 9/30/98
- --------------------------
Benaree Pratt Wiley
*BY: /s/ Michael S. Petrucelli
---------------------
Michael S. Petrucelli
Attorney-in-Fact
Exhibit Index
(1) Articles of Amendment dated July 30, 1998.
(2) Amended Exhibit A to Investment Management Agreement between Mellon Bank,
N.A. and the Registrant
(3) Sub-Investment Advisory Agreement between the Dreyfus Corporation and Fayez
Sarofim and Co.
(4) Opinion of Counsel
(5) Consent of Counsel
(6) Consent of Independent Auditors
(7) Sub-Custodian Agreement between Mellon Bank N.A. and Boston Safe Deposit and
Trust Company
(8) Distribution Plan for Dreyfus Tax-Smart Growth Fund and Dreyfus Disciplined
SmallCap Stock Fund
(9) Amended Exhibit A to Distribution Agreement between Premier Mutual Fund
Services, Inc., and the Registrant
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
THE DREYFUS/LAUREL FUNDS, INC.
Pursuant to Sections 2-105, 2-605(a)(4) and 2-607 of the Maryland
General Corporation Law, The Dreyfus/Laurel Funds, Inc. (the "Corporation"),
a Maryland Corporation, incorporated on August 6, 1987, having its principal
office in Maryland in Baltimore, Maryland, hereby adopts the following
Articles of Amendment to the Corporation's Articles of Incorporation:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation (the "Board") by Article FIFTH of the Articles
of Incorporation, the Board, in accordance with Sections 2-105, 2-605(a)(4)
and 2-607(a)(2) of the Maryland General Corporation Law, establishes and
designates the following Series:
Dreyfus Disciplined Smallcap Stock Fund
(100 million shares)
Dreyfus Tax-Efficient Growth Fund
(100 million shares)
Such Series are in addition to Series previously established and
designated.
SECOND: Whereas there are no shares of the Investor Class or
Restricted Class shares of Dreyfus International Equity Allocation Fund
issued or outstanding, pursuant to authority expressly vested in the Board
by Article FIFTH of the Articles of Incorporation, the Board, in accordance
with Sections 2-105, 2-605(a)(4) and 2-607(a)(2) of the Maryland General
Corporation Law, has redesignated all Investor Class and Restricted Class
shares of such Series as authorized capital stock of the Corporation,
without designation of Class or Series, totalling sixty million (60,000,000)
shares, available for future designation and classification by the Board.
THIRD: The aggregate number of shares of all Classes and Series of the
Corporation remains twenty-five billion (25,000,000,000), the par value per
share remains $.001, and the aggregate par value of all authorized stock
remains twenty-five million dollars ($25,000,000). Except as provided in
the foregoing Articles FIRST and SECOND of these Articles of Amendment, the
designation and aggregate number of shares of capital stock of each Series
and Class that the Corporation is authorized to issue remain unchanged. All
authorized shares not designated or classified previously by the Board or
under the foregoing Articles FIRST and SECOND of these Articles of Amendment
remain available for future designation and classification by the Board.
FOURTH: The amendments contained herein were approved by a majority of
the Board of Directors of the Corporation, and no stock of the Corporation
entitled to be voted on the matters contained in the amendments set forth in
these Articles of Amendment was outstanding or subscribed for at the time of
approval thereof by the Board, and such amendments are permitted to be made
without action by stockholders of the Corporation.
FIFTH: The Corporation is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company
Act of 1940, as amended.
IN WITNESS WHEREOF, the undersigned hereby executes these Articles of
Amendment on behalf of the Corporation, acknowledging it to be the act of
the Corporation, and further states under the penalties of perjury that, to
the best of his or her knowledge, information and belief, the matters and
facts set forth herein are true in all material respects.
Dated: July 30, 1998 THE DREYFUS/LAUREL FUNDS, INC.
By: /s/Stephanie Pierce
Name: Stephanie Pierce
Title: Vice President/Assistant Treasurer
Attest: /s/Elba Vasquez
Name: Elba Vasquez
Title: Vice President/Assistant Secretary
AMENDED
EXHIBIT A
Investment Portfolio Investment Management Fee Continuation Date
Dreyfus Money Market Reserves 0.50% April 4, 1999
Dreyfus U.S. Treasury Reserves 0.50% April 4, 1999
Dreyfus Municipal Reserves 0.50% April 4, 1999
Dreyfus Disciplined Stock Fund 0.90% April 4, 1999
Dreyfus Premier Limited Term 0.60% April 4, 1999
Income Fund
Dreyfus Institutional Prime 0.15% April 4, 1999
Money Market Fund
Dreyfus Institutional Government 0.15% April 4, 1999
Money Market Fund
Dreyfus Institutional U.S. 0.15% April 4, 1999
Treasury Money Market Fund
Dreyfus BASIC S&P 500 Stock 0.20% April 4, 1999
Index Fund
Dreyfus Premier Midcap Stock 1.10% April 4, 1999
Fund
Dreyfus Premier Balanced Fund 1.00% April 4, 1999
Dreyfus Bond Market Index Fund 0.15% April 4, 1999
Dreyfus Premier Large Company 0.90% April 4, 1999
Stock Fund
Dreyfus Premier Small Company 1.25% April 4, 1999
Stock Fund
Dreyfus Disciplined Intermediate 0.55% April 4, 1999
Bond Fund
Dreyfus Premier Tax Managed 1.10% April 4, 1999
Growth Fund
Dreyfus Premier Small Cap Value 1.25% April 4, 1999
Fund
Dreyfus Disciplined Smallcap 1.25% April 4, 2000
Stock Fund
Dreyfus Tax-Smart Growth 1.10% April 4, 2000
Fund
SUB-INVESTMENT ADVISORY AGREEMENT
THE DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
July 30, 1998
Fayez Sarofim & Co.
Two Houston Center
Suite 2907
Houston, Texas 77010
Dear Sirs:
As you are aware, Dreyfus Tax-Smart Growth Fund (the "Fund"),a series
of The Dreyfus/Laurel Funds, Inc., a Maryland corporation (the "Company"),
desires to employ its capital by investing and reinvestingthe same in
investments of the type and in accordance with the limitations specified in its
Articles of Incorporation and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Company's Board of Directors. The Company intends to employ
The Dreyfus Corporation (the "Adviser") to act as the Fund's investment adviser
pursuant to a written agreement with the Company dated April 4, 1994,
transferred to the Adviser on October 17, 1994 (the "Management Agreement"), a
copy of which has been furnished to you. The Adviser desires to employ you to
act as the Fund's sub-investment adviser.
In this connection, it is understood that from time to time you
will employ or associate with yourself such person or persons as you may
believe to be particularly fitted to assist you in the performance of this
Agreement. Such person or persons may be officers or employees who are
employed by both you and the Fund. The compensation of such person or
persons shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Adviser, you will
provide investment management of the Fund's portfolio in accordance with
the Fund's investment objectives and policies as stated in the Fund's
Prospectus and Statement of Additional Information as from time to time in
effect. In connection therewith, you will supervise the Fund's investments
and conduct a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. You will furnish
to the Adviser or the Fund such statistical information, with respect to
the investments which the Fund may hold or contemplate purchasing, as the
Adviser or the Fund may reasonably request.
The Fund and the Adviser wish to be informed of important
developments materially affecting the Fund's portfolio and shall expect
you, on your own initiative, to furnish to the Fund or the Adviser from
time to time such information as you may believe appropriate for this
purpose.
You shall exercise your best judgment in rendering the services
to be provided hereunder, and the Adviser agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error
of judgment or mistake of law or for any loss suffered by the Fund or the
Adviser, provided that nothing herein shall be deemed to protect or purport
to protect you against any liability to the Adviser, the Fund or the Fund's
security holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement,
the Adviser will pay you, on the first business day of each month, out of
the management fee it receives and only to the extent thereof, an annual
fee of .30 of 1% of the value of the Fund's average daily net assets,
calculated daily and paid monthly.
Net asset value shall be computed on such days and at such time
or times as described in the Fund's then-current Prospectus and Statement
of Additional Information. The fee for the period from the date following
the commencement of sales of the Fund's shares (after any sales are made to
the Adviser or its affiliates) to the end of the month during which such
sales shall have been commenced shall be pro-rated according to the
proportion which such period bears to the full monthly period, and upon any
termination of this Agreement before the end of any month, the fee for such
part of a month shall be pro-rated according to the proportion which such
period bears to the full monthly period and shall be payable within 10
business days of date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of
the Fund's net assets shall be computed in the manner specified in the
Fund's Articles of Incorporation for the computation of the value of the
Fund's net assets.
You will bear all expenses in connection with the performance of
your services under this Agreement. All other expenses to be incurred in
the operation of the Fund (other than those borne by the Adviser) will be
borne by the Fund, except to the extent specifically assumed by you. Under
the Management Agreement, Dreyfus pays all of the Fund's expenses, except
brokerage fees, taxes, interest, fees and expenses of non-interested
Directors (including counsel fees), Rule 12b-1 fees (if applicable) and
extraordinary expenses, each of which is borne by the Fund.
The Adviser understands that you now act, and that from time to
time hereafter you may act, as investment adviser to one or more other
investment companies and fiduciary or other managed accounts, and the
Adviser has no objection to your so acting, provided that when purchase or
sale of securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by you which have
available funds for investment, the available securities will be allocated
in a manner believed by you to be equitable to each company or account. It
is recognized that in some cases this procedure may adversely affect the
price paid or received by the Fund or the size of the position obtainable
for or disposed of by the Fund.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their
full time to such services and nothing contained herein shall be deemed to
limit or restrict your right or the right of any of your affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or the Adviser in connection with
the matters to which this Agreement relates, except for a loss resulting
from willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
your officer, director, partner, employee or agent, who may be or become an
officer, Director, employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting on any business of the Fund, to be
rendering such services to or acting solely for the Fund and not as your
officer, director, partner, employee, or agent or one under your control or
direction even though paid by you.
This Agreement shall continue until April 4, 2000, and thereafter
shall continue automatically for successive annual periods ending on April
4th of each year, provided such continuance is specifically approved at
least annually by (i) the Fund's Directors or (ii) vote of a majority (as
defined in the Investment Company Act of 1940, as amended) of the Fund's
outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Directors who are
not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty
(i) by the Adviser upon 60 days' notice to you, (ii) by the Fund's
Directors or by vote of the holders of a majority of the Fund's shares upon
60 days' notice to you, or (iii) by you upon not less than 90 days' notice
to the Fund and the Adviser. This Agreement also will terminate
automatically in the event of its assignment (as defined in said Act). In
addition, notwithstanding anything herein to the contrary, if the
Management Agreement terminates for any reason, this Agreement shall
terminate effective upon the date the Management Agreement terminates.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
THE DREYFUS CORPORATION
By:
Name:
Title:
Accepted:
FAYEZ SAROFIM & CO.
By:__________________
Name:
Title:
To the Board of Directors and Shareholders
Dreyfus Tax-Smart Growth Fund
We consent to the use of our report dated September 30, 1998 with respect to the
Dreyfus Tax-Smart Growth Fund of the Dreyfus/Laurel Funds, Inc. included in the
included in the Statements of Additional Information and to the reference to our
firm under the heading "Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors" in the Statement of Additional Information.
KPMG Peat Marwick LLP
New York, New York
September 30, 1998
To the Board of Directors and Shareholders
Dreyfus Disciplined Smallcap Stock Fund
We consent to the use of our report dated September 30, 1998 with respect to the
Dreyfus Disciplined Smallcap Stock Fund of the Dreyfus/Laurel Funds, Inc.
included in the included in the Statements of Additional Information and to the
reference to our firm under the heading "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" in the Statement of Additional
Information.
KPMG Peat Marwick LLP
New York, New York
September 30, 1998
SUBCUSTODIAN AGREEMENT
AGREEMENT made as of the fourth day of April, 1994, as amended on the
first day of November, 1995, between Mellon Bank, N.A. (hereinafter referred
to as the "Custodian"), a national banking association with its principal
place of business at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258
and Boston Safe Deposit and Trust Company (hereinafter referred to as the
"Subcustodian"), a trust company having its principal office at One Boston
Place, Boston, Massachusetts.
WHEREAS, the Custodian has been appointed by The Dreyfus/Laurel Funds,
Inc. (the "Fund") to act as custodian of all of the securities and monies at
the time owned by or in the possession of the Fund pursuant to the terms of
the Custody Agreement dated as of April 4, 1994, as amended,
, 1995 between the Fund and the Custodian (the "Agreement"), a copy of which
is annexed hereto; and
WHEREAS, the Custodian has accepted appointment as such custodian and
has agreed to perform the duties thereof as set forth in the Agreement; and
WHEREAS, Section 12(f) of the Agreement provides that the Custodian may
appoint one or more banking institutions to act as Sub-Custodian of
securities and monies at any time owned by the Fund, upon terms and
conditions specified in a certificate signed on behalf of the Fund, and the
Fund has given such a certificate to the Custodian;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained the Custodian and the Subcustodian hereby agree as follows:
1. Definitions. Terms used herein and not otherwise defined shall
have the meanings provided for in the Agreement.
2. Appointment of Subcustodian.
(a) The Custodian hereby constitutes and appoints the
Subcustodian as subcustodian of all the securities and monies at the time
owned by or in the possession of the Fund during the period of the
Agreement.
(b) The Subcustodian hereby accepts appointment as such
subcustodian and agrees to perform the duties hereof as hereinafter set
forth.
3. Duties of the Subcustodian. Subject to the overall supervision
and direction of the Custodian, the Subcustodian shall perform and discharge
the duties and obligations of the Custodian set forth in the following
indicated sections of the Agreement:
4. Custody of Cash and Securities.
5. Purchase and Sale of Investments of the Fund.
6. Lending of Securities.
7. Payment of Dividends and Distributions.
8. Sale and Redemption of Shares of the Fund.
9. Indebtedness.
10. Persons Having Access to Assets of the Fund.
11. Overdraft Facility and Security for Payment.
4. Concerning the Subcustodian.
(a) Standard of Conduct. Except as otherwise provided herein or
in the Agreement, neither the Subcustodian nor its nominees shall be liable
for any loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except any such loss or damage arising out of
its own negligence or willful misconduct. The Subcustodian may, with
respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of counsel to the Custodian or of its own counsel, at
the expense of the Custodian, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice
or opinion.
(b) Limit of Duties; Appointment of Agents. The Subcustodian
shall be entitled to the benefit of the provisions of Sections 12(b) through
(g) and 12(i) of the Agreement as if it were the Custodian specified
therein.
(c) Inspection of Books and Records. The books and records of
the Subcustodian shall be open to inspection and audit at reasonable times
by officers and auditors employed by the Fund or the Custodian and by the
appropriate employees of the Securities and Exchange Commission.
The Subcustodian shall provide the Fund and the Custodian
with any report obtained by the Subcustodian on the system of internal
accounting control of the Book-Entry System or the Depository and with such
reports on its own systems of internal accounting control as the Fund or the
Custodian may reasonably request from time to time.
(d) Compensation of the Subcustodian. The Custodian agrees to
pay the Subcustodian from time to time such compensation for its services
and such out-of-pocket or incidental expenses of the Subcustodian pursuant
to this Subcustodian Agreement as may be mutually agreed upon in writing
from time to time.
5. Term and Termination.
(a) This Agreement shall become effective on the date first set
forth above and shall continue in effect thereafter as the parties may
mutually agree.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of receipt
of such notice, provided that any such notice shall be followed within 60
days by Instructions specifying the names of the person to whom the
Subcustodian shall deliver Securities in the Account(s) and to whom the Cash
in the Account(s) shall be paid. If within 60 days following the giving of
such notice of termination, the Subcustodian does not receive such
Instructions, the Subcustodian shall continue to hold such Securities and
Cash subject to this Subcustodian Agreement until such Instructions are
given.
6. Miscellaneous.
(a) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to
it at its offices at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258
or at such other place as the Custodian may from time to time designate in
writing. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Subcustodian shall be sufficiently
given if addressed to the Subcustodian and mailed or delivered to it at its
offices at One Boston Place, Boston, Massachusetts 02108 or at such other
place as the Subcustodian may from time to time designate in writing.
(b) This Subcustodian Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties.
(c) This Agreement shall not be assignable by either party but
shall bind any successor in interest of the Custodian and the Subcustodian
respectively.
(d) This Subcustodian Agreement shall be construed in accordance
with the laws of The Commonwealth of Massachusetts.
(e) This Subcustodian Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Subcustodian
Agreement to be executed by their respective representatives duly authorized
as of the day and year first above written.
MELLON BANK, N.A.
By:_______________________________________________
Name:
Title:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
BY:_______________________________________________
Name:
Title:
THE DREYFUS/LAUREL FUNDS, INC.
DISTRIBUTION PLAN
WHEREAS, The Dreyfus/Laurel Funds, Inc. (formerly, The Laurel Funds,
Inc.) (the "Investment Company") is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended,
(the "1940 Act") and consists of one or more distinct portfolios of shares
of common stock, as may be established and designated from time to time; and
WHEREAS, the portfolios listed in Exhibit A, as such exhibit may be
amended from time to time, are referred to herein collectively as the
"Funds" and individually as a "Fund"; and
WHEREAS, the Investment Company and its Distributor, a broker-dealer
registered under the Securities Exchange Act of 1934, as amended, have
entered into a Distribution Agreement pursuant to which the Distributor will
act as the distributor of shares of the Funds, or of shares of classes of
the Funds, as indicated on Exhibit A (the "Shares"), as such exhibit may be
amended from time to time; and
WHEREAS, the Board of Directors of the Investment Company has adopted
the Distribution Plan in accordance with the requirements of the 1940 Act
and Rule 12b-1 thereunder, and has concluded, in the exercise of it
reasonable business judgment and in light of its fiduciary duties, that
there is a reasonable likelihood that the Distribution Plan will benefit the
Investment Company and the holders of the Shares;
NOW THEREFORE, the terms of the Distribution Plan (the "Plan") are as
set forth below:
Section 1. Payments for Distribution-Related Services and Shareholder
Servicing. The Investment Company may pay for any activities or expenses
primarily intended to result in the sale of Shares as listed on Exhibit A,
as such exhibit may be amended from time to time, and/or shareholder
servicing provided with respect to such Shares. Payments by the Investment
Company under this Section of this Plan will be calculated daily and paid
monthly at a rate or rates set from time to time by the Investment Company's
Board of Directors, provided that no rate set by the Board for any Fund may
exceed, on an annual basis, 0.25% of the value of a Fund's average daily net
assets.
Section 2. Expenses Covered by Plan. The fees payable under Section 1
of this Plan may be used to compensate (i) Mellon Bank, N.A. and/or any of
its affiliates (including The Dreyfus Corporation ("Dreyfus") and Dreyfus
Service Corporation) for shareholder servicing services provided by such
entities, and/or (ii) the Distributor for distribution and/or shareholder
servicing services provided by it, and related expenses incurred, including
payments by the Distributor to compensate banks, broker/dealers or other
financial institutions that have entered into written agreements with
respect to shareholder services and sales support services ("Agreements")
with the Distributor ("Selling and Servicing Agents"), for shareholder
servicing and sales support services provided, and related expenses
incurred, by such Selling and Servicing Agents.
Section 3. Agreements. The Distributor may enter into written
Agreements with Selling and Servicing Agents, such Agreements to be
substantially in such forms as the Board of Directors of the Investment
Company may duly approve from time to time.
Section 4. Limitations on Payments. Payments made by a particular
Fund under Section 1 must be for distribution and/or shareholder servicing
rendered for or on behalf of the Shares of such Fund. However, joint
distribution or sales support financing with respect to a Fund (which
financing may also involve other investment portfolios or companies that are
affiliated persons of such a person, or affiliated persons of the
Distributor) shall be permitted in accordance with applicable regulations of
the Securities and Exchange Commission as in effect from time to time.
Except for the payments specified in Section 1, no additional payments
are to be made by the Investment Company under this Plan, provided that
nothing herein shall be deemed to preclude the payments a Fund is otherwise
obligated to make to Dreyfus pursuant to the Investment Management
Agreement, and for the expenses otherwise incurred by such Fund and the
Investment Company on behalf of the Shares in the normal conduct of such
Fund's business pursuant to the Investment Management Agreement. To the
extent any payments by the Investment Company on behalf of a Fund to
Dreyfus, or any affiliate thereof, or to any party pursuant to any
agreement, or, generally, by the Investment Company on behalf of a Fund to
any party, are deemed to be payments for the financing of any activity
primarily intended to result in the sale of the Shares within the context of
Rule 12b-1 under the 1940 Act, then such payments shall be deemed to have
been approved pursuant to this Plan without regard to Section 1.
Notwithstanding anything herein to the contrary, no Fund shall be
obligated to make any payments under this Plan that exceed the maximum
amounts payable under Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Section 5. Reports. So long as this Plan is in effect, the
Distributor and/or Dreyfus shall provide to the Investment Company's Board
of Directors, and the Directors shall review at least quarterly, a written
report of the amounts expended by a Fund pursuant to the Plan, or by Selling
and Servicing Agents pursuant to Agreements, and the purposes for which such
expenditures were made.
Section 6. Majority Vote. As used herein, the term "Majority Vote" of
the Shares of a Fund means a vote of the holders of the lesser of (a) more
than fifty percent (50%) of the outstanding Shares of such Fund or (b) sixty-
seven percent (67%) or more of the Shares of such Fund present at a
shareholders' meeting in person or by proxy.
Section 7. Approval of Plan. This Plan will become effective at such
time as is specified by the Board of Directors, as to any Fund; provided,
however, that the Plan is approved by (a) Majority Vote of the Shares of
such Fund if adopted after the public offering of such Shares or the sale of
such Shares to persons who are not affiliated persons of the Investment
Company, affiliated persons of such persons, promoters of the Investment
Company, or affiliated persons of such promoters (as such terms are defined
in the 1940 Act), and (b) a majority of the Board of Directors, including a
majority of the Directors who are not "interested persons" (as defined in
the 1940 Act) of the Investment Company and who have no direct or indirect
financial interest in the operation of this Plan or in any Agreements
entered into in connection with this Plan, pursuant to a vote cast in person
at a meeting called for the purpose of voting on the approval of this Plan.
Section 8. Continuance of Plan. This Plan shall continue in effect
for so long as its continuance is specifically approved at least annually by
the Investment Company's Board of Directors in the manner described in
Section 7(b) hereof.
Section 9. Amendments. This Plan may be amended at any time by the
Board of Directors; provided, that (a) any amendment to increase materially
the costs which a Fund's Shares may bear for distribution pursuant to this
Plan shall be effective only upon the Majority Vote of the outstanding
Shares of such Fund, and (b) any material amendments of the terms of this
Plan shall become effective only upon approval as provided in Section 7(b)
hereof.
Section 10. Termination. This Plan is terminable, as to a Fund,
without penalty at any time by (a) a vote of a majority of the Directors who
are not "interested persons" (as defined in the 1940 Act) of the Investment
Company and who have no direct or indirect financial interest in the
operation of this Plan or in any Agreements entered into in connection with
this Plan, or (b) a Majority Vote of the outstanding Shares of the Fund.
Section 11. Selection/Nomination of Directors. While this Plan is in
effect, the selection and nomination of those Directors who are not
"interested persons" (as defined in the 1940 Act) of the Investment Company
shall be committed to the discretion of such non-interested Directors.
Section 12. Records. The Investment Company will preserve copies of
this Plan, and any related Agreements and any written reports regarding this
Plan presented to the Board of Directors, for a period of not less than six
(6) years from the date of this Plan, such Agreement or written report, as
the case may be, the first two (2) years of such period in an easily
accessible place.
Section 13. Miscellaneous. The captions in this Plan are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Investment Company has adopted this
Distribution Plan as of this 30 day of July, 1998.
EXHIBIT A
THE DREYFUS/LAUREL FUNDS, INC.
Dreyfus Disciplined Smallcap Fund
Dreyfus Tax-Efficient Growth Fund
Name of Series Reapproval Date Reapproval Day
Dreyfus Disciplined Stock Fund April 4, 1999 April 4th
Dreyfus Premier Midcap Stock Fund April 4, 1999 April 4th
Dreyfus BASIC S&P 500 Stock Index Fund April 4, 1999 April 4th
Dreyfus Premier Large Company Stock Fund April 4, 1999 April 4th
Dreyfus Bond Market Index Fund April 4, 1999 April 4th
Dreyfus Money Market Reserves April 4, 1999 April 4th
Dreyfus U.S. Treasury Reserves April 4, 1999 April 4th
Dreyfus Municipal Reserves April 4, 1999 April 4th
Dreyfus Institutional Prime Money Market
Fund April 4, 1999 April 4th
Dreyfus Institutional Government Money
Market Fund April 4, 1999 April 4th
Dreyfus Institutional U. S. Treasury
Money Market Fund April 4, 1999 April 4th
Dreyfus Premier Balanced Fund April 4, 1999 April 4th
Dreyfus Premier Small Company Stock Fund April 4, 1999 April 4th
Dreyfus Premier Limited Term Income Fund April 4, 1999 April 4th
Dreyfus Disciplined Intermediate Bond
Fund April 4, 1999 April 4th
Dreyfus Premier Tax Managed Growth Fund April 4, 1999 April 4th
Dreyfus Premier Small Cap Value Fund April 4, 1999 April 4th
Dreyfus Disciplined Smallcap Stock Fund April 4, 2000 April 4th
Dreyfus Tax-Smart Growth Fund April 4, 2000 April 4th
Revised: July 30, 1998
